Customer Diagnosis: Do Their Perceptions Drive Your Business?

New Page 1MARKETING STRATEGIESCustomer Diagnosis: Do Their Perceptions Drive Your Business? CHICAGO (May 15, 2006) - In a broad sense, is it possible that consumers view getting a haircut in much the same way they choose where to go for vehicle servicing? Perception or reality: which one drives consumer behavior? There will be some customers who always go to a specific barber, placing value in the work of a specific service provider - the combination of quality and consistency, personalized service and relationship. These folks will not quibble on the rates charged. Other consumers will have a preference for a particular shop, but they will not care who cuts their hair. They just show up and sit in the first available chair. The remainder - that random lot - will not even care which barber shop they get their haircut at, visiting whichever one catches their eye in the moment. Is it possible that consumers who purchase vehicle service and repair might breakdown in the same manner? Are there those who prefer and demand a specific technician - valuing the unique mix of a certain person's ability and the personal relationship or the shop's professionalism? Are there others who are drawn to the brand of a firm, who assume one technician is as capable as the next? For that matter, are there consumers who choose a shop and technician at random, as if neither mattered? Take a moment to think about the shop you work in and/or own. Is your clientele large enough? What fraction of it is loyal? More importantly, why are a percentage of your customers loyal to you? What are the factors they value in returning for service, let alone referring someone to you? For some shop owners, knowing their customer magnets as well as the weaker links matters to them. For just as knowledge is power, awareness and consideration of what is driving consumers can define future goals, identify changes in direction and shape actions in getting there. It really is that simple. Yet, it really is that difficult.Dealership service and share of market In a recent report from Frost & Sullivan (F&S) titled "OES Channel - Set for Growth?" the study reports news that may raise concerns for - even anger - those in the independent aftermarket service and repair industry. Yet, in the midst of some alarming consumer trends and perceptions, the data and conclusions show opportunity also knocks for some who choose to see it. Auto dealerships are taking advantage of opportunities to sell more parts and services to the North American aftermarket, and they are growing their share of revenues, according to F&S Research Analyst Rahul Ganju. He also says that tough competition in both new vehicle and used vehicle sales is compelling car dealerships in North America - defined as the Original Equipment Service (OES) channel by F&S - to rethink their business strategies. Automakers and dealerships are very much aware today that out-of-warranty repairs are a source of profits, a critical part of the vehicle ownership experience and a way to develop brand loyalty. F&S also forecasts that the light-duty vehicle market in North America will remain strong and is expected to grow by approximately 2.7 percent in 2006, an increase of 6.7 million vehicles. In turn, this will drive demand for aftermarket parts and service, which will continue to compel dealerships to turn their attention to garnering an even larger slice of more lucrative service and repair revenues. Dealership service centers will have to compete with thousands of other automotive aftermarket businesses, who collectively have far greater experience in attracting niche customers and a diverse customer base. Ganju analyzed a number of aftermarket segments, and cites four examples of revenue growth by the dealership channel over a forecast period of 2005 to 2012. These included cabin air filters, fuel delivery systems, engine control units and automotive lighting.Dealership Share of Revenues
By Segment Type
North America, 2004-2005

Note: All figures are rounded
(Graphic: Frost & Sullivan)Ganju says that dealership service technicians are more aware of cabin air filters than other service providers because this category appears on the maintenance schedule when the vehicle is dropped off. The fuel delivery systems segment is comprised primarily of fuel pump and fuel injector aftermarket segments. F&S expects the dealership channel to generate a higher percentage of revenue than the independent aftermarket because it anticipates that there may be a gradual shift in business by consumers from the other aftermarket channels to the post-warranty OES channel. In the engine control units aftermarket, F&S forecasts that although the traditional warehouse distributor/ jobber aftermarket channel will provide stiff competition to dealerships, consumers will continue to shift towards dealerships. Lighting being a safety component, F&S concluded that most consumers prefer to purchase replacements from dealers, enabling the dealership channel to gain market share during the forecast period. These forecasts are not just simple guesses by F&S. The report's analysis observes several strengths the dealership channel has based on consumer perceptions. F&S says that consumers in general - including owners of older vehicles who have their vehicles serviced at dealerships - purchase products from the OES channel because they believe that dealerships have:* Higher quality parts. * Better tools, diagnostic scanners, access to OE bulletins, and repair equipment.* Access to vehicle owner databases for marketing purposes.* Deeper inventories of parts with the broadest coverage for a particular vehicle make.* Access to considerable capital.* Superior training.What's on your radar screen? It is clear that many in the aftermarket non-dealership channels will argue that this is just one report. Others will opine that the analysis and conclusions drawn by F&S or others are not accurate or are distorted, despite the data collected, analyzed and reported. Others still will just ignore these studies altogether, rather than view them as navigation beacons or early warning signals. Some, however, will understand that shifting consumer perceptions today motivates subsequent buying behavior tomorrow. Moreover, these perceptions - whether about the competition or your shop - can be managed. Sifting through and acting on relevant information - good or bad - can make the difference between just getting by or enjoying wild success. Rather than ignore or decry the results reported, a prudent and forward thinking person will consider the data and see the opportunity to use consumer perceptions as motivating action points to help focus his or her business plans and propel the shop in the right direction by building and reinforcing client relationships and thereby influencing customer loyalty. Committing to, and showing evidence of state-of-the art tools and training, valuing and utilizing a timely client contact management system and cultivating a prompt and accurate parts acquisition regimen are initiatives that can be leveraged to an independent repair shop's advantage. But it isn't enough that the shop and technicians know these things happen; your customers have to know, believe - and most importantly - feel it as well. Employing "customer diagnosis" as part of your practice Do you practice "customer diagnosis" in your shop? Having the ear of a customer and a genuine dialogue with a number of them can work wonders. Test your customers' perceptions by personally asking them for feedback immediately after servicing, and acknowledge that feedback to ramp up a meaningful relationship with loyal clients. This dialogue can even be used to ask for a quality referral or testimonial from satisfied customers. There is a chasm between prospecting for information and mining it for nuggets. While being genuine in conversation, it is important to drive them with a series of questions that uncovers perceptions and then probes deeper into what's behind them. Even more important is the art of listening: Pausing at key points to prompt them into telling you more. Building these conversations and managing their flow is pertinent. It also takes practice and experience to perfect. But committing to diagnosing and analyzing customer perceptions can pay dividends that could propel a business to the next level. Consider developing conversation scripts that could be used when a customer has paid up and is about to depart. For examples, click here.

At the end of the day, the deciding vote on where service and repair dollars go is in the hands and hearts of consumers. Help them to understand why they should do business with you, rather than any other repair facility. Rather than being a threat, perception could be your edge.

(Sources: Frost & Sullivan, Top Right Consulting)