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

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

Crowdfunding forests

“Forget Wall Street, invest in interdependence” is the message from Driftless Farm founders. Thought to be one of the first examples of a community supported forest, Driftless Farm in Stoddard, WI uses a crowdfunding model to ensure the sustainability of its 140-acre forest. Members pay an annual fee of $550 dollars and in return are granted access to designated resources, events and workshops and have the opportunity to forge their own unique role within the forest. They also have unlimited access to the forest itself, where they can hike, camp, explore, scavenge firewood or simply sit back and enjoy the scenery.

Driftless Farm was launched a few months ago by Whole Trees Architecture and Construction, and already has four of its twenty memberships taken.

Forest owners often see their land as a tax burden and therefore have little economic incentive to keep it as a forest. Instead, more financial benefit can be found by clearing the land and using it for grazing or development. However, the global climate crisis is calling out for us to use our resources more wisely and to nurture and replenish our forests. So with its foundations in sustainability, let’s hope that Drifless Farm is the first of many Community Supported Forests to come.

Check out their website

Filed under: Crowdsourcing , Consciousness, Consumers, ideas

Customers drive change

Akio Toyoda spoke in Michigan yesterday. We’ve been part of this process for 10 years now and can testify to how it works making products, services and companies better and more valuable.

From Automotive News:
In his keynote speech at the Management Briefing Seminars, Toyota Motor Corp. President Akio Toyoda challenged the auto industry to reinvent the automobile and told the gathered executives that they are not in charge of deciding how to to do it.

“All of us in this room might think we are driving change in our companies and in our industry,” Toyoda said. “But we are not.

“It is the customer who is driving change. And if we want to make something happen, we’d better listen and learn the customer’s habits.”

Doing so could allow the industry to discover “a need so big that it calls for a true breakthrough idea,” Toyoda said. “Something bigger than just worrying about how many cupholders our competitor has in their new model.”

‘Contribute to society’

Toyoda said his vision for Toyota follows that of his grandfather, Kiichiro Toyoda, who founded the company in 1937. His grandfather insisted that the automaker should “contribute to society through manufacturing cars,” Akio Toyoda said. That calls upon Toyota staffers “to aspire to a higher cause than just building cars and making money,” he said.

Toyoda admitted, though, that “the severe drop in the economy and auto market has created some of the most challenging times Toyota has ever faced.” Toyota posted its third-straight quarterly loss in the three months that ended June 30 and is on track for its second-straight fiscal year of operating losses.

Toyoda also noted that General Motors Co.’s decision to withdraw from the two automakers’ joint venture in Fremont, Calif., New United Motor Manufacturing Inc., “has created some extremely difficult issues for us to resolve.”

Full article

Filed under: Automotive , Automotive, Clients, Consumers, Future, Innovation, Partnerships

Starbucks is getting ‘Lean’

We have observed for a while that the service experience at Starbucks has deteriorated considerably. Getting operations leaner might give Starbucks an added side effect from squeezing more margin out of their operations. Their employees will not be as hurried as today and return to giving customers the service they presumably pay for when paying $4.25 for a coffee that across the street costs $1.75.

From the WSJ:
Starbucks Corp. built its business as the anti-fast-food joint. Now, the recession and growing competition are forcing the coffeehouse giant to see the virtues of behaving more like its streamlined competitors.

Under a new initiative being put into practice at its more than 11,000 U.S. stores, there will be no more bending over to scoop coffee from below the counter, no more idle moments waiting for expired coffee to drain and no more dillydallying at the pastry case.
Full article

Filed under: Customer Service, Marketing , Consumers, Retail, Service, Spending

Commentary on wsj.com about air travel: charge for total weight

This article prompted a fair amount of commentary about the travails of air travel. One in particular caught our attention:

Charge passengers a fare that is based on the sum of their weight as well as the weight of their luggage:
Fare = $/lb. x (passenger weight + luggage weight)

Why should my 100 lb wife have to pay extra for taking 25 lbs of luggage while the 250 lb person who checks no luggage have no extra fee. In effect, the light are subsidizing the heavy. — Adam Brenner

We hope to hear from our airlines friends and clients on why that may or may not work – besides the obvious that charging based on a human condition probably is not PC.

Filed under: Information, Market Research , Airlines, Consumers, ideas, Obesity, Travel

Free rental cars for flexible travelers

Rental companies often need to move cars from a to b and it’s safe to say that universally, people like free “anything”. This is where Transfercar steps in. The New Zealand company works with the car rental industry, posting lists of cars which they need transporting from a to b. Drivers can either check the website for availability, or enter preferential journeys and be notified by text when cars become available.

Although all journeys begin and end at a rental company’s specified location, the lure of free rental, often with free insurance, free ferry and sometimes even free fuel is enough to attract money savvy travelers to venture slightly off their planned routes.

The idea was born when Espen, one of the founders was working part time at Ace Rentals. He began to notice a trend in large amounts of money being spent on relocation of cars from one branch to another.

Transfercar are currently in the process of raising capital to expand their operation in Australia and the USA. Let’s hope they’re successful.

Check out their site

Filed under: Innovation, Marketing , Automotive, Consumers, ideas, Innovation, Lifestyle, Rental Car, Travel

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