Crisis offers ways to lift customer retention

Dealership service departments across North America are plagued by troubling customer retention and satisfaction scores, and any increase in customer-pay sales per repair order is likely the result of higher prices, not growing demand.

This sobering assessment came from Carlisle & Co.'s 2020 North America Service Benchmark report. Carlisle collected 2019 data in February from a group of participating automakers representing 15 brands, which the company then analyzed for key trends.

Eliza Johnson, who leads the company's service benchmarking practice, shared the findings to kick off the first installment of the 2020 Automotive News Fixed Ops Journal Forum. (The online event aired Oct. 8; replays at autonews.com/fixed-ops-journal-forum.)

Despite the bleak outlook, Johnson told attendees that the coronavirus pandemic offered an opportunity to make positive change in the service lane.

Among the report's troubling trends is stagnant or declining customer retention numbers on 1- to 7-year-old vehicles with at least one customer-pay service visit. For vehicles 8 to 19 years old, retention declines even more rapidly.

"The picture here is a little more concerning," Johnson said. "Not only does retention continue to drop off with each year a vehicle ages, but over the past several years we've seen this picture get worse, particularly for older vehicles."

Each point of retention is worth billions of dollars in high-profit service sales for dealers and parts sales for automakers, she said. Retention also drives brand loyalty to sell more vehicles.

The Carlisle report also showed that across nearly every customer-satisfaction metric, franchised dealers are trending downward. Net promoter scores for dealers are about 15 points lower than for independent repair facilities.

The only bright spot — that customer-pay sales per repair order are up about 1 percent for both premium and non-premium brands — also is clouded.

Johnson said the report shows premium brands' hours sold per repair order is stagnant, meaning the growth in sales per RO likely stems from higher pricing instead of increased demand.

"We think that some pricing increases are really kind of both masking and perpetuating the problems that we're seeing get worse over the past few years," Johnson said. "It's really critical that we change and try to change quickly, especially due to COVID."

She said the potential drop in sales combined with the recession only magnify the importance of these issues.

Johnson said fixed ops departments will be critical in helping dealerships weather this storm. "Fixed ops really needs to carry OEMs through this downturn," she said.

Some ways to do that would be to continue with service pickup and delivery and mobile service vans. She also said the brands Carlisle sees with the highest retention numbers offer free and prepaid maintenance packages.

Johnson also recommended a renewed focus on recruiting and retaining high-quality personnel — including techs and advisers — as well as preparing the service lane for new products such as electric and autonomous vehicles.

"We really think it's important to actually leverage what's going on with COVID to make a big paradigm shift now to really change how we have traditionally done business for years and years," Johnson said.

To do things differently and make them better for customers "can improve this whole retention and sales picture."