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

Beardsourcing?

As you know, we are close watchers of crowdsourcing, and the interest in emerging companies like Crowdbands continues to build.

However, our friend Dan Sieger took crowdsourcing to a strange place yesterday when he asked his Facebook friends to vote on his vacation beard.  As you’ll see from the picture below, it was kind of a scraggly beard, but we’ve certainly seen worse.  He paraphrased the Clash when he asked people about the beard: “Should it stay or should it go?”

Dan posted the picture at 5:38, on the train home, and by 5:41, the responses were rolling in.  Early returns pointed to the beard’s survival, but the tide turned quickly, and by 10:32, there were 16 responses, most of which recommended giving the beard the Gillette treatment.  The vote was 12 for “Go!”, six for “Stay!” and one guy who just couldn’t make up his mind.

According to Dan: “The final straw was when my friend Eric from Vermont voted to get rid of the beard.  Eric is a passionate Deadhead and wonderful free spirit.  If a Vermont Deadhead wants you to get rid of your beard, that’s a bad sign.”

Dan is clean-shaven now.  It has yet to be determined whether he will use Facebook to vote on whether he should get the steak or the Chilean Sea Bass at his brother’s wedding on Saturday night.

Filed under: Crowdsourcing , Beard, Crowdsourcing, Fashion, Psychology, Twitter

Having a baby saves you money?

No, babies are still frighteningly expensive, however according to a recent study by psychologists in Scotland, pretending to be a proud parent of a new-born can save you money and possibly even your identity!

40 wallets with a picture of a baby inside were planted around the streets of Edinburgh and a surprising 88 per cent of these were returned to the “owners”. Doctor Wiseman who led the study said that the photograph of a baby “kicked off a caring feeling in people”. Wallets were also planted with pictures of a puppies, families and elderly couples – apparently the “caring feeling” isn’t as affective when we see these images as the return rate was 53, 48 and 28 per cent respectively. 

The wallets used in this study contained no money whatsoever. At the risk of sounding cynical, it would be interesting to run the study again with a few hundred dollars in each wallet!

Full article

Filed under: Market Research , Money, Psychology, Science

The myth of the rational customer – don’t overthink it!

What if something you thought you knew to be true, turned out to be exactly the opposite? What if an approach you imagined was working for you was actually working against you?

Imagine if it were true, for example, that almost nobody buys a product or service anymore simply because they need it, or because its price is the right price? That, even in an economic downturn, they have to want it as much as need it before they buy?

It’s a difficult concept to grasp because, at the end of the day, it’s not about rational thought. That notion is a wake-up call for products and brands who have built their businesses on pure reason.

Ask Gerald Zaltman, a Harvard scholar who suggests in his seminal book How Customers Think that only 5% of consumer purchasing behavior is based on rational thought processes, suggesting that 95% is due to subconscious motivation. I know it’s a hard statistic to swallow, but consider this: what if he’s only even half right?

Full article

Filed under: Marketing, Uncategorized , Consumers, Market Research, Psychology, Retail, Spending

How to use market research in a recession

Recession-challenged consumers are buying less, looking for deals, or switching to different brands, product categories, or stores. Some are even changing long-held attitudes toward consumption. To many folks, filling the home with more stuff or keeping up with the Joneses is no longer appealing.

As a result, the degree of uncertainty in business and consumer markets has soared. Yet, to conserve cash, most firms are reducing spending on the market research that would help manage that uncertainty. In the U.S., spending on market research has dipped for four consecutive quarters, and chief marketing officers don’t expect the situation to turn around soon. Most big consumer marketers are seeking to shave 10 to 20% off of research budgets.

In flush times, a rising tide of consumption can compensate for less than optimal branding, positioning, pricing, or segmentation. That is certainly not the case now. At the same time that marketers must pare down research expenditures, they face added pressure to secure high-quality data and insights.

Full article

Filed under: Information, Market Research, Marketing , Consumer, Market Research, Marketing, Psychology, Research

Bad weather = good memory?

After yesterday’s post on memory we heard about this one from the Journal of Experimental Social Psychology:

“Can bad weather improve your memory? An unobtrusive field study of natural mood effects on real-life memory.”

Psychologists have known for some time that mood can have an effect on memory: for example, we’re more likely to remember events that are consistent with our current state of mind, and a bad mood is known to reduce the likelihood of people recalling false memories.

In the latter case, the theory is that a bad mood triggers a more sceptical, careful mode of processing, in contrast to the less vigilant, conceptual thinking style that characterises a good mood. Now Joseph Forgas and colleagues have taken this line of work out of the lab and into the real world, showing how the weather can affect our memory via its effects on our mood.

The researchers employed the help of a newsagents shop in Sydney and tested the ability of 73 shoppers to recall ten objects, including a piggy savings jar and toy cars, that were placed around the counter. The shoppers were quizzed after they left the store, with half of them tested on rainy, cloudy days and the others tested on bright, sunny days.

A mood questionnaire confirmed that the shoppers tested on rainy days were in a worse mood than those tested on a sunny day. And the memory test showed the rainy-day shoppers correctly identified three times as many items as the participants tested on a sunny day. Moreover, the rainy-day shoppers were less likely to have false memories for objects that hadn’t been around the counter.

“This finding suggests that some allowance for such mood effects could be incorporated in applied domains such as legal, forensic, counselling and clinical practice,” the researchers said.

A possible methodological flaw is that the rainy-day shoppers might have spent longer in the store, but a follow-up study showed that shoppers spent no longer in the shop on rainy days relative to sunny days.

This appears to be the latest example of an emerging trend among memory researchers to take their work out of the lab – just last year, researchers at Goldsmith’s College performed an experiment at the London Dungeons to examine the effect of fear on eye-witness memory.

Filed under: Market Research, Science , Consumer, Experiments, Mood, Psychology

Some spending does make you happier

The array of great deals on homes, cars and other big-ticket items these days is tempting. But before you get out your checkbook, consider this: Will snagging that awesome price really make you any happier?

It’s a tricky question. Getting a real steal can be awfully satisfying, as behavioral economists and psychologists know. “Getting a good deal takes on its own value,” says Leaf Van Boven, a professor of psychology at the University of Colorado in Boulder.

But a low price may lure us into buying something we don’t really need — or even enjoy, after the thrill wears off. So, says Dr. Van Boven, “It may be useful to ask the question, ‘Why am I doing this?’ “

The good news is that some spending really is more fulfilling. Experts who study happiness have repeatedly found that people get the most joy out of time with family and friends or activities that provide personal enrichment, such as hobbies. What matters is not the amount that we spend, but the quality of the overall experience, so a picnic can be as satisfying as a weekend getaway. [wsj.com]

Filed under: Market Research, Marketing, Science , Consumer, Happiness, Psychology, Spending

The Urge to Splurge

Retail stores map out your shopping experience and nudge you toward that cash register.

Putty-colored mannequins and quaint window displays are so 1950s. Today’s retail stores map out the shopping experience with a precision that starts the moment you walk through those double glass doors.

Can’t help but reach for one of those V-neck sweaters so neatly stacked in the middle of The Gap? PT investigates how retailers nudge you toward that cash register.

Filed under: Marketing, Science , Consciousness, Consumer, Psychology, Retail