Q&A: Service Retention Is Your Lifeboat

Amazon and Uber have raised expectations for a seamless, technology-enabled customer experience, but most dealers and fixed-ops managers are still setting appointments and managing the service process the old-fashioned way. As senior vice president of marketing and managed services for Xtime (div. Cox Automotive), industry veteran Jim Roche has dedicated himself to modernizing the dealership service experience. Auto Dealer Today caught up with Roche to discuss how simple tools such as online appointment scheduling are changing the game for dealers.

ADT: Jim, we’ve all read the reports. We knew the good times couldn’t last forever. What do dealers need to do to remain profitable when sales decline?

Roche: I’ve been working with dealers for 34 years, and I count many dealers and fixed-ops managers as friends. I also have the advantage of doing public speaking regularly, talking with large groups of dealers and hearing their concerns. Dealers say — and this is also based on recent market research — 65% of dealers say retention is their No. 1 priority, and retention starts in the service department. The overall goal is profitable growth, and retention is the foundation for profitable growth.

ADT: Are dealers addressing that priority?

Roche: Dealers are lagging in terms of investing in new technology that enables a better service visit. The experiences you and I have outside of automotive are shaping our expectations when we take our vehicles in for service. I use Amazon, Uber, OpenTable — fabulous experiences that are technology-enabled. Dealers understand the primary driver of retention is the customer experience. But the market research shows that 85% of dealers don’t currently have the technology that enables a superior experience.

ADT: What are they missing?

Roche: There are so many things. In no particular order, some dealers still do not provide a digital appointment-setting experience. For those of us accustomed to the Amazon experience, or using OpenTable to book any restaurant in your city, or using Delta Airlines’ app to book a flight, it seems obvious. Service-lane and service-bay technology are also important items. Have you ordered a pizza online from Domino’s recently?

ADT: I have. You see a graphic depiction of the process and track the status of your pizza.

Roche: Look at Domino’s revenue before and after they added that interface, which was part of the overall makeover of the company. Those are the things that are shaping our expectations. We want to be able to schedule anything, anywhere, anytime, online. If you extend that to service, we want to see the day and time, our service advisor’s name, pricing, and whether we can have a loaner car. Have you been to a dealership for service lately?

ADT: I have had a good experience and a bad experience. For the bad experience, they told me to bring it in first thing in the morning and they’d handle it right away. I was there all day. The next time, I made an afternoon appointment. They were ready for me and I was in and out in half an hour.

Roche: It shows you how schizophrenic the experience can be. When you had a bad experience, you said you came in early, as requested. Dealers don’t have to do that. They just have to load the shop properly. The No. 1 reason why customers don’t come in at appointed times throughout the day is because they didn’t know they could. And that’s self-perpetuated by the dealer. If you’re doing proper appointment scheduling, you can be told to come in at 1 p.m. and it will be done by 3 p.m.

ADT: How many dealers would you say are doing that?

Roche: Probably 50% of the market is doing proper online scheduling, but that’s just the scheduling component. Another aspect is the service lane — only about 25% of dealers are using some form of mobile tech in the service lane today. Think about that experience. You drive up, you’re greeted at your car by someone with a mobile device. If you scheduled an appointment, they know who you are and why you’re there. They do a quick walkaround, make a note of anything else you might need. Quick swipe of the finger and you’re on your way.

Another example of many is that we should send service updates via text. In the most recent J.D. Power survey, 67% of consumers said they would be positively influenced by text updates. They wanted them and would be positively influenced by getting them. But only 3% reported receiving them.

ADT: Do you believe the other 97% of customers know what they’re missing? I don’t mind text updates, but I don’t mind not getting them.

Roche: Generally, I’d agree with you, for now. But our expectations continue to be raised by experiences outside automotive. The fact is that some dealers have it figured out and others are lagging. As it relates to understanding customer satisfaction, there are three levels: implicit, explicit and latent. Implicit are the things you don’t ask for; it’s implicit that you’ll receive them and not receiving them displeases you. Explicit are the things you ask for and the service provider agrees to. If you don’t get those things, again, you’re dissatisfied.

Latent is those things you don’t expect and may not know exist. You get them and you’re delighted. You say you’d like to bring your vehicle in for service and the dealer’s response is, “Not only will we look at it, we will pick you up, we will give you a loaner, and the tech will take you for a test drive once it’s fixed.” You didn’t ask for it but receiving it delights you.

No amount of latent will make up for a lack of implicit or explicit. But I think the point is, dealers can own their market by delivering a superior experience enabled by technology.

ADT: It’s not a revolutionary concept. Dealers use Amazon.

Roche: Of course they do. Think of the standard technology adoption curve: First you have the early adopters, then the large, middle part of the curve and then the laggards enter the market. The early adopters have been doing these things. Now we’re moving into mass adoption. More and more, we are seeing dealers who understand they have to provide an Amazon- or Uber-like experience.

ADT: What made it worth the investment for the early adopters?

Roche: It was a variety of things. After the recession, the need for fixed ops for survival was impressed upon dealers. The increasing awareness of the need for customer retention is a driver in that. Again, dealers realize the foundation of profitable growth is retention. Dealers spend so much money on advertising to bring in new customers. One of the reasons they have to do that is poor retention. The business would shrink without new customers.

Now, sales have plateaued, and they may have started on a downward curve. New-vehicle profit margins are less than 5%. Used is now at or around 9% or 10%. Now contrast that with the service business. Based on Cox Automotive research, less than one in three service visits takes place at a dealership. The amazing part of that is they sold all the cars. But set that aside. Recapturing some of that remaining 70% is a huge opportunity.

ADT: How long have you been working on this?

Roche: Xtime started off back in the dotcom days. But we’ve been in the automotive vertical with Xtime for about 12 years. We started with an online appointment-scheduling tool, and that’s still our flagship product. Last year, we introduced Spectrum, a suite that has four modules: Invite, Schedule, Engage and Inspect. And the most important part is they’re completely integrated. We’re going to modernize the service experience.

ADT: Have you had dealers try these tools and say they prefer the old-fashioned way?

Roche: I have never heard a dealer say that, ever. What we do hear dealers say is, “I can’t get my staff to do this.” Implementing a behavioral or cultural change is the hardest part. We help them understand and implement those process changes.

ADT: How would you advise a dealer who is on the fence about modernizing service?

Roche: Obviously, I would like every dealer in the world to have Spectrum. That’s probably not going to happen. But every dealer in the world should at least have dynamic online appointment scheduling. There is no instance I can think of where this technology is not available to me in every other walk of life. And there is a demonstrative competitive advantage in being first. So my advice is to find the best vendor for your price point and then start with scheduling.