New Study on the U.S. Automotive Service Market Topples Key Industry Myths

DMEautomotive’s “The Changing Service Loyalty Landscape” Reveals:


•       Independent Shops Aren’t Dealerships’ Biggest Threat, Aftermarket Chains Are


•       Dealer Loyalists Aren’t the Highest-Value Service Customers


Las Vegas, NV – February 4, 2012 – DMEautomotive (DMEa), the science-inspired, results-based automotive marketing leader, today released key findings at the 2012 NADA Convention from its forthcoming white paper, “The Changing Service Loyalty Landscape”- the most comprehensive study of the auto service shopper, and the entire market, to date. The overarching picture that emerges is one of a hyper-competitive market in serious flux, marked by a low rate (23%) of loyal auto service customers. Numerous findings will bust key industry myths: for instance, independent service providers are not dealerships’ biggest business threat, aftermarket chains are – and dealer loyalists spend less on service relative to other customers: both independent and aftermarket loyalists spend and service more.


DMEa’s white paper shows that while service industry stakeholders, like dealerships, need to tackle complex, new market challenges (from changes in media consumption habits, to the shift of buying power to younger generations), they also need to attack the new opportunities. With Americans holding onto their vehicles for record lengths of time, the $215 billion+ service market is projected to grow another 15% by 2015.  And yet, despite the fact that service now represents an extraordinary 46.5% of dealer profits,  until DMEa’s new reports, research into exactly where people spread their service dollars, and why, has been unusually thin.


About DMEautomotive’s White Papers:


DMEautomotive’s Strategy & Analytics division’s reports are based on a recent survey of 4,000 U.S. vehicle owners.  “The Changing Service Loyalty Landscape” (available mid-February 2012*) analyzes the decision-making process behind service center selection; consumer loyalty rates and demographics, and industry share-of-wallet realities for dealerships, independents and aftermarket chains. The second report (available in March 2012) analyzes shoppers’ communications preferences (by frequency, platform, and service outlet type), providing service businesses with outreach strategies that can better retain the “loyals,” while converting more of the “swing shoppers” and disloyalists.


Key Findings:


Low Loyalist Levels Industrywide: Dealers Most Dependent On Them


Service “loyalty” is best expressed as a combination of spend and frequency. DMEa identified three core service customers: “loyalists” (who both visit and spend most at a store type); partial, or “swing loyalists” (who either visit, or spend most at, a store type, but not both); and “disloyalists” (who neither visit nor spend most at that store type).


The survey reveals strikingly low loyalist levels across the industry, with more than three in four customers (and their dollars) in play, and not tied to one service center. Overall, “loyalists” represent only 23% of the service market, while “swing loyalists” make up 50%, and “disloyalists” 27%.


Loyalists may represent the service shopper minority, but they drive the lion’s share of each type of service outlet’s revenue. With the 23% of dealer loyalist customers driving 62% of revenue, one can see that dealership revenue streams are the most loyalist-dependent, while aftermarket stores, who generate nearly half their revenues from non-loyalists, are the least.


Myth: Dealers’ Biggest Threat is Independent Shops


Reality: It’s Aftermarket Chains


It’s conventional industry wisdom that independent service centers pose the greatest threat to dealerships, but this new data reveals that the poaching of dealer customers by independents is, in fact, very low. Only 10% of the annual service spend of a dealer’s customers migrates to independents, and independent customers only spend 13% of their service wallet at dealerships.


Dealers are bleeding nearly three times more business to aftermarket chains. Among all dealer customers, $162 of their annual service spend heads to the aftermarket, while only $59 bleeds to independents. In general, the data reveals that when both dealership and independent customers spend elsewhere, the majority of dollars travel to aftermarket chains. But the migration isn’t reciprocal: dealerships capture less of the aftermarket-loyal and independent-loyal migrating spend (at $102 and $82 annually, respectively).


Myth: Dealer Loyalists Are the Most Valuable Service Customer


Reality: Independent & Aftermarket Loyalists Spend & Service More


Dealer-loyalists are intensely valuable to dealerships, generating roughly two-thirds of their total service revenue. And DMEa’s survey reveals they have other uniquely valuable traits. They’re the wealthiest service customer: with an average household income of $72,017 vs. independent customers at $57,081, and aftermarket at $69,249. They’re the most compliant: 70% of dealer-loyalists report “always following manufacturer service recommendations,” vs. roughly half of aftermarket and independent customers. And the survey, which gauged how price-obsessed different service customers are (by age, primary store loyalty, and other factors), found that dealer-loyalists are dramatically less price-driven than independent, and especially, aftermarket, loyalists. Store attributes like “competitive prices,” “frequent sales events,” “frequent coupons/discounts” and “different price options for parts,” indexed between two and five times more important for aftermarket-loyalists than dealer-loyalists.


Given that dealer-loyalists have deeper pockets, are much less price-conscious, and follow strict service schedules, one would imagine they would spend and service the most. The opposite is true…and aftermarket chains and independents also grab significantly more spend and share-of-wallet from their loyalist bases.


                         Dealer Loyalist       Indep. Loyalist         Aftermarket Loyalist


Annual Spend:     $1,105                                $1,191                  $1,178


Spend@ Store:      $884                                $1,024                   $1,001


Share-of-Wallet:     80%                                    86%                     85%


And because dealer loyalists drive their vehicles 1,000 miles less (on average) each year than aftermarket loyalists, they service less frequently. For instance, the percentage of aftermarket-loyalists who service 7+ times annually is nearly three times higher than the percentage of dealer-loyalists that do.


Clearly, the 77% of service consumers that are now non-dealer-loyalists are a high-value, high-spending opportunity. If dealers imagine that the aftermarket industry revolves around  a series of unprofitable oil changes, that perception needs to be completely revised.


“All service stakeholders can get complacent, because as the revenue “pie” grows, their businesses are growing too – especially dealerships where, on average, nearly half of all profits come through service. But DMEa’s white papers will show that complacency is a very bad idea: major attitudinal, spend and demographic shifts are underway in the increasingly volatile, disloyal service market.  Every player needs to not only retain loyalists, but must also find innovative ways to attract the new (and as our reports will show) younger and more demanding segments,” said Doug Van Sach, Vice President, Strategy & Analytics, DMEautomotive. “These white papers will provide more than a 360-degree view of the market, they will also give service businesses a gameplan – analyzing how to send the right message, via the right platform, to the right customer – to keep increasingly at-risk loyalists close, while also attracting more of the three in four service dollars now in play.”


*To request a copy of DMEa’s white papers, click here:


About DMEautomotive


DMEautomotive (DMEa) is the industry leader in science-based, results-driven automotive marketing, and provides turnkey marketing to the largest and most innovative automotive organizations, from automobile dealerships – including AutoNation, Lithia Automotive, MileOne, Larry H. Miller and the Van Tuyl Automotive Group – to many of the largest aftermarket companies in the U.S. DMEa's uniquely panoramic view of the complete automotive sales and service market, combined with its cutting-edge, science-based marketing programs, increases customer yield, conversion and retention.


DMEa does not take marketing performance on faith, and each product and service is measured by a simple, precise scientific approach: Is it true? Prove it. Will it work? Test it. Does it generate results? Show it! Supported by DMEa’s proprietary, cloud-based Red Rocket Technology Platform, the DMEa product suite includes science-based, data-driven, multi-channel customer acquisition and retention marketing programs; best-in-class campaign reporting; data management and analytics; auto-focused Customer Interaction Center solutions, and complete on-site mail and email fulfillment services. Headquartered in Daytona Beach, Florida, DMEa also has major operations in Jacksonville, Fla.




Media Relations:


Melanie Webber, mWEBB Communications, 949-307-1723,

Angela Jacobson, mWEBB Communications, 714-454-8776,





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