J.D. Power and Associates Reports: Gap Narrows between Dealers and Non-Dealers in Customer Satisfaction Levels

Forging Personal Relationships with Vehicle Owners during Service Visits Fuels Loyalty to Dealerships

WESTLAKE VILLAGE, Calif.: 7 August 2007 —Vehicle owners who report experiencing a personal connection with their dealer service advisor are far more likely to return to the dealership for future service, spend more money during service visits and repurchase a vehicle of the same make, according to the J.D. Power and Associates 2007 Service Usage and Retention StudySM (SURS) released today.

The study, now in its 11th year, measures customer satisfaction of vehicle owners who visit a dealer service department for maintenance or repair work during the fourth or fifth years of ownership, which typically represents the period after the manufacturer’s vehicle warranty expires. Overall customer satisfaction is based on six factors (in order of importance): service initiation, service advisor, service quality, user-friendly service, service delivery, and in-service experience.

Among vehicle owners who report a sense of connection to the dealer service advisor, 70 percent say they would “definitely return” to the dealership for work not covered by warranty. These customers also report considerably higher satisfaction with their overall service experience, providing an average score of 936 on a 1,000-point scale, compared with an average of 728 among customers who say they don’t have such a relationship. In addition, among customers who feel a personal connection to the dealership, approximately 46 percent say they “definitely will” repurchase a vehicle of the same make, compared with only 15 percent among customers who don’t report such a connection. Connected customers also spend a much larger proportion of their annual service expenditures at a dealer facility than those customers who do not feel connected to their dealership.

“When dealer service staff take extra time and energy to connect with customers on a personal level—for example, by calling customers by name, treating them in a friendly and courteous manner, and being honest and upfront about the work that’s required on a vehicle—it inspires increased feelings of trust and loyalty in the dealership,” said Tom Gauer, senior director of automotive retail research at J.D. Power and Associates. “This can translate into repeat business for the dealership—not only for vehicle maintenance and repair, but also for future vehicle purchases.”

The study finds that dealerships’ failure to meet customer expectations has a considerable negative impact on customer loyalty. Among customers who say their service visit fell below their expectations, only 4 percent intend to return to the dealership for future service. However, this figure increases to 73 percent among customers who say that their expectations were exceeded during a service visit.

“It is imperative that dealerships strive to exceed customer expectations during every service visit, as one unsatisfactory service experience could open the door for previously loyal customers to permanently defect to a non-dealer service facility,” said Gauer. “Once customers have a good experience at a non-dealer service facility, they are less likely to return to a dealership. This demonstrates the need for dealerships to focus on keeping customers from going elsewhere in the first place.”

The study also finds that overall service satisfaction with dealers has improved by 11 points since 2006, while satisfaction with non-dealer service facilities has decreased by 6 points. While non-dealer facilities have typically posted higher satisfaction scores than dealerships in previous studies, the gap narrows to only 4 index points in 2007—down from 18 points in 2005. Satisfaction scores average 867 for non-dealer facilities and 863 for dealerships. In addition, customers using dealerships are more likely to have maintenance service visits that exceed their expectations, while non-dealer facilities are more likely to exceed customers’ expectations for repair service.

“While dealerships have improved across all six factors that contribute to satisfaction, there is opportunity for further improvement in meeting customer expectations for repair service, particularly in areas such as greeting customers promptly on arrival, providing accurate estimates of charges, explaining the work performed, and decreasing the length of time customers have to wait to pick up their repaired vehicle,” said Gauer. “Non-dealer facilities also have opportunities for improvement, including ensuring that vehicles are clean when they are returned and following up with customers after service to find out if the work performed was satisfactory.”

Acura, Cadillac, Lexus, Lincoln and Mercury perform particularly well among dealer service customers. Goodyear Tire and Valvoline Instant Oil Change perform well among non-dealer service facilities.

The 2007 SURS is based on responses from 11,674 owners of 2002 and 2003 model-year vehicles. The study was fielded from March to April 2007.

About J.D. Power and Associates

Headquartered in Westlake Village, Calif., J.D. Power and Associates is an ISO 9001-registered global marketing information services firm operating in key business sectors including market research, forecasting, performance improvement, training and customer satisfaction. The firm’s quality and satisfaction measurements are based on responses from millions of consumers annually. For more information on car reviews and ratings, car insurance, health insurance, cell phone ratings, and more, please visit JDPower.com. J.D. Power and Associates is a business unit of The McGraw-Hill Companies.

About The McGraw-Hill Companies

Founded in 1888, The McGraw-Hill Companies is a leading global information services provider meeting worldwide needs in the financial services, education and business information markets through leading brands such as Standard & Poor’s, McGraw-Hill Education, BusinessWeek and J.D. Power and Associates. The Corporation has more than 280 offices in 40 countries. Sales in 2006 were $6.3 billion. Additional information is available at http://www.mcgraw-hill.com.