Second of a two-part series
OAKLAND, Calif. (Nov. 1, 2000) — It is an age-old dilemma customers face—which business to patronize?
If, for instance, they´re analyzing two automotive repair providers or tire shops, informed customers probably compare the services offered, consider the reputation or quality of the work—and, of course, the prices—then make a decision based on those and other factors.
That sounds a lot more labor intensive and complicated than simply choosing which box of cereal to buy.
With the service provider certification program it has begun to gradually roll out nationwide, the 8-year-old Oakland, Calif., firm ValueStar Inc. is offering to cut through a lot of that tedius leg work for consumers.
ValueStar is analyzing companies in about 30 categories representing some 6 million businesses. The list is a varied one, including home repair, cleaning, dentists, employment services, travel agencies, and even companies that specialize in "disaster restoration."
Also in the bunch are tire and automotive service and collision repair shops that provide a range of services such as air conditioning, brakes, mufflers, engine rebuilding and transmission work.
All totalled, about 1 million businesses have been rated thus far after ValueStar verified their credentials, credit, finance, licensing etc. But how a company fares is, for the most part, still based on the evaluations of its customers.
What the symbol means
"Any time you see the ValueStar symbol, it means that business has had its credentials checked and stands behind the service it provides, that it has given the power of feedback to its customers," said Katrina Beglinger, ValueStar´s chief marketing officer.
And being listed in a directory along with competitors can be an incentive for companies to "consistently provide the best level of service," she believes.
There is no charge to a company for ValueStar to verify its credentials. But for a firm to sign up for the ratings program and receive a license to display the ValueStar symbol costs, on average, $1,200 annually. Or a business can opt to pay a transaction fee for every customer referral it receives from ValueStar. Both approaches average out to about the same cost.
Ms. Beglinger claimed ValueStar is the only company that rates local service providers and "the only one offering online customer satisfaction ratings in real time."
There are similar firms that assess companies in a specific industry, such as icarumba.com for auto service, or contractors.com, which connects homeowners with building contractors. She described those types as "vertical" while ValueStar is "horizontal" because it covers a wide variety of industries.
ValueStar´s largest presence is in the San Francisco Bay area, where the concept was launched in 1992. Other markets in which it´s currently doing business include Sacramento, Calif., Los Angeles, Seattle, Philadelphia, Dallas, Washington, D.C., and Chicago.
It has service representatives in those locales to sign up businesses and provide support, Ms. Beglinger said. ValueStar also plans to do local marketing to drive consumers to its Web site. Twice a year, it publishes directories of the companies it rates and also offers quarterly updates of new program participants.
Why Value-Star? For many consumers, Ms. Beglinger said, "all they have now is the Yellow Pages or word-of-mouth referrals—that´s often how they find a business."
The company is pursuing deals with the nation´s top five credit card issuers and recently signed a marketing contract with a top-20 card issuer, First National Bank of Omaha.
ValueStar wants to peddle its program directly to card holders through mailings in their monthly statements. Card issuers and banks also could offer special benefits to consumers who patronize ValueStar-certified companies, Ms. Beglinger said.
Do ValueStar-certified companies see any benefits from their ratings?
It´s apparently a mixed bag.
After logging on to the firm´s Web site, Tire Business accessed the company locator feature, typed in a local zip code, and pulled up about 20 auto repair establishments in the Akron area. Each listing bore the ValueStar symbol next to the business name.
But calls to several companies produced surprising responses.
The service manager at Viall Tire & Auto Service in Akron drew a blank about ValueStar and his shop´s presumed participation in it.
Comparatively, the dealership is listed on icarumba.com´s Web site, which rates auto service shops and promotes customer referrals to businesses. But Viall Tire is yet to see any benefits from that association, he said. "The only thing we get is quite a lot of (calls from) vendors, but no customers."
Despite a ValueStar listing for Gary´s Complete Auto Service in Barberton, Ohio, owner Gary Wagner said he has "never heard of" the company.
At Munroe Falls, Ohio-based Hall´s Auto Service, chief technician and part owner Dave Hall vaguely recalled a customer mentioning a Web site that rates service shops. But Mr. Hall was not familiar with ValueStar, despite his company´s listing.
The most quizzical response TB received was from Mary McFarland, secretary treasurer of McFarland & Sons Auto Service Inc. in Akron. "We´re a repair shop. How in the world did we get in there (ValueStar´s listing)?" she asked. "We´ve never gotten involved in anything like that. Tell them to take us off that."
After noting that her shop doesn´t even have a Web site, Ms. McFarland added: "I think (ValueStar) should contact us if they´re going to put us on their Web site."
However, Peter Berbee, ValueStar´s vice president of product development, explained that the reason some of the above shops may not have heard of ValueStar is because the firm provides three participation levels: verified; verified authorized; and top-rated.
"In a lot of cases, we´ve verified the merchant," he acknowledged, "but they have not had any direct contact from us yet´´—including an explanation of what ValueStar is and what it does.
Companies actually participating in the program have had varied results.
In the San Francisco Bay area, one-outlet W & S Tire Inc. has participated for three years. "It lends credibility to your company," said the dealership´s owner, Sam Barone.
"Even though we´ve been here 23 years—same owner, same location—people still want to see that you´re putting out satisfactory work."
With ValueStar, "it´s just like consumers being able to check out our company with the Better Business Bureau." They rely on it as if it were a referral from a friend, he said.
W & S Tire, in Martinez, Calif., is a Goodyear franchisee and belongs to its Gemini auto service program.
There´s credence in ValueStar´s program, Mr. Barone noted, because "we get independently audited every year. They come in and randomly sample a section of our customer base.... Then they call the customers and check our satisfaction rating."
He finds that some customers rely on ValueStar, especially new ones and those to whom W & S Tire hasn´t yet had a chance to prove itself. If they´ve done some research, he said, "they come in with a little more confidence knowing that there is a high level of satisfaction with us."
Asked how many customers actually review his company´s ValueStar rating, Mr. Barone guessed "less than 10 percent—but when you have a customer base as big as we do, that´s a pretty large number."
Many have begun noticing the rating and the ValueStar sign in front of his dealership. "It doesn´t hurt," he said. "Every chance you get to pound your chest and say, `Hey, we´re accepted as a place to go and we´ve been tested and tried´—people walk in with more confidence. Especially since automotive repair has such a stigma attached to it...."
On the other side of the country, the issue of customer service—ValueStar´s to its customers—is a sore subject for Melvin´s Tire & Auto Inc. in Baltimore. It hasn´t seen any benefit from ValueStar, owner Joe Melvin said.
"I´ve actually asked them to drop my participation in the program because they weren´t very responsive in getting some things to me that they said they were going to do."
He claimed ValueStar was supposed to print flyers about the dealership, but he became frustrated after faxing proofs to the company three times, "then they asked for yet another one.... Obviously, they weren´t up to speed with what they were doing."
Mr. Melvin conceded that ValueStar is relatively new to his area, but his dealership has been in the program nine months and has gotten no new customers from it.
"I´ve fought with them for six months to try and get a refund on the money I paid to them. Supposedly, if you´re not satisfied, they´ll give you a refund on the annual fee," he said. "But evidently, from what they´re telling me, I´m not going to get that."
In Stockbridge, Ga., south of metropolitan Atlanta, Dacus Tire & Battery Service Inc. will soon mark one year with ValueStar. Co-owner Phillip Ward said, "if nothing else, ValueStar lets you know where you stand as far as your customer satisfaction level is—which is very important to us because we´re a small, independent dealer.
"Where we can´t compete with the big companies on price, we can kill them on customer service and satisfaction."
He admitted his service operation hasn´t pulled in any new customers via the program, "but then you don´t have any idea how a lot of people look you up anyway. Being a two-man operation, we don´t have a lot of time to ask customers where they´ve heard of us. But people do come in and ask, `What is ValueStar?´ "
Dacus Tire entered the program on an introductory offer in Georgia and "so far it hasn´t cost us a dime," Mr. Ward said.
If a ValueStar-referred customer were to make a credit card purchase at the dealership, ValueStar´s cut would be 5 percent of the total invoice.
"That seems kind of steep," he admitted, "but you´re getting free advertising on the Internet, and they do a customer satisfaction audit annually. That would cost us from $700 to $1,000 if an outside firm ran it, because that is not cheap, from what I´ve checked into."
"If it gets us five customers who haven´t been in here before," he added, "it´s made itself worthwhile."