It seems easy: a clean, fueled and available loaner vehicle parked in the lot; a service advisor who understands the value of excellent customer service; an employee with spare time; and a customer with no spare time.

Why not save the customer a time-consuming trip to the dealership by delivering a loaner to them and bringing their car in for service? All the elements are there for the taking, and all the industry statistics suggest customers desperately want this:

     ►  J.D Power Survey: 35 point (3.5%) average increase in CSI for customers using pick-up and delivery

     ►  DrivingSales Survey: 56% of customers said they would buy cars more often if the experience at the dealership were better

     ►  RedCap RESULTS: More than 70% of customers use pick-up and delivery when offered (with an average of 20% in additional RO value for customers who use pick-up and delivery but that’s a different blog post on the DrivingSales website, "Psychology of Service Valet and the RO Value Increase"). 

It’s the old cliché’: If it was so easy, everyone would be doing it. Before going it alone, consider some of the things we’ve perfected with our Uber-like platform that delivers personalized out-of-store experiences:

     1.  How do you communicate the offer, not to mention the logistics of the transaction, with the customer? Over the phone when taking an appointment? By email, text, postcard? When they’re already in the store?

     2.  How do you route the order to a driver? And what happens if they are not available? Is the customer left hanging out in the wind?

     3.  How do you deliver instructions to the drivers that are specific and unique to the customer and their relationship with you?

     4.  How are you going to collect driver’s license, insurance and credit card information before releasing the loaner? Are they stored in a secured place? (Someday, we’ll blog about the service advisor who was stealing customer credit card information and the six figures in restitution it cost the dealership. We won’t disclose names, of course.)

     5.  Does the loaner paperwork need to be signed? Does the driver need to confirm the identity of the person taking control of the loaner? What if that person is the customer’s spouse or employee?

     6.  What happens if a driver gets lost driving to the customer location and will be late for the drop-off time? Does she call the service advisor to get directions? Does the driver call the customer to notify her that delivery will be late?

     7.  How do you track your driver and make sure they are executing the trip as efficiently as possible?

     8.  Are your drivers driving safely? Are they texting and driving? What happens if they get into a fender bender? A serious accident?

     9.  What happens if the customer is not on location at the time of the pick-up or drop-off? What if the location is in a downtown area, how is the driver going to handle parking and the key exchange at a high rise office building?

     10.  Do you want just any employee delivering a loaner vehicle? What if the customer doesn’t recognize the driver? Are they going to turn over their keys to someone they don’t know?

     11.  How do you coordinate a consistent service across all service advisors? Across other functions or departments, such as the BDC, loaner desk and cashier?

     12.  What’s the ROI? Are you considering loaner turn time in the ROI calculation? RO value? Employee efficiency? Are you even able to report on these metrics?

     13.  Is there a service to sale opportunity with pick-up and delivery? What’s the best way to capitalize on it?

These are just some of the issues we’ve thought through before releasing our platform, and some we’ve experienced (unpleasantly) through trial and error. You can benefit from our experience, go it alone, or not offer out-of-store experiences at all. But, without doubt, dealerships will have to grapple with the trend. Consumers want the same level of accommodation and convenience they experience in other aspects of the consumer economy. After all, any consumer item can be purchased in the comfort of your home and delivered to your door step (soon within 30 minutes by drone for many items).

The thought leaders at RedCap spend every waking moment on how to improve the customer experience through a combination of technology, workflows and training. We’re happy to share our knowledge (and even happier to demo our technology or design a pilot for your store). You can stay current by reading our Out-of-Store Experience blog at the DrivingSales website. 

It seems easy: a clean, fueled and available loaner vehicle parked in the lot; a service advisor who understands the value of excellent customer service; an employee with spare time; and a customer with no spare time.

Why not save the customer a time-consuming trip to the dealership by delivering a loaner to them and bringing their car in for service? All the elements are there for the taking, and all the industry statistics suggest customers desperately want this:

     ►  J.D Power Survey: 35 point (3.5%) average increase in CSI for customers using pick-up and delivery

     ►  DrivingSales Survey: 56% of customers said they would buy cars more often if the experience at the dealership were better

     ►  RedCap RESULTS: More than 70% of customers use pick-up and delivery when offered (with an average of 20% in additional RO value for customers who use pick-up and delivery but that’s a different blog post on the DrivingSales website, "Psychology of Service Valet and the RO Value Increase"). 

It’s the old cliché’: If it was so easy, everyone would be doing it. Before going it alone, consider some of the things we’ve perfected with our Uber-like platform that delivers personalized out-of-store experiences:

     1.  How do you communicate the offer, not to mention the logistics of the transaction, with the customer? Over the phone when taking an appointment? By email, text, postcard? When they’re already in the store?

     2.  How do you route the order to a driver? And what happens if they are not available? Is the customer left hanging out in the wind?

     3.  How do you deliver instructions to the drivers that are specific and unique to the customer and their relationship with you?

     4.  How are you going to collect driver’s license, insurance and credit card information before releasing the loaner? Are they stored in a secured place? (Someday, we’ll blog about the service advisor who was stealing customer credit card information and the six figures in restitution it cost the dealership. We won’t disclose names, of course.)

     5.  Does the loaner paperwork need to be signed? Does the driver need to confirm the identity of the person taking control of the loaner? What if that person is the customer’s spouse or employee?

     6.  What happens if a driver gets lost driving to the customer location and will be late for the drop-off time? Does she call the service advisor to get directions? Does the driver call the customer to notify her that delivery will be late?

     7.  How do you track your driver and make sure they are executing the trip as efficiently as possible?

     8.  Are your drivers driving safely? Are they texting and driving? What happens if they get into a fender bender? A serious accident?

     9.  What happens if the customer is not on location at the time of the pick-up or drop-off? What if the location is in a downtown area, how is the driver going to handle parking and the key exchange at a high rise office building?

     10.  Do you want just any employee delivering a loaner vehicle? What if the customer doesn’t recognize the driver? Are they going to turn over their keys to someone they don’t know?

     11.  How do you coordinate a consistent service across all service advisors? Across other functions or departments, such as the BDC, loaner desk and cashier?

     12.  What’s the ROI? Are you considering loaner turn time in the ROI calculation? RO value? Employee efficiency? Are you even able to report on these metrics?

     13.  Is there a service to sale opportunity with pick-up and delivery? What’s the best way to capitalize on it?

These are just some of the issues we’ve thought through before releasing our platform, and some we’ve experienced (unpleasantly) through trial and error. You can benefit from our experience, go it alone, or not offer out-of-store experiences at all. But, without doubt, dealerships will have to grapple with the trend. Consumers want the same level of accommodation and convenience they experience in other aspects of the consumer economy. After all, any consumer item can be purchased in the comfort of your home and delivered to your door step (soon within 30 minutes by drone for many items).

The thought leaders at RedCap spend every waking moment on how to improve the customer experience through a combination of technology, workflows and training. We’re happy to share our knowledge (and even happier to demo our technology or design a pilot for your store). You can stay current by reading our Out-of-Store Experience blog at the DrivingSales website. 

It’s probably getting more mainstream press than any other auto recall in history.

Defects happen, and not just in highly engineered products. But consumer fraud effecting 11 million vehicles worldwide with total cost estimates as high as $87 billion is quite another story altogether. Martin Winterkorn, CEO of Volkswagen, one of the world’s largest companies, resigned in disgrace. (Ironic feature story: How Volkswagen Will Rule The World, Forbes, May 2013).

There’s no need to elaborate on how customers feel. Let’s just make the auto dealership the white knight. Dealers have an opportunity to gain new business and help rehabilitate a damaged OEM brand, but they have to be organized and aggressive.

We outline below a four point action plan targeting highly segmented recall opportunities (e.g. based on, among many factors, (i) size of recall in the dealership’s market service area, (ii) profit margin of recall repair, (iii) shop capacity, and (iv) vehicle ownership longevity and equity) for customers who literally could complete the vehicle recall with no cost, no absence of transportation and no hassle whatsoever. (Read this blog post to learn how our action plan includes an 18% revenue lift on each RO.)

Usually, getting customers into the store takes a lot of money and effort. In the face of a recall, customers are “supposed to” bring their car into the store to get repaired.  If handled well, there is an opportunity to upsell other service while the car is in the shop. Nothing novel here, but don’t move on just yet.

If handled extraordinarily well there is not only additional revenue in the upsell but an opportunity to conquest new customers who take advantage of the recall and have a likelihood of purchasing a new car. Consider these statistics in the Automotive Warranty & Recall Report 2015: Road Map for a New Era:

1.    According to the study, completion rates for recalls are effected by a number of factors, which can be used to segment a discrete recall market best suited for your dealership:

      ►   Component Part: Completion rates for powertrain, steering and engine component parts are higher than completion rates for structural components, air bags, lighting, and speed control. This statistic ties in with the alarming finding that nearly 90 percent of the U.S. vehicles recalled because of faulty Takata air bags were not fixed as of the end of 2014, according to NHTSA.

      ►  Vehicle Age: Completion rates for recalls involving older vehicles are generally lower, sometimes significantly.

      ►   Recall Size: Completion rates for larger recalls (>100,000 units) are often approximately 5-10% lower than for smaller-sized recalls

2.    With intense pressure from lawmakers and government agencies, especially NHTSA, and with the overall increase of recalls in the past few years (record breaking >60 million recalls in 2014 and trending higher in 2015) OEMs are seeking to improve on the industry recall completion rate of 70% to 80%. While this percentage sounds positive, it still means there are millions of defective vehicles on the road. In fact, a study by Carfax, Inc. estimated that 46 million vehicles had unfixed defects at the end of 2014 which represents 46 million opportunities for dealers or nearly 3,000 per franchised dealer.

3.    There’s one more aspect, albeit obvious, that bears on our action plan. The information in the report is based on at least 6 quarters of data. Not all consumers bring their vehicle in for recall service immediately upon announcement. In the best case scenario, it takes at least 18 months for the most successful recalls to reach the limits (70% to 80%) of consumers who will take advantage of the recall repair. The graph below illustrates this point based on vehicles that have reached the three year tipping point where the widest disparity of completion rates was found.

There are many other nuggets of information in the recall reports and analysis that we will explore in our forthcoming white paper on the subject. But let’s take what we have now and bullet-point an action plan.

1.  Identify a Refined Market Opportunity: There is a clear opportunity for dealerships to segment a market opportunity based on (a) OEM franchise, (b) availability of recall parts, (c) size of recall market opportunity in the dealership’s market service area, (d) profit margin of recall repair, (e) shop capacity taking into consideration availability of technicians and component parts, and (f) customer’s ownership longevity and ownership equity. There are plenty of other factors that can be taken into consideration to refine the market opportunity. Keep in mind the opportunity is so large that the challenge is not size of the opportunity but the narrowing into a highly refined target market based on your dealership’s specific capabilities.

2.  Implement a Multi-Channel Target Marketing Campaign: Don’t rely on the OEM to inform consumers of the recall and their rights. The report states that the methods OEMs use to reach out to consumers lags substantially behind consumer media consumption:

“dramatic changes in how people receive and process information illustrate why OEMs need to rethink their outreach model: (a) first-class mail volume has decreased from 98.1 billion in 2005 to 63.6 billion in 2014, (b) newspaper circulation has plummeted over the years, (c) about 58 percent of adults own a smartphone and 42 percent own tablets, (d) an estimated 74 percent of adults use social networking sites.”

3.  Deliver a “To Good To Be True” Message: Inform your market segment of the recall, explain the scope of the repair, and obviously let them know that the manufacturer picks up the tab. They will have no cost in the transaction. And the best is yet to come.

4.  Exploit the RedCap Secret Sauce: From the customer’s perspective, there is no hassle whatsoever in getting the vehicle into the shop for the repair. RedCap software coordinates the pick-up the customer’s vehicle at a time and place of their choosing, exchanges it with a loaner, and returns their vehicle to them and brings the loaner back to the shop, again whenever and wherever they would like. The whole recall takes place without the customer ever leaving their home or office. The consumer literally can complete the vehicle recall with no cost, no absence of transportation and no hassle whatsoever.

The dealership has an opportunity to generate new business from a customer segment that offers opportunity to profit from three possible transactions: (1) the recall service paid for by the OEM, (2) the upsell for other service while the car is in the shop, (3) the sale of a new car to a new customer who has just benefited from an “over the top” customer experience.

Here is just one example of the dealership becoming the white knight by taking advantage of what many would mistakenly consider to be a relatively obscure opportunity that could yield extraordinary results. A Honda dealership markets a “no cost, no hassle whatsoever” recall repair to customers subject to the safety risks of the Takata air bag recall (literally millions of vehicles in need of recall repair). The dealership narrows the target market to prime candidates for the sale of a new car based on ownership longevity (vehicle > 3 years not under warranty) and vehicle equity (new car financing available with an equal or less than current monthly payment). At the same time, the dealership prepares shop capacity – technician and parts and parts availability -- to manage the flow of business efficiently.

Results: Unsafe vehicle off the road. Customer serviced with no cost, no hassle. OEM reputation rehabilitated. Service department benefits from regular flow of high profit transactions.  Dealership sales personnel served up highly qualified leads.

Kapow: Who is the white knight here? Be Driven.

Write your post here

It’s probably getting more mainstream press than any other auto recall in history.

Defects happen, and not just in highly engineered products. But consumer fraud effecting 11 million vehicles worldwide with total cost estimates as high as $87 billion is quite another story altogether. Martin Winterkorn, CEO of Volkswagen, one of the world’s largest companies, resigned in disgrace. (Ironic feature story: How Volkswagen Will Rule The World, Forbes, May 2013).

There’s no need to elaborate on how customers feel. Let’s just make the auto dealership the white knight. Dealers have an opportunity to gain new business and help rehabilitate a damaged OEM brand, but they have to be organized and aggressive.

We outline below a four point action plan targeting highly segmented recall opportunities (e.g. based on, among many factors, (i) size of recall in the dealership’s market service area, (ii) profit margin of recall repair, (iii) shop capacity, and (iv) vehicle ownership longevity and equity) for customers who literally could complete the vehicle recall with no cost, no absence of transportation and no hassle whatsoever. (Read this blog post to learn how our action plan includes an 18% revenue lift on each RO.)

Usually, getting customers into the store takes a lot of money and effort. In the face of a recall, customers are “supposed to” bring their car into the store to get repaired.  If handled well, there is an opportunity to upsell other service while the car is in the shop. Nothing novel here, but don’t move on just yet.

If handled extraordinarily well there is not only additional revenue in the upsell but an opportunity to conquest new customers who take advantage of the recall and have a likelihood of purchasing a new car. Consider these statistics in the Automotive Warranty & Recall Report 2015: Road Map for a New Era:

1.    According to the study, completion rates for recalls are effected by a number of factors, which can be used to segment a discrete recall market best suited for your dealership:

      ►   Component Part: Completion rates for powertrain, steering and engine component parts are higher than completion rates for structural components, air bags, lighting, and speed control. This statistic ties in with the alarming finding that nearly 90 percent of the U.S. vehicles recalled because of faulty Takata air bags were not fixed as of the end of 2014, according to NHTSA.

      ►  Vehicle Age: Completion rates for recalls involving older vehicles are generally lower, sometimes significantly.

      ►   Recall Size: Completion rates for larger recalls (>100,000 units) are often approximately 5-10% lower than for smaller-sized recalls

2.    With intense pressure from lawmakers and government agencies, especially NHTSA, and with the overall increase of recalls in the past few years (record breaking >60 million recalls in 2014 and trending higher in 2015) OEMs are seeking to improve on the industry recall completion rate of 70% to 80%. While this percentage sounds positive, it still means there are millions of defective vehicles on the road. In fact, a study by Carfax, Inc. estimated that 46 million vehicles had unfixed defects at the end of 2014 which represents 46 million opportunities for dealers or nearly 3,000 per franchised dealer.

3.    There’s one more aspect, albeit obvious, that bears on our action plan. The information in the report is based on at least 6 quarters of data. Not all consumers bring their vehicle in for recall service immediately upon announcement. In the best case scenario, it takes at least 18 months for the most successful recalls to reach the limits (70% to 80%) of consumers who will take advantage of the recall repair. The graph below illustrates this point based on vehicles that have reached the three year tipping point where the widest disparity of completion rates was found.

There are many other nuggets of information in the recall reports and analysis that we will explore in our forthcoming white paper on the subject. But let’s take what we have now and bullet-point an action plan.

1.  Identify a Refined Market Opportunity: There is a clear opportunity for dealerships to segment a market opportunity based on (a) OEM franchise, (b) availability of recall parts, (c) size of recall market opportunity in the dealership’s market service area, (d) profit margin of recall repair, (e) shop capacity taking into consideration availability of technicians and component parts, and (f) customer’s ownership longevity and ownership equity. There are plenty of other factors that can be taken into consideration to refine the market opportunity. Keep in mind the opportunity is so large that the challenge is not size of the opportunity but the narrowing into a highly refined target market based on your dealership’s specific capabilities.

2.  Implement a Multi-Channel Target Marketing Campaign: Don’t rely on the OEM to inform consumers of the recall and their rights. The report states that the methods OEMs use to reach out to consumers lags substantially behind consumer media consumption:

“dramatic changes in how people receive and process information illustrate why OEMs need to rethink their outreach model: (a) first-class mail volume has decreased from 98.1 billion in 2005 to 63.6 billion in 2014, (b) newspaper circulation has plummeted over the years, (c) about 58 percent of adults own a smartphone and 42 percent own tablets, (d) an estimated 74 percent of adults use social networking sites.”

3.  Deliver a “To Good To Be True” Message: Inform your market segment of the recall, explain the scope of the repair, and obviously let them know that the manufacturer picks up the tab. They will have no cost in the transaction. And the best is yet to come.

4.  Exploit the RedCap Secret Sauce: From the customer’s perspective, there is no hassle whatsoever in getting the vehicle into the shop for the repair. RedCap software coordinates the pick-up the customer’s vehicle at a time and place of their choosing, exchanges it with a loaner, and returns their vehicle to them and brings the loaner back to the shop, again whenever and wherever they would like. The whole recall takes place without the customer ever leaving their home or office. The consumer literally can complete the vehicle recall with no cost, no absence of transportation and no hassle whatsoever.

The dealership has an opportunity to generate new business from a customer segment that offers opportunity to profit from three possible transactions: (1) the recall service paid for by the OEM, (2) the upsell for other service while the car is in the shop, (3) the sale of a new car to a new customer who has just benefited from an “over the top” customer experience.

Here is just one example of the dealership becoming the white knight by taking advantage of what many would mistakenly consider to be a relatively obscure opportunity that could yield extraordinary results. A Honda dealership markets a “no cost, no hassle whatsoever” recall repair to customers subject to the safety risks of the Takata air bag recall (literally millions of vehicles in need of recall repair). The dealership narrows the target market to prime candidates for the sale of a new car based on ownership longevity (vehicle > 3 years not under warranty) and vehicle equity (new car financing available with an equal or less than current monthly payment). At the same time, the dealership prepares shop capacity – technician and parts and parts availability -- to manage the flow of business efficiently.

Results: Unsafe vehicle off the road. Customer serviced with no cost, no hassle. OEM reputation rehabilitated. Service department benefits from regular flow of high profit transactions.  Dealership sales personnel served up highly qualified leads.

Kapow: Who is the white knight here? Be Driven.

Write your post here

Why do customers who do not visit the dealership spend 18% more on auto service? Evidence and armchair psychology support our analysis.

I recently published a case study about the effects of service pick-up and delivery (service valet) on loaner turn time.  You can read the paper . (Spoiler alert: Loaner turn time was reduced by approximately 1.2 days, or over 40%.)

The study had a few other gems.  Among them, analysis showed customers who used service valet had RO values 18% higher than those who did not use service valet. Theoretically, these service valet customers  could have had more expensive repairs but that is not likely given the large sample size.

Instead, our longstanding experience shows service valet customers purchase more recommended services. So this begs the question:  

Why do customers who do not visit the dealership spend 18% more on auto service?

Evidence and armchair psychology support our analysis.  Consider the psychology from the customer’s viewpoint.

The dealership saved the customer a few  hours by not requiring them to visit the store to service their car. Result: customer saved time, feels valued.

Customers expecting to wait in the customer lounge for an hour are less likely to purchase additional services if it requires more time at the dealership and less time where they were planning to be (i.e. work, family, golf).

Customers in the comfort of their home or office, with a loaner, have no time constraint and are more likely to say yes to a suggested repair as the car is already at the dealership, the repair is likely needed, and there is little sense is saying No only to bring the car back at a later time.

Many customer segments (females and non-automotive savvy males) are more likely to say no to an “in person” pitch, when the suggested repair is outside the realm of what they were expecting. This is a natural reflex, especially in the automotive sector.

The median annual income of a luxury car owner in the United States is $99,364 or approx. $50/hour. The average luxury car owner would equate two hours of savings to $100. A customer is more likely to make additional purchases if it’s directly connected to a savings or discount in the same transaction.

The pick-up and delivery service sets up the sales concept of reciprocity. Now that the dealership has given the customer something (time, less pressure, more convenience), the customer will feel better about reciprocating.

Is another explanation for the increased RO value that a service advisor could be a better salesperson over the phone? Granted, service advisors like to have a direct (emotional) connection with their customers but there is a valid explanation as to why service advisors who offer pick-up and delivery show higher RO values.

We’ll look at the upsell transaction and service valet from the viewpoint of the service advisor in the next blog post. Stay tuned. Be driven.

Why do customers who do not visit the dealership spend 18% more on auto service? Evidence and armchair psychology support our analysis.

I recently published a case study about the effects of service pick-up and delivery (service valet) on loaner turn time.  You can read the paper . (Spoiler alert: Loaner turn time was reduced by approximately 1.2 days, or over 40%.)

The study had a few other gems.  Among them, analysis showed customers who used service valet had RO values 18% higher than those who did not use service valet. Theoretically, these service valet customers  could have had more expensive repairs but that is not likely given the large sample size.

Instead, our longstanding experience shows service valet customers purchase more recommended services. So this begs the question:  

Why do customers who do not visit the dealership spend 18% more on auto service?

Evidence and armchair psychology support our analysis.  Consider the psychology from the customer’s viewpoint.

The dealership saved the customer a few  hours by not requiring them to visit the store to service their car. Result: customer saved time, feels valued.

Customers expecting to wait in the customer lounge for an hour are less likely to purchase additional services if it requires more time at the dealership and less time where they were planning to be (i.e. work, family, golf).

Customers in the comfort of their home or office, with a loaner, have no time constraint and are more likely to say yes to a suggested repair as the car is already at the dealership, the repair is likely needed, and there is little sense is saying No only to bring the car back at a later time.

Many customer segments (females and non-automotive savvy males) are more likely to say no to an “in person” pitch, when the suggested repair is outside the realm of what they were expecting. This is a natural reflex, especially in the automotive sector.

The median annual income of a luxury car owner in the United States is $99,364 or approx. $50/hour. The average luxury car owner would equate two hours of savings to $100. A customer is more likely to make additional purchases if it’s directly connected to a savings or discount in the same transaction.

The pick-up and delivery service sets up the sales concept of reciprocity. Now that the dealership has given the customer something (time, less pressure, more convenience), the customer will feel better about reciprocating.

Is another explanation for the increased RO value that a service advisor could be a better salesperson over the phone? Granted, service advisors like to have a direct (emotional) connection with their customers but there is a valid explanation as to why service advisors who offer pick-up and delivery show higher RO values.

We’ll look at the upsell transaction and service valet from the viewpoint of the service advisor in the next blog post. Stay tuned. Be driven.