Dealer Satisfaction

Pradeep Saxena, Sr Vice President, TNS Automotive

Achieving the highest level of customer satisfaction is the endeavor of managers in all auto companies. However the term customer is used in a narrow sense to mean the end customer of a car, whereas the first customer of an auto company is the channel partner. Is there a relationship between the channel partners' satisfaction and the end customers' satisfaction? What drives this satisfaction? Is money the only driver of satisfaction for the channel partners?

Ranking Chart - 2008 TRIM Index Score 2008 DSS : Passenger Car Manufacturers

 
As per Maslow's hierarchy of needs, 'money' fulfills lower order needs. Needs such as Social Respect are higher in the hierarchy than the needs fulfilled by money. Does this apply to the trade partners from a business perspective? The answer is a resounding 'yes'.

In the 2008 Syndicated Dealer Satisfaction Study conducted by TNS, it is evident that the car dealers do consider their Principal's reputation and it is a key behind choosing the particular manufacturer. Fifty six per cent the dealer owners surveyed stated that the main reason behind choosing the manufacturer was that either it was a prestigious brand or it was the market leader. Car dealers have an interesting mix of traditional businessmen and the first time entrants. Sixty per cent of them either inherited the auto business or have diversified into it from another business, whereas for forty percent it is the first business started by themselves.

Ranking Chart - 2008 TRIM Profitability Index Score 2008 DSS : Passenger Car Manufacturers

 
According to the study, "Toyota attained the top slot with their dealers being the most satisfied in the industry. After 2006, when, Mahindra and Mahindra reached the top, Toyota has reclaimed the pole position it held in 2004.

In 2008, the overall dealer satisfaction recorded a decline of 7 points from 2006 level It stands at 74 in 2008. It reflects growing expectations of dealers and a declining performance of the industry in meeting these in a tough economic environment and a cyclic downturn the industry is going through.

In line with the industry, all major manufacturers recorded a decline in their scores over 2006. However, Toyota and Maruti Suzuki dramatically improved their rankings over 2006. Toyota is also the only company to improve its score.

The study also measured the satisfaction of channel partners with the profitability of business. Here also, Toyota and Maruti Suzuki stand out as the only companies with improved performance over 2006.

However profitability is not the only parameter that drives commitment of channel partners. 'Fairness in dealings' is one of the biggest drivers. It ranges from fairness in network expansion to fairness in model allocation. Another big driver is the product portfolio in terms of latest and internationally available products. Dealers also expect a more participative style of management. They expect the principals to be open to their suggestions and set targets based on the understanding of local market conditions.

 
Dealers have rated the manufacturers' performance rather poorly on a basic process such as intimation to the dealers in case of delays in delivery of cars. Another such area is the back order for spare parts. They have also rated the performance poor on advertisements in the local language and in the electronic media.

Dealers expect the manufacturers to provide them guidance / support in improving their business performance. An improved performance in this area can contribute to a relatively high improvement in dealer commitment. Other such areas are effectiveness of sales promotions and service promotions.

Does Dealer Satisfaction drive Customer Satisfaction?

It is almost intuitive to expect that a satisfied dealer will drive satisfaction among its customers. However another intuitive thought is that a satisfied dealer may also be a complacent dealer and not care much about his customers. Yet another view is that satisfied customers mean profitable dealership operation and hence a satisfied dealer. The counter point of view is that satisfying a customer means high costs, which will leave a dealer dissatisfied.

On analyzing the customer satisfaction data and dealer satisfaction data for the same period it is found that statistically there is a correlation of 0.49 between the two data sets. This essentially means that dealer satisfaction and customer satisfaction move together in half the cases. This in itself is not too bad and is a proof that a relationship does exist.

It is due to the fact that customer satisfaction is dependent on quality implementation of various processes at the dealerships. However some of these processes are directly linked with the processes at the principals' end. If these processes are well implemented the dealer is satisfied. Also the dealership is able to implement well their end of the process and hence the customer is satisfied.

 
The process-by-process data reveals that there are clearly such processes on which both the dealers and the customers rate the performance of the manufacturers in tandem. If the dealers rate them high, so do the customers and vice versa.

For example dealers rate the quality of the cars manufactured by the principals very high and customers also feel the same. Dealers feel that the condition of cars at the time of delivery is very good, customers also feel that cars are delivered without any problems. Clearly, if the cars were not delivered in a good condition to the dealers they will also not be able to deliver problem-free cars to customers. On the communication front, dealers agree that the quality of brochures is very good, simultaneously customers contend that availability of product information is very good.

There are some areas where dealers are tough on the manufacturers in terms of their evaluations whereas customers are relatively lenient. By demanding a high performance in these areas the dealers are probably able to drive processes in a manner that drives customers satisfaction. One of these areas is the availability of parts where dealers rate the principals extremely poor whereas customers rate them average. Dealers also feel that the manufacturers are extremely poor in terms of communicating delays in delivery, but the customers rate dealers average on delivering on time. Dealers feel that the sales promotion schemes run by the manufacturers are not at all effective, at the same time, customers rate them average on providing a good deal.

However, there are areas where dealers probably don't understand customer expectations too well and accordingly their expectations from manufacturers are low. This results in demanding a lower performance from the manufacturers, which subsequently results in low satisfaction of end customers. This largely pertains to training where dealers rate the manufacturers high on training support, the relevance of training programs and their frequency. This is true of sales as well as after sales service training. The only contentious issue is the cost with which they are unhappy. However they must understand that the training is expected to provide critical inputs, which can improve customer satisfaction with sales and service processes at their dealerships.

On the sales front, they need to demand training on the competition products and on how to demonstrate the in-house products. These are two major areas of dissatisfaction of customers. On service, they need to demand diagnostic skill training because the biggest customer dissatisfaction emanates from the inability to fix the problem first time and the quality of repair and service. Apart from that they should demand soft skills training in the area of service for the same reason.

There is one aspect trey can clearly learn from the principals i.e. personal accessibility. They have rated the accessibility of top and senior management high at their principal's organizations but their customers have rated the accessibility of dealers and their senior staff very low. A correction in this itself car provide them enough inputs from customers to take the customer satisfaction to a new level.

Note: The 2008 TNS Automotive Syndicated Dealer Satisfaction Study was conducted across India covering a broad spectrum of passenger car dealers of all leading manufacturers. The Dealer Principals were requested to rate the performance of their respective manufacturers on a variety of aspects, related to dealership operations. A total of 286 dealers were covered.