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Richard Holland

Richard Holland Managing Director

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Are Service Customers Defecting Due to Trust and Price Transparency?

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A recently released white paper based on a collaborative study between Cars.com and GFK, reported that consumers are leaving dealership service in favor of independents due to a lack of trust and price transparency. The lack of price transparency in parts and service are cited as key reasons that consumer perception leans towards independent automotive service providers. According to the white paper study, these can be overcome through better digital marketing. The white paper suggests that dealers should put a greater focus on increasing the digital presence of their parts and service departments and also promote their superior technicians and parts and labor warranties.

I have no doubt that dealerships should increase their fixed ops digital marketing to counteract the traction independent and major chains have achieved in their marketing efforts as the study suggests. However, the recent 2014 J.D. Power U.S. Customer Service Index Study that I wrote about last week, reported that consumer satisfaction with dealer service is increasing.

In addition to a great digital presence for fixed ops, the white paper study indicated that trust could be built through online service reviews, which is validated in the J.D. Power study, which stated, “…vehicle owners use ratings and review websites to select a dealer for service 17 percent of the time.”  Service reviews are definitely growing in importance and something every dealership should be actively seeking to obtain from their customers. Improving the marketing of your dealership is only the start, however.

Better marketing will create more visibility. Service reviews will help new customer acquisition. However, neither of these will affect customer loyalty. And that is where a dealership’s fixed ops revenue stream is most vulnerable. It’s one thing to challenge and overcome consumer perception of higher service costs at dealerships. Its quite another to keep them coming back. Service reviews in and of themselves don’t build trust in consumers. They simply assist in giving the dealership the opportunity to build trust. While the Cars.com study does indicate that, all things being equal, consumers do prefer dealership service to independents and are willing to pay a premium for it, service revenue growth is more reliant on customer loyalty than it is acquisition.

While the study is excellent in educating dealers on increasing customer acquisition, is it really the “key to rescuing service profits” as the subtitle suggests? Trust and pricing transparency are important in getting customers to your dealership but do they keep them there?

Trust and loyalty are built over time through quality work and a great customer experience. The real key to rescuing service profits lies in a dealership’s ability to retain customers. Service reviews and having pricing posted on a website won’t accomplish that. What will, however, is doing whatever it takes to ensure that your customer is satisfied with and trusts your dealership. By building relationships with your customers while their vehicles are still in warranty, you’ll have lowered the likelihood that they will defect to an independent and decreased the perception of higher service prices. Retention and loyalty are the true keys to rescuing service profits. Without those, you’re simply running in place.

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