Sullivans Auto World

1
Sullivans Auto World

• Presenter
• Dawn Birch

2
Session overview

• Background
• Major issues
• Situation analysis
• Alternative strategies
• Recommendations
• Implementation
• Conclusion

3
Company

• car dealership
• new and used cars
• sales and service departments
• medium-sized
• family-owned
• sales volume - 1100 cars p.a.

4
Current situation

• owner (Walt) has died suddenly
• family not interested in the business
• daughter (Carol - health care manager) is
  temporary GM
• 2 weeks more leave
• concerned about performance of SAW
• wondering what to do

5
Nature of the service

• possession processing
• tangible actions to peoples possessions
• medium level of contact
• people enter the service department to discuss
  service requirements
• medium-high level of customisation/judgment
• continuous service but no formal membership
• fluctuating and random demand

6
Case Issues

• Poor performance of the service department
• service revenues are below industry average and
  are declining
• survey reveals that customers overall level of
  satisfaction with service is low
• high staff turnover
• sales staff reluctant to introduce customers to
  the service department

7

• Deteriorating financial situation
• deterioration over last 18 months
• running at loss for last 6 months
• behind in mortgage payments
• accounts payable risen sharply in last 6 months
• service revenues and new car sales falling
• service revenues below industry average
• profit margin being squeezed by promotional
  expenses

8
Major issue

• Poor performance of the service department
• financial position will improve if service
  revenues increase
• repeat purchase rate will improve if after sales
  service improves

9
Overview of situation analysis

• Internal analysis
• strengths
• weaknesses
• financial analysis
• market analysis
• External analysis
• opportunities
• threats
• Services marketing analysis

10
Strengths

• human resources
• technically skilled and competent staff (high)
• above average rating of the sales staff
  performance (med)
• Carols experience, knowledge, expertise (med)

11
Strengths cont..

• physical resources
• modern and well maintained equipment (high)
• attractive showroom (med)
• favourable location (med)

12
Strengths cont...

• current market position
• well-known dealership (med)
• customer satisfaction with NEW cars is above
  average (med)

13
Weaknesses

• Human resources
• inappropriate attitude of service staff (high)
• service manager lacks interpersonal skills (high)
• problems with service writers (high)
• high turnover of service staff (high)
• loss of key person - Walt (med)

14
Weaknesses cont..

• Financial situation
• revenues are falling (high)
• deteriorating (insurance and some funds) (med)

15
Weaknesses cont..

• Physical resources
• poor appearance of service department (high)
• poor waiting area (high)
• back stage is too visible (med)
• service facility is not visible from highway (med)

16
Weaknesses cont.

• Service processes and operations
• service procedures are not customer oriented
  (high)
• inefficient recording and bookkeeping (high)
• understaffed during peak periods (high)
• business is operating as two separate entities
  (high)
• inconsistencies between service and sales
• inconvenient service operating hours (med)

17
Market analysis

• Customer perceptions of service department
• high risk
• poor performance
• poor experiences
• Service is difficult to evaluate
• high in credence qualities
• Repeat purchase is poor

18
Customer survey

• 30 day survey (new car buyers)
• rated above average satisfaction on new cars
• 90 of respondents were informed re services
• however, less that 33 introduced to service
  department
• 9 month survey (new car buyers)
• similar to national average on vehicle ratings
• in lowest 25 of Ford dealerships on overall
  satisfaction with service

19

• intend to use other service suppliers
• maintenance gt 50
• minor repairs gt 50
• major repairs gt 30
• less likely to purchase again from SAW than from
  other Ford dealers

20
Service department rated poorly on.

• promptness of writing up orders
• convenience of scheduling work
• convenience of service hours
• appearance of service department
• attitude of service department
• politeness of service personnel
• understanding of customer problems
• explanation of work performed

21
Average ratings on

• length of time to complete work
• availability of parts
• quality of work

22
Opportunities

• Penetrate current markets
• car repair and maintenance
• extend hours of operation
• provide a drop off/pick up service
• auctions
• Develop new market
• body shop

23

• Change of management
• new staff initiatives
• introduce a service culture
• internal marketing/training programs
• Use advanced technology
• computerisation
• improve service delivery
• reduce level of customer contact

24
Threats

• Economy
• high interest rates
• downturn in regional economy
• poor industry forecast
• Competition
• survey revealed that customers are likely to
  switch

25
Services marketing system

• back stage is too visible
• need to manage the physical evidence
• front stage is shabby
• need to manage the service encounter
• computerise the service writing process
• manage the moments of truth
• establish an effective service recovery program

26
The service marketing system for SAW
Service orders
27
Flowchart of SAW

• Analyse each step
• Does each step represent value for the customer
• Can service quality be improved at any step?
• Can any steps be removed or sped up?
• Where are the bottle necks and failure points?

28
Summary of situation analysis

• Major strengths
• technical skills
• Major weaknesses
• service delivery system
• Opportunities
• improve service quality through internal
  marketing/training and using advanced technology

29
Alternative strategies

• Sell now at distress price
• Improve service department and then sell in 1-2
  years
• Appoint manager (Larry Winters) to improve
  service department

30
Evaluation criteria

• customer satisfaction
• service quality
• customer loyalty
• employee satisfaction
• family
• revenues
• cost

31
Recommended strategy

• Appoint Larry as manager and improve the service
  department
• if necessary hire an external consultant to
  assist Larry to improve the service delivery
  system
• develop a client-focussed service department
• computerise client records and service writing
• train staff in service skills
• extend hours of operation
• refurbish the service department

32
Conclusion

• How can the service quality and the financial
  performance of SAW be improved while minimising
  stress on the family?
• Need to improve the service delivery system
• focus on people, processes, and the physical
  evidence