Young, Wired Auto Service Consumers Intensely Driven By Price, Convenience
According to new analysis from Daytona Beach, FL-based DME Automotive (DMEA), a one-size-fits-all service marketing approach simply doesn’t work. What motivates shoppers to choose a particular service outlet, and how they want to be communicated with, varies dramatically by age and loyalist type. To send the right message, to the right customer, via the right channel — and effectively reach younger, more demanding, tech-savvy shoppers — means targeting demographic and loyalty segments separately.
DMEA’s latest report, Marketing Success in a Changing Service Loyalty Landscape, is based on a survey of 4,000 U.S. vehicle owners. The firm breaks the participants down into three types:
• “Loyalists” both visit and spend most at a particular type of service center;
• “Swing loyalists” either visit, or spend most, at a service center type, but not both; and
• “Disloyalists” neither visit nor spend most at a given type of service center.
DMEA says that loyalists comprise 23 percent of service center customers but drive 59 percent of service center industry revenue. Loyalists place great value on attributes that their primary store is already best suited to deliver, and there is little overlap between what dealership, independent repair shop and aftermarket chain loyalists value most.
Dealer loyalists value manufacturer-trained technicians, using brand-name parts and following OEM-recommended schedules, as well as premium amenities. Independent repair shop loyalists embrace trust and relationship attributes, essentially valuing friendly, trustworthy people at the shop, as well as signs of trust like upfront estimates. The aftermarket chain loyalist places heavy importance on tangible price and convenience factors, including frequent promotions and parts/service pricing options.
DMEA points out that loyalty programs can be a powerful tool for a disloyal market. While many service providers have not implemented a points-based loyalty program and most imagine loyalty program marketing is only a fit for “true” loyalists, DMEA’s data suggests that openness to a loyalty program is nearly as robust for swing loyalists and disloyalists:
Likelihood to Participate in Service Loyalty Program
Aftermarket Chain……….Dealer……….Independent Repair Shops
Loyalists ……………………. 32%……………………34%……… ………………22%
Swing Loyalists …………….27%……………………31%……………………….16%
Roughly one-third of dealer and aftermarket chain loyalists say they’re likely to join a loyalty program, but so are nearly the same percentage of dealer swing loyalists. And more than 25 percent of dealer and aftermarket chain swing loyalists — and disloyalists — would jump on board given the option. While independent repair shop loyalists and swing loyalists are the least likely to value or join a program, for the rest of the industry, a well-designed rewards program represents an opportunity to keep the best customers close, while converting more non-loyalists into loyalists.
The DMEA survey also captured which sources of maintenance information customers turn to the most and revealed that the young-skewing aftermarket chain loyalist turns to company websites, social networking sites and online message boards/review sites — and prefers emerging digital communications like text messaging and mobile app notification — much more than any service center shopper.
The research also reveals that service selection motivators now heavily pivot around age. All under-35 customers place a high value on convenience (extended hours, online appointments, etc.), and young dealer and aftermarket chain customers (not independent repair shop customers) put a much higher premium on low prices, discounts and coupons versus those aged 35-plus.
In contrast, service customers aged 55-plus are far more likely to demand expert advisors, brand-name parts and full-service extras. Shoppers aged 35-54 exhibit the most variation in their service center selection hot-buttons. For instance, “competitive prices” ranked very high for independent repair shop and aftermarket customers, but very low for dealer customers, in that age group.
And, if one imagines that loyalty programs only have traction with older customers in their prime spending years, the DMEA data reveals that young dealer customers (aged 18-34) actually value loyalty programs more than any other service center shopper. In general, younger consumers shop the hardest. Not only do they heavily value a host of price and convenience factors, they perform more online research before they pull the service center decision trigger. To reach and convert them, DMEA says service centers must exploit database mining, social media, online reviews and loyalty programs. This is particularly so for dealerships, which DMEA says are now least likely to attract young shoppers and need to shed that “senior center” image. As demographics shift and new waves of shoppers enter the market, service centers will need to shift their customer experiences to remain competitive.
Consumers also commented on how often they want to hear from service providers, and most segments expect communication at least every three months with the overwhelmingly preferred channels being mail and email. More than 60-70 percent of all dealer and aftermarket chain customers want communications that frequently via these two channels. Independent repair shop loyalists and swing loyalists were the only customers desiring less communication, yet half still want contact once every three months.
Email ranked as the No.-1 way, and mail the No.-2 way, that all customers want to hear from their service providers — except for independent repair shop loyalists who rate mail higher. These two channels decisively trump live and recorded calls, text messages, and mobile app notifications. And, no customer prefers email communications more than the dealer loyalist: 64 percent of dealer loyalists prefer email, while 29 percent prefer mail; 38 percent of independent repair shop loyalists prefer email, 49 percent mail; and 53 percent of aftermarket chain loyalists prefer email, 38 percent mail.
DMEA is an automotive marketing firm servicing automobile dealerships as well as aftermarket companies. For more information on this and other reports, visit
84% Of Vehicles Inspected During 2011 Car Care Month Events Needed Service, Parts
With another National Car Care Month upon us, we take a look back at last year’s findings. All totaled, 84 percent of vehicles inspected at community car care events in April 2011 and October 2011 (National Car Care Months) were in need of service or parts. That’s the highest percentage in five years, according to the Car Care Council. An analysis of vehicle inspection forms found the top problem areas to be engine oil and fluids, air filters, battery cables, lights, belts, and hoses.
Nearly one out of 10 vehicles had the “check engine” light on, and new air filters were needed in 19 percent of the vehicles. At least one belt was reported as unsatisfactory in 20 percent of the vehicles inspected, and 15 percent required at least one new hose. Battery cables, clamps and terminals needed maintenance in 17 percent of the vehicles inspected, while 10 percent of the batteries were not properly held down.
When checking lubricants and fluids, the top failure rates were: low or dirty motor oil at 28 percent; low, leaky or dirty coolant at 24 percent; and inadequate washer fluid levels at 23 percent. Power steering, transmission, and brake fluids also were checked and had failure rates of at least 18 percent.
Roughly 14 percent of vehicles had front windshield wiper failures, and 3 percent needed service to rear wipers. As many as 16 percent of vehicles needed lights replaced, including headlights, brake lights and license plate lights. Improperly inflated tires were found on 8 percent of the cars, while 11 percent had worn tread and were in need of replacement.
Overall Repair Costs Down 6% In 2011, According To CarMD
Replace oxygen sensor was the most common “check engine” light problem in the recently released CarMD Vehicle Health Index. Rounding out the Top 5 were: loose or missing gas cap, replace catalytic converter, replace ignition coil (new to the Top 5 this year), and replace mass air flow sensor.
Overall auto repair costs were down 6 percent from the previous year, according to the CarMD study, despite a 1.4-percent increase in parts costs, which was more than offset by a 17-percent decrease in labor rates. “Despite the fact that the average vehicle age is at an all-time high of nearly 11 years, 2011 saw a decrease in average national auto repair cost,” said Art Jacobsen, vice president of the Irvine, CA-based company. “However, the CarMD data also shows that consumers continue to put off small repairs, which can result in much more expensive, catastrophic repairs and negatively impact fuel economy.”
The latest Vehicle Health Index is drawn from an analysis of roughly 165,000 repairs and 150,000 diagnostic trouble code scenarios in the CarMD database. The April 2012 CarMD Vehicle Health Index is available at http://corp.carmd.com.
Monro In A Deal To Buy Kramer Tire
Rochester, NY-based Monro Muffler Brake has reached a deal to acquire the Kramer Tire Co.,truck tire centers in the Norfolk, VA area. Monro already operates 17 Treadquarters locations in the region.
TBC Reshuffles Some Top Leaders Pre-Midas Acquisition
TBC Corp. (Palm Beach Gardens, FL), which is in the midst of an offer to acquire Midas Inc., has announced title changes for some of its senior leaders. Bill Ihnken has been named president and chief operating officer for the TBC Retail Group’s company-owned stores. He previously served as executive vice president and chief operating officer of the retail group. Ihnken has been with TBC since 2000. Orland Wolford remains president and CEO of the retail group; however, he has been given the additional role of vice chairman of TBC. Wolford also has been with TBC since 2000.
TBC’s retail group operates more than 1,200 franchised and company-owned tire and service centers under the brands Tire Kingdom, Merchant’s Tire & Auto Centers, National Tire & Battery (NTB) and Big O Tires. The addition of Midas would nearly double that, adding 2,250-plus franchised, licensed and company-owned Midas shops across 14 countries — nearly 1,500 of which are in the United States and Canada — as well as 161 SpeeDee Oil Change centers in the United States and Mexico.
In related news, TBC and Midas have received early termination of the required waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. This satisfies one of the conditions to consummation of the deal.
Content From The Car Care Council Featured On eBay Motors
eBay Motors has launched a new media content center in partnership with the Car Care Council. It features DIY videos and advice for consumers on topics ranging from “Essential Items to Keep in Your Car” to “How to Choose the Right Tires for Your Vehicle.” All of the content posted on eBayMotors.com is attributed to the council and provide links back to its redesigned website, www.carcare.org.
Speedemissions CFO Michael Shanahan Has Resigned
Michael Shanahan has resigned as the CFO of Speedemissions Inc. “to pursue other opportunities,” according to a March 23 filing with the SEC. The company states that Shanahan’s decision to resign “was not due to any disagreement with the company regarding [its] financial or reporting practices or otherwise or related to [its] financial or operating results.” Shanahan has served as Speedemissions’ CFO since 2005.
Dealer Service Satisfaction Tops Independent Shops
Vehicle owners who visit dealer facilities for service are considerably more satisfied with their experience at dealerships than with service from independent facilities, according to the J.D. Power & Associates 2012 U.S. Customer Service Index (CSI) Study released in March.
Among customers of dealer facilities, overall satisfaction with the service experience averaged 38 points higher on a 1,000-point scale, compared with non-dealer facilities (787 vs. 749, respectively). In addition, 79 percent of all service visits among owners of vehicles one to three years old are performed at dealer facilities — up from 74 percent in 2011 and 72 percent in 2010.
Overall satisfaction with dealer service improved by 19 points in 2012, compared with 2011, with gains in all five study measures. Among the 33 rank-eligible brands, 28 improved in service satisfaction from 2011, with eight brands improving by at least 20 points. Contributing to the overall improvement was a shift in the proportion of maintenance and repair work performed at dealer service centers. In 2012, 72 percent of vehicle owners indicated that their latest dealer service visit was for maintenance rather than repair — an increase from 63 percent in 2011. Customer satisfaction with maintenance visits was typically higher than satisfaction with repair visits, because visits for routine maintenance tend to be less expensive and less time-consuming.
“Steady improvements in vehicle quality, longer intervals between recommended service visits and a higher mix of maintenance service events have had a positive effect on overall dealer service satisfaction,” explained Chris Sutton, a senior director at J.D. Power. “Moreover, manufacturers and their dealers have instituted broad-based customer service improvement initiatives to increase satisfaction with both the purchase experience and after-sales service, with the understanding that a substandard service occasion can and will impact their ability to make a future vehicle sale or gain repeat service business.”
The study examined satisfaction among vehicle owners who visited a service department for maintenance or repair work. The CSI rankings are based on dealer service performance during the first three years of new-vehicle ownership, which typically represents the majority of the vehicle warranty period. Five measures are examined to determine overall customer satisfaction with dealer service (listed in order of importance): service quality, service initiation, service advisor, service facility and vehicle pick-up.
Lexus ranked highest in customer satisfaction with dealer service among luxury brands and received an award for a fourth consecutive year. Lexus achieved an overall CSI score of 861 and performed particularly well in service initiation, service facility and service quality. Among mass-market brands, Mini ranked highest for a second consecutive year with a score of 809. Mini performs particularly well in service quality, service advisor, service facility and vehicle pick-up. Also among the Top 5 brands in the mass-market segment were Buick (805), GMC (803), Chevrolet (801) and Hyundai (791).
J.D. Power predicts that, because of depressed auto sales during the recession, dealer service volumes will continue to decline through 2013 before rebounding. The challenge for automakers will be to maintain high levels of satisfaction once service volumes do rebound, the study concludes.
The 2012 U.S. CSI Study is based on responses from more than 84,000 owners and lessees of 2007-’11 model-year vehicles. The study was fielded between October and December 2011.
Tire Satisfaction Influences Dealership Service Loyalty
When customers are highly satisfied with their vehicle’s original tires, they are more likely to return to the dealership for maintenance and repair services as well as use the dealership for future service on tires. Additionally, they are more likely to be loyal to the vehicle brand at the time of their next purchase, according to the 2012 J.D. Power & Associates U.S. OE Tire Customer Satisfaction Study. Among owners who rated the quality and appeal of their vehicles as “truly exceptional” and their tires as “truly exceptional,” they were:
• More likely to say they “definitely will” return to the dealer for maintenance and repair work (89 percent vs. 82 percent a year ago);
• More likely to return to the dealer for future tire service work (44 percent vs. 32 percent); and
• More likely to say they “definitely will” re-purchase the same vehicle brand (67 percent vs. 59 percent).
“High tire satisfaction positively influences owner perceptions of their vehicle,” said Brent Gruber, senior manager of the tire practice at J.D. Power. “By choosing a better performing tire for its vehicles, not only are manufacturers in a position to build greater loyalty for their brand, but they’re also increasing the potential for future service business at dealerships.”
Overall, OE tire satisfaction increased 29 points to 686 on a 1,000-point scale. This increase is attributable to improvements across all factors: tire ride, tire traction and handling, tire wearability, and tire appearance. Tire ride and tire wearability had the largest year-over-year improvements at 30 and 29 points, respectively.
The performance sport tire segment posted the highest satisfaction scores among the four segments included in the study, increasing 38 points in 2012 to 748 points. Previously, the luxury segment had reported the highest satisfaction scores. This year, however, the performance sport segment overtook the luxury segment by 13 points (748 vs. 735).
Michelin ranked highest in three of the four segments: luxury (777), passenger car (726) and truck/utility (740). Pirelli ranked highest in the performance sport 20 ASE Test Takers Recognized As World Class Technicians segment with a score of 788.
20 ASE Test Takers Recognized As World Class Technicians
AAIA and ASE are recognizing 20 people this year with World Class Technician status. These professional technicians have tested and obtained ASE certification in 22 specialty areas during the 2011 test administrated by ASE. Since the World Class Technician program was established 26 years ago, a total of 1,833 technicians have been honored.
NPD Says U.S. Consumers Paid 24% More For 2% Less Gas In 2011
U.S. consumers paid 24 percent more dollars to purchase 1.7 percent fewer gallons of gas in 2011, according to The NPD Group, a market research company. The increased spending represents $76 billion more going into gas tanks compared to the previous year.
The results of the 2011 NPD Motor Fuels Index, which tracks consumer motor fuel purchasing behavior and attitudes, were reminiscent of 2008 when the national average price for a gallon of gasoline remained above $3.00 for 12 months (November 2007 to October 2008). During that time, miles driven decreased by 55 billion miles. Prices again crossed the $3.00 threshold in December 2010 and have remained above that level to date. Miles driven never fully recovered from the 2008 declines, and consumers cut back another 36 billion miles through December 2011.
“Consumers continue to modify driving patterns to purchase fewer gallons, but it isn’t enough to offset price increases at the pump,” said David Portalatin, motor fuels analyst at NPD. “There’s no doubt that the consumer is losing share of wallet at the pump despite trying to reduce consumption.”
With more money going toward gas, it leaves less to spend on other things. For example, NPD’s Convenience Store Monitor, which tracks the consumer purchasing behavior of more than 51,000 U.S. convenience-store shoppers, reports that total convenience store consumer traffic declined 4 percent in 2011. This effect was more severe at oil company-branded outlets that are typically more dependent on gasoline sales to drive customer traffic. Traditional convenience chains that are more diversified in their food and beverage offerings were better positioned to weather the trend, according to Portalatin.
According to the most recent Motor Fuels Index findings, through March 2012, consumers have already cut back another 1 percent on gallon purchases but have spent 9 percent more for those gallons compared to the same time period a year ago. “Gas prices have continued to increase into the spring of 2012 with more increases expected,” Portalatin said. “And, while seeing $3-plus on the pump is no longer the shock it once was, there is still only so much money in the wallet, and something will need to give in order to fill the tank.”
U.S. Miles Driven Increased 1.6 Percent In January
U.S. vehicle travel increased 1.6 percent, or 3.50 billion miles, in January on a year-over-year basis, according to the Federal Highway Administration. Travel was up across most regions, with the largest percentage gain coming from the Northeast (up 4.6 percent). This was followed by the North Central region (up 2.1 percent), the South Gulf (up 2.0 percent) and the South Atlantic (up 1.8 percent). The West region posted the only decline (down 1.5 percent).
Elite Worldwide Adds Business Development Coach
T.J. Reilly, the owner of Same Day Auto Service in Clackamas, OR, is now a business development coach with Elite Worldwide Inc. (Rancho Santa Fe, CA), a sales, marketing and management consultancy for auto repair businesses. Reilly has 35 years of industry experience, including being both a single-store and multi-store operator. He has an AAM degree from the Automotive Management Institute, is a past president of the Automotive Service Association of Oregon and is a columnist for ASA’s Autoinc magazine.
News Briefs 4/4/12
The Car Care Council has introduced a new online customizable service schedule to help motorists stay on top of their vehicle’s maintenance needs. The personalized schedule and an email reminder service, powered by DriverSide.com, are available at www.carcare.org. … Registration is now open at www.asashop.org for the ASA annual business meeting to be held May 7-8 at the Grand Hyatt DFW International Airport in the Dallas/Fort Worth area. All members are invited to attend. … Federated Auto Parts (Staunton, VA) has redesigned its website, www.FederatedAutoParts.com, to offer more information for its members and their service technician customers. The updated site offers new training and tech tips, as well as information about Federated marketing and support programs for professional technicians. … The automotive aftermarket division of Gates Corp. (Denver) has launched a new training site called the Performance Center that offers self-directed courses on a variety of topics pertaining to belts, hose and hydraulic products. … GE Capital Retail Bank has announced a multi-year renewal to continue providing financing for customers of Scottsdale, AZ-based Discount Tire via the Discount Tire CarCareOne credit card program, which began in 1997. Discount Tire has more than 800 locations in 23 states. … Brooksville, FL-based Monster Transmission has extended its customer service hours to 8:00 am – 8:00 pm (Eastern time) Monday through Friday. … NAPA Filters has launched a website, www.NAPAFilters.com, offering filtration information and tips for people with all types of vehicles, equipment and machinery. … Merger and acquisition activity for auto dealerships was up sharply in 2011, according to the Presidio Group of San Francisco, a personal and corporate financial services firm. Public retailers completed $512 million in acquisitions — a 140-percent increase over commitments made in 2010. Although well below the 2006 all-time record of more than $1 billion, the past year’s activity represents an accelerating trend. Private buyers also were active.
Point Of View: Quality Gets The Job Done, Especially With Aftermarket Products
Despite the fact that those who know me well often believe I talk too much, I do spend a great deal of time listening — and listening carefully. I listen to what is not said as much as to what is being said. I listen to how the speaker is speaking and not just about the intended context of the message. I pay attention to the little messages and not just the over-arching message they intend for me to hear. The same is true when it comes to reading. Particularly when reading news coverage — reporting as well as analysis — there are little gems embedded in a story, an item that is not central to the story but that tells a story of its own in its own specific context.
In the March 9 issue of The Greensheet, our sister publication, we did a report of the fourth-quarter numbers out of Long Island City, NY-based Standard Motor Products (SMP). The company reported that temperature control sales had fallen, while engine management sales were up. And, in explaining what may have been behind the numbers — as management must and will do at quarterly reporting time — SMP chairman and CEO Larry Sills touched upon a number of factors that helped generate the numbers. Among those factors was China.
In regard to China, Sills said on that March 6 conference call that China is a competitor more in temperature control than in engine management because engine management is more high tech and has more part numbers. “This is not a new phenomena. Temperature control products have been coming out of China for many years,” he told analysts on the conference call. But the intriguing comment for me came in the next part of his comments.
“In the past, several of our customers have attempted to [source direct from China],” Sills said. “Frankly, in a year or two, they decided to come back because they have come to the conclusion that issues of long lead times, returns and all this stuff tends to eat up all the potential savings.” And, over the years, that seems to be the trajectory the China connection has taken in general, and certainly in many segments of the aftermarket.
Back in the early days of the millennium, with a clear economic advantage in procuring product from China, many U.S. companies ran gleefully toward the east for goods, from tire valves to dog food to auto parts. Even some folks along the distribution portion of the channel decided to buy direct themselves, and manufacturers decided to abdicate their responsibilities to Chinese producers who may or may not have held to high standards in regard to product quality and safety.
The mistaken early impression was that U.S. companies were not responsible if the quality was lacking, an assumption that was clearly opposite of legal requisite — and that became abundantly clear when tire valve failures caused safety issues and people’s dogs and cats were dying from tainted pet food.
On the coattails of those liability issues came slow but steady economic shifts that began to close the simple price-of-goods-purchased advantage the Chinese enjoyed earlier in the decade. The Chinese middle class grew and began to expect more — more wages, better air and water, improved working conditions. And that procurement pricing gap was not what it used to be.
As Larry Sills of SMP pointed out, the China connection — though still very viable for many manufacturers and suppliers both inside and outside our industry — is not the pot of gold and easy money that many have thought it would be, especially in procuring product.
It’s nice to know that quality is what gets the job done, especially in regard to aftermarket product — and especially in regard to the overall safety and convenience American consumers expect.
Gary A. Molinaro, Editor/Publisher