2014 REPORT
In association with:
Masterclass sponsor:
Tim Smith, group strategy director, GForces
Helen Farrow, HR manager, Lifestyle Europe
Steve Nash, chief executive officer, IMI
Karl Davis, MD, Coachworks Consulting
Nick Tunnell, aftersales director, Hyundai UK
Malcolm Rixon, technical liaison and licensing manager, Autodata
Barry Nielsen, client services director, Eclipse Marketing
Dr Martin Leach, chairman, Magma Group
Paul Hilton, head of retail, GForces
Alistair Horsburgh, director, CitNow & Richard Spencer, aftersales director, Ridgeway Group
Steve Young, managing director, ICDP
CLICK ON A SPEAKER TO GO TO THEIR REPORT
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WELCOME Welcome to the AM Aftersales Conference Report, in association with GForces. The following pages of this digital magazine are packed with useful information and opinions from expert speakers at this year’s AM Aftersales Conference. In the summaries of their presentations, they explain ways franchised dealers can make their workshops more efficient, broaden their customer base and deliver a great
experience, physically and digitally, that will encourage loyalty and repeat business. We hope it is of benefit to your business, both tactically and strategically. The AM editorial team Facebook “f ” Logo
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CLICK HERE FOR VIDEO HIGHLIGHTS
CONTENTS The market – past, present & future Steve Young, ICDP Aftersales online: what constitutes best practice? Tim Smith, GForces Widening the net – Identifying opportunities and retaining customers with CRM Helen Farrow, Lifestyle Europe Training & Leadership Skills and Customer Retention Steve Nash, IMI Creating a performance culture in aftersales Karl Davis, Coachworks Consulting Keynote: The future of aftersales Dr Martin Leach, Magma Group In association with:
Masterclass sponsor:
Retention through customer satisfaction – Creating a simply great customer experience Nick Tunnell, Hyundai UK Workshop: Improve your online presence Paul Hilton, GForces Workshop: How to increase red and amber conversion with video Alistair Horsburgh, CitNow & Richard Spencer, Ridgeway Group What to consider when expanding your service offering Malcolm Rixon, Autodata Increasing profits and retention with improved communications Barry Nielsen, Eclipse Marketing
THE MARKET – PAST, PRESENT AND FUTURE
NEED TO KNOW n Mid-sized companies face the greatest risk n 31% of new car buyers and 15% of used car buyers bought a service plan in the past two years n 20% of customers go online to find third-party reviews of a service department before booking
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id-sized players in the UK aftersales sector face the greatest risk, as Steve Young, managing large groups focus on customer director, ICDP retention and small owner-operators attract bottom-end business, according to ICDP managing director Steve Young. Young told delegates that while volumes for all areas of aftersales have been falling in the UK (by as much as 20% over the past 10 years), there has been some relief due to growth in the vehicle parc and garages offering tyres. “All players need to focus on customer retention,” he said. “However, if everyone is focusing on retention there will be some losers.” Despite the decline, the UK picture is much more positive than in other European countries. Germany has seen the highest level of decline between 2009 and 2012 (down 6.88%), followed by Spain with a 6.04% fall. The UK actually increased its aftersales volumes by 1.17% over that four-year period despite the prolonged decline over 10 years. Routine maintenance has fallen by 5.6% in the UK between 20092012 due to customers doing less mileage and longer service intervals. The areas of growth include SMART repair, up 1.3% in the past four years, and cold weather tyre sales and fitment, which has grown by 1.9%. According to ICDP’s research 50% of customers want a service point within 30 minutes of their house. Young said: “Customers still want local service, but behaviour is changing, in part supported by new developments with the internet.” ICDP’s figures show 20% of customers go online to find third-party
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THE MARKET – PAST, PRESENT AND FUTURE
reviews of a service department before booking, 30% go online for price comparisons before booking and only 49% say their service experience has positively influenced their next car purchase decision. Young believes service plans are the key to attracting customers to come back to the service department. ICDP’s study shows 31% of car buyers bought a service plan in the past two years and 15% of used car buyers bought a service plan. Customer retention has been a problem in the franchised dealer industry as cars go beyond the warranty period, with a big drop-off after the third year. “Retention is key,” said Young. “Service plans lock the customer in, and are as relevant to the independent sector and used cars as for franchised dealers.”
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AFTERSALES ONLINE: WHAT IS BEST PRACTICE?
NEED TO KNOW n 62% of motorists would prefer to book a service without speaking to a retailer n Online service standards should be as high as in person
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Forces’ group strategy director Tim Smith applied lessons from Canadian ice hockey player Wayne Gretzky, CEO Tim Smith, group of General Electric Jack Welch, inventor strategy director, Thomas Edison and fictional proprietor of GForces Fawlty Towers Basil Fawlty to illustrate best practice for aftersales online. Gretzky, known by ice hockey fans as The CLICK HERE Great One, differentiated himself by being FOR VIDEO ‘ahead of the curve’. Smith said dealers, too, HIGHLIGHTS need to embrace innovation such as online service bookings since 62% of motorists (according to GForces consumer research) would prefer to book a service without speaking to a retailer and 20% want to book online. Welch, a chemical engineer, believed in ‘changing before you have to’, said Smith. Of the dealer groups that responded to GForces’ survey, 80% said they would be increasing their online presence this year. Smith recommended hosting all the information in one, easily-accessible place. Smith used John Cleese’s infamous hotelier Basil Fawlty as a lesson for dealers in what not to do. “This is about good, old-fashioned customer service,” said Smith, who pointed out that 89% of people would not return to a business where they had experienced bad customer service. High levels of service should also be applied to online responses, he said. Thomas Edison, known as The Wizard of Menlo Park where he conducted his experiments in New Jersey, famously said that “Genius is 1% inspiration, 99% perspiration. “Try, try and try again,” Smith urged the conference attendees. “Evolve your online presence.” In association with:
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D I N N E R 12th June 2014, The Royal Garden Hotel, Kensington Former mayor of London Ken Livingstone will be the guest speaker at the AM100 dinner this year which will be held on June 12 at the Royal Garden Hotel in Kensington. Livingstone served for eight years as the first Mayor of London before defeat to a resurgent Tory party in the irrepressible shape of Boris Johnson. A hard-fought contest to regain his place in City Hall four years later ended again in disappointment. Inexorably linked to London politics, Ken started his career at Lambeth Council. He soon rose through local government ranks to become Leader of the GLC, acquiring considerable notoriety for his left-wing activism on the way, before the institution was abolished by Margaret Thatcher. He then served as MP for Brent East.
During his tenure Ken most notably helped London win the right to host the Olympic Games and introduced the congestion charge. After his second defeat by Boris, Ken announced his intention to retire from the political frontline. The AM100 publication is the annual industry guide to the 100 largest dealer groups in the country, according to their company turnover. In addition, the AM100 provides a detailed analysis of the state of the industry and looks at the key issues facing dealers and their customers.
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Book your table now at www.am100dinner.co.uk or call Emma-Louise Kinnaird on 01733 395133 or email: emma-louise.kinnaird@bauermedia.co.uk
IDENTIFYING OPPORTUNITIES AND RETAINING CUSTOMERS WITH CRM NEED TO KNOW n Engage your team to engage your customers n Lifestyle encourages staff to make contact personal
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ifestyle Europe put its human resources manager in charge of its customer contact centre to grow service business and customer satisfaction across the group through engagement. Helen Farrow, That didn’t mean a focus on engaging HR manager, customers alone, but on engaging staff too. Lifestyle Europe Helen Farrow, Lifestyle HR manager, said: “The tools are important, but our staff are so important to making what we do a success.” She focused on creating a team with excellent empathy skills that could create positive relationships with customers they may never see. “We talk a lot and figure out ways we can improve and that usually involves ordering in a lot of pizza at team meetings. We are reviewing what we do all the time. “If you can engage your team, you will engage your customers.” Lifestyle Europe does not use scripts. The contact team are encouraged to find a reason to talk and make it personal. Farrow uses the key phrase of ‘how would you want your mum to be treated?’ as a jumping off point for how the customer contact team think about their approach on the phone. A specific team focuses on lapsed customers and the business holds monthly customer data sweeps to find missing customer information gaps, like email addresses or contact numbers. As a result of the changes, Lifestyle Europe doubled its service bookings across the group in February 2014. Farrow said a good tip for contact staff was to get them out to each of the showrooms in the group if possible to understand the location and context of how customers will be accessing the dealership. The customer contact centre has access to daily figures, including contacts made, contacts by method (phone/email/SMS etc), bookings and upsells, which help Farrow to manage performance.
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TRAINING & LEADERSHIP SKILLS AND CUSTOMER RETENTION NEED TO KNOW n IMI is working with 29 manufacturers and the top 10 retailers to create national accreditation n IMI professional register aiming for 200,000 members by the end of this year
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he Institute of the Motor Industry (IMI) is on a mission to create a ‘common currency’ for managerial and leadership training among automotive retailers. Steve Nash, chief Chief executive Steve Nash estimates that executive officer, IMI the sector spends £100 million on training, but with no universal accreditation it has little transferable value. The IMI is working with 29 manufacturer brands and the top 10 retailers to create national accreditation to provide a ‘common currency’ of qualifications. As well as cost savings – since training will not need to be repeated when moving brands – the scheme is expected to attract more aftersales managers as well as providing a defined career path for non-motor industry applicants. Nash said: “We are a meritocracy; we all know the apprentice who ended up running the show, but we should not glory in being underqualified, particularly when we are spending all this money on training.” Nash also thinks viewing the diminishing aftersales market as a battle between the franchised network and independent sector is missing the point. It should be simply professional versus unprofessional with professionalism being a key differentiator. As the Government has left the industry to regulate itself, the myriad professional bodies and codes of conduct can be confusing for the motorist. The IMI, however, is aiming to provide clarity with its professional register, which currently numbers 45,000 members with a goal of registering 200,000 members by the end of this year.
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CREATING A PERFORMANCE CULTURE IN AFTERSALES
NEED TO KNOW n Service teams have 10-20% more chances than the sales teams in a dealership to make a sale each day n Use performance charts to generate competition in your aftersales department
Karl Davis, managing director, Coachworks Consulting
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ealers should look at running their aftersales departments as a sales operation and recognise the contribution the service team is making to the dealership. Karl Davis, Coachworks Consulting managing director and a former car dealer, believes aftersales departments need to look at the basics and “ditch the desk” to get the
most from their teams. Davis argued that the service teams have 10-20% more chances than the sales teams in a dealership to make a sale each day. He believes service teams should get their performance put up on white boards on the wall, just like sales team, to create a bit of competition. “If you get it up on the wall your worst people will leave,” he said. “Everyone will know what their contribution is and it brings things in line with the sales department.” Davis said dealers should also be in the habit of completing a vehicle health check on every car that comes into the business. “It can be useful to use word tracks to introduce the idea of a vehicle health check and then upselling from there. That doesn’t mean a script for servicing staff, but a consistent approach each time.” Aftersales managers were also encouraged to “ditch the desk” when managing the service department. Davis said aftersales managers needed to go beyond the reports and motivate people, with daily coaching. He used the analogy of the top Formula 1 teams being able to do a pit stop in three seconds. Coaching and practice is the key. Davis said some dealers can be wary of investing in training for staff as they become scared that staff members will leave when they have been given training. In association with:
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CREATING A PERFORMANCE CULTURE IN AFTERSALES
“If they do leave, just get over it. No one would ever get married if they weren’t prepared to take a leap. Staff need a clear, written down career path. Don’t fail your staff by just reviewing that career path once a year. Coaching them through their career is a constant process. “Your team needs to be motivated and your leadership will be tested every day. Service teams need to be recognised for their performance too. Why is your star service adviser taking the bus while your sales guys have a company car?”
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ealers today face more competition, declining absorption, pressure on service advisers to sell and an increased emphasis on CSI. With such a demanding environment, CitNOW dedicated two workshops at the AM Aftersales Conference to discuss how CitNOW can play a positive role. The conference was well attended and both CitNOW workshops were full. Alistair Horsburgh, CitNOW CEO, and Ridgeway Group aftersales director Richard Spencer hosted a workshop entitled “How to massively increase red and amber conversion with video.” It illustrated the shift in the
aftersales market and what a dealership can achieve with CitNOW. To stay profitable, dealers need to retain and increase their existing customer base, as well as increase red and amber conversions. Adding CitNOW has proven to increase transparency and trust with customers, leading to an increase in sales, profits and CSI. The workshop demonstrated how some dealers increased red and amber conversion revenue by as much as 40% with CitNOW. Customers have more choice than ever. It’s vital for dealerships to differentiate themselves from other franchises and independents.
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CREATING A GREAT CUSTOMER EXPERIENCE
NEED TO KNOW n Service plans have generated £5.5 million for the Hyundai network n Hyundai based its strategy on 90,000 customer comments
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he Hyundai brand now enjoys a 3% market share and retaining its customers through aftersales was identified as imperative if it was to achieve Nick Tunnell, its volume aspirations. aftersales director, Aftersales director Nick Tunnell said the Hyundai UK strategy was borne out of low CSI scores from the last decade: “We recognised if we were to grow, we would have to focus on customer satisfaction and aftersales plays a key role in driving customer retention. “If we satisfy our customers, we make them happy. It’s not rocket science, but was something we needed to focus upon.” According to research from Warwick University cited by Tunnell, retaining a customer costs six times less than attracting a new one, loyal customers spend 3% more than new customers and fully satisfied customers are 11% more profitable. Armed with more than 90,000 comments from 38,000 of its customers, the brand identified recruiting the right staff in the network as critical and provided them with the tools and skills they needed to create the best customer experience, including service plans that have so far generated £5.5 million for the network. A 12-step customer journey was implemented which included responding to enquiries in minutes, first-time fix and a fixed total cost, with additional work cleared by speaking to customers first. Three factors proved to be an absolute must: car wash; full invoice explanation; and customer follow-up. In association with:
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KEYNOTE: THE FUTURE OF AFTERSALES
NEED TO KNOW n Motor retail sector guilty of underestimating technology’s impact n Aftersales departments should focus on making things as simple as possible for customers
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echnology will continue to transform servicing departments in the automotive retail sector and dealers should not underestimate its impact, Dr Martin Leach, according to Dr Martin Leach, Magma Group chairman, chairman. Magma Group One thing dealers can count on is the exponential growth of disruptive technology to their business, said Leach. “I think the industry is guilty of underestimating the impact technology has on our lives in the mid- to long-term future. “Big data will be massive and customers will likely have a ‘data passport’ which dealers will be able to use to tailor their services very specifically. “Manufacturers will also be recording much more information on drivers and their cars as future models become connected to the internet, sharing information for service departments to take advantage of. Self-diagnosing technology will mean cars of the future will know more about themselves than the dealer does.” Today’s customers are willing to adopt new technology at a much faster rate. Leach used the example of the radio, which took 38 years to reach 50 million users. TV took 13 years, the internet took four years and Twitter took four months. Leach envisions a future where customers are filming and recording a dealer’s service hand-over via wearable devices, such as Google Glass, instantly uploading video to the internet, Despite new technology, aftersales departments should focus on making things as simple as possible for customers, with 71% of customers looking to simplify their life, according to Magma statistics from 2012. There is also a growing mistrust of advertising, with just
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KEYNOTE: THE FUTURE OF AFTERSALES
20% of customers trusting the medium, while 90% would trust a friend who has already used a service, strangers who have used a service are still trusted by 70% of consumers, which shows why review services such as Reevoo and Judge Service are now commonplace. Leach also thinks dealers should be thinking about public transport and how reliance on cars as a transport method is declining in major metropolitan areas. There has also been a continuous reduction in the amount of mechanical faults cars suffer and Leach expects this to continue. “Mechanically, cars are getting better and the extension of service intervals will continue. The reduction in service absorption from a benchmark of 100% to 80% will continue.” However, while Leach believes it is likely manufacturers will look to push into selling directly online in the future; physical aftersales locations are always likely to remain. Leach said: “If you’re in bricks and mortar, you need to make the most of the physical contact you get. “Dealers have to simplify their processes in what is becoming a very complex world. You have to look to the future, and lead your customers there.”
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WORKSHOP: IMPROVE YOUR ONLINE PRESENCE
NEED TO KNOW n Dealers can use franchise- and location-specific keyword to compete with fast fit chains online n Online service bookings are essential
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ealers can take on the fast-fit chains, GForces’ head of retail Paul Hilton told a workshop on marketing and selling aftersales products and services online. While dealers cannot compete in online Paul Hilton, head of search for generic keywords, franchiseretail, GForces specific, geo-location keywords offer more opportunity. With some independents and fast-fits receiving low review scores online, CLICK HERE franchised dealers should highlight their typiFOR VIDEO cally high customer service scores. HIGHLIGHTS Online service bookings are essential as 36% of bookings are made out-of-hours and website design should be optimised to cater for the 30% of visitors on mobile devices. Other areas to include are retailer-driven service plans online and an internet parts and accessories shop. Hilton also offered tips that dealers could adopt from independent and fast-fit players and comparison and referral websites:n In ‘n’ Out – express MoT and services with the emphasis on convenience. n Formula One – reputable autocentres with online booking and payment. n Servicing Stop – online booking and a strong online reputation while Spotify promotions attract younger drivers. n Click Mechanic – online booking and transparent pricing appealing to entrepreneurial mechanics. n Who can fix my car.com – owned by Trinity Mirror Group, it allows repairers to quote for work and is active in the three- to four-year-old vehicle parc, providing an opportunity for franchised dealers. Hilton said: “Look at your contact strategy and engage with your customers early on as retaining customers is easier and more profitable than finding new ones.” In association with:
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WORKSHOP: HOW TO INCREASE RED AND AMBER CONVERSION WITH VIDEO
NEED TO KNOW n Ridgeway has seen a 23% increase in red work conversions as a result of using video n Customer can approve work highlighted by the technician in the report and the videos they make
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hort, packaged videos filmed by technicians at five Volkswagen centres have led to a significant increase in Alistair Horsburgh, customers approving urgent service and director, CitNow & repair jobs at dealer group Ridgeway. Richard Spencer, Using a platform known and marketed as aftersales director, Ridgeway Workshop Window, developed in Ridgeway Group the second half of last year, the group links electronic vehicle health checks to 60-second videos which are then sent to customers via email or text message. The customer is able to approve work highlighted by the technician in the report and the videos they make, with commentary, when the vehicle is on the workshop ramp. Ridgeway’s aim in using video is to increase the amount of red (urgent) work approvals through building customer trust. Comparing service promotional activity in Q4 2013 and Q1 2014, the result of producing 1,486 videos has been a 23% increase in red work conversions (worth £142,145). Taking into account there was one less day in Q1 2014, average overall sales per day was £15,753 this year, compared with £13,299 last year, equating to £96 per unit of incremental red work sold. Each video includes a ‘pre-roll’ explaining their purpose and branding. Ridgeway aftersales director Richard Spencer said: “The results have been the best I’ve seen from these five VW sites.” It is now rolling out the video packages to other centres in the group. Alistair Horsburgh, chief executive of CitNow, which provides video
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technology and training to 60 of the AM100, said the dealer group demonstrated the numerous benefits of video in the aftersales department, which include transparency and building of trust, faster authorisation process, customer and service reception education, substantiation of warranty claims, damage reporting and condition assessment recording. n In two prize draws during its workshop, CitNow gave away six months of its video service, equipment and training to Nick Pincott, general manager, Pebley Beach and David McNamara, managing director – aftersales, Ford Retail.
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WHAT TO CONSIDER WHEN EXPANDING YOUR SERVICE OFFERING NEED TO KNOW n Franchised dealers can get access to technical information for other brands n Off-brand work could fill service bays in quiet periods
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ranchised dealers should widen their servicing net to other brands as all manufacturers make their technical information available, says Autodata. Independents have been fighting for equal Malcolm Rixon, access to manufacturers’ technical informatechnical liaison and tion in order to correctly repair cars for all licensing manager, brands, but Autodata made the point that Autodata franchised dealers can also access this information. Like independents, franchised dealers can, for a fee, arrange for short-term access – from hourly, weekly, monthly or yearly – to a manufacturer’s technical information. Malcolm Rixon, Autodata technical liaison and licensing manager, said: “This could help franchised dealers to capture fleet servicing business or potentially offer preferential labour rates to attract non-franchise older vehicles into workshops.” However, Rixon also explained that committing to servicing vehicles out of brand would also mean additional training for technicians and extra diagnostic tools. It would also mean making sure the dealership has access to the right parts. “Customers will often switch over to your franchise if you look after them well. It can be a great conquest tool for attracting customers to fill service bays in quiet periods.” Rixon also warned that franchised dealers should be careful not to affect the throughput of servicing work for their own brand. In association with:
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INCREASING PROFITS AND CUSTOMER RETENTION WITH IMPROVED COMMUNICATIONS NEED TO KNOW n Dealers need to utilise all data sources n Data on warranty renewal, service and MoT reminders, and even recalls, can all increase uptake
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o gain a true picture of an individual customer and to maximise response rates to communications, dealers need to combine a variety of data sources, including the manufacturers’ information, Barry Nielsen, client according to a workshop led by Eclipse services director, Marketing’s client services director Barry Eclipse Marketing Nielsen. Nielsen identified core communications of MoT and service reminders as accounting for 70% of aftersales revenue from prompts, with mailings generating the most uptake. The remaining 30% provides additional revenue ‘events’, but targeting the ‘right customers with the right message at the right time’, such as seasonal offers or winter health checks, is imperative. Simply having access to warranty renewal information from manufacturer partners can improve data, while linking reminders to manufacturer service club discounts can increase uptake and social media data trails can also be used for additional and more personal insights. Even data obtained from recalls, particularly identifying second or third vehicle owners, can be utilised. Combining all such information creates a powerful and individual communications strategy more likely to generate positive responses. Given that the average customer is estimated to generate £3,000 of aftersales revenue over the lifecycle of vehicle ownership, this should not be overlooked. “Increasing customer retention by 2% has the same effect as increasing the number of customers by 10%,” said Nielsen. In association with:
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Events
www.am-online.com/events
Date
Event
Venue
May 16 2014
AM Executive Breakfast Club
Simpson’s in the Strand, London
June 12 2014
AM/IMI People Conference
Royal Garden Hotel, Kensington
June 12 2014
AM100 Dinner
Royal Garden Hotel, Kensington
June 26 2014
AM Aftersales Executive Breakfast Club
Hanbury Manor, Ware
August 15 2014
AM Executive Breakfast Club
Simpson’s in the Strand, London
September 4 2014
AM Digital Dealer Conference
Heritage Motor Centre, Gaydon
October 21 2014
AM Used Car Market Conference
Telford International Centre
November 7 2014
AM Executive Breakfast Club
Simpson’s in the Strand, London