TORONTO -

If there’s any doubt as to the role the service department plays in brand loyalty, consider the following data provided by J.D. Power and Associates’ Canadian Automotive Practice.

For Canadian customers who put their level of satisfaction with their most recent dealership visit at an 8 or 9 out of 10, just 17 percent claim they “definitely will” buy or lease from that same brand. When the satisfaction score is a 10, that repurchase intent is nearly two-and-a-half times as high (at 42 percent).

“However, this lift in repurchase intent only applies when the work is performed at a dealership,” said J.D. Power’s J.D. Ney in the latest Automotive Analyst Note. “Yet another reason why service retention is paramount.”

Meanwhile, for those customers rating their experience a 6 or 7, repurchase drops to 8 percent. For the 5 or less crowd, it falls to 7 percent. (These numbers are derived from the J.D. Power’s 2012 Customer Commitment Study).

Ney went on to emphasize that this 42-percent repurchase intent among “top-box customers” suggests that service experience satisfaction is “nearly as important” in determining repurchasing plans as the customer’s satisfaction with the sales process.

Citing a separate study, Ney noted that half of Canadian new-vehicle owners giving their sales experience satisfaction a 10 of 10 claimed they “definitely” would lease/buy from the same brand with their next purchase, with 18 percent of those giving an 8/9 score saying the same.

Ney went on to say, “Customer education is critical to build the deeply ingrained satisfaction and long-term brand loyalty required to drive sales. When service personnel are perceived as providing helpful advice and explaining the work they complete, customers rate their experience a 10, 31.2 percent of the time.

“However, if this opportunity is missed, ‘top-box’ satisfaction plummets to 2.7 percent,” he added.

Sharing some more data in the Canadian marketplace, Ney broke down the proportion of service occasions dealers are currently retaining by vehicle-age group:

  • Retention among owners of one- to three-year-old units: 84 percent
  • Retention among owners of four- to seven-year-old units: 54 percent
  • Retention among owners of eight- to 12-year-old vehicles: 30 percent

He attributed the strong retention in the newer class largely to the fact these vehicles are still under new-vehicle warranties.

Continuing along, Ney diagramed how dealers can generate more profits simply by moving their service satisfaction scores from the 8-9 range to the 10 range.

“The average dealership selling 50 vehicles per month sees approximately 1,300 of those for service once the vehicle is in the four-to seven-year-old age bracket,” he began.

“Dealers who are able to achieve 10s, as opposed to 8s and 9s in terms of service satisfaction score, could convert 325 more service customers into top-box repurchase intenders annually,” Ney added. “According to Power Information Network average vehicle gross figures, that translates to a yearly profit lift of approximately $350,000 per dealer.”

He went on stress how stronger performance in customer service tends to naturally boost service loyalty.

“However, by viewing the service department as a second sales division, dealers can also build repurchase loyalty,” Ney said. “It’s time to tear down that wall.”

Editor's Note: The data contained in this report pertains to the Canadian marketplace.