Friday, August 31, 2007

OPEN LETTER TO CAR MANUFACTURERS

Customer satisfaction trumps sales volume

Dear car manufacturer,

Today all of the car manufacturers can’t stop talking about customer satisfaction, especially when it comes to satisfying the car buyer. They are aware, just as everyone is, that customers visiting car dealerships rank their treatment worse than just about any other retailer. The manufacturers have been aware of this problem for about 30 years. As a Pontiac dealer, I can still remember the first “CSI” surveys that were sent out. The surveys have changed quite a bit and the methodology has changed quite a bit, but essentially it’s the same. When somebody buys a car from a dealer, she is mailed a questionnaire, sometimes it’s emailed, and sometimes the customer is surveyed by phone. The same system is used for service customers. These surveys are scored for customer satisfaction and the dealerships are measured against each other. Typically a dealership is ranked numerically within his local market (about a 100 mile radius), region (geographic section of the USA like the Southeast) and the entire USA.

The problem has been that these surveys haven’t worked very well. Realizing this, the manufacturers have steadily increased the penalties to dealers with bad scores and rewards to dealers with good scores. The penalties can be quite severe, including a dealer’s franchise being terminated, putting him out of business. The rewards sometimes include cash, vacations trips, prestigious honor clubs and societies, and even priority consideration for another dealership location. Guess what? It’s still not working! The scores are getting higher and higher, but the customers are not getting happier and happier. How can that be, you say??!!

The dealers are finding ways to manipulate the survey scores to their advantage. The stakes are so high for a good customer satisfaction score, that “fixing the game” has become pretty much S.O.P. with many car dealerships. This is especially egregious because the honest dealers, who go about improving their scores “the old fashioned way”…treating his customer better, are made to look bad relative to those who are cheating on their scores. In fact, sometimes you actually see dealers who don’t treat their customers very nicely getting higher scores than those who do! As if this wasn’t bad enough, manufacturers sometimes “look the other way” when a large volume dealers has a “CSI problem”. In awards, contests, and honorary societies, the manufacturers sometimes award “discretionary” points to bring a large volume dealer’s percentage score up to an acceptable level. I don’t have to tell you how demoralizing this is to those honest dealers who earn their points fairly. This sends a dangerous message to all of the dealers when they see sales volume trumping customer satisfaction in the priorities of the manufacturers.

The fact is that the manufacturer’s focus on customer satisfaction surveys has intensified to the point where most manufacturers’ executives care more about the numbers than the customers. They tell the dealers to “get those numbers up” which doesn’t necessarily correlate with “treat your customers better”. In a recent Automotive News article, an independent survey company found that 36% of car buyers said the salesperson asked for a perfect score and were asked to allow the dealership to address problems and complaints internally, rather than report them to the automaker. There are also instances of offering a free tank of gas or other perk for a good survey or bringing the blank survey into the dealership for the salesman to fill out. One manufacture recently caught a lot of dealers who had furnished phony email addresses for their customers so that the customer satisfaction survey would come to the dealership instead of the customer’s home.

Here is my recommendation to the car manufacturers. You can keep the surveys, but let them be used only as an information tool for improving the way the dealers treat their customers…no penalties or rewards. Replace the surveys with the “proof of the pudding” for customer satisfaction which is how many customers who buy a car from this dealer come back to buy another from the same dealer? Also, what percentage of the customers return to that dealer for service after they buy their car? What more do you need to know? Customer loyalty is the bottom line, plain and simple. If you must use a survey, use an independent survey company who surveys the dealers’ customers when he doesn’t know who is being surveyed or when it’s being done. The hardest thing for a manufacturer to do is to make customer satisfaction to trump sales volume, not the other way around. The manufacturers will find, if they have the courage to do that, the will “have their cake and eat it too”.

Sincerely,

Earl Stewart

2 comments:

  1. Earl,

    I agree with you that the auto manufacturers should do away with the survey and/or only use it for coaching reasons. I would like to say that I would venture to guess the main reason why a salesperson or a service person would beg for a good survey is because the dealer has their pay plan based on it. You can not fault the employee you must fault the dealer or the dealer managers that make this a HUGE part of the pay plan. My opinion about surveys is this; they are not needed! Period! If you don't take care of the customer they won't come back. Survey or not. The only people profiting from surveys are the JD Powers gang. Survey do not grade the customers feeling about the product or any intentions of returning. They only grade todays experience. A customer can be loyal and happy for years. Have one bad experience and they tell you all about it on the survey, thus grading you poorly. The customer will come back and give you a second chance and continue to do business with you even though they graded you poorly on the survey. Doesn't seem fair that the dealership will be penalized in this situation, but it will. I would also like to add that a lot of good, hard working car people have either lost their jobs or left their jobs due to the survey system. This is a tragedy. In todays day and age with trying to hire good people we can't afford to lose them for something so silly. As you know if a customer grades you as having a good experience that is actually hurting the dealeship. You may have a service person who customer truly like him and give him all goods and he could be looking for a new job in a few months. Doesn't seem fair do it. I think that you as a car dealer need to round up the troops, get some support from fellow dealers and change this. Not just for Toyota I am talking about industry. This blog does not get to the manufacturers you need to forward this yourself. Start a grass roots campaign and get the wheels of change in motion. As a dealer you have the influence with your fellow dealers. I am sure you can get the dealership managers to completely agree. Lastly, please add to your blog for all to read that not all dealerships brib the customers for good surveys. There are a few, but not all.

    ReplyDelete
  2. Dear Jon McMahon,

    Thanks for signing your name and not hiding under the "anonymous" sheet. Please give me a call at the dealership so that we can discuss your comments before I post the response on the Blog. There are a couple of items I want to clarify to be sure I give an accurate response...Thanks.

    Earl Stewart

    ReplyDelete

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