Dealerships selling and servicing domestic cars and trucks should expect many of the customer satisfaction improvement programs of the past several years to disappear. They simply cost too much. While there is little the individual dealer can do to reverse these trends, you can minimize the damage by understanding exactly what is being taken away.
Corporate Controllers are on the war path. The battle cry is not exactly a harsh, blood-curdling scream, but more of a single-minded and very focused mantra"CUT COSTS - CUT COSTS!" Stockholders will applaud the move! Wall Street will love it! Stockholder value will be enhanced and corporate managers will receive big bonus rewards.
But there is a price to be paid. Over the past five to ten years, the U.S. manufacturers struggled to regain the customer's trust and confidence in domestically produced automobiles and trucks. Customer satisfaction enhancement programs multiplied like rabbits. Spending money to make the buying and servicing experience more customer friendly was not a problem. It seemed like every program that could possibly improve customer satisfaction scores was adopted. Cost was not an issue.
Now, however, the climate has changed. Some, like Ford, have been very up front about their desire to cut the burgeoning cost of warranty repairs. They expect that their cost-cutting programs will yield a one-third reduction, saving an estimated $1 billion. While they claim that much of this savings will come from improved quality, many dealers are convinced that the bulk of this savings will actually come out of theirhides.
Squeezing the time allowances for standard warranty repairs and the reduction of parts prices are just two methods available to factory warranty cost cutters. They appear to be using both.
No Problem Found (NPF) Programs
Already on the Way Out!
Partly in answer to growing lemon law vehicle buy-backs, factories have devised a method of paying a technician even if he does not discover the true nature and source of a customer's warranty related complaint. Recently GM issued instructions that will significantly reduce the availability of this NPF time.
A little background on"NPF" - under standard warranty policy, a technician must discover and correct the problems in order to have a legitimate warranty claim. If the technician cannot duplicate the condition described by the customer, or cannot diagnose the actual cause, old policy demanded that no claim be filed. The time spent on unsuccessful diagnosis was not reimbursable.
In the early years of lemon law enforcement, factories discovered that customers often came to hearings with repair orders evidencing repeated visits to the dealership for identical problems. In each case a repair was indicated, often including the use of parts. But the problem persisted. Why?
The answer centered on the policy of not paying for an unsuccessful diagnosis. A technician spending half an hour on an inconclusive diagnosis would be paid nothing if he admitted as much. This leads to the performance of some repair, often an educated guess, to complete the repair. After all, this is the only way he or she will be paid for their time invested. Maybe it will work and maybe it won't.
Now look at this from the customer's point of view. They bring their vehicle in with a complaint. At the end of the day they receive their vehicle back with a repair order copy that details the diagnosis and repair work performed by the dealership. The repair order says that the problem was found and the proper repair performed. Was it? Probably not! This customer is likely to experience the same problem and will be back again. Just a little less happy this time than the last.
Out of this grew the NPF programs designed to pay techs even when they could not locate the problem. It would not be hard to image how these programs have been abused. While factories struggle with this growing cost, expect further retrenchments. Dealerships will struggle with how to compensate technicians for the time spent in unsuccessful diagnosis. Some will absorb it as shop time. Some will make the tech absorb the loss. Others will take unjustified liberties with the claiming process to cover the lost time.
Courtesy Transportation Programs
May be Next to Go!
While trying to improve customer satisfaction, factories have employed a number of programs designed to make the customer a more "happy camper." "Courtesy Transportation" in its various forms and with its various corporate labels is one such initiative. It has become a major selling point - salespeople are quick to tell the customer that they will have alternate transportation provided when they need warranty service. Most forget to tell the customer of the limitations of these programs, or that in some cases the fine print tells how it can be revoked at any time, without warning.
To be sure, many dealership service departments abuse, or at least poorly manage, these programs so that factory costs have skyrocketed. Rental cars are sometimes provided indiscriminately, without following factory limitations on the type of repair, need for over-night transportation, etc. Each factory's program is a little different, but all have some limiting factors that are often ignored by dealership staff.
The growth in this expense area did not go unnoticed at corporate offices. Enforcement programs were enacted, but were seldom effective in addressing the problem and stunting the growth of the related costs. It now appears that the factories are looking at the possibility of reducing the scope or eliminating courtesy transportation programs altogether. What they cannot control, they might as well abolish. No program = no abuse!
Blood on the service drive! That is what you can expect if the major manufacturers drastically reduce courtesy transportation programs. That customer who was told with smiling face and in equally glowing terms how they would never be without a vehicle, will now have to be told that the factory has now revoked the benefit. I don't know about you, but I would not want to be the one to explain to the customer that the rental car that was provided free of charge on the last service visit is now unavailable or will cost them.
How do you react?
In 1998 factories will use increased warranty audits, reductions in labor times and parts prices, along with a retreat from some of the more popular customer satisfaction programs to help reach their goals of lower costs and improved stockholder value. Smart dealers will anticipate these changes and prepare themselves with strategies for avoiding the negative impact of these initiatives. Honest talks with your techs will help smooth the way for the demise of No Problem Found time payments. Reviewing the presentation of courtesy transportation with your sales staff and signs in the service drive may help explain what the factory will and will not pay in courtesy transportation.
The slashing of these popular programs is bound to cause conflict with your technical staff and your customers. Prepare now to keep bloodshed to a minimum!