Service Begets Sales: An Investigation into the ...

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Service Begets Sales: An Investigation into the Relationship of Service Begets Sales: An Investigation into the Relationship of

Automotive Dealership Customer Service Satisfaction with Sales Automotive Dealership Customer Service Satisfaction with Sales

Success Success

Ivyl L. Gilbert Western Michigan University

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SERVICE BEGETS SALES: AN INVESTIGATION INTO THERELATIONSHIP OF AUTOMOTIVE DEALERSHIP CUSTOMER

SERVICE SATISFACTION WITH SALES SUCCESS

by

Ivyl L. Gilbert

A Dissertation Submitted to the

Faculty of The Graduate College in partial fulfillment of the

requirements for the Degree of Doctor of Education

Department of Educational Leadership

Western Michigan University Kalamazoo, Michigan

August 1986

Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.

SERVICE BEGETS SALES: AN INVESTIGATION INTO THERELATIONSHIP OF AUTOMOTIVE DEALERSHIP CUSTOMER

SERVICE SATISFACTION WITH SALES SUCCESS

Ivyl L. Gilbert, Ed.D.

Western Michigan University, 1986

Investigated in this descriptive study was the relationship

between new car dealership customer service satisfaction ratings and

dealership sales success, as measured by market penetration ratings,

within a major domestic automobile company. Specifically, the first

step in the study was the collection of data regarding customer

service and sales success ratings earned by the total of the subject

company's dealers in each of 42 geographical zones in the United

States. Second, an attempt was made to determine whether a relation

ship existed between the customer service ratings and sales success

ratings for the company's zones to whom certain characteristics could

be attributed.

In order to investigate the relationship between customer ser

vice satisfaction ratings and sales success ratings, hypotheses were

presented which dealt with the study group of the 42 zones and with

the zones' characteristics. Those characteristics included (a) pas

senger car market penetration, (b) overall dealer customer satisfac

tion, (c) warranty service customer satisfaction, (d) percentage of

times customers were forced to bring their new car back to the dealer

for the same service problem, (e) new car delivery condition satis

faction, (f) dealership sales staff customer satisfaction, and


(g) percentages of salesperson turnover.

A major conclusion of the study was that there exists a direct

relationship between customer service satisfaction and sales success,

as measured by market penetration.

Dealers are the most visible link in automobile manufacturers'

marketing chain and have the potential to enhance or degrade the

corporate image on a local as well as national basis. How then

should the manufacturers direct their automobile dealers? Is an all

out, highly expensive effort to increase customer service the answer

to increased sales? The significance of this study was to provide a

degree of insight into these questions.

\


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8625604

Gilbert, Ivyl Lee

SERVICE BEGETS SALES: AN INVESTIGATION INTO THE RELATIONSHIP OF AUTOMOTIVE DEALERSHIP CUSTOMER SERVICE SATISFACTION WITH SALES SUCCESS

Western Michigan University Ed.D. 1986

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Copyright 1986

by

Gilbert, Ivyl Lee

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1986

♦


ACKNOWLEDGMENTS

I am grateful to Dr. Uldls Smidchens, Dr. Carol Sheffer, and

Dr. Jim Gilchrist for their aid and support while serving on the

dissertation committee. Also, thanks go out to the Western Michigan

University Instructors who traveled to Mt. Clemens and made the Ed.D.

program possible In the Detroit area.

I am Indebted to my parents, John and Mildred Gilbert, for their

encouragement at just the right times during my educational pursuits.

I regret that my father Is not alive to share In the honor of this

degree.

Words are Inadequate to describe the appreciation I extend to my

daughters, Stacey and Shelly; my son, Ryan; and my wife, Karen, for

their love and support during the past three years. To my children,

I ask that the attainment of this goal serve as an Inspiration to

complete your own formal educations. To my teammate during this

undertaking, my wife, Karen, I acknowledge with profound love that

without your, hour by hour, understanding we wouldn't be able to now

say together— we won.

Ivyl L. Gilbert

11


TABLE OF CONTENTS

ACKNOWLEDGMENTS ........................................... ii

LIST OF FIGURES............................................. v

CHAPTER

I. INTRODUCTION ..................................... 1

Statement of the Problem........................ 2

Need and Significance of the Study............... 3

Organization of the Study ...................... 4

II. REVIEW OF THE SELECTED LITERATURE.................. 5

Impact of Consumer Satisfaction, Dissatisfaction . . 5

Ways to Measure Consumer Satisfaction Levels . . . . 7

Causes and Sources of Dissatisfaction ........... 9

Theoretical Bases of Satisfaction ............... 10

Statement of the Hypotheses .................. 11

Summary............................. 19

III. DESIGN AND METHODOLOGY............................ 21

Population of the S t u d y ........................ 21

Subpopulation of the Study......... 24

Instrument Development .......................... 24

Instrument Purpose ............................. 24

Instrument Content ............................. 25

Instrument Administration ...................... 32

Design and Procedure............................ 33

Suimnary....................................... 34

iii


Table of Concents— Continued

CHAPTER

IV. RESULTS........................................... 36

Review of Information Regarding Data ............. 36

Test of Hypotheses............................. 37

Summary....................................... 46

V. CONCLUSIONS AND RECOMMENDATIONS ..................... 50

Dealership Overall Customer Satisfaction ......... 50

Dealership Warranty Satisfaction ......... . . 51

Dealership Comebacks for the Same ServiceProblem..................................... 52

Dealership Car Delivery Condition ............. 53

Dealership Sales Staff Satisfaction ........... 54

Dealership Salesperson Turnover ............... 55

Dealership Turnover Compared to Sales StaffImage....................................... 56

Conclusions................................... 56

Recommendations for Future Research ............. 58

Summary......................... 58

APPENDICES.............................................. 60

A. Customer Satisfaction Index Program (CSI)Instrument....................................... 61

B. R. L. Polk Community Registration Report Instrument . . 66

C. Sales Personnel Productivity Report Instrument . . . . 70

D. Zone Total Reports for Each Variable............... 73

BIBLIOGRAPHY........................ 80

iv


LIST OF FIGURES

1. Universal Motor Company Sales Department ............... 22

2. Universal Motor Company's Six Regions ................. 23

3. Universal Motor Company's 42 Zones ..................... 23

4. Question 3 of CSI Questionnaire...................... 26





9. CSI Rating Scale . . . . . 29

10. Calculation of Customer Satisfaction Index ............. 30

11. Calculation of Dealer Market Penetration ............... 31

12. Relationship of Zone 1983 Overall Dealership CSI Ratingsto Zone 1983 Passenger Car Percentage of Market Penetrations .............................................. 39

13. Relationship of Zone 1983 Warranty Service CSI Ratingsto Zone 1983 Passenger Car Percentage of Market Penetrations ......................................... 40

14. Relationship of Zone 1983 Service Comeback for Same Problem CSI Percentages to Zone 1983 PassengerPercentage Market Penetrations ........................ 42

15. Relationship of Zone 1983 Delivery Condition CSI Ratings to Zone 1983 Passenger Car Percentage ofMarket Penetrations ................................. 44

16. Relationship of Zone 1983 Sales Staff CSI Ratings to Zone 1983 Passenger Car Percentage of MarketPenetration......................................... 45

17. Relationship of Zone 1983 Salesperson Turnover Percentages to Zone 1983 Overall DealershipCSI Ratings......................................... 47

v


List o£ Figures— Continued

18. Relationship of Zone 1983 Salesperson Turnover Percentages to Zone 1983 Sales Staff CSI Ratings .................................

VI


CHAPTER I

INTRODUCTION

Automotive industry analysts contend that a growing concern for

product quality and dependability is typical of today's car buyers.

According to Power (1982), dependability and trouble-free operation

rank very high as important attributes in the minds of automotive

consumers when purchasing a new vehicle, often leading such factors

as purchase price, performance, and fuel economy. And, over time,

customer loyalty is based on the in-use experience owners have with

the cars they purchased, As the U.S. automobile market increasingly

becomes a replacement market, loyalty becomes more important as

manufacturers compete fcr the return customer.

A key to surviving the uncertain direction of the U.S. auto

market is for domestic manufacturers to concentrate on those things

over which they have the most control in achieving improvements. In

the view of Gawronski (1982), it is the satisfaction, or lack of it,

with the product purchased and dealer service provided them that

builds or destroys the customer's desire to repurchase the same make

of car. Consequently, this is one place where the marketing competi

tion can be won or lost.

Power (1982) suggested it would appear that manufacturers must

place more emphasis on product quality and the quality of after-sale

service. Certainly, products can be differentiated in advertising

and in showroom sales presentations, but it would seem that consumers

1


are relying more and more on their own experience and on the reputa

tion of the manufacturer and dealer in their decision to purchase.

Statement of the Problem

Assuming that shoppers are looking for dependability more than

ever before, their perceptions of dealer service should be a crucial

differentiating factor. Clever media promotion, price discounts, or

showroom appeals might reasonably be expected to fall short in over

coming a reputation of automobiles with problems that cannot be

repaired quickly on the first visit back to the dealership.

An analysis of customer service and how it affects share of

market, in the Sales and Marketing Executive Report (“Quality of

Customer Service," 1983), states the effects in quantitative terms:

The difference between good and poor customer service can affect a company's sales volume by as much as 5Z to 6Z or more, according to a 1982 nationwide study by Shycon Associates, Inc., the management consulting firm headquartered in Waltham, MA. President Harvey Shycon noted that the survey of 185 companies with annual sales of from $50 million to $8 billion, showed that customer service had a definite impact on how well products are received in the marketplace. We've always known this, but now we have positive proof, said Shycon. For example, a company doing $250 million in sales could attribute $12.5 to $15 million of this to its customer service performance. That's $4 to $5 million added to or subtracted from the bottom line, he said. (p. 5)

But to what extent can this information be utilized within the

strategic planning of automobile companies? The problem is, do new

car dealers who rank high in providing satisfactory, after-the-sale,

customer service also have higher success in terms of new car sales


and, conversely, thor;-, with low customer service satisfaction have

lower sales success?

Need and Significance of the Study

Marketing enterprises have customarily been concerned with cus

tomer satisfaction. The consensus has been that consumers continue

to purchase those products with which they are satisfied, and advise

others about favorable products and service experiences. As pointed

out by Naisbitt (1982), in Megatrends. "Consumers are to economics

what voters are to politics" (p. 177).

While marketing scholars have emphasized the importance of cus

tomer satisfaction, few studies have examined, in detail, consumers'

responses to dissatisfaction. According to Richins (1983), "Poten

tial responses include (a) switching brands or refusing to re-

patronize the offending store, (b) making a complaint to the seller

or to a third party, and (c) telling others about the unsatisfactory

product or retailer" (p. 68).

For the automobile manufacturer, the importance of retail deal

ers in maintaining product loyalty and attracting new prospects

cannot be overlooked. Dealers are the most visible link in the

marketing chain and have the potential to enhance or degrade the

corporate image on a local as well as national basis. How then

should the manufacturers direct their automobile dealers? Is an all

out, highly expensive effort to increase product service the answer

to increased sales? The significance of this study is to provide a


degree of insight into the question concerning the relationship of

automotive dealership customer satisfaction to sales success.

Organization of the Study

Presented in Chapter I is an introduction to the study, the

statement of the problem, the issues related to the problem, the need

and significance of the study, and the organization of the study.

A review of the literature and the rationale for the research

hypotheses are presented in Chapter II.

Presented in Chapter III are the methods and procedures used to

conduct the study. The discussion includes the subjects chosen for

the study, the type of instruments used for data collection, the

research design chosen for the study, and the exact procedures of

data collection.

The analysis of data and the testing of the research hypotheses

are presented in Chapter IV.

Presented in Chapter V are the conclusions about the purpose of

the study as well as recommendations for future research.


CHAPTER II

REVIEW OF THE SELECTED LITERATURE

The purpose of this chapter is to present a review of selected

literature relative to the relationship of automotive dealership

customer service satisfaction with sales success. The review of

literature is divided into five sections. Discussed in the first

section are the impacts that consumer satisfaction or dissatisfaction

have on repurchase attitude, market performance, and managerial per

spectives.

Explored in the second section are ways to measure consumer

satisfaction levels. The causes and sources of dissatisfaction are

investigated in the third section. Addressed in the fourth section

are the theoretical bases of satisfaction. Presented in the fifth

and final section are seven hypotheses and how they relate to con

sumer response under various dimensions of satisfaction or dis

satisfaction in the automobile industry.

Impact of Consumer Satisfaction, Dissatisfaction

A review by Richins (1983) concludes that until the mid 1970s,

few studies were published in marketing literature about customer

satisfaction. About that same time in response to the consumer

movement, interest in this subject began to increase. Some initial

articles explored the appropriate ways to measure consumer satisfac

tion levels, such as Andreasen (1977) and Westbrook (1980). Others

5


investigated the causes and sources of dissatisfaction, including Day

(1977) and Diamond, Ward, and Faber (1976).

Researchers, Oliver (1980) and Swan and Combs (1976), addressed

the theoretical bases of satisfaction. Although investigative inter

est was stimulated in these areas, little attention was focused, in

the marketing literature, toward consumers' reactions to satisfaction

or dissatisfaction. As postulated by Richins (1983), even though

there has been little research focusing on customer responses to

dissatisfaction directly, suggestions appeared indirectly in some

consumer behavior literature that repeat purchase attitude is influ

enced. One nationwide study, Technical Assistance Research Programs

(1979), reported that depending on the nature of the dissatisfaction,

from 30% to over 90% of dissatisfied respondents did not intend to

repurchase the brand involved.

According to Rosenberg, Czepiel, and Akerele (cited in Bahr,

1980) marketing is under attack from consumer advocates, government,

mass media, and many consumers themselves. Bahr (1980) observed that

everyone from Ralph Nader to the next door neighbor is part of this

attack. As a result, the marketing community has responded by up

grading customer service departments, toning down advertising, and

numerous in-house studies on consumer satisfaction have been commis

sioned. As stated by Lele and Karmarkar (1983), customers when

making purchases often believe they are buying more than the physical

item. The purchase decision is accompanied with expectations about

the level of postpurchase support the product carries with it. This

can include anything from the replacement of a part due to failure to


complex warranties designed to meet customer needs over the product's

entire useful life. Defining these expectations of support and

fulfilling them effectively can be critical to a successful marketing

effort. Takeuchi and Quelch (1983) argued that the quality of cus

tomer service after the sale is often as important as the product

quality itself. They concede, however, that excellent customer ser

vice can rarely compensate for weak products totally. But weak

customer service can promptly nullify all the advantages associated

with delivering a product of superior quality. In an effort to place

the concept of consumer dissatisfaction into perspective for market

ing managers Lambert (1980) recommended the following:

Modification of marketing strategies, programs, and practices in view of alienation, either to capitalize on consumerism or defend against detrimental effects, assumes that retailers can identify the things that clash with alienated consumers' sensitivities. Because the things that alienated consumers find offensive may vary with market segments, geographic areas, and types of retailing operations, each firm must examine its own situation.(pp. 22-23)

Ways to Measure Consumer Satisfaction Levels

As noted by Ross and Oliver (1984), American firms are the

recipients of millions of letters and phone calls each year from

consumers who have complaints, compliments, or questions and sugges

tions regarding products and services. Exact numbers are unknown,

but it is undoubtedly certain that companies hear from more customers

through this communication channel than they do through formal con

sumer research activities such as surveys and focus groups. These

letters, phone calls, and other methods through which consumers may


elect to contact organizations, including government agencies, the

Better Business Bureau, etc., are normally referred to as volunteered

or consumer initiated communications. The distinction between con

sumer initiated and company initiated customer satisfaction informa

tion is not completely clear. However, most researchers would agree

that the primary distinction is that with company initiated customer

satisfaction research the firm selects a meaningful sample from a

known universe of users and obtains responses from a reasonable

number of these target respondents. Consumer initiated communica

tions, on the other hand, are by definition self-selected. In the

opinion of Levitt (1983), one of the strongest signs of poor customer

satisfaction is the absence of complaints from customers. It is not

reasonable to think that consumers can be that satisfied, especially

over an extended period of time. Chances are customers are either

not being candid or not being contacted.

A Technical Assistance Research Programs (1983) study found that

the average business hears from only 4% of its dissatisfied custom

ers. For every complaint received by the company, the average busi

ness has another 26 customers with problems, at least 23% of which

are serious. In the opinion of Swan and Longman (1975), even though

automobile companies may hear from a higher than normal percentage of

dissatisfied customers, they still get complaints from only 25% of

those who are not satisfied. Gilly and Gelb (1982) suggested that

dissatisfied automobile customers are 3 times more likely to go to

the retail level with their complaints than to the manufacturer.

However, there appears to be no research studies indicating how many


customer communications at the dealership level by unhappy customers

are viewed as complaint opportunities, much less how many are acted

upon by the retailer.

Causes and Sources of Dissatisfaction

According to Anderson and Jolson (1973), a successful marketer

must communicate with customers, not just to them. Some consumer

advocates argue that too much of current marketing communication

stresses persuasion and imagery at the expense of other more relevant

information. It seems that the consumer movement is demanding that

manufacturers and retailers provide additional information, such as

product performance characteristics, safety standards, and warran

ties. Perhaps emphasis on this information would narrow the distance

between consumer product expectations and actual performance, thus

lessening an important source of dissatisfaction. Barbeau (1985)

contributed further to the theory that customer expectations influ-v.—

ence dissatisfaction by explaining that the expectation process is

composed of two dimensions. One dimension is concerned with the

outcomes the consumer believes will be obtained from the product

purchase, and the other is concerned with the outcomes the consumer

believes should be obtained from the product. The first dimension

corresponds to predictive expectations. Predictive expectations are

generally produced by prior experience with the product and other

information about how the product will perform such as advertising,

salesperson claims, and word of mouth from other persons who have

used the product. The second dimension corresponds to normative


expectations. Normative expectations imply a standard against which

the product will be judged. For example, a customer trying a new

brand with which he or she has had little experience may judge it

against prior experiences with other brands. Disconfirmation of

either dimension of expectancy can result in customer dissatisfac

tion. Barbeau further stated that additional research is required to

better understand customer expectations as important factors in dis

satisfaction.

Theoretical Bases of Satisfaction

In the viewpoint of Westbrook (1982), it is only recently that

researchers have begun to inquire into the nature of satisfaction

itself. He referred to the 1977 Marketing Science Institute Confer

ence on Customer Satisfaction as the first time that the conceptuali

zation of satisfaction was seriously addressed. At that conference,

Hunt (1977) proposed that consumer satisfaction is essentially an

evaluation of emotions sustained by consumers in the course of their

consumption experiences. Alternative conceptualizations were subse

quently offered by Westbrook (1980, 1981) and Oliver (1980, 1981),

each of whom conceived satisfaction as the emotional response which

followed an evaluation of the outcomes of consumers' purchase related

experiences. Levitt (1983) observed that the relationship between a

seller and a buyer doesn't end when a sale is made. The sale simply

consummates the courtship, at which point the marriage begins. How

satisfying the marriage is depends on how well the seller manages the

relationship. Westbrook (1981) categorized consumer experiences into


three broad types. The first is experiences related to the retail

outlet itself, such as dealing with an automobile dealership. Second

are the experiences that the customer has with the product. And

third is the service obtained from the retailer. Each of these

experiences receives an evaluation and an accompanying emotional

reaction from the consumer. It therefore may be possible to employ a

range of approaches not directly related to the product to raise

levels of customer satisfaction. As such, these concepts of consumer

satisfaction are of considerable value in mapping marketing strategy.

Statement of the Hypotheses

It is believed by this researcher that the preceding review of

the literature has established a theoretical foundation for this

study. Indeed, it was the goal of this study to examine today's

automobile industry through use of this theoretical foundation.

Hopefully by employing selected satisfaction, dissatisfaction, and

complaining behavior theories, useful information can be generated

toward a better understanding of automobile customers' needs and

wants. This is of particular importance at this time as customer

loyalty to domestic automobile brand names and individual dealers is

at an all time low. This condition exists for a number of reasons.

As explained by Power (1983), in the 1930s population growth, sub

urban sprawl, and increasing mobility combined to break up the per

sonal relationship new car dealers generally had with their custom

ers. Dealer loyalty by customers began to wane, but this was offset

partially by brand name loyalty, which didn't start to break down


until the 1970s.

The addition of new import nameplates, offering consumers a wide

variety of purchase alternatives, coupled with the sheer'increases in

the size of individual dealerships pushed traditional customer

loyalty almost out of the picture. Yet, the positive side for deal

ers was that there appears to be a tremendous opportunity to estab

lish a new kind of customer loyalty based on superior service to the

consumer. With this in mind, seven hypotheses were constructed which

test the relationship between defined levels of specific customer

service provided by dealerships and new customer loyalty, as judged

by dealership overall sales success. The development of the hypothe

ses was based on the review of the literature and this researcher's

25 years of experience as an employe and manager in a large domestic

automobile company.

Development of the first hypothesis, which probes into the

relationship of overall customer satisfaction and sales success, was

particularly influenced by Hunt (1977), who argued that intention to

repurchase is an excellent composite measure of customer satisfac

tion. If an equivalent repeat purchase is intended, that indicates

the first purchase was important enough to be repeated and the origi

nal choice provided satisfaction at a level in which the customer

doesn't feel compelled to seek an alternative choice the second time.

This is a reverse way to measure customer satisfaction but it has

support in marketing literature.

In the opinion of Olshavsky (1977), it should be expected, at a

minimum, that ths dissatisfied consumer will discontinue use of the


13

unsatisfactory product, service, or brand, or conduct a personal

boycott of the offending retailer. In D3A Today. Grangenois (1983)

reported: "In the rough and tough slugfest for profits, market

share, and in some cases survival, companies across the USA are

finding out that nice guys don't finish last" (p. IB). The message

being that United States companies are discovering that customer

satisfying attitudes, as much as high tech products, can keep them

competitive. Fincher (1933), in Dun's Business Month, warned corpo

rate planners: "Too often, in fact, the lackluster results on corpo

rate balance sheets are matched by similarly indifferent attitudes

behind the counter" (p. 89). It is not that firms are unaware of

this situation. It is simply that they become so involved in manag

ing finances, cost controls, and marketing that customer service at

all levels is often neglected.

As a result of the review of related literature and in response

to the widely acclaimed, but often ignored, importance of customer

satisfaction in the automobile industry, the following was hypothe

sized:

Hypothesis 1: There exists a direct relationship between over

all new automobile dealership customer satisfaction ratings and sales

success as measured by market penetration ratings.

Examined by the second hypothesis of this study was the rela

tionship between product warranties and sales success. Kendall and

Russ (1975), defined the range of warranties as follows:

A warranty is an affirmation by the seller of the quality or performance of the goods he is trying to sell. Express warranties make such an affirmation in writing. They range


from simple statements about product attributes (e.g.,"pure wool") or product performance ("satiafaction guaranteed or your money back"), to the complex documents limiting the legal responsibilities of manufacturers of automobiles and appliances, (pp. 36-37)

According to Bernacchi, Kono, and Willette (1979), the warranty

promise is a reasonable way of reducing the buyer's perceived risk as

he or she prepares to make a purchase, especially in the case of a

high priced product. As put forth by Darden and Rao (1977), satis

faction with repairs under warranty is instrumental in encouraging,

or retarding, repeat sales with present customers. Warranties are

expected to increase consumer satisfaction, and to do so by providing

security, peace of mind, and insurance with respect to the minimum

performance characteristics of the purchased products. Glassman and

Smith (1979) summed up warranty satisfaction by outlining four pri

mary factors. The first is the comprehensiveness of the warranty

coverage. Second is the ease and speed in obtaining repairs. Third

is the quality of the repairs. Policy adjustment shortly after the

warranty expires is the fourth factor.

The foregoing literature review and personal automobile market

ing experience leads this researcher to present the following:

Hypothesis 2: There exists a direct relationship between war

ranty service ratings received by new automobile dealerships from

their customers and sales success as measured by market penetration

ratings.

Dealership service departments and how they influence new car

sales success was inquired into in the third hypothesis. Bohon

(1985) stated that long before market researchers started utilizing


customer satisfaction surveys, successful new car dealers recognized

that one of the most rewarding ways to retain customers and promote

repeat business was through a confidence inspiring service depart

ment. Reporting his findings from a study which included 50,000

interviews with owners of automobiles, Braden (1977) concluded that a

high degree of relationship was discovered to exist between re

purchase intentions and repair experience. Power (1982) added that

recurring repair problems do more to sabotage the chances for repeat

buyers than any other single factor: "Owners who experience mechani

cal difficulties with their new car that are not fixed with dispatch,

and stay fixed, are quick to broadcast their woes to anyone who will

listen" (p. 4). According to Bearden, Crockett, and Graham (1979),

service problems may be due to any combination of dishonesty, in

competence, error, difference of opinions, lack of consumer knowl

edge, and/or poor communications between car owners and service

departments. Poor service departments at new car dealerships may

have a specific source, in the viewpoint of Turnbull (1982):

Car dealerships are generally owned by salesmen, not by mechanics, and the salesmen may not know or care much about the mechanical end of things. But if the boss man in the dealership doesn't care much about mechanical things he does know that his customers want a show of service, so he still may have a good looking service shop. Good looking, but maybe not so good. (p. 18)

Drawing upon this researcher's automotive experience, the fault is

more likely in the "salesman" owner's lack of leadership skills that

allows a significant investment in a "good looking" service shop to

be just show. Bennis (1983) said, "While most managers concern

themselves with doing things right, leaders focus on doing the right


things" (p. 64).

Based upon their surveyed sample of 2,330 new ear owners,

Bernacchi et al. (1979) reported:

The most frequently mentioned reason for service dissatisfaction was repeat service visits for the aame problem, either not getting it fixed correctly or not getting it fixed at all the first time. Of the 289 service dissatisfied, 872 checked repeat service visits as one source of dissatisfaction (respondents were invited to check as many as applied). In addition, repeat visits was most mentioned as the most irritating service problem, (p. 141)

Bohon (1985) echoed these findings and advised that people can under

stand coming in once to a new dealership's service department for a

problem, but not having to come back again for the same problem.

Therefore, since service department comebacks are representative

of service dissatisfaction, this hypothesis is presented:

Hypothesis 3: There exists an inverse relationship between the

number of times customers must bring back their automobile to a new

car dealership service department to satisfactorily solve the same

problem with the automobile and the dealership's sales success as

measured by market penetration ratings.

Involved in the fourth hypothesis was the condition of the new

car as delivered to the purchaser, his or her degree of satisfaction,

and how this related to dealership sales success. Power (1984)

reported that in February 1984, J. D. Power and Associates conducted

a New Car Delivery Condition Test Survey (NCDC). Some 39,500 respon

dents were requested to indicate if there was anything wrong with

their new cars when they were delivered. Results of the NCDC test

indicated that 402 of the total respondents experienced problems with


their new cars upon delivery. Included in the list of problems were

squeaks and rattles, electronic failures, interior finish, paint and

moldings, noise problems, and even engine stalls.

It appears reasonable to expect that the customer's satisfaction

with his 'or her new car at delivery sets the tone for the entire

ownership experience. This led this researcher to present the fol

lowing :

Hypothesis 4: There exists a direct relationship between new

car delivery condition, customer satisfaction ratings, and sales


Explored within the fifth hypothesis of this study was the role

of salespeople, how they can satisfy customers, and consequently how

the various levels of satisfaction relate to dealership sales suc

cess. Unfortunately many consumers feel that car buying is a frus

trating, unpleasant experience, and that bartering is designed to

confuse customers, that salesperson practices are unethical and lack

professionalism. Swan and Oliver (1985) believed that there was an

exchange of equity between a customer and a salesperson. In brief,

the equity theory suggests that a customer will compare his or her

inputs, such as shopping effort, to outcomes received from the sales

person and form a perception of net gain. The customer is also

believed to estimate what the salesperson invested in the way of

inputs, to serve the customer, and the outcomes that the salesperson

received, such as a profitable sale. The final step is the compari

son of customer to salesperson net gain. If the net gain favors the

salesperson then customer dissatisfaction is the result. Peters and


Waterman (1984) provided a simple message to salespeople derived from

their studies of many excellent companies:

All business success rests on something labeled a sale, which at least momentarily weds company and customer. A simple summary of what our research uncovered on the customer attribute Is this: the excellent companies reallyare close to their customers. That's It. Other companies talk about It; the excellent companies do It. (p. 156)

Hopefully, the Image of the fast talking, bright plaid double

knit suit, car salesperson Is giving way to a higher level of profes

sionalism. The fastest way to convince dealers to remove the cartoon

salesperson Is to show them the detrimental effect these employes

have on customer satisfaction with their sales staffs and sales. In

that regard the following was hypothesized:


car dealership sales staff customer satisfaction ratings and sales


Examined in the sixth hypothesis were new car dealership sales

person turnover rates and the impact this phenomenon has on dealer

ship customer satisfaction. It is a commonly believed marketing

principle that it is desirable to select a satisfactory sales staff

and to retain those individuals who are selected because, In general,

the longer the salesperson remains with a firm the more valuable he

or she is to the firm. The nature of costs of salesperson turnover,

implied by Heneman, Schwab, Fossum, and Dyer (1980), included the

cost of placing the new salesperson in the firm, such as training,

and the indirect loss due to the ineffectiveness of the new sales

person. They also viewed a turnover rate of 40% as excessive. Vogel


(1984) viewed Che costs of salesperson turnover in a slightly differ

ent aanner: "Turnover gets to be very costly, not only the hiring,

but the open territories, general disruption, and a bad image as far

as the customers are concerned" (p. 20).

The automobile industry has a salesperson average turnover rate

in excess of 40Z, which raised the following hypothesis:

Hypothesis 6: There exists an inverse relationship between new

car dealerships' percentage of salesperson turnover and overall new

automobile dealership customer satisfaction ratings.

Pursued in the seventh and final hypothesis was the relationship

between salesperson turnover and sales staff customer satisfaction.

The two previous hypotheses examined the relationship of the sales

staff and salesperson turnover to other variables, respectively. The

close association of these two variables led this researcher to

hypothesize the following:


car dealerships' percentage of salesperson turnover and sales staff

customer satisfaction ratings.

Summary

In summary, the preceding review of literature was divided into

five sections. In the first section the impact that customer satis

faction or dissatisfaction has on repurchase attitude, market per

formance, and managerial perspectives was dealt with. In the second

section selected ways to measure consumer satisfaction levels were

provided. There followed in the third section a review of causes and


sources of dissatisfaction. In the fourth section the theoretical

bases of satisfaction were addressed. Seven hypotheses based on the

review of literature as well as this researcher's experiences in the

autoaobile industry were offered in the fifth section.


CHAPTER III

DESIGN AND METHODOLOGY

In this chapter are presented the research design and method

ology used in this study. Contained within is a discussion of the

population of interest to this study as welT as of the subpopulation

that was studied. This is followed by a description of the data

gathering instruments with attention focused on the development, the

purpose, the content, and the administration of the instruments. A

discussion of the procedures used in this study completes the chap

ter.

Population of the Study

The population of interest in this study was 5,250 new passenger

car dealerships franchised by a major automobile company. To protect

the anonymity of the company a pseudonym, Universal Motor Company,

has been substituted for the actual commercial name. Total annual

passenger car sales by Universal's dealer network for the period of

this study was approximately 2 million units. Universal is a mul

tiple carline manufacturer and has franchised dealerships in every

state. The sales department of Universal Motor Company appoints new

dealers, administers the franchise agreement, and provides business

management council to all of Universal's dealerships. To accomplish

these responsibilities, the organizational structure of the sales

department had four levels (see Figure 1).

21


22

CentralOffice

6 Regional Offices

42 Zone Offices

504 Districts

5,250 Dealers

Figure 1. Universal Motor Company Sales Department.

The top level of the organizational structure of the sales

department was Universal's central office located in a major metro

politan city. Within the second level, at the time of this study,

the United States was divided into six geographic areas labeled as

regions (see Figure 2). Each region was in turn divided into seven

zone areas, as the third level (see Figure 3). To make up the fourth

level, zone3 were divided into an average of 12 districts, and each

district had an average of 10 dealerships within its boundaries.


23

CMAT L W B

SOUTHWEST

Figure 2. Universal Motor Company's Six Regions.

Figure 3. Universal Motor Company's 42 Zones.


Subpopulation of the Study

The subpopulation investigated in this study was the 42 zones of

Universal Motor Company. Available from each zone was composite

business information reflecting the approximately 125 dealerships in

each zone. This subpopulation was chosen for the study because of

the availability of pertinent data deemed to be representative of the

dealer network as a whole.

Instrument Development

The data from which this study was drawn originated from three

instruments which were used extensively by Universal's Marketing

Information and Research departments. The first instrument, the

Customer Satisfaction Index (CSI), provided customer satisfaction

data through use of a mail questionnaire sent directly to a large

sample of Universal's new car purchasers. The second instrument,

entitled the R. L. Polk Community Registration Report, provided new

car purchaser registration data by dealer area. The third instru

ment, the Sales Personnel Productivity Report, provided sales produc

tivity and employment status data for each salesperson in Universal's

dealerships.

Instrument Purpose

The purpose of Universal's CSI program was to measure customer

satisfaction on a continuous basis with regard to Universal new cars

and the service provided by Universal dealers. These data were used


in the study to rate total zone customer satisfaction levels through

the combined CSI ratings of each zone's dealers.

The purpose of the R. L. Polk Community Report^ for Universal's

use, was that of monthly measurement of market penetration versus

competition for each of Universal's dealership areas. In the study,

the registration data were used to rate total zone sales success

through the combined registrations of each zone's dealers.

The purpose of the Sales Personnel Productivity Report was to

collect and prepare salesperson sales data for various comparisons,

as well as to provide individual salesperson qualifications for

Universal's sales honor societies. For purposes of the study, the

Sales Personnel Productivity Report was used to determine total zone

salesperson turnover percentages through the combined data of all

salespeople within each zone.

Instrument Content

Page 1 of the 4-page CSI questionnaire (see Appendix A) is

computer imprinted with the owner's name, the model and series of

vehicle owned, the name and location of the selling dealer, and the

month and year of purchase. The complete questionnaire contains 17

questions which refer to the selling dealer and to the automobile

listed on page 1. The. data obtained from four of the questions were

selected for use in the study. A discussion of each of the four

selected questions follows.

Question 3 (see Figure 4) asked the customer about the selling

dealership's sales staff. Did they have a good attitude, know their


26

produce, explain Che features of the car and the warranty, and treat

customers right?

ABOUT YOUR DEALER'S SALES STAFF ■■ ' ' ■ ■3. H o w ftM to w m b w wHhtha SALES STAFF 1 ymr mW— a— r i d t o l n i b hfcw taa t t t

(By sales staff we mean the salesperson, the sales manswer or the owner).

THE SALES STAFF:V tfjr

‘s'wua*1Natter SUM*fcj_aai----jIvHr U H H N

1 TaiaiH ut1 teawmi*

VeryMm iM M

Has A Good Attitude ................................................................. ........... □ □ □ □ □Is Well Informed About The Product ............................... ........... □ □ □ □ □Explained The Features Of The Car...................................... ........... □ • • • • . . . □ . . . . . . . . . . . . . . . . . . . . . . . □Explained The New Vehicle Warranty ............................... ........... □ □ □ □ □OVERALL SATISFACTION WITH SALES STAFF....... ......... □ □ □ □ □

Figure 4. Question 3 of CSI Questionnaire.

The customer respondent provided answers by marking boxes under

any one of five predetermined, consistent throughout the question

naire, response ratings (see Figure 4). Only the data collected from

the "overall satisfaction with sales staff" part of Question 3 were

used in the study.

Question 4 (see Figure 5) dealt with the delivery condition of

the new car. Customers were asked to respond to items such as clean

liness and mechanical operation. Only the data collected from the

"overall satisfaction at time of delivery" part of Question 4 were

used in the study.

Question S (see Figure 6) asked customers for responses on what,

if any, warranty services they had sought from the selling dealership

and the number of trips needed to correct the same problem. Only the

data regarding the "number of trips needed to correct the same prob

lem" part of this question were used in the study.


27

AT THE TIME OF DELIVERY - --------- '■ :4. How satisfied wore you with the condition or your IMS product AT THE TIME OF DELIVERY considering

tbo blowing Itomi? (By delivery we mean when you first received it from the dealer.)Si— nOot NtMur sm m m s w wtm Vtn S«U*a«0 Nor D lltl lh O dMWliOrt DtMXbltO

Cleanliness of Car............................................ □ □ □ □Mechanical Operation ( engine, transmission, etc.) ........ □ □ □ □Electrical Operation ( lights, radio, power windows, etc.) .. . . . . . . ...□ .... .... □ ........ □... .. nBody Fits (doors, hood, trunk lid. moldings, e tc .).......... □ □ □ □Paint Finish ................................................. □ □ □ □OVERALL SATISFACTION AT TIME OF DELIVERY .. □ □ □ □ □


S. Thinking about your IMS product, have you had WARRANTY SERVICE from your sellna dealer on any ofthe items Haled below? If “YES," pteaae check the number of tripe needed to correct the SAME problem.

Nam btr oTTHpi N m M H id S m ltt? lo C o«m t SAME Problem

V t* No I 1 3 o r more

Air Conditioning......................................................... ..... ....... ...Body Fits (doors, hood, trunk lid. e tc .)...................... ..... □ □ □ □ □Body Water Leaks, Wind Noise ................................ ..... □ □ □ □ □Brakes.......................................................................... .............. ........ .........Steering........................................................................ .............. □ □ □ □ □Electrical (lights, gauges, instruments, e tc .) .............. .............. □ □ □ □ □Engine Hard to Start, Won't Start ............................. .............. □ □ □ □ □Engine Noise, Knock.................................................. .............. ....... .........Engine Rough Idle, M isfiring...................................... ..... □ □ □ □ □Oil Leaks .................................................................... .............. □ □ □ □ □Paint............................................................................. ........ .........Radio............................................................................ .............. □ □ □ □ □Speedometer................................................................. .............. □ □ □ □ □Squeaks and Rattles.................................................... .............. ........ .........Transmission ........................................................ .............. □ □ □ □ □Trim, Hardware. Moldings......................................... ..... □ □ □ □ □Wheels, Tires, V ibration............................................. ..... ......Other □ □ □ n n

(Please write ini



28

Question 9 (see Figure 7) asked customers to rate the selling

dealership's warranty service. Considerations included were attitude

of service personnel, promptness of attention, and convenience of

hours. Only the data collected from the "overall satisfaction with

the warranty service" part of Question 9 were used in the study.

9. How satisfied hive yen bsra with the WARRANTY SERVICE from your gjHng frthf ctmdikrtsf «ho Mowing Items?V try Soawwhat Neither SatltBad Sim i what Very

Saddled Sedsfed Nar OlmaUe«ed Dlmadi fied Mmadeaed

Service People Have A Good Attitude .................................... □ □ □ □ GService People Wait on Me Promptly ..................................... □ G G G GService People Understand My Problem................................ G ..........G ..............Q .............G .......... QRepair Order Is Easy to Understand ....................................... G G Q Q GJob is Done When Promised .................................................... G G Q Q GJob is Done Right The First Tim e........................................... Q ..........Q ...............Q ........... G .......... GService Hours Are Convenient ................................................ Q G Q O ONeeded Parts Are in Stock Q Q Q G QOVERALL SATISFACTION WITH WARRANTY SERVICE 0 G □ □ □


Question 10 (see Figure 8) was designed to obtain the customer's

overall satisfaction with the selling dealer, including sales staff,

the delivery condition, and any service on the car received at the

selling dealership. The data collected from this question were used

in the study.

TOTAL SATISFACTION WITH SELLING DEALER10. Overall, how satisfied have you been with your seUlna dealer? (Including the sales staff, the delivery condition o f your

1985 product, and any service you may have received at your selling dealer on this car.)

Vtry Somewhat Neither S Misfed Somtwhat VtrySatis fed Sails fed Nor Dieeadened DtmaUsfed DtseaUsfed

G G G G G



The five rating responses that customer respondents could choose

within each question category were applied to a rating scale struc

ture (see Figure 9). The indexes of customer satisfaction shown in

the dealer and zone reports were based on this rating scale.

NeitherSatisfied

Very Somewhat Nor Somewhat VerySatisfied Satisfied Dissatisfied Dissatisfied Dissatisfied

I_________I_________ I_________I_________1(100) (75) (50) (25) (0)

Figure 9. CSI Rating Scale.

The numbers in parentheses on the scale in Figure 9 were the

weights used to calculate the indexes. They ranged from 100 for a

very satisfied response to 0 for a very dissatisfied response. These

weights were not shown on the mail questionnaire. From the customer

responses to the satisfaction scale, a 2-digit average rating or

index was calculated (see Figure 10). The customer satisfaction

indexes were calculated for each question in the CSI questionnaire

for all the customer respondents for each Universal dealer. Thus,

dealership indexes were provided. Through use of the dealer CSI

rating, Universal could counsel with dealers as to their individual

customer satisfaction indexes and where improvements in customer

satisfaction needed to be made in their operation. For comparison

purposes, Universal calculated and communicated within the company

CSI ratings for each zone (see Appendix D), by combining the total

responses from all questionnaires returned for all CSI dealers in


each zone. Zone CSI ratings for Che selected questions were utilized

in the study.

Number of Rating respondents

Rating scale description

scalevalue

rating each category

Very dissatisfied 0 X 8 - 0

Somewhat dissatisfied 25 X 9 m 225

Neither satisfied nor dissatisfied 50 X 9 « 450

Somewhat satisfied 75 X 45 m 3,375

Very satisfied 100 X 93 - 9,300

164 13,350

13,350/164 * 81 mean value or index

Figure 10. Calculation of Customer Satisfaction Index.

The R. L. Polk Community Report was based upon new vehicle

registrations at the time of purchase. This was possible because

registration of motor vehicles was required by law in every state.

The two principal elements used to compile the Community Registration

Report were the postal communities in the dealer's Area of Primary

Responsibility (APR), and the new unit registrations within those

communities. The postal communities which constitute Universal deal

ers' APR were determined by Universal through studies which included

such items as number of new unit registrations in each community, the

road network, natural barriers, stability of the community (permanent


31or temporary, such as military posts or resort areas), and population

trends. The registration data for the APR are purchased through R.

L. Polk & Company and are derived from official state documents.

Universal dealers are provided copies of their individual monthly

Community Registration Reports (see Appendix B). The term market

penetration refers to the percentage of dealer registrations of

Universal automobiles, over a given period of time, by the franchised

dealer in his or her APR versus the industry market. A simple calcu

lation (see Figure 11) of dividing, registrations by total industry

results in market share.

Dealer Total Marketregistrations industry penetration

400 f 2,000 - 20%

Figure 11. Calculation of Dealer Market Penetration.

For comparison purposes Universal calculates and communicates

within the company market penetration percentages for each zone (see

Appendix D) by combining the total registrations from all Universal

dealers in each zone and dividing the sum by the zone's industry

total. Zone market penetration percentages are utilized in the

study.

The Sales Personnel Productivity Report information is collected

through the completion of report forms by Universal dealers (see

Appendix C). The data provide detailed information concerning each

dealer's sales force such as salesperson average sales, sales honor

club points, and salesperson turnover percentage. For comparison


purposes Universal calculated, and communicated within the company,

salesperson turnover percentages for each zone (see Appendix D) by

combining the total salesperson data from all Universal dealers in

each zone. Zone salesperson turnover percentages were utilized in

the study.

Instrument Administration

The data required for this study were obtained from three

separate instruments used by Universal's Research and Information

departments at the time of this study, and each drew from completely

diverse sources and required dissimilar collection techniques.

The CSI program included approximately 1,800 Universal dealers,

or about 80Z of Universal's total yearly sales. Customers who re

ceived questionnaires were selected based on a stratified random

sample. Customers were mailed their questionnaires at the 6-month

point of ownership. This timing gave the customer long enough to

have returned to the dealership yet provided relatively recent infor

mation on the sales experience and delivery condition of the car. To

maximize questionnaire returns, a follow-up card was mailed to each

customer 4 days after the original mailing. Approximately 600,000

questionnaires and follow-up cards were mailed for the year of the

study, 1983, with a response rate of slightly over 50Z. Some Univer

sal dealers expressed a concern that the replies would be heavily

biased on the negative side because owners with complaints are more

likely to reply than satisfied customers. A Universal telephone

survey of 9,000 nonrespondents to the CSI questionnaire was used to


check Che possibility of a nonresponse bias. The customers tele**

phoned answered the questions from the questionnaire in the same

general manner as the customers who returned the questionnaire. When

asked why they hadn't responded, the majority answered that they were

"tob busy."

The Community Registration Report, purchased from R. L. Polk &

Company, was used by all domestic automobile companies. The reports

were compiled only from official state documents, that is, registra

tions made with and accepted by the motor vehicle bureau of each

state. R. L. Polk & Company maintained a field force of trained

representatives who not only obtained the registration information

but also maintained close contacts in every state. These contacts

reached from top state officials through the motor vehicle groups to

dealer associations and others interested in vehicle registration

procedures. In this way, Polk field representatives were alerted to

any unusual situation within the states which might require special

study or attention. The credibility of the R. L. Polk Community

Registration Report in the automobile industry was rarely questioned.

The Sales Personnel Productivity Report was completed monthly by

Universal dealers and was computed and printed by a branch division

of Universal Motor Company. Dealers with salespeople were required

by the Universal franchise to participate in the reporting program.

Design and Procedure

This study was designed to answer research questions concerning

the relationship which was hypothesized to exist between automotive


dealership customer service satisfaction with sales success. In

order to test the hypothesis, this researcher relied upon three

research instruments utilized by a major automobile company. The

resultant data were deemed to represent the total dealer network of

5,250 dealerships; however, it was reported in terms of 42 geographic

zones (see Appendix D). These data were used because they were

accessible to the researcher and thought to be representative of the

larger population.

A hypothesis regarding the relationship of overall new automo

bile dealership customer satisfaction ratings and sales success was

developed as were hypotheses regarding warranty service, comebacks

for the same service problem, new car delivery condition, dealership

sales staffs, and salesperson turnover. In order to investigate each

of the hypotheses developed and utilizing the data extracted from the

three instruments discussed previously, geographic zone totals were

compared for each variable. In an endeavor to determine whether or

not relationships existed between the variables referenced in each

hypothesis, the Wayne state University Computing Services Center,

Detroit, Michigan, was utilized to plot a scattergram and compute a

Pearson product-moment correlation for each hypothesis.

Comments relating to the analysis of data are included in Chap

ter IV ("Results") following the discussion of each hypothesis.

Summary

Presented in this chapter was a description of the population of

interest and subpopulation studied, type of instruments utilized in


the atudy to collect date, and discussion of the research design and

procedures. Addressed in the next chapter are the results of the

data interpretation procedures.


CHAPTER IV

RESULTS

Reported in this chapter are the findings of the study. The

problem investigated by the study posed the question, do new car

dealers who rank high in providing satisfactory customer service also

have higher success in new car sales? The significance of the study

was to provide a degree of insight into this question and thus deter

mine to what extent the results can be utilized within the strategic

planning of automobile companies. Reported in the first section of

this chapter is general information regarding the data collected;

reported in the second section are the results of the seven previ

ously offered hypotheses.

Review of Information Regarding Data

The population of interest consisted of 5,250 franchised new car

dealerships of a major domestic automobile company. The subpopula-

tion studied consisted of 42 geographical zones of the company. The

data which are presented as zone totals reflect the combined totals

of data of all dealerships within each zone. The zone data were

extracted from three instruments utilized by the automobile company

focused upon in the study. The three instruments were: (a) Customer

Satisfaction Index Program (CSI), (b) R. L. Polk Community Registra

tion Report, and (c) Sales Personnel Productivity Report. The data

collected by the three instruments utilized in the study represent

36


the calendar year o£ 1983. The following provides a brief descrip

tion of the zone characteristics of interest examined by the instru

ments which are basic to the findings to be presented:

1. Zone passenger car market penetrations in 1983.

2. Zone overall new car dealer customer satisfaction in 1983.

3. Zone warranty service customer satisfaction in 1983.

4. Zone percentages of times customers were forced to bring

their new car back more than once to the selling dealer for the same

service problem in 1983.

5. Zone new car delivery condition customer satisfaction in

1983.

6. Zone customer satisfaction with dealership sales staffs in

1983.

7. Zone percentages of salesperson turnover in 1983.

Test of Hypotheses

An analysis of variables which are of interest to this re

searcher when comparing new car dealership customer satisfaction with

dealership sales success are offered in the following hypotheses.

The hypotheses resulted from the review of the literature as well as

the experiences of this researcher who has worked both as a non

management and management level employe for the subject company

during the past 25 years. Rationale for the stated hypotheses was

offered in the review of literature.

For the sake of clarity, each of the seven hypotheses are pre

sented and a review of the results of testing follow.


Hypothesis 1; There exists a direct relationship between over

all new automobile dealership customer satisfaction ratings and sales


A review of the scatter of the points in the scattergram (see

Figure 12) suggests a positive and linear relationship between cus

tomer satisfaction ratings and market penetration ratings.

A Pearson product-moment correlation coefficient for these data

is .64 (see Figure 12). Therefore, using an alpha of .05 it is

possible to reject the null hypothesis that the (Pearson product-

moment correlation coefficient) parameter rho is equal to zero,

against the alternate hypothesis that it is greater than zero.

The scattergram suggests and the correlation coefficient con

firms the presence of a direct relationship between customer satis

faction ratings and market penetration ratings. Therefore, these

data support the hypothesis that a direct relationship exists between

dealership customer satisfaction ratings and sales success as mea

sured by market penetration ratings.

Hypothesis 2: There exists a direct relationship between war

ranty service ratings received by new automobile dealerships from

their customers and sales success as measured by market penetration

ratings.


Figure 13) once again presents a lower-left-to-right pattern, sug

gesting a positive relationship between the variables of interest.

The Pearson product-moment correlation calculation produced a

result of .54 (see Figure 13). Using an alpha level of .05, it is


39

s e i f f i i i i M i oo toami ocu 9.00 t i c 19.00 19.00 IT. 00

u c o o ttJ p c m t t .o o a t.o o 19.00 99.00 ar.oo

99 .00 ♦111t

•0 .0 0 *1I1I

99 .00 ♦1t11

9 0 .0 0 »1t1

9 4 .0 0 *tI11

9 9 .00 ♦11f1

W .b 6 ' ♦111-179.00 *

tIKI

7 9 .00 ♦1t11

74.00 ♦11t1

79.00 ». •••9.01

titiit I ’tiiiK itI It

It•.I!•IIItItIII

to.00 19.00 14.00 19.00 19.00 90.00 99.00 99.00 99.00

COtKCUrtON <*)• 0.99744 9 SOUAlfO 0

(XCIUOID VAIUIS* 0

SIGNI7ICAMCI

MISSING V AIUH

Figure 12. Relationship of Zone 1983 Overall Dealership CS1 Ratings to Zone 1983 Passenger Car Percentage of Market Penetrations.


40

SCATTI99JMM O f fOOWH « *M (ACtOlt) 9CA9t .0 0 1t .00 t3 .00 1».00 IT.00 19.00 31.00 33.00 39.00 37 00

9 1 . 0 0 *

79.00

77.00

w.oo

73.00

71.00

•9.00

•7.00

•9.00

•3.00

• 9.00 *

•• •

• .00 10.00 13.00 14.00 19.00 13.00 20.00 32.00 24.00 29.00 20.00

COMIUTtON («>* 0.94397 9 SQUAMO 0.29990 SICNIPICANCK

n o rrto valuco - 43 CXCUJOCO VALUC9- MIS9IN0 VALUC9 *

Figure 13. Relationship of Zone 1983 Warranty Service CSI Ratings to Zone 1983 Passenger Car Percentage of Market Penetrations.


possible Co rejecC Che null hypothesis that the parameter rho is

equal to zero against the alternate hypothesis that the parameter rho

is greater than zero.

A direct relationship between warranty service ratings and

market penetration ratings for new car dealerships is, therefore,

suggested by the scattergram and confirmed by the correlation co

efficient. The hypothesis that a direct relationship exists between

dealership warranty service ratings and sales success as measured by

market penetration ratings is, therefore, supported.

Hypothesis 3: There exists an inverse relationship between the

number of times customers must bring back their automobile to a new

car dealership service department to satisfactorily solve the same

problem with the automobile and the dealership's sales success as

measured by market penetration ratings.


Figure 14) presents a lower-right-to-left pattern, suggesting a nega

tive relationship between forced service comeback for same problem

and market penetration.


result of -.54 (see Figure 14). This correlation is significant at

the .05 alpha level and the hypothesized inverse relationship between

dealership percentage of times customers must bring back their auto

mobile for service on the same problem and dealership sales success

as measured by market penetration ratings is, therefore, supported.

Hypothesis 4; There exists a direct relationship between new

car delivery condition, customer satisfaction ratings, and sales


42

SC4TTIIlOOMO 0* <OMN» MM •.00 t•.0 13.00 10.00 !»• 00(AC *0991 M Mit. oo at.oo aa.oo at,oo at00

90.00

90.00

94.06

93 .00 t I t’ ’ t "

9 3 .0 0 *I I1t

f t . 00 ♦It

.......I---I ♦t I I

. I "40.00 4

t. . . ttI4i.o0' .ttti

47 .0 0 ♦

90 .00

10.00 12.00 U.OO 10.00 10.00 10.00 32.00 24.00 10.00 30.00

C0MI14TI0N (01- -0.04302 • 00040(0 0.30442 SIGNIFICANCf 0.00010

PL0TTID V41UI0 • 42 (XCUWI0 V41UII- 0 MIOSINO V4LUII

Figure 14. Relationship of Zone 1983 Service Comeback for Same Problem CSI Percentages to Zone 1983 Passenger Percentage Market Penetrations.




Figure 15) suggests a positive and linear relationship between de

livery condition and market penetration.

The Pearson product-moment correlation coefficient for these

data is .64 (see Figure 15). Therefore, using an alpha of .05, it is

possible to reject the null hypothesis that the parameter rho is

equal to zero, against the alternate hypothesis that it is greater

than zero.

The scattergram suggests and the correlation coefficient con

firms the presence of a direct relationship between delivery condi

tion and market penetration. Therefore, these data support the

hypothesis that a direct relationship exists between dealership new

car delivery condition and sales success as measured by market pene

tration.


car dealership sales staff customer satisfaction ratings and sales


The calculation of a .68 correlation (see Figure 16) produced by

utilizing the Pearson product-moment method confirms the presence of

a positive relationship between sales staff customer satisfaction

ratings and sales success as measured by market penetration ratings.

The alternate hypothesis is, therefore, supported at the .05 level.

Hypothesis 6; There exists an inverse relationship between new

car dealerships' percentage of salesperson turnover and overall new

automobile dealership customer satisfaction ratings.


44

SCAfTlOQOAM 08

• T O O

•9.00 *IIII•8.00 ♦ I I I I ♦ t t I K

•8 .0 6 ♦tIIt•8.00 ♦tIII

•4 .0 0 ♦I tIi

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•a .o o *i t i I • i t i t

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1 1 ;

1 11 1 t1 ......................................... 1 i1 1 t1 11 ............................................ ...................... 1 i1 1 i1 1 i1 ............................................. 1 iI 11 • 1 it ..................................... 4 | • i1 • • 1 i1 • 1 i1................................... 1 "I 1 i

• • •• I i1 • 1• I • 1• 1 " • • 1 i• 1 • • 3 1 t• • • I 1

’ ...........................• ' 1 ..................• ..............I " .............................. I “ i• t 1• f I i

.................................................. *• ........... I * ....• .................................... ........ I ' i1 1 i

• • 1 1 __________ i•..................... .........- ...................f “ ‘ .........................................• 1 1 it 1 i

• .00 to .00 ta.oo 14.00 18.00 18.00 30.00 33.00 34.00 38.00

C08881AT10N <•)• 0.83948

plottco vAiuis - 43

• SOUAIKO

IXCkUOlO V4LUIS-

0-40381

0M G N m C A M C K

tflSSINO VALUI9 *

0.00000

Figure 15. Relationship of Zone 1983 Delivery Condition CSI Ratings to Zone 1983 Passenger Car Percentage of Market Penetrations.


45

K t t r i N M 0* <00W» IT tM• ■OO II.oi.W *•

•TOO

•0.00

•0.00

■4.00

•3 .00

• J .06

• 1.00

•0.00

to.00

70.00

cooo

PLOT

13.00 If.OO IT.00i i c h i i i k m

•0.00 31.00

• ••

as.oo a t . oo ar.oo

00 10.00 19.00 u 00 i t .00 I t .o o ao.oo

la t io n <«>• o .ta a ta

(0 VAIUIS - 49

a souaiio

CXCLUOIO VAIUIS-

0.40733

0

39.00 94.00 a t . oo a t . 00

StGNinCANCt 0.00000

MISSINQ VALUtt • o

Figure 16. Relationship of Zone 1983 Sales Staff CSI Ratings to Zone 1983 Passenger Car Percentage of Market Penetration.


A review of Che scatter of the points in the scattergram (see

Figure 17) presents a lower-right-to-left pattern, suggesting a nega

tive relationship between salesperson turnover and overall new auto

mobile dealership customer satisfaction ratings.


result of -.57 (see Figure 17). This correlation is significant at

the .05 alpha level and the hypothesized inverse relationship between

dealerships' percentage of salesperson turnover and overall new auto

mobile dealership customer satisfaction ratings is supported.


car dealerships' percentage of salesperson turnover and sales staff

customer satisfaction ratings.

The Pearson product-moment correlation coefficient for this

final test is -.54 (see Figure 18), which is indicative of a negative

relationship between new car dealerships' percentage of salesperson

turnover and sales staff customer satisfaction ratings.

Using an alpha level of .05, it is therefore possible to reject

the null hypothesis that the (Pearson product-moment correlation

coefficient) parameter rho is zero, against the alternative hypothe

sis that it is greater than zero.

Summary

Results have been offered which support the purpose of the

study. In the first section of this chapter was described the need

to investigate the problem of whether or not automobile companies

should include in their marketing strategies the hypothesized


47

fC A r r iM M oo (OOMI OMfc (4C0099) 7091091.00 90.00. 90.00 44 00 40.00 91.00 90.00 90.00 94 00 90.00

91.00 • 1 1 •t 1 I1 1 1I 1 11 1 1

90.00 • 1 1I t1 1 1t ( 11 I

•0.00 • I I1 IK It 1 11 1oo.oo * t1 t

1 1f K 1

•4.00 • f 11 11 tI I t...1 • I

•f.OO • 1 1I* K1 • • it • 1 It ... 1 1

•0.00 • ............................. * 1 1 ■** **1 • •1 r1 • • I * i

I • • • • • i♦ • • • i1 *

. .... . . . . . . #1

1 • •1 t1 • 1 • |I • 1 • i

70.00 • I • |1 1 • • *I •1 • |1I

11

i & J74.00 » '' « *•

1 t i1 t t1 1 • |1 • I 1

71.00 ♦ 1 1 •

90.00 34.00 90.00 . 40.00 40.00 10.00 14.00 10.00 03.00 10.00 TO.00

C0MU4M0M f i t - -0.17919 | 10U40I0 0.33711 II6MI4IC4NCI 0 00004

4107710 V4CUI1 • 43 KCUMO V41U11- 0 4I11IN0 VALUI1 • 0

Figure 17. Relationship of Zone 1983 Salesperson Turnover Percentages to Zone 1983 Overall Dealership CSI Ratings.


48

1C4TTIMMN W (OOMtl IT*»»IS.OS N .C I *0.00

(•caoiti rovi*oo M.OO 13. 00 M 00 *0.00 M 00 *0 00

*0.00 •

•TOO

W.00 *•

M.OO

M.OO

•3.00

M.OO

•too

•0.00

TS.OO

T3.00 •

30.00* * 34.00 * 30.00 43 00 4( 00 M.OO 14.00 M.OO (3.00 M.OO TO.00

HON (01- -0.13043

43■ 1004*10

1XCIU0I0 V4LUI1-

0 JM M SI0NITIC4NC1 0 00011

o 41111440 V41UI1 • o

Figure 18. Relationship of Zone 1983 Salesperson Turnover Percentages to Zone 1983 Sales Staff CSI Ratings.


relationship between satisfactory customer service and sales success.

Described in this section also were the general background character

istics of the automobile company's zones. Characteristics of inter

est were market penetration, overall customer satisfaction, warranty

service, comeback problems, delivery condition, sales staffs, and

salesperson turnover.

In the second section of this chapter were presented the results

of the testing of the seven hypotheses. All seven hypotheses were

accepted.

Offered in Chapter V is a discussion concerning the conclusions

that can be drawn from the data analysis presented in this chapter.

In addition, recommendations are made for future research and use of

this study.


CHAPTER V

CONCLUSIONS AND RECOMMENDATIONS

As detailed earlier, this study was conducted for the purpose of

determining whether or not there exists a relationship between new

car dealership customer service satisfaction ratings and dealership

sales success as measured by market penetration ratings. The popula

tion of the study was 42 geographic zone clusters of dealerships in

the United States for a major domestic automobile company. Ratings

for the total dealers in each zone were obtained, representing cer

tain characteristics. Conclusions relative to each of those items

are discussod in this chapter. The conclusions regarding the rela

tionship between overall customer service satisfaction and sales

success are presented in the first section of the chapter and are

followed by conclusions regarding the relationship of other charac

teristics of interest. In the second section of the chapter recom

mendations for future research are offered. The chapter concludes

with a summary of this researcher's opinions and thoughts regarding

the study.

Dealership Overall Customer Satisfaction

In Chapter IV ("Results") the data collected from the study

population of all 42 geographic zones of the subject automobile

company were presented. The data were collected by three company

utilized instruments detailed in Chapter III ("Design and

50


Methodology"). The data were then processed with the aid of a com

puter. It is believed by this researcher that these data are repre

sentative of the 5,250 franchised dealerships of the major automobile

company focused upon. A number of observations can be drawn as a

result of the statistical support of the hypothesized direct rela

tionship between overall customer satisfaction ratings for these

dealers and sales success. Dealerships who consistently demonstrate

either high or low overall customer satisfaction can normally be

expected to produce similar levels of results in sales success. It

would appear then that automobile companies should indeed attempt to

educate, support, and lead their dealers in becoming customer satis

faction oriented. Thus, the monitoring of customer satisfaction is

an important management tool at both the local dealership and

national company levels. Population growth, suburban sprawl, and

increasing mobility of the consumer have combined to break up the

personal relationship new car dealers generally have with their

customers. Therefore, consistent policies that create service satis

faction for all customers is more important than ever before.

Dealership Warranty Satisfaction

The results of the study indicate that there exists a direct

relationship between dealership warranty service ratings and dealer

ship sales success. The data collected suggest that a positive

opportunity exists for marketing management to utilize warranty poli

cies as customer satisfaction tools. This brings into question the

thought that the major role of warranties is to limit the


responsibility of automobile companies. It also challenges the atti

tude that complaint-handling departments are established merely to

exemplify good automobile company citizenship, and that a complaining

customer is an adversary. It is recommended that complaints handled

by warranty be viewed as having promotional value. Also that com

plaints in general provide useful feedback on how to improve warranty

coverage. Consumer complaints and warranty expenses are not just

something to be endured. They can serve as valuable guides to neces

sary product improvements and just as importantly they can, when

well-handled, promote customer satisfaction with the warranty service

received.

Dealership Comebacks for the Same Service Problem

It was not surprising that the results of the study supported

the hypothesis that there exists an inverse relationship between the

number of times customers must bring back their car to solve the same

service problem and dealership sales success. The frustration of an

owner who returns to the dealership time and time again to repair the

same service problem was anticipated by the researcher to be ex

pressed in no less terms than loss of sales. It is suspected also by

the researcher that owners returning to the same dealer for unsatis

factory service, while not likely to purchase again from the same

dealer, are also not likely to repurchase the same make of automo

bile. It is recommended that dealerships review the communication

channels between the customer in for service and the mechanic who

will perform the service. Very often the customer tells a service


counselor the nature of his or her problem, the repair order is then

written by the counselor, which goes on to the work area and is

assigned to a mechanic who has not directly spoken to the customer.

The nontechnical customer's request may be lost en route. The result

is that the car is not properly or completely repaired the first

time. In many dealerships, the only contact the dealers may have

with their service department is when a customer telephones and

threatens to sue. Since not fixing the car right the first time is

the most frequent complaint voiced by customers, the frequency of

this problem is a good indicator of a dealership's service department

image. The direct relationship of this variable to sales success

suggests that everyone on the dealership service staff must be in

spired to do the job right the first time, not out of idealism, but

because their paycheck depends on it.

Dealership Car Delivery Condition

Customers rightfully question why their brand-new, expensive

cars have so many bugs to be worked out. This researcher, an automo

bile company manager, has explained to many dealers that it is their

responsibility to fine tune and prepare our mass produced product

before delivery to our customers. The cliche used in this situation

has been "if all that is necessary from the dealership is to wash the

car before customer delivery then the company could simply sell the

products out of a catalog with direct delivery to the customers." In

reality mass produced automobiles require more than a wash job before

delivery and that is part of the franchised dealer's


responsibilities. The importance o£ this process is born out by the

finding in the study that there exists a direct relationship between

new car delivery condition, customer satisfaction ratings, and deal

ership sales success as measured by market penetration ratings. It

appears clear that the customer's satisfaction with his or her new

car at delivery sets the tone for the entire ownership experience.

The extent to which customers are satisfied or dissatisfied with the

delivery condition of their vehicle creates a lasting impression

toward repurchase intentions at the same dealership.

Dealership Sales Staff Satisfaction

This researcher's suspicions were confirmed when the highest

relationship in the study was found to exist between new car dealer

ship sales staff customer satisfaction ratings and dealership success

as measured by market penetration ratings. In the automotive world,

the dealerships that succeed in attracting customers and garnering

repeat business appear most often to be those noted for their in

formed and helpful sales people. To develop this spirit in their

sales staffs, dealers must be willing to devote the time and funds

necessary to a training program that instills the knowledge; confi

dence; and friendly, caring attitude indispensable to good customer

service by salespeople. A recommendation is that salesperson incen

tives and rewards can be a means of demonstrating the dealer's com

mitment to excellence of service and it is recognition of the sales

person's important role in creating the dealership's image to cus

tomers. This study supports the researcher's opinion, prior to the


study, that this kind of dealer leadership can effect the total sales

of the dealership.

Dealership Salesperson Turnover

One would expect that dealerships with high salesperson turnover

would also suffer with a poor image in the eyes of the customers.

Therefore, it is not surprising to find support in the study that

there exists an inverse relationship between new car dealerships'

percentage of salesperson turnover and overall new automobile dealer

ship customer satisfaction ratings. A sad, but too often, actuality

is that some new automobile salespeople maintain their position only

as long as it takes to sell cars to all their family prospects. They

simply do not have the skills or receive the training to become

professionals in their new occupation. The other condition contrib

uting to salesperson turnover occurs when the professional sales

person feels he or she should transfer their skills to another deal

ership to achieve a better opportunity for success. An increase in

communication between dealers and salespeople is recommended to de

crease turnover. For many years, high salesperson turnover in auto

mobile dealerships has been an accepted fact of life. The results of

this study suggest the lack of dealer efforts to strengthen the bond

between the sales staff and the dealership can potentially be costly

in lost overall customer satisfaction.


Dealership Turnover Compared to Sales Staff Image

As with dealership overall customer satisfaction, it was pre

supposed by this researcher that salesperson turnover would have an

inverse relationship with customer satisfaction ratings of dealership

sales staffs. Indeed the results of the data collected for these

variables did indicate an inverse relationship and the hypothesis was

supported. As in many business firms, the salespeople in an automo

bile dealership are expected to work together as a team. It is the

combined contributions of customer satisfaction from each salesperson

team member which builds the total dealership's sales staff image.

Membership pride in belonging to a professional sales staff team may

increase occupational satisfaction and reduce turnover. However,

high turnover when left unchecked, can create a workgroup atmosphere

of strangers with very little team pride, which may promote further

turnover. The importance of dealer management understanding and

active control of salesperson turnover was reinforced by the results

of this study.

Conclusions

Prior to initiating the study, this researcher had the strong

suspicion that there existed a direct relationship between the type

of dealership operation that was required to obtain high ratings in

customer service satisfaction and the dealership that enjoys sales

success. For this reason, the hypotheses regarding the relationship

between customer satisfaction and sales success were presented and


Investigated. The results of the study were, therefore, not surpris

ing.

In summary, conclusions have been stated regarding each of the

hypotheses considered In this study* The conclusions were based on

the data analysis and on the results of the statistical tests of

significance. The review of literature as well as the data Investi

gated supported each of the hypotheses. This researcher demonstrated

the likelihood that a sufficient number of new car dealership opera

tions provided customer service and sold their products with similar

degrees of effectiveness as to result In a direct relationship be

tween ratings measuring these two areas of performance. The stated

significance of the study was to determine to what extent the results

could be utilized within the strategic planning of the subject auto

mobile company. This researcher's conclusion Is that the results

demonstrate a high enough degree of significance to be used with

caution.

The researcher devoted considerable time In the study Indicating

why the subpopulation of zones was representative of the dealership

population of interest. Because of that representativeness, it is

again concluded that the results and recommendations reached can be

extended to the entire population of dealerships by marketing manage

ment of the company.

It is recognized by this researcher that this study has limita

tions which must be addressed. It is for this reason that future

research is recommended.


Recommendations for Future Research

It is hoped that this descriptive study will result in addi

tional' analysis and research concerning the relationship between

customer service satisfaction and sales success.

If additional research is done, it is recommended that data be

collected concerning customer pricing sensitivity of services pro

vided at dealerships and how this variable relates to customer satis

faction.

It is also recommended that future study be devoted to the

relationship of consumer expectations and customer satisfaction at

new car dealerships. It might be hypothesized that rising expecta

tions of new car dealership customers are a main cause of their

dissatisfaction, and exaggerated promotional information such as

advertising contributes to these rising expectations.

Finally, it is recommended that salesperson draining programs be

tested by collecting sales staff customer satisfaction ratings from

those dealerships employing company provided training, and those not

utilizing the training offered.

Summary

This researcher studied new car dealership characteristics as

they relate to customer satisfaction and customer purchases. The

group studied was deemed representative of the entire population of

franchised dealers within the retail network of a major domestic

automobile manufacturer. Every effort was made to protect the


confidentiality of the company and the individual dealerships.

It is believed that this research can and will serve as a cata

lyst to initiate additional research into the relationship between

customer service satisfaction and sales success.


APPENDICES

60


Appendix A

Customer Satisfaction Index Program (CSI) Instrument

61


62

[ | CUSTOMER SATISFACTION STUDYDEAR OWNER:

The experiences (hat our customers have with their products and their Dealers’ service are o f greatinterest to us. The purpose o f this survey is to keep us informed regarding those experiences. The questions should be answered by the person most familiar with the car shown below and its service record. Your help in filling out this form w ill be most appreciated. _ _

—- o tm aacoB M SN O w nuT vourvacH A StO A iN S--------------------------

raowIN:

ABOUT THIS CAR T" 1 ' ■ ~ ■"1. Do you sttU have (Ms IN) ' product?

□ Yes □ No (Please fill out this form, even if you no longer have this car.)

2. How satisfied have you been with your 1985 product coordering the fodewing Mama?Vffjr Sawtm ai-l.a.- — Saawwhai Vary

SaiisflH SatiaSH Nar HaaatfaM Dtaaailiflie DtaaaUaSStyling, Appearance...................................................... .... □ □ □ □ □Product Q uality............................................................. ........... □ □ □ □ □Pickup, Acceleration .................................. .............. ........... □ ••• ....... □ ......... . . . . . . .Ride and Handling....................................................... ........... □ □ □ □ □Interior C om fort........................................................... .... □ □ □ □ □Freedom From Noise.................................................... .... □ ••• .. □ ......... . . . . . . . . . . □Fuel Economy.............................................................. .... □ □ □ □ □Freedom from Repairs.................................................. .... □ □ □ □ □Value for the Money .................................................... .... □ ••• .. □ ......... . . . . . . . •• □OVERALL SATISFACTION WITH YOUR C A R ....... .... □ □ □ □ □

ABOUT YOUR DEALER'S SALES STAFF................... .........3. How satisfied have you been with the SALES STAFF at your selUna dealer shown above considering the following items?

iBy sales staff we mean the salesperson, the sales manager or the owner).

THE SALES STAFF:Has A Good Attitude ..............................................Is Well Informed About The Product ..................Explained The Features Of The Car.......................Explained The New Vehicle Warranty ..................

OVERALL SATISFACTION WITH SALES STAFF

Vary Somaohal Nattkar Salts AH SomawAal VarySaiisflH SatisHH Nor DtnaOtfln DHaatisSH PhaattsflH

□ □ □ □ □i ; □ □ □ □nu • . . . . . . . . ... n□ □ □ □ □□ □ □ □ □


63AT THE TIME OF DELIVERY = = =

4. How satisfied were you with the condition of your IMS product AT THE TIME OF DELIVERY consideringthe folowing items? (By delivery we mean when you first received it from the dealer.)

NtMktr SaOsSaO SonwwKM v»r*Sat tiffed .NarOtauMM DissatiifM

Cleanliness of Car.............................................................. . . n □ □ □ □Mechanical Operation ( engine, transmission, etc.) ............ . . n □ □ □ □Electrical Operation ( lights, radio, power windows, etc.) . , . n ... . . . . □ . . . .......□ ......... ... □Body Fits (doors, hood, trunk lid. moldings, etc.).......... . . n □ □ □ □Paint Finish ..................................................................... . . n □ □ □ □OVERALL SATISFACTION AT TIME OF DELIVERY • • n □ □ □ □

WARRANTY SERVICE5. Hava you Ukan your IMS product to your ttlMnt dealer far now car WARRANTY SERVICE? (That is. the

service offered at no com to you under the terms o f your New Vehicle Warranty.)

□ No (Please skip to Question 10)□ Yes. I returned to my selling dealer

6. How many tripe have you made to your selBna dealer for WARRANTY SERVICE in the paM 6 months?

Number o f T ripe____________I Please Write-In)

7. How many months has it bean since you but went to your sclUnt dealer for WARRANTY SERVICE?

□ One Z Two □ Three □ Four □ Five ~ Six

S. Thinking about your IMS product, have you had WARRANTY SERVICE from your selllna dealer on any ofthe items listed below? I f "YES.” please check the number of trips needed to correct the SAME problem.

Nuntbtr of Trips Ntttfcd Hid Strvke? la Correct SAME ProblemYm No 1 2 3 or more

A ir C onditioning □ • • • G ....................G — C • • ■ ZBody Fits (doors, hood, trunk lid. e tc .) Z Z — — ZBody Water Leaks. Wind Noise Z G G G GBrakes G • ■ G ....................Z • • • Z • ■ • ZSteering Z Z -- i — —Electrical (lights, gauges, instruments, e tc .) Z □ _ ZEngine Hard to Start, Won't Start Z G Z G GEngine Noise. K nock G • • • Z ....................Z — G • • • GEngine Rough Idle. M is firing G G □ Z GOil Leaks G G G Z ZPaint............................................................................................. ..................Z - . - - Z -. ZR adio - j u _Speedometer G Z Z _Squeaks and R attles _ • • • — ....................^Transmission G Z □ G GTrim . Hardware. M oldings Z G G GWheels. Tires. V ibration Z • • • Z ....................□ — Z • • • ZOther _____________________________________________ Z Z □ Z G

I Please write in i


649. How satisfied have you been with the WARRANTY SERVICE from your selling dealer considering the following Items?

V.rjr Somewhat Neither S a tiilM Somewhat VerySallefM Sat If fled Nor M sa ttn iM Dtiiailifled DheatiiB

Service People Have A Good Attitude .................................... □ □ □ □ □

Service People Wait on Me Promptly ................................... •• □ □ □ □ □

Service People Understand My Problem................................ . . n • • • . . . . . . . . .. □ ............ . . . . . . . ■ • n

Repair Order Is Easy to Understand ..................................... • □ □ □ □ □

Job is Done When Promised ..................................................■ • □ □ □ □ □

Job is Done Right The First Tim e.......................................... . . □ . . . . . . . □ ... ....... □ ......... . . □ .... • • n

Service Hours Are Convenient .............................................. • □ □ □ □ □Needed Parts Are in Stock..................................................... • □ □ □ □ □

OVERALL SATISFACTION WITH WARRANTY SERVICE □ • □ □ □ □

TOTAL SATISFACTION WITH SELLING DEALER ■■ =10. Overall, how satisfied have you been with your seillnt dealer? (Including the sales staff, the delivery condition o f your

I98S product, and any service you may have received at your selling dealer on this car.)

Very Somewhat Neither Satisfied Somewhat VerySatisfied Satisfied Nor Dissatisfied Dissatisfied Dissatisfied

□ □ □ □ □

SERVICE IMPROVEMENTI I . What is the most important thing that you would suggest TO IMPROVE SERVICE at your selHna deafer?

TOTAL OWNERSHIP EXPERIENCE12. A ll things considered, how satisfied have you been with your TOTAL OWNERSHIP EXPERIENCE? (Please consider:

Your 198S product. . . your dealer's sales staff. . . the delivery condition of your car . . . and your serviceexperience.)

Very Somewhat Neither Satisfied Somewhat Very■Satisfied Satisfied Nor Dissatisfied Dissatisfied Dissatisfied

□ □ □ □ □


65

RECOMMENDATIONS ■■■■■ " =

13. Would you rtcomimnd a product to a (Hand? Q Yes Q No

14. Would you recommend a product to a friend? □ Yes □ No

15. Would you recommend your selllna dealer to a friend as a place to buy a car:

... based on your new car BUYING experience?........... □ Yes □ No

. .. based on your SERVICE experience?....................... □ Yes □ No

16. May we send this form to your seilina dealer?.................... Q Yes Q No

MORE ABOUT YOUR 1985 CAR - ■■■

17. About how many milea do you have on it? (If you no longer have this car. please estimate the mileage it had when you sold or traded it.)

________________________ Miles.

PLEASE TELL US ABOUT YOURSELF (To help us analyse the study) — -■ ........

Are you . . . ? Q Male Q Female

Are you . . . ? Q Married Q Single

What is your age? Q Under 25 Q 25-34 Q 35-44 □ 45-54 f j 55-64 Q 65 or Over

THANK YOU FOR YOUR COOPERATIONPLEASE RETURN THIS QUESTIONNAIRE IN THE

ENCLOSED. STAMP AFFIXED ENVELOPE.


Appendix B

R. L. Polk Community Registration Report Instrument

66


$ $ $ . 9 $■ » % » ■ * _________ t - t w _________ L fB S _________ L— _______

H

f

■gjggy* 5gym.______m

i

Irn1 W

I1

nunmot

M«nJ&SSJ!


R. L. POLK PASSENGER CAR

BICTION*

© Section on* IndlcatM th * Region, Zon*. District, Oat* and Dealer Community for which thisraport is com pi lad.

(D Analyst* by Qroup * th# passenger ear aaction la divided into five market sag manta: SubCompact. Compact. Midsize, Regular and High. This grouping ia not uniform throughout th* industry and aach manufacturer develops th * groups and raport he wishes to saa. You w ill not* that th * upper right-hand comar Indicate* that this raport was compiled by R. L. Polk for

Reports for other manufacturers such as Ford. Toyota, ate. may b*similar.

(?) Th* column represents an abbreviation of th* manufacturer, I.*.. CH - Chevrolet; BU - Buiek; OL-Oldsmobile; ate.

© Th* year column represents th# number of units registered year to date for each model.

© T h e c o l u m n represents th * percent of market penetration that model obtains in its groupbased on th* year-to-date registrations. For example, th* 264 Chav'ett* registrations represent 10.91% of th* total Sub Compact group's 2912 registrations.

© "S.w. Memo" - Station Wagon Memo indicates the number of Station Wagons included in th*total model registrations.

© "% Elf." - Th* percent o f Efficiency section of th * R. L. Polk report seems to be th * mostconfusing of all when in reality it is a very simple concept. Simply stated, w* are comparing how well the dealer performs in a market segment to th * Zone’s performance. For example, let's say Chevette registrations equal 19% of the Sub Compact group in a dealer's “Area of Primary Responsibility." Ouring th * same time period, however, the Zona's Chevette registrations are 20% of th* same group. Th* dealer's percent of efficiency would be 19% -t* 20% or 79% efficiency. Although th* Zone's market penetration figures do not appear for aach car lin t on th* dealer's sheet, they are calculated and used in the development o f the percent of efficiency calculations. Th* approximata zone average penetration for any car line can be calculated by dividing th* percent of efficiency by the dealer’s percent of market penetration. Looking at th* year-to-date Chevette penetration, w * find that Chevette has 10.91% of th * Sub Compact group. If w * divide that figure by the percent of efficiency of 72.20%, we find the approximate zone average penetration for Chevette is 14.96%. Assumming the zone average penetration of. 14.96 is a reasonable goal, registrations should be approximately 366 units (2912 x 14.96) instead of 264. The difference of 102 units obviously represents lost sales and profit opportunities for the dealer.The percent of efficiency is indicated for all manufacturers. This calculation is developed by taking th * market penetration of each manufacturer within th* Chevrolet Zone's "Area of Primary Responsibility” and dividing it into each individual dealer's “Area of Primary Responsibility" market penetration.

© “Total Area Fleet” • This column is a memo to column *4 and indicates how many of th* unitsware registered to fleets. For example, of th * 264 Chevettes registered year to date, 19 were registered to fleet buyers. Units registered to Fleet Certificate Holders are automatically Included in the fleet memo section. In addition, whan registrations to one individual or company exceed ten or more in a single year, R. L. Polk lists th* total registrations in th* fleet memo section.

© “Ossao Co. Ml” • This is the county in which the dealer is located. Additional towns located inthe same county are listed subsequently by columns in alphabetical order, if a dealer operates in more than one county, then additional counties w ill be listed and th* towns therein listed in alphabetical order.

© "Benton" - This is th * town where the dealer is located which is normally the largest town inthe “Area of Primary Responsibility.” The figure below represents the number of units registered in "Benton” and is a memo to th* total under "year” column #4.

© Adams. Gaines, Radford, Stanton - These towns represent the remaining towns in the dealer's"Area of Primary Responsibility" and are listed in alphabetical order. Registrations for aach community are listed below. The towns listed on th* R. L. Polk report are th* same ones listed on the Notice of Area of Primary Responsibility addendum to the Oealer Sales and Service Agreement. The towns selected are those that have Post Offices providing First Class service. Other communities may be located within the geographical boundries but not listed on th* Notice of Area of Primary Responsibility or th * R. L. Polk sheet. Registrations for these areas are given to the town that provides postal service.


69

@ “Memo” - This section i t provided a t an ta ty means to aaa Chevrolet. Ford and the Import panatratlon. Thia i t tha only araa of tha raport that provides tha total parcant o< import ragia* trationa.

© Total Car Trand Summary -Thia aaction providaa tha currant and prior three yaar registrationand marfcat panatratlon figures ta r manufacturers In tha dealer's Ana of Primary Responsibility. Tha cur.ant "year-to-date” column o f thla aaction providaa information aa to how many untta and what parcant o f tha marfcat aach manufacturer haa In thla dealer's Area of Primary Responsibility.Tha naxt column, Zona % of Induatry, rapraaanta tha total markat panatratlon tor all manufaeturara within tha Chavrolat Zone's Araa o f Primary Responsibility. Tha foitowing two coiumna "Mamo Station Wagon’’ and "Memo F loor rapraaant tha total o f all Station Wagon and Float Registrations for aach Division. Tha naxt aix coiumna rapraaant tha prior thraa year’s ragiatrationa and parcant o f Industry to r a ll within tha dealer's Araa of Primary Responsibility.

@ Chevrolet Cars in Operation-The first row of this column reprseanta the number o f Chevroletcars in operation in the daalor’a Araa of Primary Responsibility that are up to six years old. The second shows tha number of units that are seven yaarx old or oider. T o ta i Chevrolet" la merely the addition o f the two (6370 ♦ M M ■ 16,PM). T o ta l Industry* represents tha total number of automobiles o f a ll makes that era s till in operation. Tha 23.78 parcant rapraaanta tha total number of Chavrotats compared to all makes currently in operation in the dealer’s area. This figure is Important to the dealer since it represents tha currant Chevrolet owner base and. whan compared to the current year*to-date market panatratlon, enables the dealer to determine if he is gaining or losing customers.

© This section providaa tha dealer tha means to track his prog raw on a month-to-month basis.Each figure in this section is for the current month only. Sines the other figures on the report are for year to date, a comparison can be made to see tha direction tha dealer is heading. In our example, tha Chevrolet dealer's 114 registrations represent 18.91* p f the total registrations tor the month. The year-to-date market penetration for this dealer found in both tha mamo and Total Car Trand Summary faction is 18.70*. This indicates that Chevrolet haa made a small increase in market share of approximately .21% for the month of October.

® This section shows the year-to-date sales reported by this dealer based on tha 10 Day SalasReports. Up to now, we have dealt only with registrations and this is the first and only place sales are shown on tha R. L. Polk report. Using these figures, we are able to develop the concept of "earned” market share. This simply means that a dealer sails enough passenger cars to equal or exceed his registrations. Although Chavrolat has tha capability o f matching each sate to the registration, a process which is costly and time consuming, it is raally unnecessary. Tha results are merely netted. That is, if Chevrolet passenger car registrations

Reproduced with permission of the copyright owner Further reproduction prohibited without permission.

Appendix C

Sales Personnel Productivity Report Instrument

70


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Appendix D

Zone Total Reports for Each Variable

73


74

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asth n « u 77.T 77.4 77.0 47.4 47.9 U . l U .0 U . l M .O U .S U .7 U .4 U .0 u .o U .1 ISM

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MUTMUST M U M 77.4 77.4 77.0 U .O U .S 47.4 u .o U .O U .9 U .7 U .S U .S U .S u .o U .4 U 1JAOOSNVILLI 70.4 70.4 74.1 41.0 41.1 U .O U .S U.O U . l U .O u .o •1 .8 U .S M .O U .S M•ISNIMHAM 70.0 U . l 70.4 U .O 44.4 47.4 U . l U .O U .9 U .S U .S U .O M .7 91.4 U .4 41ATLANTA 70.4 74.0 77.7 U .7 U . l U .O u .o u .o M.O U .S U . l U . l M.O U .7 U . l UCNANLOTTI 70.0 74.4 •0 .9 U .O 47.0 U .O U . l •7 .8 U .0 U .7 U . l U .S M .7 U .7 U .4 MU O M U 77.0 77.1 78.0 U .4 U .O 70.9 U .7 U .S M.O U .S U .4 U . l U .S U .S U . l ULSUISVILLI 40.4 74.9 u .o 71.9 U .O 71.1 U .O U .S U .S U . l M .7 M .O 47.4 U .O M .8 41OM 8.I8TM 74.1 74.9 M .9 U .O U .8 78.4 U . l U .O U .7 U .4 U .S U .4 91.8 U . l U .O a

u n u cm tsal u n u 74.1 78.4 78.9 U .7 U .O 78.1 U .8 u .o U.O U .O u .o U . l U .S U . l U .O mo it w it 7S.4 74.0 74.4 U .S U .S U .O U .O u .o u .o 81.7 U .S U .S U .7 U .7 M .8 44PUNT 74.4 74.1 74.1 u .o U . l U .O U .7 U .S u .o U .O U . l M .8 U .S t t . 4 U .4 U1MIANAPIL1S 77.0 79.4 78.0 70.0 47.0 U .S M.O u .o u .o U .8 U .8 M .8 U .S U . l U .O aCINCINNATI 74.0 7S.1 78.8 70.1 U .S U .8 M.O U .S M .9 U .S U .8 M .O U .1 U . l u .o aa m u a 40.7 40.7 74.9 70.9 78.1 78.9 M.O M .8 U . l M .O U .S U .S U .7 U . l U .9 TOWPPALO 40.1 •0 .9 74.0 71.0 78.9 78.4 U .S U .O U .S U .O U .S U . l U .S U .7 47.4 uPiniMNMM 01.4 01.1 U .4 71.4 71.8 71.9 U .O u .o U .S U . l •7 .9 •7 .0 U .S U .O U .0 44

1ST INN AUA 77.7 77. 9 77.1 U .O U .O 47.4 u .o U .7 U . l U .S U .S U .S U .S U . l ll .S 784

•MAT LAMS tm w 74.7 70.7 78.8 70.9 U .O 78.7 u .o U .7 M.O U .S U .S U .S U . l U . l U .S 8 tto a c A u 77.4 77.0 74.0 44.0 U .7 47.0 u .o U .S U .S •1 .4 •1 .7 •1 .9 u .o U .S M.O 44MMIAP0L1S 70.0 70.0 74.4 71.8 49.9 70.9 U .7 U .S M.O U .S U.O U .S U .S 47 .• U .O UM LN U KII 40.0 •1 .4 01.7 78.7 74.0 74.8 U . l u .o U . l U .O U .8 U . l U .1 U .O U .0 uPCM1A .. 41.4 81.9 U .S 78.0 78.1 74.9 u .o U .8 U .S U .S U . l U .S t t .1 U .O M .O u•UNA 01.4 74.7 81.0 71.1 U.O 71.9 U .S M .9 U .7 U .7 U .O 87.4 44.• U . l U .O 11ST. LOUIS 7S.4 74.0 78.7 70.4 U .S U .4 U . l U .7 U .7 U .S U . l U .S U .S u .o U .S 01PAMS 7S.1 74.0 78.7 U .O U .O 71.1 U .8 U .S U .7 U .S •1 .1 U .1 U .0 M .7 M .8 11

s o m w iT m u m 77.7 77.0 77.0 U .O u .o U .O M .9 M .8 M.O u .o u .o u .o U .8 U .S U .4 u sM i l « 74.4 70.7 77.8 u .o U . l U .O U .O U .S U .9 u .o M.O U .S U . l 47.7 M .S MMUSTON 79.4 74.7 79.7 41.1 41.7 U .S U .S M .O U .8 M .8 U .4 U .S 47.S U .S M .O uMM ONLIANS 77.4 77.4 74.4 U .O U . l 47.4 U . l •9 .8 U .S U .S U .O U .8 U .4 M .7 U . l TONMPM1S •1.4 74.8 74.0 79.8 70.0 78.9 M.O U .O U .8 M .7 M.O U . l 97.0 M.O U .O uMNVIN 70.7 70.4 70.4 U .O U.O 41.0 U . l U .7 U .S U .9 79.4 U . l U .S M .9 M .O 80OKLMMMA CITY 70.4 74.4 74.9 U .S U .S U .S U .S U .O u .o U . l U .0 U .S u .o U .O U .S MKANSAS CITY 79.4 79.4 74.0 47.8 47.8 u .o M.O U . l M .8 U . l u .o U .7 u .o U .7 M .7 U

PAC1PIC COAST M U M 79.7 79.0 79.0 U .S U .O U .S U .O U . l U .8 M .O • l.S U .1 U .7 U .4 M . l M7s u m s 70.4 70.9 70.4 U .O U .8 49.0 u .o U .4 U .7 U . l u .o U . l U .4 M.O M .S aPM TIAU 74.7 70.7 70.9 49.8 47.0 70.7 M.O U .S •9 .4 •1 .7 t t .9 U.O U .S U .S U .8 »•INLAND 70.1 77.0 74.1 U.O U .7 U .O U .O U .S U .S 77.7 TS.S TS.S U . l M .S M .S uIAN DIMS T7.7 74.4 79.4 U.8 U .7 U .O u .o U .8 U .O M .8 U .O M.O U . l U .S M .S uLM ANSILIS 70.7 71.9 70.0 U .7 41.0 U .O M .9 U .S • l.S 77.9 70.8 70.4 U .S tt.3 H .7 uPNMN1K 74.9 74.4 79.9 97.4 M .O U .9 U .O U . l U .7 SS.8 U .S U .S M .9 M .O U .O aSALT LAM 78.1 77.7 78.0 U .7 U .8 47.9 M .8 M.O U .S •9 .4 U .S U .l U . l U .S M .8 14


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