2013 Automotive Technician Survey:

Transcription

1 2013 Automotive Technician Survey: Key Findings February 2014 Carlisle & Company, Inc. 30 Monument Square

2 * 2012* 2013* DIFM Sales (Billions) 2013 Automotive Technician Survey: Key Findings Carlisle recently completed its annual industry syndicated Automotive Technician Survey. This survey covered dozens of areas affecting the technician, ranging from career goals to training needs to the use of technology. However, two issues stood out as having a profound impact on technician satisfaction and retention: The interaction between the Technician and the Service Advisor The growth of dealer based Express Service/Quicklube This white paper will discuss our findings in these areas and share some of the key implications. Introduction Figure 1 Automotive Aftermarket Sales In Billions Of Dollars $300.0 Aftermarket Sales $200.0 Dealership Sales $100.0 $0.0 Source: AAIA Factbook Year In times past, if you pulled into a dealership and asked them to replace your tires, they d send you to the tire chain store down the street. Ask for an oil change, and you d get sent to one of the ubiquitous oil change outlets. Dealers didn t want to conduct repairs that required heavy inventory investments (e.g., tires) or low margins (e.g., oil changes). As a consequence of this and other factors, OEM dealer share of the repair business shrank, while the total market grew modestly (see Figure 1). Car dealers also organized themselves very differently from the competition. They had middle-men, called service advisors, who interacted with customers to diagnose the problem and document the customers requests. The customers never met the technician who actually performed the service. This was all done in the name of efficiency. 30 Monument Square

3 Service Criteria While the service advisor /technician relationship has not changed in many years, the OEMs have recently seen the light with respect to sending customers away and are working to improve this dynamic within their dealerships. However, the issues associated with this change are staggering. Consider this: the U.S. automotive industry employs hundreds of thousands of technicians, ranging from entry-level lube/oil/filter (LOF) technicians to highly qualified (and certified) master technicians. Automotive dealerships alone (excluding chains and independent garages) employ over 100,000 technicians and many dealerships are struggling to hire even more. Automotive service technicians represent the critical link between the service customer and their product satisfaction and repurchase loyalty. Recruiting, training, and retaining technicians is vitally important if dealerships want to increase their service/repair market share. Yet to do this effectively, we believe that OEMs and their dealers must work together on two critical areas improving the interaction between technicians and service advisors, and developing more formal career progression tracks for technicians. Improving Technicians and Service Advisor Interaction Carlisle focuses considerable energy trying to understand how consumers decide where to take their vehicles for service/repair, and what it takes to get them to switch channels. As part of our research, we conduct an annual Consumer Sentiment Survey that addresses this issue. Figure 2 What Customers Value vs. Dealer Strengths My vehicle is available promptly at the time they estimated Informs of total cost upfront My vehicle is fixed right the first time Charges reasonable hourly labor rate Has a great reputation with other customers Set appointment quickly at convenient time People are knowledgeable and courteous Explain what was done to vehicle Technicians are certified and highly qualified Open for business on weekends Total charge for parts is reasonable Provides generous parts and warranties Opens early/stays open late on weekdays Has necessary tools and diagnostic equipment Provide inspection and assess future maintenance timing Able to speak with technician Use genuine parts Comfortable waiting room Do not have to schedule appointment Offers online/paper discounts/coupons or award programs Provide a ride to work Provide loaner vehicle Has positive reviews on the internet I can make my appointment online if I want to Quality cost estimates are available online Offers loyalty programs 3 28% 31% 9% 2 22% 28% 22% 9% 17% 33% 14% 23% 6% 15% 19% 2 6% 18% 9% 15% 6% 16% 9% 1 7% 5% 3% 7% 5% 18% 11% 7% 16% 11% 5% 3% 2 13% 30 Monument Square % 5% 45% 32% 28% 22% 28% 35% 26% 12% 32% 33% 29% Dealer Strength IRF Strength Proportion Of Consumers

4 One of the key findings from this survey is depicted in Figure 2 (Page 4). It shows what customers value when selecting where to take their vehicle, and the relative strength of the dealer and non-dealer channel. Besides the fact that the non-dealer channel is stronger in all the important criteria (a topic for another white paper), note the first and third criteria My vehicle is available promptly at the time they estimate, and My vehicle is fixed right the first time. Both of these issues require seamless integration between the service advisor who communicates with the customer and sets expectations, and the technician the person who takes the service advisor s input and repairs the vehicle. If these individuals are not on the same page, these two criteria will not be met. According to technicians, this lack of being on the same page happens far too frequently. We asked technicians, What improvements would have the biggest impact on your ability to deliver efficient, quality repairs and respondents could select two options (Figure 3) Far and away, Technician/Service Advisor Communication was one of the top two choices. (The other was Parts Availability, an important issue, but not for this paper.) Figure 3 Biggest Impact on Improving Quality Lack of communication has a profound impact. According to technicians, 43% of repair orders require additional clarification from the service advisor, costing each technician about 30 minutes per day of follow-up time. Think about it: For a typical dealership with 12 technicians, each losing 30 minutes a day, charging out at $60/hour that s ~$90,000 of lost service revenue per dealership per year! Further, it s not just a monetary issue. Figure 4 (Page 5) shows that technicians estimate that approximately one-third of customers are provided with unrealistic waiting times and as shown in Figure 2, that s the #1 customer value when selecting a repair location. Conversely, Figure 5 (Page 5) shows that service advisors (from our 2013 Service Advisor Survey) believe that they provide realistic promise times 83% of the time. Clearly, technicians and service advisors do not see eye-to-eye on this critical process. 30 Monument Square

5 OEM 13 OEM 7 OEM 4 OEM 9 OEM 14 OEM 15 OEM 10 OEM 5 OEM 1 OEM 2 OEM 8 OEM 11 OEM 3 OEM 6 OEM 12 OEM 3 OEM 2 OEM 6 OEM 4 OEM 5 OEM 1 Figure 4 Time Customers Given Unrealistic Waiting Time 4 Figure FFigure 5 Service 3 Biggest Advisor - Provides Realistic Wait Times (1-Never; 10-Always) % % 7 While technicians point out issues with service advisors, the reverse is not true., Figures 6 and 7 below show that 1) service advisors rate their satisfaction with the technicians higher than any other aspect of their job, and 2) service advisors rate their ability to translate/ communicate customer requirements to the technicians as one of the lowest required skills for success. From the service advisor s perspective, their feedback is What problem? Figure 6 Service Advisor Satisfaction FFigure 3 Biggest 6 45% 3 15% FFigure 3 Biggest Figure 7 Service Advisor - Skills For Success Compensation proves to be another issue in the technician/service advisor working relationship. As with most jobs, compensation has a tremendous impact on employee satisfaction and retention. Besides being paid to repair vehicles, many techs are also partly compensated with commission, based on selling the customer extra parts and service. On average, 85% of technicians report having their compensation tied to upselling customers extra work, either directly or indirectly. 30 Monument Square

6 Percent of Total Compensation Pay Satisfaction - Top Box Avg Annual Pay Figure 8 Pay (Satisfaction, Avg) Based on Upsell 2 15% Pay Satisfaction Avg Comp 60,000 45, ,000 5% 15,000 Yes-Directly Yes-Indirectly No Is Your Compensation Tied To Your Ability To Upsell? 0 Is this a good or bad incentive for the tech? (Whether or not it s good or bad for the customer is another issue for another day.) Well, it depends on your perspective. The more the technicians compensation is tied to upselling, the more money they make but the lower their satisfaction with their pay(figure 8)! How can that be?? One of the primary reasons for this is control, or in the case of technicians, lack of control. We all like to have control over our pay if I do my job well, I should be paid well. However, in the case of the technician, much of their pay is in the hands of the person driving the upsells the service advisor. Figure 9 Average Service Advisor Compensation Breakdown 10 13% 8% 9% 1 7% 8% 75% 5 28% 34% 33% 33% 38% 38% 25% 57% 56% 56% 55% 53% 53% OEM 1 OEM 2 OEM 3 OEM 4 OEM 5 OEM 6 Commision Salary CSI Bonus Other From our Service Advisor Survey we know that this position whose base pay is usually in line with that of a K-Mart cashier, is often untrained technically, and averages a 4-5 turnover is typically compensated heavily for sales. In fact, sales commission averages 55% of a service advisor s total compensation, and this is quite consistent across all brands (Figure 9). Compensate these folks to sell flushes, and they re going to sell flushes. From the perspective of a skilled technician, it cannot be easy to have your 30 Monument Square

7 OEM 9 OEM 6 OEM 14 OEM 10 OEM 3 OEM 7 OEM 15 OEM 12 OEM 5 OEM 4 OEM 13 OEM 2 OEM 11 OEM 8 OEM 1 take-home pay in the hands of someone who is driven to sell, sell, sell regardless of what it is they sell. Technicians Career Progression with Respect to Express Service/Quicklube Over the last decade or so, OEMs woke up to a hard fact: they had directed customers to other retail outlets for LOF or tires, but those customers discovered that these tire/lof outlets also did tune-ups, brake jobs, and other repairs. Feeling comfortable with these service locations, most lost customers never returned. To win customers back, OEMs began designing programs to help their dealers start performing these services first with tires, and then with LOF offerings. Not all dealerships have jumped on-board, but a growing number now provide 30-minute oil changes, similar to the quicklube retailers down the block. The challenge to the dealer is how to staff this service while still staying cost competitive. Highly trained/certified technicians are simply too expensive, so most dealers view the quicklube technician as an entry-level job. This would be fine, provided the dealerships developed plans to help these technicians increase their skills and eventually move on to perform higher-paying repairs. Figure 10 Formal LOF Progression Plan? 10 75% 5 25% Yes Unfortunately, not a single OEM that participated in our Technician Survey had more than a small percentage of their dealerships focused on LOF technician career planning. In fact, 7 of the technicians at the best performing OEM still said their dealership did not have a realistic LOF progression plan (Figure 10). Is it important to have an LOF progression plan? It is if you want to retain your technicians, rather than seeing the 2-3 turnover rate so prevalent across the industry. Let s peel the onion on this. No 30 Monument Square

8 Percent Satisfied % 9/10 on 10 Point "Chose Right Job" Scale Finding #1: The more time a technician spends in LOF, the less satisfied they are with the job they selected Figure 11 Chose Right Job vs. % Time on LOF Percent Time Spent on LOF We asked technicians how much time they spend in LOF, versus diagnostic work, routine maintenance, heavy repair, and other. We also asked them whether they made the right choice in selecting their current job, with answers on a ten-point scale ranging from 1 - No, absolutely not to 10 - Yes, definitely. As a whole, the industry averaged about 35% selecting either a 9 or 10. Of more interest, we segmented the scores by amount of time spent in LOF. The results were not surprising the more time a tech spends on LOF, the more they question whether they took the right job (Figure 11). Finding #2: The more time a technician spends in LOF, the less satisfied they are with their career progression Figure 12 Satisfaction With Career Progression %+ Percent Time Spent on LOF 30 Monument Square

9 # Responses We asked technicians how satisfied they were with their career progression. Possible answers included: Satisfied moving along as expected Somewhat satisfied moving a little slowly, but acceptable Somewhat dissatisfied moving more slowly than I d like Very dissatisfied I feel stuck in my current position This one is also quite clear the more time a technician stated they spend in LOF, the lower their satisfaction with their career progression (Figure 12). Finding #3: Technicians that are not happy with their career progression are leaving the industry Figure Figure 13 5 Year Plans for Techs Least Satisfied With Career Progression I feel stuck in my current position Moving more slowly than I'd like Across the industry, about 4 of the respondents picked the last two choices with regards to career progression somewhat dissatisfied or very dissatisfied. Focusing on just this unhappy 4, we see that the vast majority of these technicians especially those that are very dissatisfied plan to leave the industry, rather than just switch dealerships (Figure 13). Clearly, when technicians feel stuck in their career, they see it as an industry, not a dealership, problem. Note how few of these technicians selected same job/different dealer as a career objective. So, we have a problem here. Unless dealers aggressively go after the LOF and tire businesses that they gave away in the past, they will continue to see service share declines. But, the more of this low-pay work they give their techs, the more likely it is their techs will be unhappy and leave the industry. Bottom line OEMs and their dealers must address this job progression issue with the technicians, or they won t have anybody to do the work: the LOFs and brake jobs as well as the current mix of warranty work, scheduled maintenance, and heavy repair. A 30 Monument Square

10 difficult problem? Definitely. A Catch-22? No but hoping the problem will miraculously fix itself is not a strategy for success. Conclusions Recruiting and retaining qualified technicians is critical to the automotive industry. This task becomes more difficult as the pool of potential employees interested in vehicle repair shrinks. There are a number of issues that must be addressed to enable this process training, field support, improved tools, rewards programs, etc. However, the two critical issues are clarifying the roles of technician and service advisor and designing a realistic career path for technicians. Solving these two issues seems worthy of joint focus by OEMs working closely with their dealer councils. If the industry wants to reverse the decline in service customers, they must perform better on the issues that customers care most about. That means the service advisor and technician must be on the same page when it comes to recommending what services should be performed on a customer s vehicle. The technician must be confident that the recommended repairs are necessary and in the customer s best interest and not just an attempt by the service advisor to increase their commission. In addition, they must work together to make sure the customer receives an accurate estimate of both cost and completion time. Ultimately, OEMs and their dealerships must work together to make sure their technician and service advisor roles and compensation incentives are aligned with their service customers needs. Today, the industry is not there. Further, many dealerships have been quickly growing their ability to support LOF services, enabled by low-cost, entry-level technicians. Yet most dealerships have not figured out how to actively support these technicians to become more experienced, higher-paid employees. Unfortunately, this problem will not take care of itself. Careers will stall; technicians will get frustrated, and leave the industry. When the overall supply of workers interested in this critical career is shrinking, the industry cannot afford to drive anyone away. OEMs and their dealers have a big job ahead; they need to make sure that they can continue to recruit and retain qualified technicians. They also need to modify their organizations to make sure the service advisor and technician are working as a unified team to hit on the value that customers care most about trust, value, and convenience. Without these fixes, OEMs will continue to lose customers regardless of the services they are offering. 30 Monument Square

11 Who We Are Carlisle is the preferred provider of aftersales strategic guidance and tactical solutions for the world s leading motor vehicle brands. Our expertise is in consulting, benchmarking, research, service operations and non-profit consulting. Global OEMs in the automotive, agriculture, commercial truck, construction, diesel engine, industrial products, mining and power equipment sectors have been coming to Carlisle for over 20 years. Our capabilities are global with a particular focus on North America and Europe. We have built our reputation on our history of performance, our strong values and culture, and the integrity and creativity of our people. Research Working collaboratively with most of the global automakers, Carlisle & Company produces various research products that allow OEMs to better understand the people side of the service business: Annual Customer Sentiment Survey: Probes into the values, likes, dislikes, satisfaction, and loyalty of dealer and non-dealer service customers. Annual Service Manager Survey: Covers such topics as technical support, tools and equipment, service information, and technical training. The 2013 edition of the survey covered 28 brands and received responses from nearly 9000 service managers. Annual Parts Manager Survey: Covers such topics as parts availability, delivery, order processing support, parts marketing, etc. The 2013 edition of the survey covered 35 brands and received responses from over 11,000 parts managers. Annual Service Advisor Survey: Covers such topics as demographics, job history, career development, compensation, customer processes. This survey was piloted in 2013 with six brands and received over 4000 responses. Annual Service Technician Survey: Covers such topics as recruitment, retention, satisfaction, and training needs. The 2013 edition of the survey covered 15 brands and received responses from approximately 9000 technicians. To learn more about our surveys, including how to join, please contact us at hhollenberg@carlisle-co.com 30 Monument Square