1. Session Senior Director
Mick Vigliotti
Session Senior Director

2. J.D. Power
Driving Loyalty

3. Agenda Generation Y Satisfaction Across Industries
Sales Satisfaction by Generation
Technology Trends in the Sales Process
Impact of Feature Explanations
Loyalty Impact of
Sales Satisfaction
Vehicle Quality
Service Satisfaction by Generation
Technology Trends in the Service Process
Impact of Service Satisfaction on Brand Loyalty
Recommendations

4. Gen Y Satisfaction Across Industries
Satisfaction among Gen Y customers varies by industry - automotive retail has larger negative satisfaction gaps
Industries that have a lower frequency of interpersonal interactions (e.g., life insurance, utilities, and credit card) tend to earn higher satisfaction scores among Gen Y
-16 -9
-45 19 6 38 -4 -9 18 23
When comparing the satisfaction gaps between Gen Y buyers and buyers in all other generations across several J.D. Power studies, it is clear that some industries share the same challenges with Gen Y, while others achieve much higher satisfaction scores among Gen Y customers.
For example, the satisfaction deficit among Gen Y buyers in the 2016 U.S. SSI Study is roughly equivalent to that in the 2016 U.S. Auto Claims Satisfaction Study. However, many other industries that have a lower frequency of interpersonal interactions (e.g., life insurance, utilities, and credit card) tend to earn higher satisfaction scores among Gen Y.
This presents a challenge for the automotive industry in serving younger buyers: the vehicle-buying process relies heavily on personal interactions. Adept usage of technology and communicating in ways younger buyers are comfortable with can help improve their level of satisfaction relative to other age groups.
1J.D. Power defines the generations as Pre-Boomers (born before 1946); Boomers ( ); Gen X ( ); Gen Y ( ).

5. Sales Satisfaction by Generation
Younger customers report lower satisfaction scores than older customers (which is historically consistent) and points to gaps between expectation and reality
Satisfaction gaps between Gen Y customers and other generations are widest in those measures based more on personal interactions - Salesperson and Working Out the Deal
Developing positive personal relationships and reducing negotiation friction are particularly critical for younger customers
In general, satisfaction is lower among younger customers (especially Gen Y) than among older customers, which could be due to less experience with the buying process and having higher expectations for their experience.
Older generations—who presumably have purchased several new vehicles—are likely more accustomed to and comfortable with the process.
In particular, the satisfaction gaps between Gen Y customers and the other generations are widest in those measures most based on personal interactions, Salesperson and Working Out the Deal. Again, this may speak to the fact that older customers have likely been through the vehicle-buying process multiple times, and while they may not be familiar with the latest vehicle technology, they are knowledgeable and comfortable with the interpersonal aspects of buying a vehicle. As a result, dealers should be aware that developing positive personal relationships and making price negotiations as easy as possible are particularly critical for their younger customers.
Over the years we continue to see the younger generations be less satisfied with the sales process

6. Gen Y Mix by Brand
GM Brands are performing significantly below Segment averages with Millennials

7. SSI Buyer Performance by Generation
Buick and Cadillac perform well across all generations, where Chevrolet and GMC struggle with Gen Y buyers
GM brand
Gen Y
Gen X
Boomers and Pre-Boomers
Overall
Buick
862* (2 out of 20)
859* (4 out of 20)
(1 out of 20)
(1 out of 20)
Cadillac
880* (3 out of 12)
(2 out of 12)
(4 out of 12)
(4 out of 12)
Chevrolet
(7 out of 20)
(2 out of 20)
(2 out of 20)
(3 out of 20)
GMC
(5 out of 20)
(1 out of 20)
(3 out of 20)
(4 out of 20)

8. Technology Trends in the Sales Process
Millennials continue to grow as a percentage of new-vehicle buyers
Technology applications throughout the buying process are becoming increasingly important and expected
Younger customers are more likely to use the internet and shop on a mobile device
Internet usage more common than phone calls; some buyers don’t use either. Overall, 42% of owners indicate that they made phone calls to dealers as part of their shopping process. Premium buyers are more likely (49%) to make phone calls than Non-Premium buyers (41%).
Pre-Boomers are the least likely to use the internet (61%) or phone calls (33%) during the shopping process, meaning a large proportion of these customers have little information when they visit a dealership.
Most buyers who make phone calls do so to check vehicle inventory and pricing. Internet research lowers satisfaction, while phone calls raise it
While it is common for buyers to use both the internet and dealer phone calls during the shopping process, the effect on satisfaction for these two activities moves in opposite directions.
Among buyers, satisfaction is lower among those who use the internet to shop than among those who do not (823 vs. 843, respectively), and higher among those who call dealers than among those who do not (835 vs. 823).

9. Technology Trends in the Sales Process
Technology adoption and approval ratings continue to climb
The use of technology increases for both Non-Premium and Premium brands in 2016
Non-Premium brand dealers are moving quickly to use technology as frequently as Premium brands
Usage of Technology throughout Sales Process
Processes
Non-Premium
Premium
2015
2016
Salesperson used a tablet device
15%
22%
24%
27%
When tablet device is used, it is used to…
Record input and feedback about vehicle needs
25%
26%
30%
Demonstrate vehicle features
35%
38%
50%
48%
Capture personal information (e.g., name, address, and contact information)
58%
61%
57%
64%
Display price or payment information
43%
45%
41%
Not only are dealer using tablets more often, there has been an uptick in the percentage of deals that include more involved processes during the buying experience.
Additionally, satisfaction with the technology used during the buying process has increased YoY among both Premium and Non-Premium buyers. Likely resulting from using tablets at more points in the process.

10. Usage of Technology throughout Sales Process
Tablet Usage by Brand
Tablet usage is fairly consistent across GM brands
Buick customers are less likely to report that vehicle features were demonstrated on a tablet
Satisfaction with tablet usage is highest when the device is used throughout the process, not just to capture personal information
Usage of Technology throughout Sales Process
Processes
Buick
Cadillac
Chevy
GMC
Salesperson used a tablet device
22%
21%
19%
17%
When tablet device is used, it is used to…
Record input and feedback
about vehicle needs
25%
24%
30%
26%
Demonstrate vehicle features
37%
40%
41%
Capture personal information (e.g., name, contact information)
60%
61%
55%
65%
Display price or payment information
51%
45%
49%
Bullet points cover this slide well

11. Impact of Technology on Satisfaction
Gen Y buyers are the least likely to indicate their salesperson used a tablet during the sales process. Gen Y buyers report the lowest satisfaction with how their dealer used technology
Just as technology content in entry-level vehicles has increased to cater to younger buyers, it is critical for dealers to make better use of technology during the sales process to satisfy younger buyers
Conversely, while more Pre-Boomer vs. Boomer buyers indicate tablets being used, differences in satisfaction are negligible
Given that tablet usage is a key driver of sales process satisfaction for all buyers, and dealers would likely benefit the most by increasing tablet usage, how they use the technology is vital
In both the Premium and Non-Premium segments, Gen Y buyers are the least likely to say their salesperson used a tablet during the sales process. Gen Y buyers are also likely to have the lowest satisfaction with how their dealer used technology.
Non-Premium Gen Y buyers seem to be particularly sensitive to the lack of technology used; despite only a 1-percentage-point difference in how often tablets are used between Gen X and Gen Y, there is a 0.17-point gap in technology usage satisfaction between the two generations.
Just as technology content on entry-level vehicles has increased in recent years to cater to younger buyers, it is critical for dealers to make better use of technology during the sales process to satisfy younger buyers.
Conversely, while more Pre-Boomer buyers indicate tablets being used than Boomers, the increase in their satisfaction with technology usage is negligible.
While tablet usage is a key driver of sales process satisfaction for all buyers, dealers would likely benefit the most by increasing tablet usage.

12. ROI of Tablet Usage
Non-Premium: Usage of tablets has increased YOY(+7 percentage points)
Both front end gross profit (+$40) and service contract income (+$29) are higher when tablets are integrated into the sales process
+$40
+$29
Not only does tablet usage positively impact customer satisfaction, both vehicle gross and service contract income are both higher when a tablet is used during the sales process.
We know from SSI that displaying pricing information on a tablet or computer screen lead to higher satisfaction due to the transparency the process offers the customer. Involving a tablet in not only the pricing conversation, but also in F&I, may lead to further gains in satisfaction and gross/service contract income.
Note: Number in parentheses on x-axis denotes incidence.
Source: J.D. Power 2016 U.S. Sales Satisfaction Index (SSI) Study and Power Information Network Data

13. Impact of Feature Explanations on Sales Satisfaction
Satisfaction is highest when a thorough explanation of vehicle features is completed
Tablets can help provide consistency, accuracy and thoroughness during vehicle delivery
Tablets can be used to create a consistent delivery process for all buyers through the use of OEM apps. While not reflected in the graph, satisfaction is higher when explanations are received for these technologies than when they are not. Keep in mind that customers should be taught to use the technology and the salesperson should not simply “do” a step in the process for the customer. Bluetooth is a great example, how often do salespeople pair phone for customers instead of taking the time to teach the customers how to pair their phone? The customer really needs to be involved in a “hands-on” teaching process.

14. Impact of Feature Explanations on Sales Satisfaction
Satisfaction declines when a customer has to return to the dealer for further explanation. This is especially true when the lack of understanding is caused by an insufficient explanation at delivery
Returned to Dealership
Why Returned to Dealership
While relatively low incidence, returning to their dealer for further explanation is associated with lower satisfaction. However, the severity of the drop in satisfaction is related to the reason for their return. If the reason is related to a poorly executed dealer delivery process, satisfaction is lowest.
Tablets not only can be used to create a consistent process, but also makes sharing information easier. For example, the salesperson can send an with links to OEM resources (apps, hotline, how-to videos, documentation, etc.) while completing the delivery.

15. Impact of Feature Explanations on Vehicle Quality
A thorough explanation can improve vehicle quality scores by reducing the incidence of difficult to use (DTU) issues (in addition to increasing overall buyer satisfaction)
Not only does a thorough delivery improve satisfaction with the purchase experience, thorough explanations can help mitigate design “problems” as reported in IQS. Why should vehicle quality be of concern for dealers?

16. Impact of Vehicle Quality on Loyalty
Actual brand loyalty decreases as the number of problems reported in IQS increases
Well, actual loyalty (those that stayed with the same brand) is highest when a customer does not have any reported problems. From a dealership perspective the number of DTUs can be reduced by providing an excellent delivery as mentioned on the previous slide. However, there are other opportunities to ensure a perfect product at delivery by correcting issues identified at vehicle receptions, PDI, and even detailing.

17. Impact of Sales Satisfaction on Customer-Paid Service Loyalty
Highly satisfied buyers indicate a strong likelihood of returning to their selling dealer for customer paid service
1.5X
Loyal
At Risk
Lost
Additionally, highly satisfied customers at the time of sale are more likely to return to their selling dealership for customer paid service. As you can see, the higher the satisfaction the higher the service loyalty for customer paid work

18. Service Satisfaction by Generation
Satisfaction gaps between Gen Y customers and other generations are consistently wide across all factors, once again indicating a disconnect between expectations and actual experiences
On the service side again, in general we see satisfaction is lower among younger customers (especially Gen Y) than among older customers, which could be due to customer expectation that can be off set when delivering the vehicle.
Older generations—who presumably have now had many different new vehicles—are likely more accustomed to and comfortable with the overall service process.
As a result, dealers should be aware of how this younger generation wants to interact with the service department o help develop positive personal relationships and focusing on making especially the first couple free services as easy as possible. Making these customers aware of free shuttles, early drop off, courtesy transportation or other conveniences are particularly critical for the younger customers.

19. Gen Y Mix by Brand (Service customers)
Similar to what we saw on the % Gen Y for sales customers…

20. CSI Performance by Generation
Although satisfaction for younger customers still lags, GM brands are improving relative to competition. Cadillac’s Gen X performance is a concern
GM brand
Gen Y
Gen X
Boomers and Pre-Boomers
Overall
Buick
812* (3rd out of 19)
(1st out of 19)
(1st out of 20)
(1st out of 19)
Cadillac
840* (3rd out of 10)
(10th out of 11)
(3rd out of 12)
(5th out of 12)
Chevrolet
(4th out of 19)
(5th out of 19)
(4th out of 20)
(4th out of 19)
GMC
(2nd out of 19)
(7th out of 19)
(3rd out of 20)
(3rd out of 19)

21. Technology Trends in the Service Process
Technology adoption in the service department continues, with both service scheduling and the use of tablets increasing since 2015
The percentage of customers who scheduled service online has increased 4 percentage points since (from 9% to 13%)…How is this being handled (BDC, etc.)?
Conversely, telephone appointment scheduling has declined by 4 percentage points
All generations show an increasing preference for scheduling appointment via the internet, which increases customer satisfaction
How was dealer visit scheduled?
2015
2016
2017
Called for an appointment
73%
71%
69%
Scheduled appointment over the internet/app 9%
11%
13%
Scheduled appointment via vehicle communication system 0%
Did not make an appointment
18%
17%
The upward trend in the use of technology in vehicle service continues, with both service scheduling and the use of tablets increasing since 2015.
The percentage of customers who scheduled their service online has increased by 4 percentage points since 2015 (to 13% from 9%), with an equal decline in the percentage of those who called for an appointment.
In terms of tablets being used during the service experience, tablet usage increased by 7 percentage points since 2015 (to 24% from 17%) during the same 3-year period.
J.D. Power research has shown that the use of online scheduling and the use of tablets tend to increase customer satisfaction.

22. Technology Trends in the Service Process
Tablet usage has increased from 17% in 2015 to 24% in 2017
Cadillac has the second highest rate of tablet usage - Buick is the lowest
Similar to Sales, satisfaction with tablet usage is highest when the device is used throughout the process, not just to capture personal information
Usage of Technology throughout Service Process
Processes
Buick
Cadillac
Chevy
GMC
Service Advisor used a tablet device 4%
39%
11%
When tablet device is used, it is used to…
Record/Access my information
88%
86%
85%
Access service history
50%
44%
47%
Capture work to be completed
52%
59%
42%
List specific details of issue
23%
19%
18%
21%
Provide a cost estimate
20%
16%
12%
Show a menu of available service options
10% 7% 9%
Tablet usage by service advisors varies across GM brands but is at or below average for non-premium and premium brands. Just as is the case for tablet usage during the buying experience, table usage should take place throughout the entire process and include more than capturing information. Interestingly Buick has the lowest tablet usage rate in the industry, but outperforms the other GM brands for incidence of using the app for other processes.
Additionally, efficiently using a tablet in the process requires full integration into the dealer systems to alleviate possible duplication of work by the Service Advisor.

23. Technology Trends in the Service Process
A huge opportunity exists to leverage technology when keeping customers informed of vehicle status
56% of service customers leave the dealership while service work is being completed
And yet, among those customers who do receive a service update communication, only 5% received a text message or to provide status, up from just 2% in the 2015 study
How are you capturing customer preferences?
How were you kept informed on the progress of your service work?
2015
2016
2017
Waited for service work to be completed
43%
44%
Dealership called me
24%
Updates not needed
23%
21%
I called the dealership 5%
I was not kept informed of the progress 6%
Text message updates 1% 2% 3%
updates
While there has been a noticeable increase in the use of technology in the customer service department, technology is still not being used to inform customers about the progress of their service work.
Nearly half (44%) of service customers wait for their service work to be completed, which has remained fairly constant over the past three years.
Still, for those customers who do receive an update about their service, only 5% received a text message or update in the 2017 CSI Study, up from just 2% in the 2015 study.
So how does the customer prefer to receive updates about their vehicle?

24. Technology Trends in the Service Process
Internet service scheduling and communicating with customers via text message have not kept pace with customer preferences
Dealers that communicate service updates via text and have the highest future intended loyalty (i.e., “definitely will” return for paid service); and yet, they remain the least common methods of communication (3% and 2%, respectively)
While internet service scheduling and communicating with customers via text message have increased over the past 3 years, they have not kept pace with the increase in customers’ desire for these activities.
Dealers that communicate service updates via text and have the highest future intended loyalty (i.e., “definitely will” return for paid service); however, text and updates remain the least common methods of communication (3% and 2%, respectively).
Gen Y and Gen X customers prefer text message communication to phone calls by a small margin; that said, all customers (regardless of age group) have shown an increased desire for text message communications over the past 3 years.
The combination of Gen Y customers accounting for more vehicle sales and service customers, and customers of all age groups increasingly desiring text communication should make the increased use of electronic communications a top priority for dealers.

25. Impact of Service Satisfaction on Brand Loyalty
“The ROI of CSI”: among Non-Premium brand owners, brand loyalty is 15 percentage points higher when satisfaction reaches “951 and higher” vs. “700 and less.”
Not only are these happy service customers more likely to return to your dealership for service, the positive experience in service also leads to higher loyal to the Brand for future purchases.
Read slide
Source: J.D. Power and Associates 2016 Customer Service Index (CSI) Study (CSI Index Scores are based on 1-3 years owners)
1J.D. Power and Associates Power Information Network (PIN) trade-in VIN data matched to 2016 CSI Study

26. Recommendations
Strong delivery processes of high quality vehicles start a Loyalty trend for dealers…
Properly integrating technology into your current processes has proven important, especially younger customer
How can you use the current GM apps and other technology GM offers to provide the best experience for your customers?
Evolve your customer handling process with the changing needs of your customers
Is your facility strategy and employee training aligned with changing customer expectations and preferences?
Dealers and GM need to work together to provide a level of service that earns you both “Customers For Life!”