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Customer Treatment Trumps Price

17 Dec 2010 EasyCars

The manner in which customers are treated by the dealership is more important to overall new vehicle buyer satisfaction than the actual transaction price, according to a J D Power and Associates 2010 US

Sales Satisfaction Index (SSI) Study released on 17 November.

The study is a comprehensive analysis of the new vehicle purchase experience. Overall customer
satisfaction is measured across four factors, all of which directly affect the dealer’s role in the sales
They are:

  • Working out the deal (33%)
  • Salesperson (25%)
  • Delivery process (21%)
  • Dealership facility (20%)

The study finds that more than half of new vehicle buyers (52%) cite dealer treatment as a reason to
purchase their new vehicle from a specific dealer.

In comparison, 38% of buyers cite vehicle price or the deal offered as the reason for selecting their
dealer. Furthermore, once the dealer is selected, the ease of coming to an agreement on the final vehicle
price has the single greatest influence on buyer satisfaction, surpassing the importance of fairness of the
actual price paid. With the exception of selecting a vehicle, negotiating the deal is the aspect of the new
vehicle buying process that takes the longest time – almost an hour (53 minutes, on average).

According to Jon Osborn, director of automotive research at J D Power and Associates, “the process of
working out the deal is the primary indicator of whether new vehicle buyers have a satisfactory
experience. While there are some buyers who enjoy the negotiation process, many find it to be the most
unpleasant part of purchasing a new vehicle. It is particular important for dealers to make this process as
efficient and collaborative as possible, given its importance to overall satisfaction.”

Showroom approach

The study also finds that 60% of new vehicle buyers visit more than one dealership during the shopping
process. While many dealers are rejected for not having a vehicle that the buyers wanted to purchase,
almost one in five buyers walk out of the showroom primarily due to poor customer treatment by the
dealership’s sales people.

While some new vehicle buyers complain about the dealership’s sales people applying too much sales
pressure – an equal proportion complain about receiving insufficient attention from sales people. Other
frequently mentioned complaints include dealership sales people being discourteous and rude or not
being straight forward with the buyer.

“With new vehicle retail sales remaining soft and manufacturers spending considerable amounts on
incentives and bonuses to get customers into showrooms, the value of prospects coming in to a
dealership is extremely high,” said Osborn.

“Dealers cannot afford to drive away customers through poor treatment. In addition, many of these
rejecters go on to purchase a different brand of vehicle entirely, meaning that both the individual dealer
and the manufacturer lose out!”

The role of the internet

The internet continues to play an increasingly important role in the new vehicle buying process, with eight
out of every ten new vehicle buyers using the internet during the shopping phase.

One in four buyers in 2010 submitted an online request for a quote to a dealer, and interestingly, were,
on average, more satisfied with the negotiation process and the price paid. However, perhaps expecting
a quicker sales process, these buyers are more likely to express dissatisfaction with the length of the
sales process than are buyers who did not submit an online request.

“Dealers need to streamline the new vehicle buying process for customers who do a lot of research
online,” said Osborn. “These buyers tend to be affluent, well-informed and time sensitive. They
generally know the exact vehicle they want and how much they expect to pay for it. Despite often having
little familiarity with the dealership they are buying from, they want to get in and out as quickly as
possible. Dealers need to balance respect for the customer’s time while still providing what the customer

Whilst this study is based on new vehicle buyers who purchased or leased their new vehicle in the US, we
wouldn’t be at all surprised if a study was to be conducted in Australia that the responses would be very
similar. After all, many aspects of our automotive industry are very similar to the US.

Dealer service satisfaction grows

Another recent J D Power and Associates study found that customer overall satisfaction with dealer
service departments keeps on increasing – marking the 10th consecutive year of industry wide

In particular, customer satisfaction has increased in the following areas: ease of driving in and out of the
dealer facilities; convenience of parking; thoroughness of the work performed; the total time required to
complete the service on the vehicle; flexibility of accommodating customer schedules; and thoroughness
of explanations.

Several other time-related metrics have also improved – including the ability of customers to get an
appointment on the same day as their initial enquiry call and the service being completed in full the day
that the vehicle was brought in for service.