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Service Retailers Missing Best Chance at Increasing Customer Pay Revenue, According to New Research

DMEautomotive consumer survey reveals that key service opportunities are not being seized - while young, hard-researching, online-buying consumers are rewriting the purchase process

 

Key Findings:

  • Only 5% of consumers who needed tires – 9% a battery – and 21% a brake service –were first made aware they needed these services performed because of a service provider recommendation.
  • Wired, under-35-year-old consumers research at dramatically higher rates: 2 in 3 research these three service purchases, vs. 1 in 3 of those over 35, on average.
  • Younger consumers are driving an e-commerce surge: 38% now purchase batteries online, and 17% purchase tires online - 4 and 8 times the rate, respectively, of those over 35.

Daytona Beach, FL – October 1, 2012DMEautomotive (DMEa), the leader in science-based, results-driven automotive marketing, today released key findings from a national survey conducted among 2,000+ U.S. vehicle owners by its Strategy & Analytics Division.[1] The new data reveals a changing consumer purchasing process for the auto service industry’s high-volume, high-profit “Big Three”: brakes, batteries and tires - and indicates that new sales and marketing strategies, especially for younger car owners, are needed by service retailers.

With battery, brake and tire replacement services representing tens of billions in customer pay dollars annually, the findings serve as an industry wake-up call. On average, only one car owner in twelve first learned that they needed new brakes, tires or a battery from a dealer or mechanic, indicating that an overly passive sales approach is leading to lost revenue opportunities. And, while the survey reveals that consumers, on average, do a large amount of research on these services, it’s the under-35 customer that’s radically remaking the path-to-purchase: not only are they far more likely to research providers, using more digital media sources, and to start researching further in advance – they’re also exponentially more likely to both buy, and consider buying, their tires and batteries online.

“This new research helps all service businesses understand today’s brakes/battery/tires purchasing funnel, so they can put in place the right, cross-channel strategies to grow market share,” said Doug Van Sach, Vice President of Strategy & Analytics at DMEautomotive. “And the new data suggests several basic, best practices that retailers really should embrace:

 

  1. To combat widespread sales passivity, complimentary, comprehensive multipoint inspections need to happen with every service visit.
  2. Retailers need to create a high-visibility, engaging online shopping platform for batteries and tires, with clear pricing, a range of price-points and detailed product features.
  3. The ‘holy grail’ is to implement marketing programs that can anticipate when a customer is ready to make a brakes, battery, or tire purchase and deliver timely, relevant campaigns that interrupt their typical research windows – to put that store top of mind when it most matters.”

 

While both the aftermarket and dealerships alike are missing out on crucial revenue opportunities, Van Sach noted that other, recent DMEa research[2] reveals that aftermarket players are winning the brakes-battery-tires war, with only 64% of dealer customers reporting they would consider using dealers for brake services – 46% for battery replacements – and 36% for tires.[3] Only 44% are likely to choose dealerships for these services (in aggregate) within the first two years of in-warranty ownership. And, as vehicles hit 3-6 years, dealers lose roughly half of this business. Furthermore, DMEa research shows that for dealers, cracking the under-35 shopper’s service selection “code” is mission critical, as roughly half of aftermarket chain loyalists are now under-35, while half of dealer loyalists are an aging 50+.

 

Key Findings:

 

Too Little Monitoring/Selling: Customers aren’t actively monitoring their brakes, battery and tire health…and neither are retailers. Seventy percent reported they realized they needed to replace their battery because it was already dying/dead - 44% realized they needed new tires because they personally noticed they were worn out - and 69% became enlightened that they needed brakes because they were already squeaking, grinding, or having other issues. Dealers and mechanics are clearly not aggressively identifying or recommending these service needs:

 

% Realizing Service Needed Because of Dealer/Mechanic Recommendation

Tires

5%

Battery

9%

Brakes

21%

 

High Research Levels: For relatively simple auto services, a surprisingly high level of provider-selection Internet research is going on - another window into the intensely disloyal service market. Thirty-nine percent researched where to have their most recent battery replaced, with 77% performing that research within a week of replacement. Forty-one percent researched where to have brakes replaced, with 63% starting that research within a week of service. For tires, research levels are even higher, and people are also taking more time to find the right place to buy: 58% researched their last tire purchase, and 47% began researching stores a month or longer before they pulled the trigger.

 

Sky-High Research Rates for Younger Shoppers: The survey found that the under-35, dealer-resistant consumer’s brake/battery/tire purchase process is a far cry from their “grandfather’s,” with this age group researching these services at rates over two times higher than those over 35:

 

% Consumers Researching Providers

 

Under 35

Over 35

Brake

66%

26%

Battery

62%

25%

Tires

69%

51%

 

Additionally, younger car owners research significantly further in advance. For instance, for tire purchases, they’re 62% more likely to start their tire research 2-5 months out, compared with those over 35.

 

Those under 35 are also more likely to consult a variety of external sources – especially digital media. For example, the survey closely examined the tire purchasing process and found that younger consumers consulted every commonly used resource when researching tires (whether TV or print ads - or asking a mechanic or friend) at higher rates than those over 35. They were also nearly three times more likely (31%) to consult store websites than those under 35 (13%), with store sites representing the #1 resource this younger shopper uses. Websites also have a more powerful impact on the under-35: over 50% reported store/auto sites impacted their tire purchase, vs. 25-30% of those aged 35+.

 

Younger Owners Vastly More Likely to Buy Online: The under-35 customer is also radically more likely to buy, and consider buying, their tires and batteries online.

 

 

Under 35

Over 35

Bought battery online

38%

10%

Bought tires online

17%

2%

Def./prob. buy battery online in future

50%

28%

Def./prob. buy tires online in future

46%

10%

 

And those that have made online purchases seem very satisfied: across all age groups, more than 90% that have purchased batteries/tires online would do so again.

 

About DMEautomotive

DMEautomotive (DMEa) is the industry leader in science-based, results-driven automotive marketing, and provides turnkey marketing to the largest and most innovative automotive organizations, from automobile dealers to many of the largest aftermarket companies in the U.S. DMEa's uniquely panoramic view of the complete automotive sales and service market, combined with its cutting-edge, science-based marketing programs, increases customer yield, conversion and retention.

 

DMEa does not take marketing performance on faith, and each product and service is measured by a simple, precise scientific approach: Is it true? Prove it. Will it work? Test it. Does it generate results? Show it! Supported by DMEa’s proprietary, cloud-based Red Rocket Technology Platform, the DMEa product suite includes science-based, data-driven, multi-channel customer acquisition and retention marketing programs; best-in-class campaign reporting; data management and analytics; auto-focused Customer Interaction Center solutions, and complete on-site mail and email fulfillment services. Headquartered in Daytona Beach, Florida, DMEa also has major operations in Jacksonville, Fla.

 

Media Inquiries
Melanie Webber, mWEBB Communications, +1-424-603-4340, melanie@mwebbcom.com
Angela Jacobson, mWEBB Communications, +1-714-454-8776, angela@mwebbcom.com



[1]    Conducted by DMEa's Strategy & Analytics Division: 2,000+ U.S. vehicle owners surveyed, Spring 2012

[2]     DMEa White Paper: "The Changing Service Loyalty Landscape," Feb. 2012

[3] Customers who visited a dealership for service within the last year

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