Customer Experience – Treat Me Like Your Mother-in-Law

by Peter Sorgenfrei

The car buying experience has always been on the top ten list of the things people fear the most.  Consumers fear walking onto a dealer lot, being attacked by the first salesman to spot them, and then coerced into considering a vehicle in a different color, with a different trim level and at a different price (higher) than what they set out to buy.

Then comes the whole song and dance with the F&I manager and the dealership principal to ‘approve’ the terms offered after the consumer has been sitting in the chair for hours, hungry, tired on on the verge of leaving.  Far from a pleasurable experience.

Brands like Saturn and Scion entered the scene with no haggle pricing and the purchase experience got a little better for buyers of those brands but the one-price philosophy did not bleed over to other stores.  For the majority of the buying public, the dealer experience ranks right below getting a root canal.  At least there is anesthesia at the dentist!

The car buying experience should be one of the things in the auto industry that is the simplest to fix. It does not involve complex engineering, logistical challenges, supplier failure, etc. It is about human interaction and treating people they way we want to be treated.

Recently I told a sales team that they should imagine they were selling vehicles to their mother-in-law.

My basis for that analogy was that we treat our mother-in-law with more respect than our own mother (we get away with more with her), we do not completely dumb it down, cause we want her to like us, and we certainly do not pressure her to do anything she is does not want, of fear of retribution and wrath. (Just kidding Fran!)

But seriously, if car salesmen (and women) treated all their customers like their mother-in-law, I believe more and better relationships would be formed and more repeat (and less expensive) business would occur.

Next time you are shopping for a car, if the salesman is pressuring you, ask him to imagine you are the mother-in-law, after he stops looking dumbfounded, tell him about this theory and I bet your experience will be better.

Filed under: Automotive, Customer Service , Automotive, Cars, Consumers, Customer Service, ideas, Psychology, Retail

On Management – Why GM Needs New People

by Peter Sorgenfrei

Running a car company (or any company for that matter) is not easy. Add a board with strong personalities who seek to solidify their legacy and government oversight and you have the makings of a perfect storm. In the case of GM, it was more like a category 5 hurricane.

Fritz Henderson was not the right man for the job from the start it seemed. He has had great experience, is known as the ‘turn-around expert’ at GM, but was too ingrained in the culture of GM that caused the problems they are in now.  At the time he was tapped the board did not have that many choices and I doubt many outsiders would have taken a look at the job so Fritz got the gig.

Now what happens? Ed Whitacre certainly does not mind being in charge, and the search for an outsider is likely to take a while. With the pay restrictions in place, the board composition and the government oversight, our bet is the right candidates are not interested.

We say right candidates because there are probably a fair amount of people who want the job – the chance to attempt revival of one of the largest companies in the world is alluring, but the person who will succeed in this job is already sitting in another CEO chair, being well compensated and with less tape to deal with. Why would she/he take the position?

The person the board is likely to get under the current circumstances will not have the gravitas required to drive the kind of change needed at GM. And it is not just about the CEO’s office, several layers deep in the organization change (as in personnel change) has to happen.

Someone at the board level (and as incoming CEO) has to say. Enough! The only way this company will be able to repay the government(s) is to completely revamp the system. And unfortunately that involves human change. We as humans don’t really change. We might want to change, but fundamentally we like habits and stick to what we know (which is what we have done in the past).

It is not about consultants coming in and showing the team matrix after matrix of what needs to be done. It is about a group of people (CEO through Directors) that are completely focused on taking care of the customer and the company. It is also about a corporate culture that rewards risks, does not punish strong personalities and constantly reinforces the focus on product and customer.

The combination of management and corporate culture is not in place at GM today.  GM has dedicated, intelligent and passionate employees for sure but if you lived in a state with 15% unemployment and had children to support, would you stand up and rock the boat?  Probably not.

GM will get a new CEO but in order to get the right person for the job, they need to attract someone that is adept in corporate cultural change as well as financial management.

Filed under: Automotive , Automotive, Cars, Consumers, GM, Psychology

What is the “New Normal?”

by Peter Sorgenfrei

A question we get frequently when discussing the future of the auto industry in the U.S. is: “Will this economic downturn have the same impact on the American psyche as the Great Depression?  Will the buying habits of the American automotive consumer fundamentally change?”  Our answer; yes and no.

First off, our current economic situation is nowhere near as severe as the massive market adjustment during the early part of last century.  While the double-digit unemployment rate, high rate of foreclosures and daily doom reports from the talking heads are not exactly great news, we are not experiencing sacrifice and shortages seen in the U.S. beginning with Black Tuesday in 1929.  While our relatives rationed gasoline and saved rubber bands our biggest shortage these days are a dearth of Eggos and canned pumpkin pie filling.  Hardly a comparison.

The American consumer, all things considered, is still consuming. He/she still eats out, still shops, still drives to work and takes the kids to soccer practice. The change that has happened in the last 18 months is how consumers talk about their financial lives. They worry more, they might cut back here and there, but net/net they are still consumers.

Car buying behavior has definitely changed – fewer new cars are sold today compared to last year and the types of vehicles purchased  is changing.  The volume story is one of consumers realizing that purchasing a new vehicle every three-five years isn’t a requirement so they are keeping their vehicles longer.  Most industry “experts” believe that the the sales volume will return, albeit to a “new normal” of 11 – 12 million vehicles per year.  The real question is what will the showroom floor look like?  Will the American consumer start buying only what they need rather than what they want?  Will the streets of NYC begin to mirror those of Paris? Probably not.

Our take is that yes, the garages of America will be populated with relatively smaller, more fuel efficient vehicles in the future but it isn’t because this economic hiccup fundamentally changed our values.  It is more a combination of less conspicuous consumption combined with manufacturers offering more efficient products mandated by law, not consumer desire.

Fundamentally, a 5-passenger hatchback cannot meet the needs of a family of 7.   There will still be a need for minivans, crossovers and yes, even SUVs that seat 7+ passengers.  The difference is they will be purchased by people who need them to schlepp the kids, carry the cargo or tow their boats.  The rest of us may downsize to more fuel-efficient Crossovers and sedans but the “new normal” will still feature the American consumer driving more car than they really need.

Filed under: Automotive, Market Research , Automotive, Cars, Consumers, Future, Lifestyle, Psychology

Echo Booming – Baby You Can Drive My Zipcar

by Dan Sherman

I have friends in Atlanta, New York City, Los Angeles, and even Durham, NC who are Zipcar members.  Despite having an eager 2006 Mazdaspeed6 hibernating in my driveway back home on Long Island, my parents insist that I instead use Zipcar at school.  Why is ZipCar so popular?  And is its strategy of infiltrating colleges around the country creating brand loyalists for life?  My network of 20-somethings provided insight.

My Emory friends are Zipcar members because Atlanta stinks.  Let me clarify—Atlanta stinks without a car.  Students who can afford a car and all the associated costs (driving/shipping it to Atlanta, insurance, gas, maintenance, and astronomical $654 on campus parking) do so in a heartbeat.  However, car sharing best serves the needs of the stereotypical car-less, cash-strapped college student who wonders, “How am I supposed to get food and alcohol?” With a $50/year charge for membership and around $10/hour car pricing, Zipcar has a low initial cost which entices students who drive sporadically or can’t afford having a car full-time.

So why doesn’t everyone have a Zipcar? For one, car sharing completely destroys the element of spontaneity associated with owning a vehicle.  Daily dialogues between my roommates and me go something like this: “Yo, I’m starving, let’s get some Chipotle for lunch. OH WAIT, the Zipcar’s booked until 8 o’clock.  Guess we’re not eating ‘til dinner!”

Zipcar advertises itself as “green” to no end.  I asked a cadre of Gen Yers whether the environmental aspect makes them more positively inclined toward car sharing.  Their response was that the only “green” factor that moved them had dead Presidents on it.

The appeal of Zipcar will most likely continue after my peers graduate and move to cities like New York City, Chicago and Boston.  Even those that anticipate being able to afford a car of their own will likely stick with Zipcar to reduce the expense and hassle of owning a car in the city.  As an added bonus for those from outside the country, a US state license is not required for Zipcar membership.

So it is cool, convenient, and inexpensive but how will they grow?  Will the Echo Boomers continue to use Zipcar even after they leave the cities and move into suburbia?  Probably not, but as long as it continues to communicate a hip image in college towns and large cities, it should maintain its position as the leader in automotive timeshare.

Filed under: Automotive, Echo Booming, Market Research , Cars, Automotive, Gen Y, Echo Boomers, ZipCar, Car Sharing

Its About the PRODUCT Stupid

I just read a very interesting article on AdAge.com – How To Build Better Car Marketing.  In it Jordan Zimmerman makes some interesting points about how agencies are up for review because marketing automobiles is a unique proposition and in his words “agencies lack a fundamental understanding of how the industry operates.”

I couldn’t agree more but I think that Jordan left out a few key points:

1. In too many instances, the agencies handling the accounts not only lack an understanding of how the industry works, they lack an understanding of the PRODUCT.  Automobiles are different than sneakers, diamonds or food – all of which the average agency grunt can relate to.  Cars and trucks are complex machines that evoke passion in enthusiasts and owners alike.  Driving and interacting with the machine involves every sense and sensation – whether the owner is aware of it or not.  Yet we trust the communication of core brand attributes to people at agencies in cities like New York who often don’t even have drivers licenses!  In order to represent an automotive brand, everyone on the team should have a passion for the product and have the ability to experience the product on a daily basis.
2. Agencies need to stop working for awards and keep the goals of their clients in mind.  In the case of the auto industry, it is a monthly cycle that is focused on moving the metal.  Award-winning ads are great, brand awareness is important but every agency should be tasked with helping sell the product and rewarded or penalized based on their ability to do so.
3. To follow up on the point above, the way agencies are organized it is difficult to measure how effective a national campaign is in terms of sales.  There is a lot of inefficiency in the system with different agencies handling the Tier 1, Tier 2 and Tier 3 advertising.   What about a different model that coordinates the three under one agency and true metrics put in place to measure the efficacy of a campaign?

The role of the advertising agency is changing rapidly and the automotive industry is a primary catalyst to this change.  Even after the economy stabilizes, automotive clients will be running lean and demanding more accountability from their agencies.  Per Mr. Zimmerman, a better understanding of how the industry works is important but I’d argue a understanding of and passion for the product is paramount for success in the future.

Filed under: Advertising, Automotive, Marketing , Advertising, Automotive, Brand Engagement, Cars, Consumers, Design, Retail

It’s official: BMW will launch electric car sub-brand

Automotive New reports:

BMW will launch a new class of environmentally friendly vehicles under its own brand, signaling that even premium automakers are ready to embrace electric vehicles as a mainstream product.

Without new concepts and technologies, certain carmakers “may no longer be in the market” soon after the advent of a raft of tax penalties and incentives designed to force the auto industry to go green, CEO Norbert Reithofer said.

BMW’s board decided to create a new sub-brand — similar to its “M” label for its high-performance cars — to label a new range of sustainable vehicles, Reithofer said on a conference call on Tuesday.

Full article

Filed under: Automotive, Innovation, Marketing , Automotive, Cars, Clients, Energy, Innovation

Ad Age: GM’s appointment of Lutz shows no respect for marketing

Can’t say we disagree with this commentary from ad age:

General Motors’ new advertising and marketing czar is Bob Lutz, who until April of this year headed global product development. According to CEO Fritz Henderson: “Bob’s responsibilities beyond creative design will include brands, marketing, advertising and communications.” (I can visualize Bob at his first meeting with one of GM’s agencies: “I’m not a marketing expert, but I did stay at a Holiday Inn Express last night.”)

Has respect for marketing fallen so low that the most difficult job in the profession (getting GM out of the ditch) can be given to someone with so little experience in marketing?

I’m afraid so. The fact is that most companies do not assign much value to the marketing function. Nor do they compensate marketing people at the same level as they do financial, legal and other functional occupations.

Full article

Filed under: Marketing , Advertising, Automotive, Cars, Consumers, GM, Marketing

Toyota’s Bill Reinert – tremendous commentary on future of Green Vehicles

From Automobile Magazine:

Bill Reinert, Toyota’s in-house energy guru and resident contrarian, looks like he’s just taken a whiff of a long-expired container of milk.

Reinert is serving on a future-of-the-car panel at a high-powered green-think conference sponsored by Fortune magazine and featuring heavyweights such as President Bill Clinton and Bill Ford. Although the symposium is being held in a button-down bastion of Orange County, the ambience is totally Silicon Valley, all iPhones and Aeron chairs, with lots of clever but undercapitalized tech entrepreneurs sniffing around for angel investors. At the moment, Shai Agassi, the charismatic founder of Better Place, is making a dynamic pitch for creating vast networks of battery-charging stations to support electric vehicles that will, he claims, be cheaper than the equivalent gasoline-powered cars. While executives from Ford, BMW, and Fisker Automotive listen with polite smiles, Reinert squirms in his seat, crosses and recrosses his legs, and generally behaves like a schoolkid who can’t wait for the bell to ring so he can escape for recess.

When it’s his turn to speak, Reinert bites his tongue. He mildly questions the viability of Agassi’s wildly improbable plan to create battery-swapping stations for the coming wave of EVs. He lobs a few gentle barbs in the direction of the ethanol lobby, which he privately regards with unalloyed scorn. He outlines his genuinely radical vision of a future where publicly owned and shared cars are used to complete urban mass-transit systems. But by and large, he’s on his best behavior, showing the benevolent public face of the world’s greenest car company. Until the mics are turned off.

“That’s the first law of Disney at work–wishing will make it so,” he mutters shortly after bolting out of the conference room and yanking off his tie. “Using ethanol for fuel is like electing the dumbest kid in school as class president. As for plug-in electrics, they’re just not plausible right now. Lithium-ion batteries are too expensive by at least an order of magnitude. They’re not energy-dense enough. And we generate a lot of our electricity from coal. I don’t think Shai is being disingenuous. I think he really believes what he’s saying. I see it all the time from those Palo Alto types. They think the whole world is like a computer company, and they’re always trying to recreate the dot-com economy. You see exactly the same mind-set with Tesla. It’s all going to work out. It worked out with eBay. It worked out with SAP. But transportation is a different world. I mean, Shai’s bragging about driving an electric RAV4 with a seventy-mile range. How many of your friends are going to buy that car?”

Full Article

Filed under: Automotive , Automotive, Cars, Consumer, Energy, Future, Gasoline, Innovation, Technology

Recyclable Cars

Each year, around 10 million vehicles are disposed of in the United States. Before vexing your conscience though, you should know that over 95 percent of these “retired” cars head straight to one of the 7,000 vehicle recycling operations around the country and 75 percent of these cars’ parts are completely recycled, letting cars claim top spot as the world’s most recycled product.

Cars are (surprisingly) the world’s most recycled product. Find out which parts of your car end up as landfill, and which parts don’t in this article from posci.com

Filed under: Automotive , Automotive, Cars, Consumers

Finding the price you should pay for your car

Here is a new site that aims to educate consumers on new vehicle pricing and help them negotiate with the dealer.

Truecar.com

We wonder if the space is getting too crowded between Edmunds, IntelliChoice, KBB, there are probably a couple of other sites and now TrueCar. Consolidation should (probably will) happen over the next year or so we are guessing.

Regardless, the auto dealers continue to lose more of their informational advantage. There is no doubt that dealers will have to focus harder on the service aspect of their business and not just parts. But the actual experience in the dealership and give the customer a reason to come back and to recommend the dealership.

Filed under: Automotive, Market Research, Marketing , Automotive, Cars, Consumers, Research