Decreasing Service Costs Improves Customer Loyalty with Dealers, J.D. Power Study Finds

Melbourne: 30 Nov. 2016 — Automakers’ efforts to keep customers coming back to their dealership for service are paying off with increased customer retention and profitability, according to the J.D. Power 2016 Australia Customer Service Index (CSI) StudySM released today.

The study finds that 70% of customers surveyed in 2016 return for service to the same dealership from which they bought their vehicle, an increase from 60% in 2012. The increased customer loyalty is attributed in large part to efforts automakers have made to ease concerns around servicing and maintenance costs, which include capped price servicing, service packages and longer warranty periods.

“Aftersales service contributes significantly to a dealer’s overall profitability,” said Mohit Arora, executive director at J.D. Power. “Customer retention is a vital aspect of a dealer’s business that not only allows them to grow their business but also builds long-term customer relationships. Offering service packages and capped price servicing options entice customers to visit the dealership for their regular servicing needs, but it needs to be complemented with a proficient, convenient and an engaging customer experience.”

One-third (33%) of customers say they chose their dealership for servicing because of a capped price servicing offer, an increase from 26% in 2015, while 16% of customers returned to their dealership for the service package offered, up from 8% last year. Additionally, 52% of customers say they are covered by capped price servicing, up from 47% in 2015. These automaker initiatives are helping to drive down costs incurred by their customers, as the average amount paid for service averages $296 in 2016, down from $326 in 2012.

Satisfaction and Loyalty

In the mass market segment of the study, overall customer satisfaction with the vehicle after-sales service experience at an authorised service centre improves for a third consecutive year to 809 index points (on a 1,000-point scale) in 2016, up from 797 in 2015.

Driving the increase in satisfaction is dealerships’ focus on improving deployment of their service standards20% of customers say they received at least 15 of 16 service standards in 2016, an increase from 15% in 2012. Meeting service standards can improve satisfaction. Notably, returning the vehicle washed and vacuumed after service can increase satisfaction by as much as 40 index points.

“Increased focus on deploying the service standards is resulting in overall improvement in the customer experience across dealerships in Australia,” said Loi Truong, senior country manager of Australia at J.D.Power. “Delighting customers translates to higher loyalty and advocacy.”

Among delighted customers (those whose overall satisfaction is 911 index points and above), 75% say they “definitely will” recommend the brand to family and friends, and 84% say they “definitely will” revisit their service dealer for paid service work. In contrast, among customers who are disappointed (scores of 733 index points and below), only 30% say they “definitely will” recommend the brand and only 13% say they “definitely will” revisit their service dealer for paid service work.

Additional findings of the study include:

·         What’s the Cost? Satisfaction among the 68% of customers who received a detailed cost estimate of how much the work costs before service is performed is 821 index points. Satisfaction drops to 758 index points among customers who did not receive a cost estimate.

·         Communicating with Customers: The study finds that 62% of customers received a notification from their dealer about their routine maintenance, up from 55% in 2012. Overall satisfaction among customers who are notified when their vehicle is due for maintenance is 827 points, compared with 780 among customers who did not receive a notification from their dealer.

·         Satisfaction Highest in the South: Satisfaction among customers in the South Australia region is highest again this year (829 index points), and these customers also experienced the highest number of service standards (24% indicate having received at least 15 of the 16 service standards). By comparison, customers in the Australian Capital Territory have, on average, the lowest overall satisfaction (788 index points) and received the fewest number of service standards (just 15% indicate having received at least 15 of the 16 service standards).

Australia Customer Service Index Rankings

Mazda ranks highest in customer satisfaction with dealer service among mass market brands, with a score of 834 index points. Mazda performs consistently well across all factors. Toyota ranks second (824), followed by Subaru (816) and Kia (812).

Now in its seventh year, the study measures overall satisfaction with the vehicle service experience at an authorised service centre by examining five factors (listed in order of importance): service quality; vehicle pick-up; service advisor; service initiation; and service facility.

The 2016 Australia Customer Service Index (CSI) Study is based on responses from 4,666 owners who purchased their new vehicle between August 2011 and September 2016 and took their vehicle for service to an authorized dealership service centre between August 2015 and September 2016. The study was fielded from August through September 2016.