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Service & Parts Loyalty Programs: Helpful or Headache?

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Service & Parts Loyalty Programs: Helpful or Headache?

Fixed operations leaders generally have mixed feelings about automotive loyalty programs. Loyalty metrics can provide valuable insights into customer behavior and help dealerships better understand their customer base. They can also help dealerships track their loyalty programs’ success and identify improvement areas.

However, some individuals may feel that manufacturer loyalty metrics can be overly simplistic, not providing a complete picture of customer loyalty. Loyalty metrics may not consider customer satisfaction, service quality, and pricing factors, which all have an impact on customer loyalty.

Service and Parts Loyalty Programs

TVI MarketPro3 agents have the pleasure of sitting down with fixed operations leaders from all over the country. TVI’s Fixed Ops Marketing Director, Kurt Hankey, says the general sentiment is frustration. “For the most part, [ fixed ops leaders’] feelings on this range from strong dislike to moderate dislike,” says Hankey. 

“Some are indifferent because their GM or owner takes the position of ‘do the best job you can, focus on taking good care of the customer, and generate revenue.’ If they also get high marks from the manufacturer for retention, that is a secondary benefit.”

Frustrated for Good Reason

Hankey stresses that “any good service manager understands the basics of retention and how it plays into the long-term growth and profitability.” However, there are several reasons for fixed ops leaders’ aversion to some manufacturer programs: 

  1. -The general feeling is that the manufacturer’s expectations must align with how customers think of the frequency and timing of their service visits and many of the programs fall short.
  2. -They feel the program sets them up to fail.
  3. -The programs add complications to their daily business routine.
  4. -The objectives are not  realistic.
  5. -The programs add anxiety and stress to individual fixed ops leaders and their teams.
  6. -They don’t fully trust the manufacturer’s data or reporting.

Hankey recently spoke with a dealership leader in Florida who expressed his outright disdain for Toyota’s TLE program, asking why he should worry about something so “unattainable.” Many dealers feel forced to adopt and pay for a program they don’t believe in.

As a fixed ops professional with decades of experience in the service department, TVI’s Ken Pletcher worked under such programs. He says, “loyalty programs and CSI (Customer Satisfaction Index) surveys are great diagnostic tools, but once a payment plan is attached, the information is no longer valid.” Many stores base pay or continued employment on the program’s results, which breeds an undesirable work atmosphere.

Factors that Affect Feelings

TVI MarketPro3’s Western Regional Sales Director, Nick Shaffer, says that a fixed ops manager’s feelings on these metrics vary between OEMs. For example, Shaffer says, “as a general rule, fixed ops managers at Honda, Toyota, and Subaru feel that the OEMs put a lot of thought into how their retention metrics are calculated (TLE, DSE, and OSR respectively).” 

The way these manufacturers calculate the metrics “makes sense, keeps the playing field even, and doesn’t change over time,” says Shaffer. Leaders in these stores don’t tend to view KPIs in a “like/dislike manner.” Instead, Shaffer says, “They simply understand how to drive the KPI and embrace the challenge.”

On the flip side, Shaffer says “as another general rule Fixed Ops Managers at other OEMs like Nissan, Kia, Hyundai, CDJR, are consistently disengaged with OEM retention metrics.” Several variables contribute to the disengagement, such as calculations that are not as thought out, change frequently, or don’t make logical sense. The managers feel they are challenged to reach goals with inconsistent measures.

Additionally, fixed operations leaders may see loyalty metrics as too focused on transactional data, such as service visits and parts purchases. Therefore, they fail to provide enough insight into the customer experience. Loyalty metrics may not capture the full range of customer interactions with the dealership and may overlook areas such as communication with service advisors or sales staff.

While the feelings vary on manufacturer loyalty programs, sometimes the best approach is to face the challenge head-on:

  1. -Understand the manufacturer’s program clearly, including its benefits and requirements, to determine how it can benefit your dealership.
  2. -Identify your customers’ needs and preferences, and learn how they align with the loyalty program’s rewards.
  3. -Determine how the manufacturer’s loyalty program can help you achieve your dealership’s goals. 
  4. -Develop a strategy for implementing the loyalty program, including a plan to promote the program to your customers and track and measure its success.
  5. -Train your staff to be well-versed on the manufacturer’s loyalty program and on how to promote it to customers. 
  6. -Monitor the effectiveness of the loyalty program and make adjustments as needed.

Overall, some fixed operations leaders see value in manufacturer loyalty metrics as a tool for tracking customer behavior and measuring the success of loyalty programs. However, many feel that loyalty metrics could be more comprehensive in capturing the full range of factors contributing to customer loyalty. Regardless of the fixed ops leader’s position, finding a way to work with the program is the most effective approach.

However, some individuals may feel that manufacturer loyalty metrics can be overly simplistic, not providing a complete picture of customer loyalty. Loyalty metrics may not consider customer satisfaction, service quality, and pricing factors, which all have an impact on customer loyalty.

TVI MarketPro3 agents have the pleasure of sitting down with fixed operations leaders from all over the country. TVI’s Fixed Ops Marketing Director, Kurt Hankey, says the general sentiment is frustration. “For the most part, [ fixed ops leaders’] feelings on this range from strong dislike to moderate dislike,” says Hankey. 

“Some are indifferent because their GM or owner takes the position of ‘do the best job you can, focus on taking good care of the customer, and generate revenue.’ If they also get high marks from the manufacturer for retention, that is a secondary benefit.”

Frustrated for Good Reason

Hankey stresses that “any good service manager understands the basics of retention and how it plays into the long-term growth and profitability.” However, there are several reasons for fixed ops leaders’ aversion to some manufacturer programs: 

  1. -The general feeling is that the manufacturer’s expectations must align with how customers think of the frequency and timing of their service visits and many of the programs fall short.
  2. -They feel the program sets them up to fail.
  3. -The programs add complications to their daily business routine.
  4. -The objectives are not  realistic.
  5. -The programs add anxiety and stress to individual fixed ops leaders and their teams.
  6. -They don’t fully trust the manufacturer’s data or reporting.

Hankey recently spoke with a dealership leader in Florida who expressed his outright disdain for Toyota’s TLE program, asking why he should worry about something so “unattainable.” Many dealers feel forced to adopt and pay for a program they don’t believe in.

As a fixed ops professional with decades of experience in the service department, TVI’s Ken Pletcher worked under such programs. He says, “loyalty programs and CSI (Customer Satisfaction Index) surveys are great diagnostic tools, but once a payment plan is attached, the information is no longer valid.” Many stores base pay or continued employment on the program’s results, which breeds an undesirable work atmosphere.

Factors that Affect Feelings

TVI MarketPro3’s Western Regional Sales Director, Nick Shaffer, says that a fixed ops manager’s feelings on these metrics vary between OEMs. For example, Shaffer says, “Honda, Toyota, and Subaru are top shelf [and] put a lot of thought into how their retention metrics are calculated (TLE, DSE, and OSR respectively).” 

The way these manufacturers calculate the metrics “makes sense, keeps the playing field even, and doesn’t change over time,” says Shaffer. Leaders in these stores don’t tend to view KPIs in a “like/dislike manner.” Instead, Shaffer says, “They simply understand how to drive the KPI and embrace the challenge.”

On the flip side, Shaffer says the “lower shelf OEMs like Nissan, Kia, Hyundai, CDJR, are genuinely disliked,” causing disengagement between the fixed ops managers and the KPIs. Several variables contribute to the disengagement, such as calculations that are not as thought out and don’t make logical sense. The managers feel they are challenged to reach goals with inconsistent measures.

Additionally, fixed operations leaders may see loyalty metrics as too focused on transactional data, such as service visits and parts purchases. Therefore, they fail to provide enough insight into the customer experience. Loyalty metrics may not capture the full range of customer interactions with the dealership and may overlook areas such as communication with service advisors or sales staff.

While the feelings vary on manufacturer loyalty programs, sometimes the best approach is to face the challenge head-on:

  1. -Understand the manufacturer’s program clearly, including its benefits and requirements, to determine how it can benefit your dealership.
  2. -Identify your customers’ needs and preferences, and learn how they align with the loyalty program’s rewards.
  3. -Determine how the manufacturer’s loyalty program can help you achieve your dealership’s goals. 
  4. -Develop a strategy for implementing the loyalty program, including a plan to promote the program to your customers and track and measure its success.
  5. -Train your staff to be well-versed on the manufacturer’s loyalty program and on how to promote it to customers. 
  6. -Monitor the effectiveness of the loyalty program and make adjustments as needed.

Overall, some fixed operations leaders see value in manufacturer loyalty metrics as a tool for tracking customer behavior and measuring the success of loyalty programs. However, many feel that loyalty metrics could be more comprehensive in capturing the full range of factors contributing to customer loyalty. Regardless of the fixed ops leader’s position, finding a way to work with the program is the most effective approach.

Check out the TVI MarketPro3 website for more insights and interesting industry reads.

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