myKaarma CEO/Founder Ujj Nath shares why it's the little things that matter when it comes to customer experience in the dealership.

myKaarma CEO / Founder Ujj Nath explains what makes great brands great in this video blog.

The next evolution in the automotive industry will fundamentally transform dealership service departments… and this one will be big: service departments that could be empty. 

If you look at current trends, you can see the writing is on the wall; ride-sharing being the biggest current shift. 

And that’s not all. Consider the fact that someday consumers may be able to simply speak to Google assistant on their smartphone and the vehicle will wake up and drive itself to the dealership, get serviced and then return to the customer on its own. 

Automotive News just released a very enlightening article about this titled, “How EVs could create the biggest disruption since the iPhone.” The article states, “Electric cars, with a little help from ride-hailing and self-driving technology, could be about to change the auto industry in a similar way to Apple's upending of the mobile phone industry 10 years ago. The rise of Tesla and its rivals could be boosted by complementary services from Uber and Alphabet's Waymo unit, just as the iPhone rode the app economy and fast mobile internet to decimate mobile phone giants like Nokia.” 

Consider this. A normal internal combustion engine vehicle can have upwards of 10,000 parts all working together. This presents a huge amount of potential service opportunities as the vehicle ages. In stark contrast, an electric vehicle has as few as 150 moving parts, which obviously greatly decreases potential service opportunities. 

In fact, according to the Automotive News article, “After disassembling GM's Chevrolet Bolt, UBS Group concluded it required almost no maintenance, with the electric motor having just three moving parts compared with 133 in a four-cylinder internal combustion engine.” 

Decreased service opportunities from electric car ownership will bring lower repair orders and increased time between service visits. This will severely impact service department profitability.  

And, with over-the-air software and hardware updates that require no dealership visit whatsoever, as electric vehicles increasingly populate our roads traffic in service departments will further decline. 

Take for example an associate of mine who owns a Tesla. When they took it in for it’s very first service at 7,500 miles the total repair bill was a whopping $25. Think this is an aberration? It’s not. 

Tesla is so confident about its vehicle quality that it has issued an infinite mile warranty. CEO Elon Musk states in a blog, “The Tesla Model S drive unit warranty has been increased to match that of the battery pack. That means the 85 kWh Model S, our most popular model by far, now has an 8 year, infinite mile warranty on both the battery pack and drive unit. There is also no limit on the number of owners during the warranty period.” 

Wow, infinite mile warranties! While currently this confidence is only publicly stated by Tesla, every major car manufacturer is feverishly racing to compete in the electric car market. 

Additionally, a comparison done by Tesloop, a rideshare service which runs a fleet of Teslas, states that their total costs were $10K for 300K miles! 

“During the first 300,000 miles, the total combined maintenance and fuel costs of the Tesla Model S were $10,492, with a total of 12 days in the shop. Of these costs, $6,900 was scheduled maintenance and $3500 was headlight damage due to driving through deep water. Had this been an Mercedes S class, the scheduled routine maintenance and fuel would have been $86,000 ($52,000 maintenance and $36,000 fuel) with 112 days of servicing, or for a Lincoln Town Car $70k,000 ($28,000 maintenance and $42,000 fuel) with around 100 days of servicing.” 

What does all of this mean? 

Up until now, your dealership has connected with service customers anywhere from 2-3 or more times per year, depending on how much the customer drives. Aside from regular maintenance, you’ve had first crack at recommended services and replacements for wear and tear items such as brake pads and tires. Well, electric vehicles will change all that. 

It is now vital to make the most of every opportunity. Good news is that there are still 300 million light vehicles on US roads and these cars are lasting longer. Have you done a histogram to see what percentage of the service dollars come from cars that are more than 5 years old?  If not, you should.  In the future, the only way to keep your dealership’s service revenue from staying flat will be to start capturing market share back from the independents and to start servicing older cars.  

It makes sense to get ahead of the game.  Stand out from your competition now in order to keep the customers you do have and attract new ones. Prepare to offer your customers the convenience and ease they wish for now and will increasingly demand.

If you haven’t noticed, our culture has changed. Your customers are no longer willing to wait. Everyone wants everything NOW! 

Just look at the leader of the pack, Amazon. With this market powerhouse it’s all about same day or 2-day delivery. I can’t tell you how many times my first filter on Amazon has been to see how fast I could get something I needed – delivered right to my doorstep. This phenomenon is not going away. We’re already starting to see it in the automotive retail space. And soon, that will expand to include service as well. So, get ready for a huge shift. 

Why? 

Well, if you look at current trends, you can see that the writing’s on the wall; ride-sharing being the biggest current shift. In the next five years I would seriously advise you to start preparing for an automotive service environment that includes 24/7 service, or you will miss the next boom in fixed ops. 

Consider Uber, Lyft and other ride-sharing services. An ambitious driver will drive 60,000 miles per year, or 200 miles per day, approximately 300 days per year; allowing for a few days off. Any downtime for these driver’s vehicles costs them money. What do ride-sharing drivers want? Convenience. Take me for example. I like to get groceries at 2am because nobody is there and I can get what I need, checkout and be done. As ride-sharing proliferates, drivers will turn to those services that offer the most convenience and cater to their schedules. If those services are not at a dealership, they will go elsewhere. 

And, since 2010, new car buyers have decreased in every age group, aside from 55+. If, due to lack of convenience, today’s dealerships only get 1/3 of the repairs from younger generations, it becomes imperative to improve the convenience factor, or they will lose even more service revenue. 

Alright, so, what can you do now to prepare for this shift while optimizing your current service operations? 

I suggest that you: 

1. Take a look at your current operations and see what can be done to better maximize your service capacity. 

2. Once you’ve maximized your service capacity, institute a pickup and delivery service for your customers. It’s all about convenience and that extra convenience can make customers chose you over any competition. 

3. Extend your hours from 2 shifts to a 24-hour service operation, so customers can get service on their terms, whenever they can fit it into their schedules. 

4. If #3 above didn’t raise any eyebrows, I’m sure I’ll get a lot of push back on this one; but you’ll be thanking me several years down the line if you consider this option: What about building remote service facilities so that your customers can get service not only when they need it, but WHERE they need it? Think about it. Your current facility can only handle so much traffic. Perhaps OEM rules need to change so that these facilities can even be outside your PMA, which extends your brand and reach, and could even make for some new vehicle sales from service as well. 

Yes, this will take some getting used to; more resources and some changes in scheduling and organization. However, I strongly believe change is on the horizon and it is something you need to get ready for in order to survive and thrive. 

Doing it now means that your dealership has the first-to-market edge. And, while your competition may think you’re crazy, consumers will flock to you and remain loyal as you become the Amazon of automotive service. And that’s what leads to a profitable future.

Since multi-point inspections became standard, dealers have followed the same old processes. A customer comes into the service drive; the service advisor checks them in; a technician takes the car, examines it, then gives the inspection to the service advisor for review with the customer which is typically done by emailing the 5 page report to the customer.

The forms typically have line items with checkboxes colored in red, yellow, and green. 

And to make matters worse, this form is typically emailed to the customer in a PDF format that sometimes can be as many as 5 pages. 

Well, these days technology has evolved. And, as a result, most content is now presented in a visual form with pictures and videos. Consumers have in turn become more visual. They don’t have the time to page down on their mobile phone and navigate through a bunch of red, yellow and green check boxes. And, while some may read these row by row inspection results, it is hard to comprehend. 

Most of the times these MPI report require a phone call with the advisor for clarification. Traditional MPI forms may continue to be used internally. But, if the customer doesn’t understand what is presented to them, approval of recommendations will continue to get longer and will require that the customer get in touch with the advisor.  With so many customers either in rental or loaner cars, just connecting to discuss recommendations is becoming a game of voicemail tag.

Today, many leading dealerships have started to use video documentaries to present recommendations to their customers, with great success -- a picture is worth 1,000 words and video is worth 10,000 words. Their service department profitability is rocketing as a result of increased recommendation approvals! A technician that records the grooving on brake pads and explains the consequences is going to get no argument from the customer.  It speeds up authorizations and is much more convenient. The technician can record the video on their smartphone then send it to their service advisor to ultimately add an explanation and send on to the customer.

This is a very simple process to implement. Here are some best practice tips from my experience: 

1. Every vehicle inspection should get a video documentary or walk around. For best results use a newer phone such as an iPhone 7 or Samsung Galaxy S7/8, as they have better quality video. Some employees will have these already and, if not, they are a relatively inexpensive investment and you will soon reap the ROI. Hold the phone in one hand and point out the feature you are documenting with the finger of your other hand while adding a voice commentary, so it is very clear to the customer what you are recommending. 

2. Identify 2 or 3 of your most technologically-inclined and progressive service technicians. Hold monthly meetings to go over the results. Any among those who are resistant will soon come around once they see how well the other techs are doing. Stats such as increased approval time, upsell, and CP lift will quickly get them on board. 

3. Look for a tool to make the process more efficient, one that documents and archives the video recommendations for future reference. It should also be very easy to send to the customer. This way, you can show the customer on their next visit (should they decline the service). Consistency builds customer trust and gives you another shot at getting their approval. 

4.  Last, but not least, consider a simple spiff program (the simpler the better). One of our customers has seen a significant rise in doing this, and a simple incentive will improve adoption. 

You already do it for tire sales, right? Why not for completed video documentaries?

Don’t get left in the dust by other, more progressive dealers. There’s absolutely no reason to. Let that old technology Rest In Peace and adopt video documentaries. It creates a win-win situation for everyone.

In a recent  article Colin Shaw, a leading customer experience thought leader and author, details his car-buying experience – and not in a positive way. He experienced car-buying the same way that car dealers have always done it in the past. Spoiler Alert! -- The title of the article is “Unbelievable! Does Car Buying HAVE to Be SO Bad?” 

What are the long term service ramifications of this “BAD” sales process? 

Answer: Limited or NO loyalty for your service business! 

Dealerships currently average only 33% retention of car buyers into the service department. Those customers angered by the sales process frequently decide to drop the dealership from consideration when it comes to servicing their vehicle.  

I am sure you all know how important service revenue is the overall financial health of your dealership. Well, when you start the relationship with a bad experience the ripple effect can be extremely costly. Lost opportunity costs include: 

•  Multiple years of service work revenue 
•  Up to 80% decrease in the opportunity to sell that customer another vehicle 
•  Lost referrals they could have given 

And let’s not forget how much time, effort, and money you spend trying to win them back for service and sales opportunities. In total this can add up to thousands, or even tens of thousands of dollars of lost revenue per customer that abandons your dealership due to a bad sales experience. 

The key to growing your business is to keep your customers and have them refer other customers.  That is why the hugely popular customer service score NPS (Net Promoter Score) asks one question only - ““How likely are you to recommend this business to a friend or colleague?” 

A few simple things can make a big jump in loyalty gains: 

    1. Honor agreed upon prices and avoid the “Today Only” mindset. 

    2. Simplify the foursquare process as much as possible and set a time limit for negotiations. 

    3. Focus on the “lifetime value” of customer during the sales process. 

Sticking to old processes and singing that “same old song” which doesn’t apply to current generations will send your customers out the door to your competitors. Be open to new ideas. Change is not your enemy. Dealerships that adopt new technology, realize the need to focus on the customer experience, retention and loyalty, are already leading the pack into the future. Do yourself a favor and jump on board! 

Every business wants to be the market leader and have success. Yet to do so, many have the mindset that it is necessary to spend more money. “Buy a Super Bowl ad,” they say. “Spend hundreds of thousands on TV and radio.” The trick to getting big isn’t always about trying to reach the most people possible. In fact, according to American author, entrepreneur, marketer, and public speaker Seth Godin, it is focusing on what he terms the “minimum viable audience.”

This is the smallest audience you can capture and maintain. When you focus on that, you have a much better chance of making them happy, changing processes that need to be changed and creating a customer experience that’s truly memorable.

Focus too big and your message reaches nobody -- it’s too generic. Today, effective marketing relies upon personal preferences and connections.

Why?

Because nobody can be everything to everybody at the same time. That newspaper ad or “spray and pray” direct mail spend targeted at EVERY customer has a very small return on investment. Sure, the low percentage of people that do respond do so because you happen to hit them at the exact right time with the exact right message. But, what about the other 98 percent of the people? You just annoy them.

Would you rather capture 2 percent of the revenue and alienate the other 98 percent, or flip that around?

According to Seth Godin, most major brands are now focusing small and that is exactly what has made them big and keeps them thriving.

There is a reason why User Experience (UX) and customer experience are today’s buzzwords. In the automotive world, true growth isn’t gained by coupons, discount or novelties, but rather by ensuring that your customers become loyal advocates.

Ensure that each customer that comes in for sales or service has a great PERSONAL customer experience. Try it out. Send in a mystery shopper and spot check your customer experience.

According to today’s highly successful companies, a greater focus on the personal customer experience rather than mass marketing to the universe leads to far more growth.

Take care of your customers with a personal touch and they will take care of you.

I’m sure that you’ve all heard the tale of the princess and the frog. In the beginning, the princess despises the frog and doesn’t want to interact with it – especially not to kiss it – but through personal interaction and a little time, the frog wins her over, gets that kiss and transforms into the prince he actually was all along.  

In the past, big brands have sort of been the princesses of the retail world. They had all the money, spent it to get attention and this worked well for them. However, as the Internet has evolved and greatly improved ease of communication, the world has shrunk. Today’s consumers expect brands to interact with them on a more personal level. 

And that’s exactly what many brands have decided to do. 

A recent blog by Chris Brogan breaks down exactly how and why big brands have decided to think smaller. Rather than reaching out to mass audiences, they have realized that a single person at a time may be a better strategy.  

The fact that the Internet – and, more specifically social media – has allowed consumers to interact with brands instantaneously and on a personal level has changed the game and levelled the playing field. No longer is it all about “Buy our things because we’re popular!” Today it is more about, “Do business with us because we care about you – and we’re talking just to you… at the moment.” And that’s what creates brand advocates. People love the individual experience, tell their friends and continue to interact.  

When consumers display the desired behavior, brands reward them with social media interaction – thus encouraging the behavior and increasing the likelihood of repetition and loyalty. The more the behavior is rewarded, the more often the consumer repeats it.  

As Chris Brogan states, the future lies in using all your tools to let your buyers feel as seen and heard and loved and personally tended to as humanly possible. You’ve “gotta take all the sentiment and heart and caring and dedication to the satisfaction of the buyer and deliver on this at a many-to-one scale.” 

Consider trying this approach with your operations wherever you can by simply communicating via your various channels on a more personal level. Step up your social media game. Make sure you are monitoring and replying to your customer comments and questions. Thank them for any positive reviews and reach out to them if their review is less than great. You don’t need to spend millions of dollars on a Super Bowl commercial to gain brand advocates… in today’s world, all it takes is some personal attention and recognition.

As automotive tech vendors increasingly push the importance of bringing the car buying experience online to combat companies threatening disruption, it appears that a couple of world-leading companies may be showing us the future.  
 
An article in Marketing Dive theorizes that the trend towards a better online experience is slowly being overshadowed by a push for traditional in-store customer experiences. This could explain the curious move by the world’s largest digital retailer, Amazon, to open physical bookstores, along with its recent acquisition of the grocery chain Whole Foods. In addition, the world’s largest traditional retailer, Wal-Mart, is aggressively acquiring online retailers. It does seem counter-intuitive but, in reality, it’s actually pretty logical.   

If you recall, way back in 2001, while everyone was predicting the death of brick-and-mortar stores, Apple’s Steve Jobs introduced the Apple Store - which many predicted to fail. We all know how that worked out as Apple Stores have succeeded beyond everyone’s expectations. Have you tried to visit one lately? 1) They are always packed with people; 2) Apple does a great job of servicing their customers; and 3) Apple is able to showcase its latest products and educate consumers on them. These three KEY elements apply to any customer-focused business, be it Apple, or an auto dealership. 

While I realize most dealers will not have the same success as Apple, Amazon and Wal-Mart, the point is that the way to grow, and at least approach that type of success, is to realize that today’s consumers demand the experience THEY want on THEIR terms. For some consumers, that experience may be completely online, others may desire a completely traditional buying experience, while others may want a combination of the two.  
 
For the future, those businesses in the forefront will be the ones that ensure their customers can have the experience they want, rather than being forced to endure the experience the business wants them to have, especially when it does not meet the customer’s desires. 
 
In the end, what will determine your dealership’s success is how you adapt to your customers preferred ways to interact with you and whether or not you provide that experience to them, be it traditional, digital, or a mixture of both. 

Costco has certainly built a loyal following over the years, even though it literally charges consumers for the privilege of buying goods from them – and many consumers happily do so. In fact, 85 million consumers who, in 2016 alone, spent a collective $16 billion.  
 
Why do 85 million people pony up $55 and more per year (depending on the type of membership) simply to purchase items from Costco? Good prices and a great customer experience are two key things that have helped the company grow through strong customer loyalty.  
 
And, talking of a great customer experience, did you know about their incredible no-questions asked return policy? I was refunded the full amount for a gift I ordered for a friend because it did not reach them in time. One would think that this no-questions asked policy would be pretty risky. However, while there are some who may abuse it, the loyalty it engenders amongst the vast majority more than makes up for any losses it may incur.  
 
In our industry, most dealers certainly don’t have the same sort of policy, (although some do have limited return periods) and I’m not suggesting that dealers should. I’m merely pointing out the power that catering to customers can have in creating customer loyalty -- even if it costs a little money. It helps transition repeat customers into brand advocates.  
 
When issues arise between customers and dealerships, decisions are often made from a financial viewpoint, rather than with customer service and the overall customer experience in mind. The dealership employee or manager often factors in the dollar cost of pleasing the customer when making their decision. If that cost is too high, they may lean towards declining or offering a token gesture, but not one that completely rectifies the bad experience as far as the customer is concerned. 
 
Nothing will cost you more money over time than the loss of a loyal customer. A customer’s lifetime value to your dealership across sales and service can easily climb into the hundreds of thousands of dollars range. Yet many dealers end up with an unhappy customer by concentrating on the dollars and cents of a single transaction. 
 
Consider whether you would rather have hundreds of thousands of dollars in revenue in the future, or lose a customer so you don’t take a one off $200 hit in service or sales. 
 
I know how much I would rather have.