Automobile Club of Southern California: Personal Service

Operations Executive Spotlight
Written by Grayson Walker
Monday, 01 October 2007
CEO Thomas McKernan explains why individual customer service remains a hallmark of this auto club. Economies of scale generally allow companies to serve their customers with greater efficiency, which can increase profits. But customer service often suffers as a company grows. That’s a common business mistake that Thomas McKernan, CEO of Automobile Club of Southern California (Auto Club), has vowed not to make as the AAA affiliate has expanded its relationships with other AAA clubs during the past few years. “Our organization is here to serve, to come to people’s rescue at a time when they need it, and to make a not-so-fun event like an auto accident more palatable through good customer service.” Auto Club serves 10.5 million members in 15 states, which represents nearly one-quarter of all AAA memberships nationwide. But belonging to such a large organization does not mean a decrease in service levels to members, McKernan stressed. Auto Club has spent millions of dollars developing a single membership relationship management system that links 17 legacy information systems on one platform for use by employees. Thomas McKernan, CEO “It allows us a 360-degree view of each member, and it’s helped us tremendously,” McKernan said of the system that was implemented in the first quarter of 2006. “It’s also helped us in training our employees and helping new employees get up to speed quickly.” Forging partnerships The auto club movement got its start in the early 1900s, mainly with local clubs situated in population centers in the East. The organization now known as AAA was formed in Chicago in 1902, giving motorists a national voice on safety and transportation infrastructure issues. At its peak, 580 auto clubs could be found across the nation, but during the Depression, many closed or merged with other clubs. Currently, the US has about four dozen auto clubs, and many are affiliated organizations like the nonprofit, Los Angeles-based Auto Club. The period following World War II was a time of great growth for auto clubs, but by the 1960s and the advent of modern computing technology, many clubs found it difficult to scale up to sufficiently serve customers, so consolidations began. Auto Club started its growth curve in the 1990s by taking on management of AAA of Texas, AAA of New Mexico, and AAA of Hawaii. In 2003, it affiliated with AAA of Northern New England, which covers Maine, Vermont, and New Hampshire. Last year, it completed an alliance with AAA of Missouri, which covers Missouri, Arkansas, Louisiana, and Mississippi. Auto Club also has affiliated with the 300,000 members of AAA Alabama, recently taking over its roadside assistance calls. Growing the organization gives Auto Club tremendous clout when it comes to negotiating rates with service providers. The company has a relationship with AAA Auto Club South (Florida, Georgia, Tennessee) to help the organization expand its auto and homeowners insurance operation and is offering its insurance through AAA groups in Pennsylvania and Ohio in partnership with AAA Michigan. Becoming adept Technology has become vital in the past few years as members choose to interact with Auto Club in a variety of ways, and the company’s membership relationship management system helps employees keep track of members and their interests. “We have to be adept to serve members where they want to be served,” McKernan said. “They might order TripTik Travel Planners online but want to visit a local office to talk about a cruise. More and more, we have to know when members start in one channel and go to another,” said McKernan, who notes that 6 million members visit local offices each year. The relationship management system tracks information, such as what products a member uses, preferences, longevity, any complaints or service failures, and the last product used. “Our customers expect us to know them,” McKernan said. “We’re a big organization, but we still give each customer the personal touch and feel they expect.” Diversification is another strategy that has served the organization well. In addition to its core roadside assistance program, Auto Club offers car, home, and boat insurance. Because of the buying power Auto Club has, the insurance rates it offers are 25% lower than they were 10 years ago, McKernan said. The company also purchased a wholesale travel business, Pleasant Holidays, to offer complete vacation packages to Hawaii, Mexico, the Caribbean, and Europe to AAA members and nonmembers. “Our (membership) renewal rate is very high, and we have the strongest road service network in the country,” McKernan said. Members usually join because of the peace of mind that comes with roadside assistance but often are unaware of other AAA benefits. Auto Club pioneered the new AAA Premier plan, an extension of the AAA Plus plan. With the Plus plan, members are covered for 100 miles of towing and receive $750 in trip-interruption benefits, complimentary rental car upgrades, locksmith services up to $100 per call, $300,000 free travel accident insurance, and free AAA maps. With the Premier plan, members are covered for up to 200 miles of towing and receive the benefits of a home lockout service, one-day complimentary rental cars, free personal notary services, 24-hour emergency travel and medical assistance, 24-hour concierge services, and trip interruption benefits up to $1,000. The company has found success in the Texas market by running informercials about Auto Club’s services. “When we sign up a new member, the member knows about roadside service but awareness falls off for other services,” McKernan said. “When someone suggested running informercials, I was initially skeptical but gave the go ahead. Our research now shows that new members have a greater understanding of what Auto Club can do for them.” McKernan has been with Auto Club for 41 years, starting in a local office before moving into information systems and, later, management. He picked up an MBA in finance and served as CFO for five years before assuming leadership of the organization in 1991. “We’re managed and led by a great management team,” McKernan said. “We don’t always agree, but we always do what’s best for our members.” Grayson Walker, This e-mail address is being protected from spam bots, you need JavaScript enabled to view it , is a freelance writer based in Atlanta.

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