Those Maddening Surveys!

LAS VEGAS — Auto makers' customer satisfaction surveys remain a big complaint for dealers.

Alan Starling, 2003's chairman of the National automobile Dealers Assn. raised the issue in October by blasting how auto makers poll customers and how that data is used to measure dealer performance.

Complaints include unfair scoring, too many questions and using the survey results to reward and punish dealers.

Although many dealers believe the system is rift with problems, Chris Denove, partner with J.D. Power and Associates, doesn't believe it's broken, only that there are legitimate concerns.

“We would like to work together with dealers and manufacturers to improve the survey process to make it as fair and as equitable as possible,” says Denove, whose firm does a lot of the surveying for auto makers.

Some dealers, though, consider J.D. Power to be part of the problem, saying that the company has convinced OEMs of the need to survey customers so heavily when no such need really exists.

Denove answers that charge by trying to minimize the role his company plays in developing the surveys.

“J.D. Power only handles 20% customer satisfaction surveys that are done,” he says.

“The OEMs design the studies, we are merely the research supplier. So if you want to affect change in how the surveys are handled, you need to work with the manufacturers on this,” Denove tells dealers at a J. D. Power Roundtable session here.

Despite the problems, the surveys allow OEMs to know how their dealers are doing and to share information with dealers to help them make better business decisions, says Denove.

“This is the area where OEMs need the most help,” he says. “Let's face it, dealers are probably the most fabulous business individuals in this country, and they need to be,” Denove says. “If you give the dealer the right information, they will come to the conclusions that will not only make the dealership more profitable, but will make the manufacturer more profitable as well.”

Dealers are most concerned with how the surveys are scored. It's a method known as “top-box scoring,” in which only the surveys that receive an excellent rating are considered by OEMs when measuring dealership performance.

That means any survey scores below “excellent” — including “good” — are considered poor.

Denove agrees with dealers about the scoring.

“We would like to encourage scoring based on averages,” he says. “The reality is that top-box scoring forces the dealer to beg for good scores. Is it fair to equate a good score with a poor score?”

Power's data shows that customers are more frustrated with pressure from the dealer to grade favorably than they are with the length of the surveys. This contradicts what dealers believe. The length of the surveys is one of the problems NADA would like to see fixed. It's something auto makers are beginning to do finally, says NADA.

The longest survey J.D. Power administers is about 70 questions long — which is a long survey. Yet, it gets over a 30% return rate. “By market research standards, that is a huge response rate,” Denove contends.

Another concern dealers have is how the OEMs reward them for great customer satisfaction ratings.

Most controversial is the direct payment of cash to dealers with great scores — much like Ford Motor Co.'s contentious Blue Oval program. “OEMs should tie the incentives to a broad range of metrics,” Denove argues. “Good scores do not drive customer loyalty — good processes do.”

Some other suggestions Denove makes include allowing more time between the buying process and the survey. OEMs also should broaden the survey to include those who left the dealership without buying.

Despite the controversy the surveys create, Power's data indicate dealers with the highest customer satisfaction scores also “close” the highest percentage of overall customers, especially those who are returning to the showroom for a second time.

The closing ratio for first-visit customers isn't as high. Meanwhile, dealerships with poor satisfaction ratings try to close customer who walks in for the first time, and often show high closing ratios for that group. The problem is that most customers are usually looking for information only during their first trip to the store, and pushing to close then is often perceived as laying on the pressure. That's reflected in satisfaction surveys.