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Aftermarket Conference: Customer relationship is key to your survival

Look at what other people are doing – and do it better. This was one of the central themes from this year’s AM Aftermarket Conference, held at the Kassam Stadium, Oxford, on February 25.

Roy Williamson, marketing director, BP Lubricants Europe

Customer insight

Targeted marketing initiatives to maintain and increase your customer base must never be overlooked, says Roy Williamson, BP Lubricants Europe marketing director.

And essential to achieving this is a good understanding of your customers. But Williamson warns of a danger that, as servicing intervals increase and dealerships consolidate into larger businesses, customer contact will diminish, particularly at managerial level. On the upside, the DIY servicing segment is contracting rapidly as vehicles’ complicated technology prevents owners from doing their own maintenance, meaning workshops should see an increase in business.

As a result, he says, aftermarket businesses will need to make the remaining contact as effective as possible. Williamson believes any repairer’s first step should be to analyse the customer client base to determine the frequency and method to market to them effectively.

“This gives us enormous insight into our customers,” he says, adding that email, SMS messaging, direct mail and telephone contact should be exploited fully.

Roger Trembath, managing director, Quay Auto Centre

A different approach to CSI

As a family-owned business going back 90 years, Quay Auto Centre in Kingsbridge, Devon, relies on the personal touch. The Ford and Suzuki dealership in a market town of just 5,000 residents, has introduced several developments to help it maintain good customer relationships.

Managing director Roger Trembath says that if a motorist books a service, but further repairs are necessary, the workshop will provides two invoices – one for the service and one for the extra work. This ensures the client does not always associate the higher cost with the service.

Where possible, work may be booked for a future date rather than alarming the customer with an unexpectedly large bill. Alternatively, the customer may choose to have the urgent repairs first and delay the service for a few weeks.

Trembath believes this is vital in building customer trust. “A lot of people come to us as service customers first, then they buy a car from us a few years later,” he says. “Our best salesman is our service department. I believe the service sector is the strength of our industry.”

While the business plays a strong role in its community under Trembath’s leadership – he loans vehicles for the town’s annual festival, and takes students from local schools on work placements – he believes such measures are not the preserve of owner-driven businesses. “Even if you’re not a family business I think you can still be run like one,” he says.

Tim Milsom, managing director, Exminster Garage

Recruiting and retaining the best

Service and repair businesses need to put more thought into retaining and recruiting good quality technicians. That’s the message from Tim Milsom, managing director of Exminster Garage, an independent workshop in Devon.

Milsom has been pro-active in tackling some of the issues which traditionally cause employees to leave, such as poor incentives and a lack of recognition. “We can do a lot about this issue provided we keep our ears to the ground and listen for the signs,” he says.

He operates reward schemes for training as well as sales, such as giving tool vouchers to staff who come up with ideas for improvements. Under his Exminster Golden Thank-You initiative, technicians’ pay slips may include a bonus of £300, £500 or £1,000 for particularly good work that month. He publishes an Extra Mile Newsletter to highlight achievements.

Milsom believes recruitment is a greater problem for independents than franchised repairers, in that they require technicians capable of working on any marque. He is a strong believer in ‘grow your own’, and maintains links with local colleges and schools. Nevertheless, he stresses the importance of using good recruitment procedures, such as workshop trials.

“You can tell a lot more about an applicant from spending a couple of days with them in the workshop,” he adds.

Dave Cartwright, aftersales business consultant, Carter & Carter

Retaining owners of older cars

Older cars are becoming an increasingly valuable segment for franchised service workshops businesses, says Dave Cartwright, aftersales business consultant at Carter & Carter.

As parts reliability increases and service intervals are extended, work traditionally done within the first 60,000 miles, such as clutch and brake disc replacement, is now coming much later.

Cartwright believes franchised workshops need not be priced out of the market by independents with lower overheads.

“Look at what other people are doing and aim to do it better,” he urges. He is a strong advocate of mystery shopping competing workshops. Once you have identified your target market, he says, you should plan your marketing strategy in line with this, and maintain contact with your customers by phone rather than relying on them to reply to a postal reminder.

Mike Owen, head of aftermarket, RMI

Access to technical data

Mike Owen, head of aftermarket at the RMI, says vehicle manufacturers must allow diagnostic equipment suppliers easier access to their technical information.

“Many car owners may choose to approach independents for servicing and repairs. Without equipment that can be used on these vehicles, many independents will go out of business,” says Owen.

Block exemption rules allow a car to be serviced anywhere, as long as manufacturers’ standards are adhered to. The difficulty of accessing the essential technical data means diagnostic equipment suppliers cannot offer comprehensive coverage.

“Some of the manufacturer websites are so complicated you might need your blood group and inside leg measurement to gain access to the technical area,” he says.

“Technical information is the lifeline of the car in operation. Block exemption says it has to be freely available, but did not say it has to be made available for free.”

In the absence of freely available data, garage equipment manufacturers are having to invest large amounts of time and money in reverse-engineering diagnostic equipment. “Customers are starting to feel the pinch of the information vacuum already,” he says, pointing out that, ultimately, the whole industry will be the loser. “It’s hunting time in the motor industry again and the press will start mud-slinging at all of us. Who can afford to be perceived as one of the guilty ones?”

Robert Mcnab, director of published research, Trend Tracker

Market size and structure

Service and repair is a declining market but, according to Robert Mcnab, director of published research at Trend Tracker, it’s not all bad news for repairers. Improving reliability and increasing service intervals present major challenges for the aftermarket, but there are still opportunities.

“The car parc has grown but become much younger,” says Mcnab. “The size of the over four-year-old car parc is shrinking and the mileage each car is driven has fallen, meaning a reduced volume demand for servicing and repairs. The only saving grace is higher value servicing because of the higher retail cost of parts and labour.”

But how long can the decline in sold hours be offset by higher labour rates? “Indefinitely,” says Mcnab, pointing out that although service and repair costs have risen, as a percentage of customer’s disposable income, they have fallen from 1.5% to 1% over the last 10 years.

Independents have even more to gain: from the OFT recommendation allowing them to compete in the warranty service market, and by becoming authorised repairers (up from 273 in 2003 to over 500 in 2004).

Meanwhile, franchised dealers face a rising percentage of cars ‘not yet serviced’ (18-20,000 miles before the first service in some cases) and having to compete with independents, despite a much higher labour rate (franchise average £60 versus £35 at independents).

Peter Turner, chairman, Automotive Advantage

Increasing the value of every customer

“How do you increase profit without knocking back CSI by reducing cost?” asks Peter Turner, chairman of Automotive Advantage, consultant to the aftermarket.

Turner says the key is a better understanding of ‘repair mindset’ – for instance, what do customers consider major and minor repairs?

Automotive Advantage research gives surprising results: diagnostics are considered a major repair, while replacing an exhaust is considered minor.

“In a trusting environment, price is 60% elastic,” says Turner “If we are to create value, customers must trust us.”

What not to do: the car not being ready on time, using technical jargon, not recognising the customer, not caring for his wallet. What to do as a trust builder: know the customer’s name, be well organised, clean and tidy, and give good honest advice .

Sarah Sillars, chief executive, Institute of the Motor Industry

Variance in the quality of technician training needs to be driven out by a national minimum standard agreed within the motor industry, says Sarah Sillars, chief executive of the Institute of the Motor Industry.

Technician accreditation has been a hot subject at the IMI since a 2002 survey of its 24,000 members highlighted a lack of value, recognition and status among those working across both the franchised and independent sectors.

“We don’t do enough to recognise the skills and competence of our technicians, either for themselves or for consumers,” Sillars says. “What we’re looking for is a common benchmark. It doesn’t matter what area you come from.”

She points out that only five UK industries are licensed – gas installers, taxis, aeronautics, nightclub door staff and, most recently, electricians – and automotive is low on the Government’s list. But Sillars believes the motor industry should develop a voluntary standard before legislation is necessary.

Since October, the IMI has been conducting an accreditation pilot involving 204 technicians, 40% from the independent sector. When the scheme is rolled out within two years, costs will range from a £50 fee for in-house governance to £200 at an independent accreditation centre.

But in a recent press release, the Trading Standards Institute says the IMI’s strategy is too late.

Peter Stratton, its motor industry spokesman, says repairers have had ample time to self-regulate, and it is time the Government steps in with mandatory licensing.

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