Who Will Miss Car Dealers? Not Customers!

John – you’re a friend and esteemed colleague. However, I think you missed a couple of key points here. As someone very involved from a consulting perspective with retail automotoive – but very willing to criticize the channel – I don’t agree with you.

First, the capability to hear end customer feedback and act upon it is rooted in customer-centric process – which is entirely absent on the manufacturing side. I know the auto-makers are spewing forth endless bromides about their customer concern – but they’re still grading dealers on the results of surveys skewed by salespeople saying: “If you don’t give me a five, I’ll be fired.” The dealers resist this phony stuff, but the manufacturers won’t give it up, no matter how specious the results. And the results of these BS surveys is a major factor in how they grade dealers.

Second, the smaller and more community-based the dealer – and the more likely to be eliminated – the closer the relationship with customers. Small dealers aren’t the problem. A mis-designed distribution system is the drag. Forcing dealers to take possesion of inventory – rather than just demo vehicles – is an arcane business practice, and pro-manufacturer rather than customer-friendly.

And third, assessing the entire auto marketing/sales/service process from the outside (customer) in reveals a thoroughly manufacturing-centric model. Dealers aren’t the problem. Car-makers are.

You’re my buddy, but I think you missed this one (and I have an unfair advantage because I’m in the midst of trying to deal with the problem).

Hi Dick,

You don’t have to apologize for taking a different perspective. In many ways we need more healthy debate to clarify positions taken in 500 words. Here’s my reaction to what I hear you saying.

First, the small dealers might want to care more about their customers because they live in the community. However, they don’t have much sway with the manufacturer. I know this a the son of a small dealer.

I agree that the process has been manufacturing-centric. Manufacturers using pressure to stuff the channel with products that don’t sell. We have seen this with other technology and equipment. Take the printing industry. Manufacturers forced distributers to buy product they often couldn’t unload. Or, both concocked finance deals that had deferred payments and the like. Why? Because the product was not tenable in the marketplace. The domestic car business is experiencing this same picture.

I raise the example if Fiat500 for several reasons. First, they involved prospective customers 18 months before they re-released the car. Through a social network 8000 prospective customers helped design the car options and became big advocates before the release. Thanks to the social network that engaged people, they sold 57,000 cars the first month. This was far more than they anticipated. The social network keeps customers involved by enhancing the experience with the vehicles — the ecodrive is only one example. Domestic manufacturers have online vehicle configurators which are a sales gimmick with nothing to extend the experience.

As to the role of dealers in the future, I think they will have to go far beyond the consultative role. The small dealer who is well known in a small community might have enough trust to be listened to. However, the car salesman is our metaphor for someone who cons people.

My hope is that as the manufacturers try to sort out the mess they are in they don’t just rely on coming up with a leaner and meaner version of the system that now exists.

John

John I. Todor, Ph.D.

Michael Lowenstein, Ph.D., CMC
Senior Vice President and Senior Consultant
Harris Interactive

John –

Totally agree with your blog post. Dealerships, in the main, haven’t learned how to create owner lifetime trust and value. I’ve pasted the article I wrote for CustomerThink a couple of years ago on this subject, about a highly successful auto dealership group – and what separated them from the rest.

Michael

Experience is (Almost) Everything
The Hows, Whats, and Whys of Customer Decision-Making, Commitment and Advocacy

“It will not suffice to have customers that are merely satisfied. An unhappy customer will switch. Unfortunately, a satisfied customer may also switch, on the theory that he could not lose much, and might gain.” This is a statement made close to thirty years ago by W. Edwards Deming, in his book Out of the Crisis. Though an expert in total quality processes, he well understood that it was customer experience, formed by interactions with employees, augmented by systems and processes, and supported by a company’s messaging and other communication, that creates success. He concluded: “Profit in business comes from repeat customers, customers that boast about your product or service, and that bring friends with them…….profit in a transaction with a customer that comes back voluntarily may be 10 times the profit realized from a customer that responds to advertising and other persuasion.”.

Framing and Transforming an Experience

All who have anything to do with customers should pay close attention to statements like Deming’s. They have the clear ring of truth and staying power. Experience is (almost) everything to customers, and are at the center of perception, relationship, and trust.. Here’s an example. Just about every reader of this piece owns a car, SUV, or light truck; and we have all gone through the often painful and exhausting experience of purchasing the vehicle and maintaining it. Speaking for myself, it’s an experience which favorably compares with the same eager anticipation of a trip to the dentist or the IRS.

In the movie Fargo, there’s a memorable scene in which an auto buyer is forced to pay more for a car than he’d agreed because, supposedly, the factory had ‘automatically’ applied undercoating (a $500 option), even though the buyer had specified that he wanted the car without the undercoating. Though very angry over this situation, the buyer took the car, but made it clear to the dealer that he had felt cheated and would never buy from him again. And, although only implicit in the movie, it was evident that the buyer would tell everyone he knows about the negative dealership experience.

Companies have to be aware that every experience between themselves and customers, no matter how seemingly trivial, has the power to both excite and disappoint, to build loyalty, commitment and advocacy or create disaffection, disloyalty, and even sabotage. And, the impact of each experience, and components of the experience, need to be fully interpreted and understood so that prescriptive actions can be taken. This is especially true if the experience, or an element of the experience, is identified as a contributor to customer risk and/or loss.

Understanding the Critical Relationship Between Employee Behavior, Experience Management Processes, and Customer Loyalty

Michael Price, General Manager/EVP of Price Automotive Group, a seven brand auto dealership chain headquartered in New Castle, DE, focuses on optimized customer experiences, and redefining what customers think of auto dealers, at least as well as any of the better-known organizations, such as Nordstrom’s, Wegman’s, Ritz-Carlton, Starbuck’s, The Container Store, and Southwest Airlines.

What Michael has accomplished proves that companies of any size, and in any industry, can optimize the loyalty and commitment of customers and the loyalty and commitment of employees. Here are some of the achievements of his flagship dealership, Price Toyota, in New Castle, Delaware:

• Sixty-seven percent of their business is repeat or referred.
• 13.5 vehicle sales are made per representative per month.
• Ninety-seven percent of their customers are A or B credit scored.

All of these results are significantly above industry norms or standards. For example, average representative monthly sales levels are 9.5 vehicles per month, so reps at Price Toyota sell about 50 percent more than the typical salespeople.

Price’s success is driven by closely monitored process management at each customer life stage, always with the objective of optimizing perceived customer value. This is built on a solid foundation of insight into customer needs and expectations coupled with flexible, innovative approaches to delivering benefits. Further, and perhaps most importantly, the dealership is able to customize, and value-enhance, the individual and lifetime experiences of each customer.

Several years ago, Price Automotive Group switched to a “one-price” method of vehicle selling, in which the best vehicle price is offered up-front, completely eliminating the highly disliked negotiation process. They conducted research to better understand the pros and cons of this selling approach. One of the key early customer learnings at the dealerships had to do with experiences associated with the purchase transaction process. Customers tend to equate a long, drawn-out vehicle purchase transaction with personal vulnerability, filled with negatives and potential added, unwanted expense; and, beyond two hours, future purchase intent and recommendation likelihood scores decline rapidly. Simply stated, they found that speed equals trust, at least insofar as buying a vehicle is concerned. The shorter the transaction time, the greater the customer’s level of trust in the dealership.

Price has reduced the transaction time for most customers to under two hours, with the finance and insurance (F & I) element compressed to under 25 minutes. Among the more than 75 percent of customers who complete their purchases in under two hours,
100 percent plan to repurchase at the dealership, 97 percent plan to service their vehicles there, and 67 percent have already referred.

The dealerships offer 15 high-perceived-value benefits to customers, including a 72 hour buy-back/exchange policy, service and parts discounts,no charge towing, and $300 extra for their Price vehicle at trade-in. These are some of the tangible elements of value. The real differentiators for Price dealerships are the approaches to creating intangible, emotionally-based value.

Price understands that, particularly at the beginning of the customer’s life with the dealership, traditional sales processes, and resulting experiences for buyers, had to be redesigned and realigned to address each customer’s needs. This means that the processes had to match what customers want, eliminating obstacles and perceived negatives. Sales reps, for instance, are carefully trained to guide customers through the purchase and to offer quick, responsive support. They are on salary rather than commission. Also, the dealership has defined the critical profit-driving linkage between employee and customer loyalty, and so special emphasis is placed on making certain that sales reps—and all Price staff—feel that they are part of a team, that they are directly contributing to the dealerships’ successes, and that they are appropriately compensated without having to push customers for each additional dollar. As a result, Price experiences very low employee turnover.

Vehicle owner research has clearly proven that loyalty to the dealership is leveraged at least as much by cumulative service experiences as the sales and delivery processes, so Price puts equal weight on service performance. Its value guarantees
are offered through a Preferred Customer Card, which provides such benefits as five no-charge diagnostic service certificates, four no-charge oil service certificates,free roadside assistance, mobile service for light repairs, and free loaner cars if the vehicle isn’t fixed right the first time. Price also offers extended service hours, a child safety program, and a service menu that has been greatly simplified for easier write-up.

Post-sales communication and service experiences are monitored to identify any potentially neutral or negative situations that need to be stabilized or turned around. Price does some basic predictive churn modeling to help identify when their customers will be ready to make the next vehicle purchase. Price actively believes in customer engagement, providing service reminders and otherwise customizing the post-sale communication for each owner. Uniquely, Price is also concerned about customer loss, and invests in customer win-back. They identify when and why a customer would have stopped servicing his or her vehicle at the dealership and have methods in place to re-establish the relationship. Few other dealerships do this.

Net-net, like their larger and better-known counterparts, Price Automotive Group has built long-term relationships and value through creating superior, and consistent, experiences for customers.

John – what small dealers? I dfon’t believe many survived last week, unfortunately. I will say that some large dealer networks are working their tails off to get over past stigmas (and past behaviors). My wife, son and I all have cars consciously bought from the same network because their after-sale service is superb – and competitive price-wise. But I agree that manufacturers have to change their stripes to make car-buying customer-centric.

Dick

PS: Do you know what FIAT stands for? Fix It Again, Tony.

I’ve had my share of bad car buying experiences. But the past 3 cars have been bought at the same dealer, that
a. had the car I wanted to buy
b. was willing to be price competitive
c. had delivered trust-building experiences

If the manufacturer builds uncompetitive products, whether in terms of quality, styling or price, I don’t see how the dealer can fix that. A great “dealer experience” will take you only so far.

My recent experience was that the car I wanted was available several places, at similar prices. Or so the internet listings said.

Where did I buy the car? At the dealer that I trusted. We did negotiate the price but it was a short and stress-free process. The purchase was completely quickly and I’m happy with the car. I’ll go back there again.

Dealers do matter, but the car matters more. I have great empathy for the dealers that bet their livelihoods on GM and Chrysler. Unfortunately, thinning out the distribution channel is part of the solution.

Bob Thompson, CustomerThink Corp.
Blog: Unconventional Wisdom

John

I think your diatribe against dealers is badly misinformed and somewhat out of touch with reality.

Putting to one side the surfeit of dealers in GM/Chrysler’s network and the reasons why, dealers in general provide a valuable service to customers, particularly during the years long after the manufacturer has forgotten about the customer once their vehicle is out of warranty.

I have worked with a number of automotive manufacturers over many years. And my wife worked in the head office for another one for well over 15 years. My wife just shook her head when I showed her your article. Neither of us recognised the auto industry you describe.

The role of dealers is only partly to sell new vehicles. That’s what the manufacturer wants them to do, as legislation in most countries prevents them from doing so themselves.The manufacturers push and cajole dealers to keep the metal moving to maintain their sales numbers. But the manufacturers don’t know their customers (95% of leads go through dealers direct, not through the Internet), don’t care about anything but selling new vehicles and the finance that acompanies them, and absolutely are not interested in customers once their vehicle is out of warranty.

In contrast, dealers are around to sort out all the little problems with your new car, to battle with the manufacturer for unusual warranty cases to be paid for (and I have seen the battles with my own eyes), to keep your vehicle on the road long after it is out of warranty and to provide a whole range of services that the manufacturer just isn’t interested in. Unlike the manufacturer, it is the dealer who has the incentive to develop a working relationship with their customers. After all, they make most of their living from servicing vehicles and from selling used vehicles, not from selling new ones. So it is the dealer who is the person you are most likely to have the relationship with, the one you are most likely to go to for automotive help when your vehicle breaks down and the one I would trust to find me the best second vehicle financing deal too.

The Fiat 500 is a great little car, but its social media launch was a marketing gag. It didn’t and doesn’t drive volume sales. Traditional manufacturer and dealer marketing does. And the Fiat 500 is an exception, not the norm.

So next time you feel like criticising automotive dealers, first get your facts straight and recognise that without them, you would literally be all by yourself wit your shiny new vehicle once you had driven it away from the smiling salesman.

Graham Hill
Customer-centric Innovator
Follow me on Twitter

Interested in Customer-centric Innovation? Join the Customer Driven Innovation groups on LinkedIn or Facebook to learn more.

Wow! we are getting so strong position taking. I will admit that my title and view of dealers was intented to stimulated some debate. However, most dealers don’t measure up to the dealer Michael mentioned. Dealers in the Toyota/Lexus family in the USA that opt’d for the corporate sponsored customer-centric program are major exception. Interestingly, the roi for them has been very high. Unfortunately, most of the domestic manufacturer/dealer systems didn’t follow suit.

As Graham pointed, manufacturers have been constrained by laws and contract. This is changing. What I am hoping will happen is a stepping back and re-evaluating a century old model of sales and service. Dick mentioned a manufacturing-centric model that is problematic and I agree.

Graham, I agree that the Fiat500 is the exception, not the norm. There is a lesson to learn from them.

John

John I. Todor, Ph.D.

Graham – I believe what John (and probably others) wrote here rubbed you the wrong way because none of us clarified that we’re talking about U.S. carmakers. Unfortunately, GM and Chrysler are so dominant in the news over here that we forget there are others.

Dick

The days of needing car dealers to “sort out all the little problems with your new car” are going, going . . . almost gone!–at least in the US. But when I read Graham’s comment, I thought that’s just what I need for my computer! So dealers do play a role, but dealers are most valuable in markets that truly need what they do.

Better vehicle quality, higher reliability, better information, and improved channels for manufacturers to hear and respond to the Voice of the Customer are only part of the forces that have whittled down the value that car dealerships have offered.

After Chrysler and GM made announcements about paring the dealers I was apalled to see daily newspaper photos of septuagenarian men who were faced with shutting family car businesses that began in 191X. The towns where the businesses were established read like a who’s who of American rustbelt communities. It is sad to witness the loss of commercial icons (for me, long-gone Bendall Pontiac in Alexandria, VA and Bob Peck Chevrolet–“Check with Peck before you buy!”–in Arlington, with its gaudy 60’s vintage zig-zag roof). Beyond the owner’s remorse over the end of an era, customers expressed a similar feeling of bereavement.

But those interviewed are almost all older than I am. Since I purchased my first new car in 1985 (one of six), a car dealer has represented a place to avoid. High pressure sales, high-priced service, and inconvenient overall. Once past the indignity of the “buying experience,” I rarely–if ever–drove back on the lot. I didn’t have to because I had better choices.

How many other businesses can survive using largely the same business model for 100 years? (Just as remarkable, most family-run businesses never make it past the third generation!) Add to that what’s happened in manufacturing technology, energy, globalization, demographics, transportation sytems, and society, and it’s even more amazing to think “Wow, Rivermont Chevrolet has been selling Chevys out of the same location since 1920!”

I’m as nostalgic as anyone, but market forces aren’t sentimental. The car dealership business model died under its own weight and mass, helped by the domestic auto manufacturer’s incredibly poor strategy of saturating territories with suppliers.

Andy,

Like you and Bob, I feel for the dealers who made a commitment to a manufacturer and lost out. It happened me when I was a VAR in the late 80’s.

Dealers may not be a thing of the past, but as you says the traditional model needs some work. I suggest they have a careful look at how Apple Stores operate. Then, have a look at the big-box electronics stores. They need to learn a few lessons from the former and learn what not to do from the former.

John

John I. Todor, Ph.D.

John – for many years auto dealers have been coaching customers on how to complete their “customer service” surveys. Manufacturers have caught on to this and have begun penalizing those who get caught. But they still do it.

In the case the manufacturers get it. They understand a problem had developed and they took steps to fix it. They learned and evolved.

Yet the dealers have continued their same old ways, coaching customers as much as they can. They refuse to learn, to change or evolve, for the most part.

If this is typical of how they do things (and I think it is) then I agree with you. The manufacturers are in a better position to drive change (pardon the pun) and build a better customer experience. On the whole, dealers have been unwilling to do so.

Kevin Stirtz
The Amazing Service Guy
http://www.amazingserviceguy.com
1-952-212-4681

Kevin,

I think the whole model needs some rethinking and it needs to start by taking an outside-in perspective. The outside being customers. Both manufacturers and dealers should be eagerly trying to involve and learn what would make for a better customer experience. My fear is that they will spend time, energy and resources (our dollars) trying to tweak the old system.

They need some break out thinking. About a decade ago there were rumors that Ford and Hertz were going to offer a new flexible lease program. Customers would have the flexibility switch vehicles when their needs change. If on the weekend I wanted an SUV to go skiing, no problem. Most days I might drive a small economical car but on other occasions I might want a large car to handle guests. This may not be the solution but it is the kind of thinking that views transportation differently.

John

John I. Todor, Ph.D.

Yesterday I completed an online survey for Subaru, following a service visit at the dealer last week. For the first time I was asked whether the dealer attempted to influence any of my questionnaire responses.

Andy,

My Subaru experience preceded the online variety. After servicing our then new 2002 Outback, the head of service blatantly stated that if we couldn’t give them a perfect score, could we discuss it, now!

On the other hand, the place I get tires takes a different approach. The last time I bought tires I wanted a smoother riding and less high-performance tire. After discussing it the tire guy made a recommendation. When I showed up to get the rotated, he asked how they were working out. I gave him a good report. While I was waiting, I notice him ask other customers about previous work done before they addressed the current reason for service. They didn’t always get positive answer but they always worked towards a satsifactory outcome for the customer. They also learn from customers’s experience so they could share it with others.

Asking before you get the money for the current visit is risky but build trust and a sense that they authentically care.

John
John I. Todor, Ph.D.

Here is some new thinking about cars.

http://tinyurl.com/qmsgsx

John

John I. Todor, Ph.D.

Wow – nice heated discussion.
John, I very much like the new thinking of cars comment. I made a “Detroit Proposal” last year : http://www.facebook.com/group.php?gid=97901110531

I guess we are having two very different problems:
1) The ruined car industry
2) A dysfunctional channel

John, this post is about a dysfunctional channel and I agree with you. In my book “Channel Excellence” I briefly talk about channel corrosion in other industries but the pattern are the same in all industries: “channels corrode after 30 years”. Maybe not exactly 30 but after some time. The changing customer education process is killing the auto dealer – because the auto dealer has no clue how their customers changed. I’m in the market for a new car. The experience would go far beyond the capacity of that page. But summarizing: Car dealer sales people are probably the least educated humans in the western society. They stand in front of their shops like bodyguards in front of Al Capone’s favorite bar. They do everything they can to make the visit unpleasant. In one case I walked after the contract was done and ready to sign. The boss came in in the last second and hoped to get some extra margin. His sales guy almost had a heart attack.

But than the structure is broken, making dealers buy inventory is ill. The way that whole industry operates is unbelievable.

I guess the dealer shake out is just the tip of the iceberg. That industry need to reinvent itself or is taken over by foreign car manufacturer. Again I still believe it must start with taking Ford and GM apart create a new national auto industry with 20 competing brands and do a CTRL-ALT-DEL. 😉

Axel,

I think reinvention is required and this will take the courage to break with traditional premises and models.

I read recently about two new entrance to the auto industry that were trying to break the mold. Both were using standard and readily available material that would let cars be assembled locally by independent contractors. Environmentally friendly and innovative. There may be problems with the idea and their cars might not satisfy everyone but it bust out of a big manufacturer-centric model.

John

John I. Todor, Ph.D.

The stereotype of car dealers exists for a reason; some still behave that way.

But I feel compelled to defend those that don’t. My car dealer for the past 3 cars has been fabulous. Great buying experience and excellent service. My wife has been treated well at a Honda dealer.

Good car companies and dealers are available. Somehow they make the “dysfunctional” distribution process work, despite some of the problems that Axel mentioned like taking inventory. Unfortunately for Detroit, it seems that the “good” dealers are more likely to be affiliated with foreign brands.

Making dealers “agents” could fix the inventory problem, but won’t fix cars that have quality problems or dealers that practice win/lose negotiating.

Bob Thompson, CustomerThink Corp.
Blog: Unconventional Wisdom

Bob,

In a recent survey the Chevy Malibu was ranked top in its class by JD Powers. That might be helping GM but not enough.

A few years ago the GM Geo Prism and the Toyota were made from the same parts by the same people in the assembly plant in Fremont, CA. GM routinely offered incentives of up to $1000 to get their cars off the lot. If Toyota offered an incentive it was a fraction of that offered by GM. Another telling difference occurred when the cars show up in the used car lots. The nearly identical Toyota Corolla command a 15-20% greater price than the Prism.

Why the difference? Trust and confidence that the manufacturer and their dealer network would stand behind their produce. And, that the overall owner experience was different.

I agree that their are good dealers who really care about their customers but if they worked of Ford, GM or Chrysler, they had an uphill battle because of the manufacturer-centric model that Dick Lee mention in an earlier comment. This needs to change.

I must say that when I originally posted this blog I was hoping to get a discussion about the customer experience surrounding the entire car experience and the ways social media might play a role. Obviously, people have other issues on their minds. If people from the auto business are reading, they will gain some great insight.

John

John I. Todor, Ph.D.

Here is a link to an article that discusses how the auto industry can change by:

focusing on enviromental issues
dealers that focus on the braoder customer experience
the GM Saturn experience as a starting point

http://tinyurl.com/lsjgxw

John

John I. Todor, Ph.D.

John – here’s a quick passage (and a true story) from a book I may one day finish (a Visual Workflow book has to come first). This speaks volumes about why Americans don’t give credence to U.S. car makers.

My business partner at the time drove a K-car. A Plymouth. The ugly little thing spent more time in the shop than on the road, or so it seemed. Until one day she was driving on 24-hour busy Interstate Highway 94 from Minneapolis back across the Mississippi River to our office in St. Paul. Suddenly, without warning, the driver’s side door fell off. Right onto the busy freeway. Understandably panicked, she yanked the wheel to get off the road. But then she ran back along the shoulder towards the fallen door that cars were wildly dodging; stopped traffic; strode onto the roadway; and all 5 feet and 100 pounds of her picked up the door and carried it off the road.

Fortunately, she was an early cell phone adopter and was able to call her husband, who quickly arrived and helped her load the door into the back seat of her car. Then he drove back to work while she drove this wind tunnel on four wheels back to the dealer. When she arrived, she rushed the service manager in her wild-hair state and let loose, using language that would turn a sailor’s face crimson. He was so scared by this little woman screaming at him that he finally stammered, “But Mrs. _________, you must have opened and closed that door a thousand times already.”

John,

It would indeed be interesting to talk about the role of social media in the car experience. But can social media fix more fundamental problems of bad products, high costs or flawed distribution channels? I don’t think so.

Since Detroit’s problems are dominating the headlines now, I put the question back to you: What should GM be doing with social media to help with their crisis? Or is social media just the “sizzle” that can be used to improve an otherwise good “steak” at more healthy car-makers?

Bob Thompson, CustomerThink Corp.
Blog: Unconventional Wisdom

Bob, I’d like to oppose and say “Yes, social media can fix the problem”.
John, let me talk to the social media aspect of your post:

We analyzed Ford and Toyota in our “MindShare Report” and there are a few very substantial findings that could help fix the 2 1/2 remaining car makers:
1) The social web provides deep insight into the customer behavior and market dynamics that can teach the auto maker where to start and what to do. Our assessment gave just a few superficial hints but once really engaged it demonstrates how deep you can go. For instance: One of the two car maker bought several of the reports – the other didn’t – no interest.
2) Once you have the assessment you can fix the root cause problems from the customer perspective. You will quickly learn how auto buyers educate themselves about a new car purchase and what role a dealer could and couldn’t play. It goes further into service requirements, how important environmental aspects are and where the trends are.
3) Once you get this into a professional process you then pick up trends way before a purchase is happening, maybe not fast enough to influence the design phase, but fast enough to influence the production phase.
4) Now as a next step you analyze your logistical pattern all the way down to raw material purchase – now you are way beyond what Joe Doe thinks about social media. You use most current market dynamics and analyze them real time instead of asking a research firm to do a survey who PAYS the interviewed to answer the stupid questions which are knowingly irrelevant in just too many ways.
5) Now you start to return the flow and begin to feed back answers and information to help educate your market. You educate about green cars, behavior and much more. You close the loop to your market to further strengthen the relationship and the feedback circle. All the way to a point where your market can collaborate with you on the next car design.
6) At this point now the information flow is so strong that even the last executive will understand what they have to do to make their business work. Now it will grow to the next level: Co-Creation based on social media solutions drive and influence the car design and as the “ownership” in the design is extended into the market – the market will begin to help sell THEIR product. They may even align with the local representation (lets still call it dealer for the sake of a better word). The engaged people will do joint parties at the dealer and talk about their ideas and how it influenced the car design. They may invite their friends and while this is only local – done in 100 cities influencing 1,000 citizens is 100,000 people, more than any of the stupid adds do today.
7) How does all that influence product quality? Well it does already with one difference: Some car maker listen and act, others don’t. The GM/Ford monsters have no idea what the market say. The market say brand A is better than Brand B. Because of that information band A get bought more than brand B. In our “MindShare Report” we showed one brand with over 60,000 clips on YouTube provided by their drivers – Nobody can ignore that high level of advocacy one would say. Well some car manufacturer do and wonder why their car is not selling as well.

So I guess social media could play a major role in fixing the broken car industry. I know for fact it does at least in one car manufacturer.

@AxelS

Social Media Academy

Well, Axel addressed the potential of social media.

I want to roll the clock back and then roll it forward. The auto industry and the tire companies bought the trolly lines in many big cities and ripped out the tracks. Why? To make cars necessary.

Now we are having a exponential rise in the number of public markets in cities. They provide a gathering point, focus on local sustainability and generally are accessible by public transportantion. Even dollar spent in the market lead to up to $3 spend in the surrounding area. Back to the future.

Maybe the auto industry needs to invest in a sustainable future rather than trying to perpetuate a business model and narrow view of transportation. I am not suggesting they abandon the car but think broader and more long term.

John

John I. Todor, Ph.D.

Dick,

Your KCar story many be the dominant opinion about after purchase experiences. Here is one from the bright side.

A friend of mine bought a new Lexus from a dealer in Rochester, NY. When the deal was done and he was about to leave the dealership, the owner came out to thank him for his business and then said, “I understand from Bill (the salesman) that you are an IT consultant and travel a lot, with your permission we would like to make an extra set of keys to your car. When you go out of town, put the parking ticket in the ashtray then call us and let us know the parking spot number. We will come and get the car and store it for you. If it needs service, we will take care of it while you are away. Call us just before you board your return flight and we will return you car to the airport and leave you a voice mail message with the parking spot.

After taking of this service for a while, my friend was thrill. When he returned his car was always washed and he never had to use in town days for service. The reduced parking fees were minor benefits. This won that dealer a long-term customer who was not just satisfied but became a big advocate.

Many seem to judge a car dealer by whether they escape without being annoyed rather than having positive and meaningful experience.

John

John I. Todor, Ph.D.

Axel, these are great examples of how social media could help.

But most of what you advocate has been practiced by leading manufacturers long before social media became the hot thing.

So, two points…

1. If a car-maker is not customer-oriented to begin with, social media won’t change that. It’s just a new tool. For real change to happen in Detroit, new leadership is required with a different vision of how to engage with customers.

2. It seems to me that the real breakthrough would be co-design. Rather than just use social media to improve communications (to support research or marketing agendas), why not get customers involved much earlier in the process? Some call this customer co-creation. Any car-makers practicing?

Bob Thompson, CustomerThink Corp.
Blog: Unconventional Wisdom

Bob,

I agree that it is the relationship between customers and the overall auto industry that needs to change. The Fiat500 story that I mentioned in the original post is a good example of the emergence of such a relationship. It started by involving customers before the product was designed and launched and continues to involve them through their ownership experiences. Experiences because they expect owners to be long-term customers.

In this case, social media was the catalyst and ongoing backbone for the relationship but the relationship exists vibrantly in the real world.

Earlier, Graham mentioned that the Fiat 500 was only a small piece of the bigger auto picture. That might be true but it is a start of a new type of relationship. Other shouldn’t just copy, they should learn from it.

Social media has allowed us to move from large aggregation efforts to highly customized relationships with smaller groups of customers with common interests and desires. This might apply to Fiat 500. It also might apply to the new much, much slimmer GM. Let’s hope they realize that this is a possibility.

John

John I. Todor, Ph.D.

GM released a short reinvention video to Youtube. Unfortunately, it look more like trimmed back, leaner but more of the same. I don’t see much reinvention. Hope I am wrong.

http://tinyurl.com/ojqd7j

John

John I. Todor, Ph.D.

Axel,

There is a small company roaming around the country showing off a radically modified Saturn that get 150 mpg. He wants to use the idle Saturn plant in Tennessee to build cars. Apparently, they are shut out at GM and now is lobbying Washington. Even if their car only gets 75 mpg someone should be taking them seriously. They have a car now!

John

John I. Todor, Ph.D.

My comment on the WSJ Post as mentioned by John:

This is disappointing as it has no content other than leaner, greener, less brands? Less brands? We need more brands. Obviously not from one behemoth company but through many agile and globally competing companies – see my “Detroit Proposal” on Facebook: http://www.facebook.com/group.php?gid=97901110531

But really disappointing is the fact that a “commercial” is believed to convince consumer to develop new trust in a otherwise dysfunctional business, company, industry.

The social media space has probably a Million suggestions to fix the car industry. Probably hundred thousand decent ideas and 10,000 valuable proposals. But nobody seem to listen. We have tools and instruments to professionally research the sentiments and content of those ideas, but nobody seem to be interested. The Social Media Academy created a customer mindshare report contrasting Ford and Toyota but only foreign car manufacturer took the report.

Sorry this “commercial” is just reiterating IGNORANCE and demonstrating that this company has not the faintest concept to reinvent itself – but still some money to be able to wast it. I’m very sorry.

Axel Schultze
Social Media Academy

I can’t believe it only goes to 1 star. They deserve a -5 stars. Worst people I’ve ever dealt with, bar none. A required steering recall on my Chevy ended up taking 3 days (1.8 hr job) when I refused another $2700 in out of pocket services they recommended. I was back in days when the steering system failed, and despite seeing the damage in the components they worked on, they insulted my intelligence caliming this steering damage had nothing to do with their replacing that steering component. They’d be happy to fix it for $700 out of my pocket, and when I took it to a private garage for half the price they told GM and the BBB that despite their technicians having first look and refusing to help me for 2 weeks, I was trouble for not calling them while it was in the private shop. GM washed there hands of the situation when Global refused to return there calls. Pursuing National Highway Transportation and Safety Admin for results. I’ve owned only Chevys for 20 years driving, but one experience with these guys, and I’ll NEVER own another! Run away fast!.