When car owners rely on digital diagnostic reports, traditional stores can no longer retain them through the current customer retention methods.

At present, the Xi’an automotive aftermarket is very lively under the competition between the “cat (Tmall AutoCare) and tiger (Tuhu).” Although their market share is not very high, e-commerce franchises are coming aggressively and pushing the market more competitive than ever.

“The automotive aftermarket is large enough. Mom-and-pop repair stores, regional chains, and brand franchises should all have their own living space.” Huang Lei, head of Bosch Car Service Xi’an Qizheng Store, is optimistic about the store’s prospects. However, he also said that traditional stores should also learn from the fast-expanding e-commerce franchises and focus on car owners to provide higher standard car services.

‘Problems’ of big repair shops

On one hand, car owners put higher requirements on the vehicle maintenance service, such as technology and quality, maintenance transparency, quality of accessories, and after-sales guarantee. On the other hand, when car owners encounter better than expected in-store experiences, they gradually become dependent on the brand.

“When digital tools can provide car owners with a standardized and more transparent service experience, the stores that are leading the changes have remarkable advantages,” Mr. Huang emphasized the importance of finding the “suitable” tool when introducing digital tools to the store.

Huang Lei is responsible for two stores that are both over 100 square meters. One shop provides sheet spraying, with monthly revenue of RMB 600,000 to RMB 700,000 ($92,680 to $108,120); the other store mainly serves fleet business, focusing on electrical and mechanical maintenance, with monthly revenue of about RMB 350,000 ($54,000).

Targeting middle-class customers, the store emphasizes training the technic, skill level, and customer service of their staff and using price level to distinguish target customers and operate the business.

Huang Lei knows the situation of store customers like the back of his hand: “The store conducts a large-scale customer gathering event every year, and new customers account for about 20 percent; new customers through referral activities account for 80 percent every month. Retention rate will be easier to calculate when you have more reliable and loyal customers. For example, if there are 2,000-3,000 customers who visit the store four times a year, and 7,000-8,000 customers who visit the store regularly for maintenance, and if you add customers such as car beauty and tire change, the total number of customers has exceeded 10,000 annually.”

A larger number of customers will significantly increase the complexity of store management and pose many challenges to store managers.

For example, when is the most appropriate time to guide customers into the store next time? How to communicate with customers to figure out the best next service item? How should technicians communicate with customers? Whether the technician can explain the condition of the vehicle and necessary service items to the customer?

Huang Lei said that based on the large number of customers accumulated in the stores and the aging of vehicles, they are eager to find suitable digital marketing management tools to serve car-owners better while continuously increasing the revenue. At present, the yield of each vehicle at Bosch Car Service Xi’an Qizheng Store exceeds 1,000 yuan, and he hopes to increase the yield by 10 to 15 percent on this basis.

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Why is digitalization difficult?

The most apparent characteristic of the digital age is the emergence of many customer-oriented SaaS systems. The effective management of thousands of customers at Bosch Car Service Xi’an Qizheng Store is also based on the application of digital systems.

In the past, technicians provided paper test reports called “serious test version 1.0,” but they were basically for internal use only. Then there were display walls, and service advisors explained the structure of a particular module of the car to the customer with the receipt in hand. This is version 2.0, but it is challenging and demanding for service advisors to present professional and accurate explanations to customers. Next, with the upgrade of hardware tools, a display wall has evolved to a dynamic visual display called version 3.0, but the cost increased dramatically, and communication was complicated.

“We have also tried to build a data-based diagnosis platform, but due to the high back-end maintenance costs and the lack of centralized use of data, we have not formed a systematic management logistic.”

Huang Lei said that until they recently discovered and used the AutoX3 system, which has promptly supplemented the deficiencies of the existing system. The system achieved three-screen links by connecting the technician’s phone screen, the car owner’s phone screen, and the large touchscreen in the store. AutoX3 simplifies the complexity of the technician’s data input procedures. It syncs the digital report directly to the large screen for the technician or service advisor to communicate with the car owner. It also offers the ability to send the car inspection report to customers for review at any time.

He regarded the system as a digital marketing toolkit and called it “Digital Inspection 4.0 “. It can create a complete closed-loop service process between technicians/SAs, customers, and stores from the perspective of store operations.

In the check-in process, the store will build electronic customer profiles and perform detailed inspection reports for vehicle models, conditions, and driving data. Enhancing customer trust by digitalizing and visualizing vehicle condition data to customers while saving comprehensive car data to the system can potentially increase the conversion rate of service items and boost revenue.

In the work order process, customers will receive real-time pictures or videos of vehicles through their mobile phones to dissolve customers’ doubts about technicians and stores. The store can also trace the data back to warehouses or suppliers to provide customers with an after-sales service guarantee when problems occur.

Finally, after the service, the technician or SA can predict the best time window for different maintenance services according to the average daily mileage of the vehicle and the recorded vehicle inspection data. Providing highly customizable “butler-style” services to every customer, the store can significantly improve the customer service experience.

Huang Lei said that with the help of the system, technicians could accurately determine the car’s condition through previous inspection reports once the vehicle checked in. The technician can then provide a customized service plan and quote the parts and services as soon as possible to maximize customer satisfaction and trust.

The system is also very friendly to technicians.

When service advisors/technicians present inspection report through the large touchscreen, the system will provide corresponding highly restored 3D models and a knowledge base endorsed by the manufacturer spontaneously. Service advisors and technicians no longer need to memorize complex knowledge points and explanations; instead, they can fluently explain the conditions of the vehicle according to the prompted information on the large touchscreen. With the help of the AutoX3 system, workshops can reduce the training cost and duration significantly.

“For medium and large repair shops, digital tools are the best way to improve customer satisfaction and boost revenue.” Huang Lei believes that with the help of appropriate digital tools, the complexity of store management will be greatly reduced.

Three phases of shop digitalization

It is undeniable that the 2020 pandemic has accelerated the process of digitalization for traditional industries. Integration of the Internet, digital solution, and standardized management tools have become essential for modern enterprises.

Aftermarket is more traditional and conservative. Thousands of store owners are still groping on the road to digitalization. Contrarily, younger car owners are raising their standards and expectations for service transparency and convenience.

With the changes in consumption habits of car owners and the influence of Internet franchises and third-party digital solutions, the digitalization of automotive repair shops can be divided into the following three phases.

Phase one: Digitalization of car owners’ demand. Car owners can purchase and schedule services at any time, mainly includes standardized services such as tire change, maintenance, and car beauty. Automotive aftermarket service provider Tuhu has achieved rapid growth in the process. Store owners can either join Tuhu or connect their stores to Meituan and AutoNavi. Either way, store owners need to figure out an easy and quick way for car owners to reach out to them.

Phase two: Digitalization of vehicle condition management. Through AutoX3 or a similar system, stores can establish a three-step service process: checking in vehicles and recording data online; creating maintenance plans; communicating with customers, and determining service items. All store owners and managers knew the importance of vehicle check-in. However, it was impossible to generate positive feedback from project conversion and performance evaluation without data accumulation and supporting tools.

Phase three: Online user operation. The store can accurately predict the next maintenance date and required service items of each vehicle according to the service history and inspection to truly achieve “butler-style” services and fully manage the whole vehicle life cycle.

These three phases of digitization correspond to the three states of “before service,” “in service,” and “after service,” respectively. Without the digitalization of vehicle condition management, customer relationship management will purely rely on managers and technicians.

Huang Lei noted, “digitalization is a new thing. If stores cannot accept and revolve with an open mind as soon as possible, they will be left out when this tool becomes popular.”

Many small independent repair shop owners think that their stores are small with a relatively small number of customers but high customer loyalty. Thus, there is no point in utilizing digital tools. However, the fact may be the opposite. When car owners rely on standardized and transparent services brought by digital inspection tools, their consumption habits will be affected by highly digitalized franchises.

He predicted that the digitalization process will be faster than ever in the next two years, and many stores in the market that cannot keep up with the pace of development will be closed, transferred, or merged.

“After the digitalization transformation, the store will achieve higher efficiency. It is optimistic that after the initial digital precipitation, the store has a higher human-efficiency ratio. For example, only one SA is needed to present inspection reports with digital tools; technicians can reduce work time and increase efficiency with standardized procedures; warehouse management will be highly intelligent and needs fewer people.

With the same expenditure of stores, increasing employee salaries is the most effective way to deal with fierce competition. “Digital tools will give us more power and bring more opportunities in the future.”

Jonathan R. Li is the Marketing Manager (North America) at AutoX3. He graduated with a degree in Mechanical Engineering from the University of California, Irvine – Henry Samueli School of Engineering, and photography at
The School of the Art Institute of Chicago.

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