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2010 Customer Service Index Study

2010 Customer Service Index Study

By Jeff Youngs, December 31, 2009

These days, the service department-not the new car showroom-is the most profitable operation at most automotive dealerships. To an industry awash with negative reports about dwindling new car sales, that may sound like good news-but it is not. Unfortunately, those depressed auto sales are affecting the service department in a big way, as dealer service traffic volumes of late-model vehicles are predicted to fall by approximately 20 percent over the next five years, resulting in a 25-percent decrease in revenue. As fewer new customers fill their service departments, retail automotive dealers must adapt in this increasingly difficult environment and try new methods to keep customers coming back.

"With service customer retention becoming more crucial than ever during the next few years, dealerships must focus on not only providing superior levels of customer service, but also on enhancing convenience for vehicle owners and providing pricing that is more competitive with non-dealer facilities, " says Jon Osborn, research director at J.D. Power and Associates.

Examining that ever-important satisfaction vehicle owners have with their dealer service department when they visit for routine maintenance or service work is the focus of the J.D. Power and Associates 2010 Customer Service Index (CSI) Study.SM In conducting the study, owners were asked about their first three years of ownership-the period when nearly all vehicles are still under full factory warranty. Drilling down at the specifics, the CSI study looks at five different measures to offer an accurate barometer of overall customer satisfaction with dealer service (listed in order of importance): service quality; service initiation; service advisor; service facility; and vehicle pick-up. All scores are tabulated, and then reported on a 1,000-point scale (a higher score is better).

The automotive service outlook appears challenging
According to the study, dwindling retail automotive sales have a direct long-term effect on the service department. Someone who buys a car today will likely have it serviced for the next three years at their local dealer. Nonetheless, when the warranty runs out at the end of three years that same customer may choose an independent shop for service and the dealership permanently loses a customer. Retailers must continuously feed a new supply of customers to the service department or the result will be a lack of business down the road. In a similar fashion, a winery harvests grapes each autumn to ensure strong wine production in future years. With that in mind, the recent drop in new car sales is expected to affect the service department for several years, reaching a low point in 2013, according to the study.

Dealerships focus on customer retention
The so-called "honeymoon" period-the first three years of new-vehicle ownership-is when nearly all cars and trucks are covered by a full factory warranty. While repair visits are an inconvenience to owners, financial expenditures outside of routine maintenance are very rare. This is the optimal time for dealer service departments to build relationships with their customers, with the primary goal of retaining them after the honeymoon is over.

To improve service, many repair departments have made it their objective to get customers in the same day that they call-and complete the repair that same afternoon. In addition, many luxury automakers keep a fleet of complimentary service loaner vehicles on hand-or have a contract with a local rental car company-to improve convenience, something very few independent shops can match. Often chided for being expensive when it comes to routine service such as oil changes, dealer service outlets have begun offering rock-bottom pricing with promises to get customers back on the road within a specific amount of time. As an added benefit to the service department, customers visiting for oil changes are often sold other maintenance services, adding to dealer profits.

Overall satisfaction with dealer service on the rise
Overall, satisfaction with dealer service has increased from last year. According to the CSI study, customers have been very happy with driving in and out of dealer facilities, parking convenience, the thoroughness of the work performed, the speed of the service, and the flexibility of the dealer to accommodate schedules and how well the service department explained the job. Osborn points out a possible explanation: "These improvements may be due to not only an increased focus on customer satisfaction from dealers, but also are possibly a result of lower volumes of service traffic that dealers are now experiencing." This may be partially true, but improving scores equate to more consumer confidence with the service department. Happy customers are loyal customers-exactly what the service department is seeking.

Lexus takes the top spot among luxury brands
Lexus stands atop the podium among luxury brands in the 2010 CSI rankings-earning the award for the second consecutive year-with an index score of 837. According to the study, the Japanese luxury automaker performs very well in four of the five measured categories. Ranked No. 2 among luxury brands is Cadillac (827), showing a huge improvement from last year. Cadillac is followed in the luxury brand rankings by Jaguar (822). The British automaker ranked highest overall in 2008, held the No.-2 ranking in 2009, and has dropped to a No. 3 ranking for 2010. Other top luxury brands include Acura (817) and BMW (816). The luxury brand industry average is 813.

Hummer tops among mass market brands
Hummer earns the coveted top spot among mass market brands with a score of 815, thanks to its service quality and service facility scores. The brand, known for its off-road-capable SUVs, has fared very well in recent CSI studies. In 2009, Hummer ranked No. 5 overall-following four luxury brands-improving its score significantly from 2008, when it was decidedly mid-pack. Hot on the heels of Hummer is Saturn (808). Ironically, Saturn has shown significant improvement in CSI over the past few years, but the brand has been discontinued by General Motors just as it climbs to the podium. Buick (805) rounds out the top three among mass market brands. It is interesting to note that of the top seven brands in the mass market segment, six of them are from General Motors. In comparison, Ford brands hold the No. 7 and No. 8 rank positions, while no Chrysler brands perform at or above the mass market industry average of 758.

About the study
The 2010 CSI Study is based on responses from more than 114,200 owners and lessees of 2005 to 2009 model-year vehicles. The study was fielded between October and December 2009.

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