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Many Happy Returns

By CIOinsight  |  Posted 03-07-2007 Print

Many Happy Returns

While the last phase of Volvo Cars Belgium's project wrapped up faster than expected, the whole undertaking required three years of painstaking planning and implementation. The entire project cost the company 1.75 million euros ($2.3 million usd), a cost shouldered by the dealerships themselves. Not surprisingly, after the project was complete in late 2005, Cordier was already looking for a return in 2006. So he turned to the customer surveys.

In 2006, customer-service scores at Volvo, which are given on a scale of 1 to 5, inched up to 4.09 from 4.02 the previous year. "That may not seem like very much, but it is a spectacular change for one year," says Cordier. One of the important contributing factors to the increase, says Cordier, is the ability to compare dealerships on a standard set of key performance indicators. Now that systems are all speaking the same language and the metrics are all uniform, there is no excuse for poor customer-service ratings. And like business intelligence software, the dealer-management system allows Volvo Cars Belgium and VCC to drill down and identify specific areas that need improvement.

"Our dealers now have the tools to act quickly to respond to customer and prospect inquiries," explains Cordier. "For example, a customer coming in for a simple car repair will likely communicate with a receptionist, a workshop manager and a parts shop manager, and each of them needs flexible access to the same information so they can track the repair and manage customer expectations."

Perhaps even more impressive is the revenue uptick from auto parts sales seen by Volvo Cars Belgium since implementing the new system. In 2003, new regulations for the automotive industry in Europe, called the Block Exemption Regulation, turned the European auto market upside down. Among other things, the new regulation ended contractual obligations by independent repair shops to buy certified parts through the manufacturer. Even authorized Volvo dealers could buy parts from any parts dealer they wanted if they could get a better price. The change in rules threatened to devastate the parts business for manufacturers throughout Europe, and Volvo Cars Belgium was no exception.

"We had to make sure the dealerships would want to do business with us," recalls Cordier. By linking its systems up to Volvo corporate headquarters, Cordier was able to ratchet up the service the company provides to its own dealers and other independent repair shops throughout the country. Parts are now automatically ordered when dealerships book certain types of repairs, whether it's an 80,000-kilometer maintenance checkup or a brake job for a Volvo XC90. The system identifies the VIN number, reserves the part and ships it out for overnight delivery. That's how Volvo is able to deliver 98 percent of its parts to Belgium overnight.

As a result, Volvo Cars Belgium has increased its total revenues from before the implementation of the Block Exemption Regulation. In 2002, the company was pulling in 30 million euros ($39.3 million usd) a year in parts. By 2006, they had upped the figure to 40 million euros ($52.4 million usd), in the face of withering competition.

Of course, this kind of success hasn't gone unnoticed by Volvo Cars Belgium's corporate parents up in Goteberg. But at the moment there is no movement afoot to push the solution to other Volvo dealerships throughout Europe or elsewhere. Cordier and Adamo are just fine with that. They compete, or at lease compare themselves, against different regions throughout Europe, as does parent VCC. So far, Volvo Cars Belgium seems to have the jump on its European brethren. "We have been watching customer satisfaction scores in other countries," says Cordier. "There is no increase like the one in Belgium."


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