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Dennis Galbraith

Dennis Galbraith Chief Marketing Officer

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Looking Beyond the Sales Satisfaction Index

 

J.D. Power and Associates has been releasing its Sales Satisfaction Index for a quarter century, and it has contributed to profitable changes in how dealerships interact with customers during the in-store sales process. However, in the age of relationship building between retailers and customers, we need to think beyond the customer's satisfaction with the in-store sales event.

I recognize that many critics of satisfaction research believe people are either satisfied or dissatisfied, but that conclusion simply is not supported by the results. It has long been true that restaurant and hotel customers are more apt to fill out table cards when they are delighted or disgruntled, but when surveys are well distributed by an independent third party, more of the 2-4 ratings appear on the five-point scale. This is a serious challenge faced by those who would like to replace customer satisfaction surveys with ratings from Google, Yahoo, or DealerRater that also rely on convenience sampling. I have yet to see evidence that these ratings represent the car buying population as a whole. They have their place, but survey data may still be necessary to gauge the mean satisfaction of buyers at the brand or store level.

However, is the mean satisfaction rating from a single event what really matters to the dealer's business? What dealers want is loyalty and advocacy, and there is a good case to be made for paying closest attention to the extremes rather than the averages.

At a given point in time, most car buyers are not strong influencers regarding where anyone else buys a car.  Pareto's principle would suggest that 80% of the advocacy influence in car buying comes from 20% of the car owner. My hypothesis is that advocacy related to where to buy is significantly less dispersed than advocacy related to what to buy. For dealers in particular, the opportunity for more business may lie in expanding the positive extreme than gently moving the middle of their customer base. Dealers need to focus on having very strong relationships with the few customers who are extreme influencers.  Sales satisfaction is nice, but turning that satisfaction into loyalty and advocacy for your store is where the money is. Look at the adjacent chart. The distribution of your customers probably looks a lot like this, with many of them giving you a high rating and darn few doing anything for you that will grow your business.

Getting a few more of your customers to become extremely active advocates of your store, and taking care of the few you have now, may be far more fruitful than getting another 500 followers who don’t do anything. Quality may be far more important than quantity when it comes to fans and followers in a dealer’s social media campaign. Quantitatively, the number of fans and followers making X number of interactions with your social media effort per month or per quarter may be the more important Key Performance Indicator (KPI). The total number of fans and followers remains important, but may not be as important as the metric has been hyped up to be.

The negative site is extremely important as well. A dealer’s social network becomes a very valuable asset over time, along with the store’s brand image. However, the bigger the network gets, the faster it can burn down with a single incident gone out of control. Here, the substance of the negativity may be more important than the raw number of negative ratings. Negative occurrences in social media might be compared to earthquakes. The world experiences over 1.4 million earthquakes each year, which has no significance to anyone. What does matter is the roughly one time per year that a quake of 8.0 or higher occurs. It often spells disaster.

My hypothesis is that the vast majority of social media disasters have to do with the dealership not honoring a published price. More research needs to be done in this area. Whatever the most prominent sources of social media disasters are, they need to be scanned for constantly, and appropriate action needs to take place rapidly. The raw number of negative interactions should not be dismissed, but certainly should not be taken as seriously as those incidences that could turn into disasters.

Statistical means, like the Sales Satisfaction Index, are but one perspective on the distribution of customers. The size and nature of the extremes now seems more important than the mean. Additionally, satisfaction with the single sales event is becoming less important than activity generated from the ongoing relationship. As previously stated, Sales Satisfaction Index still has its place. After all, many car buyers don’t care two hoots about having a relationship with their car dealer. However, dealerships, OEMs, and vendors need to adjust with new metrics and early warning systems and adapt to the age of relationship building. Your customers have the ability to influence more friends, family, and co-workers than they ever did before. They also have the ability to influence them to a higher degree. We can neither ignore the facts nor ignore the metrics that truly matter today.

Eric Miltsch
Dennis, Wonderful article. The sales satisfaction index seems like an out-dated tool in today's connected consumer world. This sentence rings loud to me: "Dealers need to focus on having very strong relationships with the few customers who are extreme influencers." The ratings and reviews platforms have shifted in that they enable the extreme influencers to stand tall & be heard - while also rewarding them for their activity. Perfect example: Klout. Sure - it's a new measuring stick & it has it's flaws. Yet, it signals a new era in influence, loyalty & relationship building.
Dennis Galbraith
Bringing up Klout and other influence metrics is a great addition to this topic Eric. Thanks!
Jim Bell
Great stuff Eric. I love the quality vs. quantity. Makes so much sense.

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