Maritz Research: High Customer Satisfaction Helps Dealers Keep Doors Open

ST. LOUIS--Domestic auto dealers with lower customer satisfaction went out of business three times as much as dealers with high customer satisfaction ratings, according to analysis by Maritz Research’s Automotive Research Group. The group, which conducts customer satisfaction research for nearly three out of every four vehicles sold in the United States, recently analyzed its domestic dealership customer satisfaction data from the past three years.

The findings were striking. While dealerships at all levels went out of business in 2008 – close to 1000 dealers according to the National Automobile Dealers Association – the dealers that scored in the bottom 10 percent for customer satisfaction went out of business at a rate almost three times that of dealerships that scored in the top 10 percent. Also, going-out-of-business rates grew rapidly for those dealers receiving mid to low customer satisfaction scores.

“The industry has long known that satisfying customers is related to loyalty and repeat purchase at the individual customer level. Take care of customers at the time of sale and they are more likely to come back for service and for the next vehicle,” said David Ensing, strategic consulting director for the Maritz Automotive Research Group. “With even more dealerships closing this year, the industry is under unprecedented pressure to satisfy customers and keep business alive.”

By combining data across domestic manufacturers’ programs, Maritz Research was able to identify virtually every dealership that went out of business (970 dealers) during 2008 and then compare those dealers to the majority that did not close. Maritz Research examined 2006 and 2007 customer satisfaction statistics for each domestic manufacturer’s dealerships. The company then compared customer satisfaction among dealerships that went out of business to those who remained in business in 2008. Researchers looked at both 2006 and 2007 data to be sure the effects weren’t caused by cutbacks in the final months leading up to a dealership’s demise. While there were some differences between the two years, the overall effects were quite similar.

According to Ensing, many people assume that sales volume determines a dealership’s likelihood to survive difficult economic times. According to this analysis, however, while retail sales volume is related to dealerships going out of business, customer satisfaction has an additional impact – especially for mid- and lower-volume dealers.

“To our knowledge, Maritz Research’s analysis is the first time anyone has shown the importance of customer satisfaction to a dealership’s ability to survive an economic downturn,” said Ensing. “While media reports have alluded to this correlation between poor customer service and dealer closings, our analysis proved it,” he added. “As more dealership closings loom on the horizon, dealers that focus on high-quality customer service will have a better chance of survival in this economy than those who focus solely on sales volume.”