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Competing for Customers: Do Independents Have an Edge?Posted 4/12/1999By Angie Wilson
Competition. Every business is faced with it. For the automotive repair industry it is a multifaceted challenge. Across the board, the industry is affected by an image problem. NAPA's 1998 Auto-Attitudes Report revealed that of the 1,525 polled, only one in four (27 percent) believed they could get good advice from their automotive technician and only one-third (32 percent) considered automotive technicians to be trustworthy. Shop owners say there's no abundance of qualified technicians when it comes to expanding the business or replacing employees. And it's not an easy task to stay up to date with today's complex vehicles. In addition to the challenges that affect all segments of the industry, automotive repair businesses, to some extent, must also compete with their neighbor down the road. Dealership, quick-lube and independent repair shops are often equipped to meet the needs of the same customer. According to several industry professionals, there are distinct ways that independents can set themselves apart from the competition. Kevin Caldwell, AAM, Autobody by Caldwell Inc., says it's the desire to have more control of the final outcome that separates independents from others. "Reputation is everything for the independent," said Caldwell. "Most independents survive by referrals." Often, consumers want to talk directly to the person who repaired their vehicle, says Caldwell, and independents can offer that level of personal attention that you may not find at other types of facilities. Jerry Alred, Alred's Automotive, also believes personal attention to customers is a key to success. "Most people choose an independent because they are able to see the person that is working on their car and get to know the employees for a long relationship," said Alred. "How many dealers get cookies, cakes, Christmas cards and so on?" Alred said the customer's ability to talk to the owner or recognize a stable staff of service writers and technicians sets independents apart from dealership service centers. "The owner of the shop sets the standard and the personality of the shop. His personal intention to deliver what is promised is hard to cover up if something flubs. Just look at the turnover comparison at the dealers," said Alred. "The independent shop usually deals with more than one product line, which requires them to connect more with the theory of how things work, rather than remembering the most likely part to try. An independent has a closer pulse on whether he is putting out good products or not, and genuinely gives more of a neighborhood presence than dealers." Jim Linder, Linder Technical Services, agrees that independents have an edge on the competition when it comes to service. "I think in terms of service the independent shop can offer much more - and in some cases can offer too much with our long days and weekends," said Linder. "The biggest service feature is the many makes and models serviced by the independent." Linder predicts this flexibility could take a downward turn as tools and vehicles become more and more complex. Control over business operations is another variable that separates independents from other facilities. Patrick Paul, Mell Paul's Body Shop, says independents have an advantage due to their flexibility in all aspects of the business vs. the constraints of a dealership or franchise operation. "Competition has served to make our business an 'upmarket,' prestigious and quality-oriented business, whereas many others attempt to compete on a pure pricing basis," said Paul. "We've positioned ourselves 'above' the price war. We offer many of the same services dealership or franchise body shops do, we simply do it better." Education is also crucial to stay ahead of the competition. "Because of stiff competition, independents are reaching for their niche and when finding it, educate, educate, educate," said Don Seyfer, AAM, Seyfer Automotive. "Independents will devote enough dollars in a yearly budget to provide 100-plus education hours per year for their techs. Witness the upsurge of management education, 20's groups, bottom line groups, and upscale education for owners, managers and service advisors in the independent sector." Seyfer said his customers use their services because of great warranties, pleasing atmosphere, personal service with honest answers and highly competent technical repairs.
Trust Seyfer offers one suggestion to win the trust of customers. "The progressive independents are associating with credible, high profile, big image entities such as AAA Approved Auto Repair, NAPA Auto Care, ASE Blue Seal, CARQUEST, and so on," said Seyfer. "This greatly adds additional credibility." For the independent repair shop that must compete with dealership service facilities for business, there's more good news. According to the J.D. Power and Associates 1998 Service Usage & Retention Study (SURS), non-dealer service providers, on average, showed much greater customer satisfaction levels than dealerships, even though the highest satisfaction levels come from certain excellent groups of dealerships. The study contrasted the new-vehicle service habits of customers whose warranties have expired, to the habits of the same group when their vehicles were covered by the warranty. The highest satisfaction was seen among customers of Lexus dealers, followed by Infiniti, and then by independent service facilities. In a summary of the study, Joe Ivers, director of customer service research at J.D. Power and Associates said, "Most dealerships see their customers less and less after the warranty ends. Customers increasingly go to aftermarket providers, such as specialty oil change shops and full-service facilities." The study revealed that about 50 percent of the defection from dealerships is because of customer dissatisfaction with dealership service during the warranty period. Two strong contributors to this lost business were cited: unreasonable amounts of time taken to service the vehicle and the need to return to the dealership because of unsatisfactory work. Most customers who used non-dealer service providers said they do so because of convenience, location and the amount of time it takes to get the work done. Referring to "cream-of-the-crop" independent repair shops, Seyfer said, "Independents are driven to provide better customer service, better technical competence, and better perceived value." Seyfer said there are a few "primo" dealers in every large city that are providing decent service, but a far larger number are not. "The big picture of dealer ownership is muddled at best, with the mega owner groups and name identification. The pulse seems to be a state of confusion for their techs and sales people," said Seyfer. Another reason dealership service facilities aren't a threat to independents is just the pure numbers of dealers vs. independent repair shops, says Linder. "If the dealer had the same number - and they don't come close - they would be a larger threat to the independent." And in most cases, Linder believes dealerships don't really wish to have the business of a used, high-mileage vehicle and don't try to compete for that market.
Concerns It's not all a bed of roses, however, when it comes to consumers' perceptions of independents vs. other repair facilities. Independents did not do as well when ranked on cleanliness/appearance or management. From his contact with current consumers, Paul suggests that consumer opinion is probably the same today. "Many independent shops are managed by former technicians, and most of them aren't businessmen (or women) at heart, and thus their practices reflect that in their poor image, but outstanding service," said Paul. Alred, Linder and Caldwell offer similar stories, suggesting that the clean, well-lit independent facilities do exist, but they're not the majority. "As far as appearance to the consumer, most independent shops do not realize that the facility communicates before words ever come out of the service writer's mouth," says Alred. "Image is a big concern of this industry, visual and performance. We are an easy target for the media because face it, there are more automotive repair shops of all sorts than many other industries." When you consider the higher level of technology required for automotive repair, compared to most professions, and the frequency of vehicle use these days, Alred says if technicians don't stay current, the shop's reputation is on the line. Another J.D. Power and Associates report from last year, the Customer Satisfaction Index (CSI) Study, showed that almost one-third of services performed on in-warranty vehicles were handled outside the dealership at aftermarket providers. "Customers clearly reward good service with loyal patronage regardless if it is a dealership or an aftermarket service provider," said Ivers. The CSI study outlined the following key factors that help determine customer retention:
Regardless of who your competitors might be, your best defense is to recognize your strengths and take advantage of them.
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