AKRON (Aug. 1, 2001)—Most shop owners and managers look on customer complaints simply as a distasteful but unavoidable part of the automotive service business. Yet if viewed as an opportunity rather than a pain in the undercarriage, such complaints can improve shop operations and provide the key for turning dissatisfied grumblers into loyal—and more profitable—long-term customers.
That's the advice to tire dealers offered by Sonsio, a Wheat Ridge, Colo.-based firm that administers warranty programs and customer-service operations for some of the nation's largest automotive service chains, including Sears, Roebuck and Co., Shell Oil Co., NAPA and Goodyear.
Sonsio, formerly known as Ameraan, specializes in recovering dissatisfied customers for large automotive service networks such as those mentioned above. However, the company believes the same approach and methods it uses in helping large service networks turn their customers' complaints into relationship-building experiences are no less applicable to smaller-scale operations like those of a single-outlet tire dealership.
Glitches are virtually inevitable in any service operation dealing with a large number of customer transactions—and particularly in auto repair shops, said Jim Rohrer, Sonsio's vice president of strategic development.
“A million things can go wrong, particularly in a smaller shop,” he said. “Sometimes parts don't arrive on time or one of the technicians is late for work. Maybe there's a brake job that takes longer than expected and puts things behind schedule. When that happens, promises get broken and customers become upset because they depend on their vehicles.”
Sears had placed Mr. Rohrer in charge of its auto service centers several years ago after the giant retailer came under fire from California regulators for allegedly overcharging customers for service repairs. He believes customer complaints about routine service glitches are far more common than instances in which technicians were unable to solve the customer's vehicle problem.
Public displeasure and distrust of automotive repair shops is hardly a secret. A nationwide survey conducted by the U.S. Better Business Bureau in 1999, for example, found that auto repair shops placed forth from the top among various retail businesses in which public dissatisfaction is widespread.
Moreover, a study by the Society of Consumer Affairs Professionals (SOCAP) found that three out of four dissatisfied auto service customers simply leave without complaining and find another service facility to do their future work.
Sonsio's experience has shown that many of those dissatisfied customers can be retained if a conscientious effort is made to assuage their dissatisfaction, Mr. Rohrer said.
One of the most compelling reasons for saving and retaining such customers is simple economics: It costs far less to keep a customer than lure in a new one.
“Advertising to attract new customers is very expensive. So why not work to save the ones you already have?” said Fred Sumner, Sonsio's vice president of business development and another former Sears veteran.
Disgruntled customers, once impressed by management's efforts to make things right, often turn very loyal and wind up spending more money in subsequent years than typical first-time customers, Mr. Sumner said.
Experience shows, he said, that retained customers are more profitable to a business than new ones because they:
1) Buy more goods and services;
2) Purchase merchandise that's not on sale;
3) Refer new customers to the company for service;
4) Select higher-gross-profit goods and services; and
5) Require no further advertising dollars to bring them in.
Mr. Sumner said a study published by the Harvard Business School shows that for every dollar of profit earned from a first-year customer, that same customer will provide $1.40 when retained for a second year, $2.80 in the third year and $3.52 in the fourth year. This means the four-year customer is typically worth 252 percent more than a first-year customer.
In sales dollars, the service shop that loses 10 percent of its customers each year—but gains the same percentage of new ones—has zero net growth. However, if the shop reduces this 10-percent annual customer turnover to 5 percent, while continuing to attract 10-percent more customers, it will double its revenue in 14 years, according to Mr. Sumner.
Still another important reason for effectively following up on service complaints is the opportunity it provides for obtaining valuable feedback from customers. Customer feedback is the shop owner's easiest and most cost-effective method of research. The ability to determine and therefore eliminate potential problems in this manner will improve shop operations, he said.
Making it easy for customers to contact the owner or manager to complain also may prevent them from bad-mouthing your shop before you have a chance to make things right, he advised dealers. “Customers discuss their dissatisfaction. They might as well be discussing it with you.”
On the other hand, he said, those customers who are happy about the way you handled the situation will tell others about your company just the way unhappy customers do.
Investing the time, effort and money in customers not only will pay dividends, but also sends a positive message to them and company employees alike, the two Sonsio officials pointed out.
Recovered customers receive a message that their business is important to your company. Employees see that the boss is dedicated to doing the right thing when service glitches occur.
The secrets of a successful customer recovery program are relatively simple, according to Messrs. Rohrer and Sumner. They include:
1) Viewing customer feedback as a second chance at cementing customer relationships;
2) Not worrying about who's to blame—the shop or the car owner;
3) Focusing on saving the customer by asking what you can do to correct the situation and then doing it;
4) Determining the cause of the problem rather than merely dealing with a symptom;
5) Solving the problem within the customer's time frame rather than your own;
6) Getting back to the customer afterwards to make sure that promises were kept and resolution was achieved;
7) Making certain the customer is satisfied and asking the tough question: “Will you continue to buy from us?”;
8) Keeping track of complaints by cause in order to assure that repeat incidents decrease, then doing follow-up surveys from time to time to verify your recovery results;
9) Establishing a customer-service fund and rewarding employees when complaints decrease. (Sonsio suggests writing off such costs as advertising expense.)
Adopting a simple method of scorekeeping will prove that customer recovery works, Mr. Sumner said. When talking with a customer, it's best for the caller to accept personal responsibility and sincerely apologize. “Never discuss the cause—just the solution,” he advised dealers. “If you leave the conversation, you lose.”