Turn One-Time Visitors into

Lifetime Customers

Jim Roche
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VP, Marketing & Managed Services |Xtime | Redwood City, CA
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#NADASHOW
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Two Things to
Agree On

1 Objective is
Profitable Growth

2 Consumers are
in Control
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Margins Continue to Decline

GROSS MARGIN AS % OF SELLING PRICE New Used
16%

14%
12.1%
12%

10%

8%

6%

4%
2.9%

2%

0%
2011 2012 2013 2014 2015 2016

Source: NADA
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Primary Opportunity is Service

Less than 1 in 3 Service Visits are at Dealerships

Body Shop, 4% Other, 5%

Specialist, 5%

Retail, 6% Dealerships
30%
Tire Store, 11%

Quick Lube, General

14% Repair/Service
Station, 25%

Source: Cox Automotive Maintenance & Repair Study, 2016

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Focus Needs to be on Growth in Service

Only 3 Areas of Control

Visits $/Visit Cost

Utilization Selling Efficiency
Retention More time Good processes
Experience Appointments Good People
Good Systems
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Growth Strategy

YOUR THE COMPETITION

DEALERSHIP

Customer Retention + Customer Acquisition

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Dealers Know
Retention is Key

64.4%

Dealerships who said

customer retention is their
primary concern
Source: 2017 Xtime Market Research Study
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Automotive Brand
Loyalty is Changing
Average Automotive
Industry Loyalty

51.5%
“OEMs with the greatest
improvements in loyalty
experienced market share Top Performers
gains during the quarter.”1
Ford 64.0%
Mercedes 57.8%
Toyota 57.8%

Source: IHS/RL Polk Loyalty Studies [Link]

(1) An IHS Automotive study analyzing first quarter new vehicle registrations in 2014.
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Expense Benefits of Loyalty

Customer Acquisition Cost $633 Per New Vehicle Sold1
“It costs 10 times as much to obtain a new customer as it does to retain an
existing customer.”

Source: (1) NADA Data 2016 (2) John Wiley & Sons
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Revenue Benefits
of Loyalty
GM states that “Every 1%
increase in sales retention
translates to a $700
million increase in
revenue annually.”

This is an average of
$150,000 per dealer.

Source: GM’s Alicia Boler-Davis at NADA 2014

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Defining Loyalty

Satisfaction
APOSTLES

MERCENARY LOYALIST Reputation

$ Time

Wallet
Loyalty

DEFECTOR HOSTAGE

TERRORISTS
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Where Should You Focus?

Loyalists
More sales per customer
Higher margins
More referrals

Don’t waste your time and

capital on Mercenaries
or Terrorists!
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What’s Changed?
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The Customers
Are Changing
WHO IS BUYING? MILLENNIALS NOW ACCOUNT
FOR A LARGE SHARE OF NEW VEHICLE SALES

20%
24%
29% 40%
2020
25%
Gen Z
42% Millennials
36% Gen X
Boomers
14% 9% Silents

2011 2016
Source: Cox Automotive 2017 Mid Year Review
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Higher Customer Expectations Top the

List of Trends
Both service managers and upper management mention higher customer
expectations as the biggest factor impacting service operations
“Customers want more than just having their vehicle fixed correctly.
They want:
A good interpersonal experience
Easy scheduling and prompt turnaround
Fair and transparent pricing
Good communications
Amenities:
• Coffee Bar
• Wi-Fi
• Manicures

Source: 2016 Xtime Market Research Study

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Differentiators
Are Changing
Product and manufacturing
innovations have created parity

Differentiated experience is
growing in importance

Gen Y consumers believe

customer experience is three
times more important than
vehicle design

Source: Deloitte – Acceleration of the Connected Experience 2014

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The Experience is Emerging as the

Key Differentiator
Improving a customer experience from merely average to something
that wows the consumer can lead to a 30 to 50 % increase in measures
such as likelihood to renew or buy another product.
Source: McKinsey, What it takes to deliver breakthrough customer experiences, November 2015

In 2016, 89% of companies expected to compete mostly on the basis of

customer experience, versus 36% in 2010.
Source: Gartner 2014

By 2020, customer experience will overtake price and product as the

key brand differentiator.
Source: Walker 2014

Source: Deloitte – Acceleration of the Connected Experience 2014

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How to Create Memorable Experiences

The Power of Moments

Day-to-day
experiences blend
together

Peak
experiences
are memorable

Source: The Power of Moments by Chip Heath and Dan Heath

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The Power of Moments

Source: The Power of Moments by Chip Heath and Dan Heath

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The Power of Moments

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The Power of Moments

At the end of the day,

people won’t
remember what you
said or did, they will
remember how you
made them feel.

-Maya Angelou
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What Companies are Reshaping

the Customer Experience?
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Amazon
1 Email Promo 2 Shop Online 3 Place Order 4 Email Confirm

$
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Uber
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Domino’s Pizza
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If the Service Experience was like Amazon

$
1 Email Promo 2 Shop Online 33 Place Order 34 Email Confirm

35 Check-In 36 Status Updates 37 One-Click Confirm 8 Bill Pay

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Amazon Position
• Currently sells
aftermarket parts
online
• Launched Amazon
Vehicles in 2016
• Car-buying research site

• Sells SEAT Vehicles

in France
• Sells Fiat cars in Italy
• Working with OEMs
to offer Alexa for in-
car services
50% of Americans today live
within 1 hour of an Amazon
distribution center
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Let’s Compare Experiences

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Today’s Typical Dealer Experience

Technology United Postal Service Email Request Form Mainframe

Cost $2,000+/month N/A $3,000+/month

Customer Value Good N/A Wait 5+ minutes

Customer Convenience N/A 57% unanswered Wait 5 min, 25% unanswered

Customer Trust Low Low Low

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What Do Customers Want?

Value Convenience Trust Quality

What do I need? 24x7 access online, Accurate pricing Fixed the first time
mobile, telephone,
What does it cost? & vehicle to service Appointment Genuine parts &
recommendations, availability equipment
When can I get it?
price and availability
Delivery estimates Certified technicians

Source: Cox Automotive Maintenance & Repair Study, 2016

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Positive Service
Experience is
Important

85%
State their experience with
the service department
has influenced their
likelihood of purchasing
another vehicle

Source: Cox Automotive Maintenance & Repair Study, 2016

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Positive Service Experience is Important

Consumer Reasons for Returning
Dealership A ermarket

40
Good prior experience 47

17
Trust in shop and personnel 10

8
Parts Warranty 0.3

8
Loyalty to store 5

7
Convenient loca on 19

3
Low prices 7

1
Fair prices 3

1
Branded parts 0.3

1
Purchase mul ple items 1

1
Personal recommenda on 4

1
Quick, easy checkout 1

11
Other 2

Source: IMR, Inc.

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Dealers Understand
Experience is Important

93.1%
Believe that the
service experience is
more important than
the actual repair

Source: 2017 Xtime Market Research Study

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Are You Providing a

Superior Experience?

85.1%
of Dealers
State that their current
systems do not
provide a superior
ownership experience

Source: 2017 Xtime Market Research Study

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The Experience Begins During the Sales

Process and Continues During the
Ownership Journey

Were introduced to service

department at the time of purchase
41%
said it came into play when

53% deciding where to repair the vehicle

Source: Cox Automotive Maintenance & Repair Study, 2016

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Sales & Service Need to be Connected

– Not Separate
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Pleased to Meet You:

Importance of
Relationship-building

2.3x
Increase in Customer
Return Rate when
introduced to service
department at time
of purchase

Source: 2017 Xtime Market Research Study

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Common Myths about the

Ownership Experience
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MYTH #1
Most service customers are only available early morning

MYTH #2
Being transparent with pricing is not important

MYTH #3
Dealership service is more expensive

MYTH #4
Tablets complicate the service write-up experience
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FACT
Customers Want Appointments
Throughout the Day
32% of customers want
to come in before 9am.

The most recent data

shows that while 7-11am
are still the peak hours
for service appointments
with 62% of the total,
38% of appointments
come outside of that.

Source: Xtime, based on 5096 dealers between Dec 2016 – Nov 2017
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Walk-Ins are Good,

Appointments are Better
+$54 +7.5%

$280 72.4%
$226 64.9%

Walk-Ins Appointments Walk-Ins Appointments

$ per RO One year service retention, %

Source: Xtime, based on dealers with Go-Live date before 9/1/2016, OEM specific vehicles only, December 2016 – November 2017
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22% Web Customers Schedule

Appointments After Hours 1631k

22%

589k 603k
563k
490k 518k 509k 483k 461k 432k
365k 330k
304k

8% 8% 8%
7% 7% 7% 7%
6% 6%
5% 5%
4%

7AM 8AM 9AM 10AM 11AM 12PM 1PM 2PM 3PM 4PM 5PM 6PM After
Hours

Source: Xtime, based on 6154 dealers between Sept 2016 – Sept 2017
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Nearly Half
are Unaware of
Online Scheduling

45%
of consumers NOT
scheduling online did not
know if their providers
offered this service

…though 56%
of car owners are more
likely to service a vehicle
at a dealership that offers
online scheduling

Source: (1) Cox Automotive Maintenance & Repair Study 2016

(2) Cox Automotive Future of Digital Retail Study 2018
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FACT
Consumers Want Pricing

71%
Of customers are most concerned
with transparent cost estimates
when setting appointments

Average cost of routine maintenance at a dealership

is comparable to third-party providers

Source: (1) Xtime Market Research 2016

(2) Cox Automotive Maintenance & Repair Study 2016
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FACT
Concerns When Setting
Service Appointments
71%
68%

39% 55%
of car owners are
more likely to
service a vehicle at a
21% dealership that
provides online cost
estimates

CHOICE OF SERVICE ADVISORS TRANSPORTATION OPTIONS CHOICE OF APPOINTMENT COST ESTIMATE

TIME/DAY

Source: (1) Xtime Market Research 2016

(2) Cox Automotive Future of Digital Retail Study 2018
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FACT
FACT
Price Perception vs Market Reality
Is your customer’s perception “Dealership Service is Expensive”?
Do you know how competitive you are?
Research data shows each market is different with these factors
impacting price:
• Franchise
• Rural vs. Metro
• Types of Aftermarket Competitors
• Density of Competition
It is becoming essential for a dealership to understand their unique
market better - and then learn how to leverage “Price” to their
advantage.

Source: Data provided by KEEPS Corporation

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National and Regional Views

Source: Data provided by KEEPS Corporation

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Market View

Source: Data provided by KEEPS Corporation

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FACT
Tablets Improve the Write-up Experience
Service Tablet: Overall CSI Impact Tablet CSI
Usage
Change
Tablet usage grew significantly and continues to produce Make
Mercedes-Benz
Usage
48%
Impact
50
YOY
9%
a significant positive satisfaction impact. smart
Chrysler
42%
36%
52
98
n/a
11%
Cadillac 35% 61 6%
Dodge 34% 66 11%
Lexus 34% 44 4%
Industry Tablet Usage and CSI BMW 33% 58 5%
Ram 33% 96 14%
Jeep 32% 67 13%
80% 900 Toyota 30% 55 3%
72% MINI 30% 51 6%
70% 880 Lincoln 28% 66 1%
Infiniti 28% 43 6%
849 860 Nissan 28% 56 5%
60% Scion 28% 99 1%
Honda 28% 50 4%
840 Audi 27% 63 6%
Tablet Usage

50% 820
Buick 27% 49 2%
Hyundai 27% 81 6%
Acura 26% 64 4%

CSI
40% 782 800 Porsche 26% 57 9%
Kia 26% 90 5%

30% 28% 780 Jaguar

Land Rover
25%
25%
65
68
5%
2%
Chevrolet 24% 74 2%
760 Volkswagen 23% 84 4%
20% GMC 23% 80 0%
740 Fiat 22% 120 0%
Mitsubishi 21% 87 0%
10% 720 Ford 21% 69 3%
Volvo 19% 98 0%
Subaru 19% 62 5%
0% 700 Mazda 18% 86 2%
Industry 28% 68 5%
Yes No
Source: Analysis of survey data from J.D. Power and Associates, McGraw Hill Financial 2016
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Tablet Use Increases Customer Retention

Higher Retention for Same Advisor at Same Dealer
Regardless of Advisor Engage Utilization

72.9% 71.6% 71.3% 70.5%

Retention Increase 68.8%

Avg. Retention

6.7pp 64.8% 62.9% 61.3% 57.8% 63.9%

11.0pp
10.0pp
8.1pp 8.6pp

Retention Benefit, Tablet

6.7pp

>0%-25% 25-50% 50-75% 75-100% Grand Total

DMS Engage

Source: Xtime, based on 89 dealers using Engage and Go-Live date before 5/1/2015, 216,332 VINs and 463 Service Advisors
VIN based retention based on May-July 2015
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What Can You Do?

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Improve the
Ownership Experience
Ownership
Experience Impacts:
• Retention
• Revenue
• Growth
• CSI
• Online Reputation
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A Seamless Ownership Experience Is Ideal

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Customer Updates During Service Visit also

Create a Superior Service Experience

“definitely will” return

for service when
“definitely will” return updated via text
for service when
updated via phone

receive text message updates

Source: J.D. Power 2017 U.S. Customer Service Index (CSI) StudySM
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More Things
You Can Do
1. Welcome video from GM or DP
2. Technician sends video to explain
additional work and leaves his/her
business card on the customer’s dashboard
3. Power train warranty for life on
used vehicles
4. Free “mini-inspections” at any time
5. Vehicle pick up and delivery
6. Self service kiosk
7. Customer service app
8. Free state inspections
9. Owner rewards program
especially on used

Source: The Rickess Group

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Consumers Will
Pay More for a
Better Experience

54%
Would choose to buy
from a dealership with
their preferred
EXPERIENCE versus a
dealership with the
lowest price

Source: 2015 Autotrader's Car Buyer of the Future Study

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Ownership Experience is Key to Retention

Retention is Driven by Both Vehicle and Service Satisfaction

Vehicle
Satisfaction
Excellent
Service can be
a remedy for
poor vehicle
perception.
Repurchase Intent, %

Above Average

Retention is
Average equal for
Excellent vehicle/
Below Avg Mediocre service
and
Poor Poor vehicle/
Superior service

Service Satisfaction

Source: OEM data based on > 500,000 customer responses

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Recap
64.4% state that customer retention is their
primary concern.

93.1% of dealers feel that the service

experience is more important than repair.

85.1% of dealerships feel that their current systems do

not provide a superior ownership experience.
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Questions
Turn One-Time Visitors into
Lifetime Customers

Jim Roche Please visit the NADA Pavilion

in the Expo Hall for information
DVP, Marketing & Managed Services |Xtime | Redwood City, CA
on accessing electronic versions
[Link]@[Link]
of this presentation and the
accompanying handout
materials, and to order the
education video recording.
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