In the wake of the backlash from the recent United Airlines incident, it has been widely reported that many airline CEO’s salaries are, at least in part, connected to customer satisfaction scores. In the case of United’s CEO Oscar Munoz, poor customer satisfaction ratings can cost him about $500,000 in bonuses. The CEOs of Southwest Airlines and Delta have similar contractual clauses.
On top of that, one poor experience – especially if it’s perceived by many as being egregious – can, by itself, ruin an airline’s entire quarter, or even the year. In fact, in the case of United Airlines, at one point their valuation dropped about $1 billion, according to USA Today.
But what about an industry closer to our hearts, that is similarly hyper-competitive and also has financial repercussions for poor customer satisfaction scores?
Yes, I am talking about the automotive industry.
Manufacturers penalize franchisees that fail to meet customer satisfaction expectations through loss of revenue including stair step money and other incentives. And some dealers even include CSI expectations in their managers’ and salespeople pay plans. Failure to meet these goals can have a trickle-down effect that costs everyone in the dealership money.
Poor customer satisfaction can also lead to outraged customers who defect to your competitors – taking friends and family with them. This can then force your dealership to increase spending on acquisition, which is much more expensive than retention.
As consumer choice continues to expand, customer experience is increasingly more important. Customers are no longer willing to put up with a bad experience – and they are more than happy to share that poor experience with the world via online review sites and social media.
It really doesn’t matter whether the customer is right or wrong. It’s about how the experience is perceived. That specific United flight needed four volunteers to leave the plane. Three complied without incident. One customer chose not to. While it’s probably safe to say the other three people also had a poor experience and were inconvenienced, we don’t know their story. However, because that one person was treated extremely poorly, and it was captured on video by several customers, we know what happened on that flight. And, because of that, while it did not happen to them directly, other United customers are cutting up their United loyalty and branded credit cards. They are outraged that a company they had been loyal to would allow such a poor customer experience. A single bad experience – and arguably poor employee handling at that time – put United at risk and became the catalyst for a mass defection.
While your dealership probably doesn’t have to worry about an incident of this magnitude, it’s all a matter of scale. The United incident is simply a good illustration of the backlash that can happen due to a poor customer experience, along with poor employee decisions and actions in the heat of the moment.
In the end, it’s far less expensive to suck it up and fix the problem and/or apologize, than it is to take the chance that a customer chooses to share their experience with the world.
Customer experience has grown into one of the biggest differentiator for any business– so the choice is to either embrace that change and ensure a great customer experience, or watch your customers flock to competitors.
The title of this blog post originated from a thought-provoking interview with Chad Mitchell, senior director of digital communications at Walmart. In the interview he lays out a philosophy that every industry – especially automotive – should embrace. The main point he makes is that our digital and physical world is evolving at light speed and, the car business especially, tends to find itself far behind leading brands when it comes to customer experience, communications and… well, adopting new things.
As an industry we tend to sit back and wait for “new” things to be proven before we even try them. That “sit back and watch” strategy typically finds us scrambling to catch up when that new thing punches us between the eyes and we realize that we need to be doing (or adopting) this “thing.”
Think about it — there was a time dealerships didn’t believe they needed a website. Now we’re arguing the effectiveness or necessity of social media platforms, advertising, online sales and F&I transactions — along with in-store technology designed to expedite transaction times. And while we do that, the competition is embracing these new tools and attracting consumers.
Mr. Mitchell isn’t suggesting that businesses drop their tried and true core processes, but states that they should, “try things quickly and be willing to shift and go in a different direction. Don’t be afraid to take chances and learn.” For a leader in an organization as big as Walmart, one would think that perhaps caution would be the better part of valor and, the most prudent business decision. One can only imagine the challenges an organization as large as Walmart experiences when it comes to customer experience, loyalty and reputation. With so many locations, customer touchpoints and the sheer volume of customers, Walmart has challenges on a store-by-store level and overall as an organization. It’s certainly possible that employee interaction and the customer experience at one location can differ from another, simply due to management, staff, location and resources. Well, the key to success, according to Mitchell, is to determine what new endeavors require more care. And, in the retail business, he states that the one thing which should be at the top of the list is customer experience and loyalty.
As consumers get groomed by major brands to expect certain types of transactional experiences, they naturally expect those same frictionless experiences from other retailers they do business with, including auto dealers. Conquesting the competition is sure to become more prevalent for forward-thinking organizations that adopt new technology and offer an easier customer experience and transaction. That’s why most major automotive groups produce and roll out technology, products and services designed specifically to nurture customer loyalty.
It would be a wise decision for us all to pay attention to what’s going on in the world and not drag our feet when it comes to trying new things. While change can be scary, it’s also inevitable. It’s much better to be leading the pack than trying to catch up with it. This doesn’t mean that you should abandon the things that have earned customer loyalty. Core values and tried-and-true processes that your customers love should always be handled – and changed – with care.
Mitchell makes a great final point in the article where he states, “We don’t want to break the heirloom china; we want to break the paper plates.”
Don’t be afraid to try new things, adopt new technology or change processes. Just be prepared to react and alter paths should you find something either failing or succeeding. By doing this, your business should be more future-proof and in-line with customer expectations and, in turn, enjoy greater customer retention, loyalty and acquisition.
It’s no surprise that Disney has created one of the largest groups of loyal customers in the world. Of course, this isn’t by accident. Everything Disney does is by design. According to an article in Automotive News, Porsche wants to do a similar thing and create its own brand loyalists by bringing a little Disney magic to its dealerships.
Porsche has enlisted the Disney Institute to help train all of its customer-facing dealership personnel. It has also asked dealers to create a new position in their stores, Customer Experience Manager, responsible for ensuring staff embrace customer experience. The Customer Experience Manager will also watch and analyze customer satisfaction in their stores at each point of contact.
Customer loyalty begins at the first point of contact a customer has with a dealership. Regardless of if the first experience is in service, via the Internet, by phone, or in person, if this first experience is poor, it’s much harder to win over their loyalty. Through creating a company culture that focuses on the customer experience, similar to Disney, Porsche is on the right track to increase their Customer Satisfaction scores, along with dealership and brand loyalty.
The Disney Institute is a world-renowned training group that has ongoing relationships with other manufacturers, including GM. It has trained dealers in several areas, including leadership and management skills, and attendees largely have very positive things to say about the training.
Low CSI scores can cost your dealership thousands of dollars in lost OEM incentives, to say nothing of the loss of sales and service revenue and the scramble to replace those customers, along with high acquisition costs.
Take a look at what Porsche is doing and consider analyzing your customer experience at every touchpoint. Strive to improve areas that are lacking and reward any staff that perform well. Whether you choose to send your staff to the Disney Institute or not, an internal program designed to improve the customer experience at your dealership can certainly mean future business and revenue growth.
It’s great to see a manufacturer take this move to improve the customer experience and thereby loyalty. Hopefully, other manufacturers and dealerships will follow their lead. It can only mean an improved perception of dealerships by consumers. And that will lead to more business for everyone.