Effective Customer Service in the Automotive Industry

We have all heard, demanded, used and complained about customer service at some point in our lives as consumers. And depending upon what the issue was, the term ‘customer service’ differed based upon whatever it was we received, did not received, or thought we should have received.

The preceding is exactly the point. Customer service seemingly differs depending upon the industry as well as the segment within the particular company that the public deals with. And while the corporations we deal with are huge organizations, our conception of customer service comes down to those individuals within the company with whom we come in contact, as well as those we do not.

Blacharski (2006, p. 17) in his book “Superior Customer Service: How to Keep Customers Racing Back to Your Business – Time Tested Examples from Leading Companies “ tells us that

“Customer service is not just the responsibility of the service center or call center …”, it represents “… a comprehensive, integrated strategy that involves every single area of the company”. In today’s highly competitive environment, customers have the information as well as option to pick and choose from any number of competing products which aside from elements of style, manufacturing processes and some features, are basically highly similar.

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Lilien’s (1974, pp. 279-285) examination of why consumers buy as contained in his work “An Application of a Modified Linear Learning Model of Buyer Behavior” found that consumer learn on a continual basis of the quality as well as characteristics of the brands they purchased, as well as those of friends and associates.

And therein lies the point, a brand represents a certain image it conveys, and we expect that image to deliver in real terms when and after we purchase. Mention a brand, is if the company has successfully cultivated its image, that brand will conjure up certain thoughts and a stance regarding the company in our minds.

Mention Microsoft, Coca-Cola, IBM, BMW or DaimlerChrysler and you probably form some sort of opinion or image just from hearing the names, either from personal experience, those of associates, friends or the company’s advertising and or market reputation .

The preceding companies are recognized as the top most respected companies according to surveys and studies by the Financial Times PriceWaterhouse Coopers in 2005 (FinFacts Ireland, 2005). The foregoing is integral to what is termed branding, as well as customer service, as these images or expectations are what we are lead to believe we are buying, in addition to the actual product, the company behind it!

The foregoing leads us to an examination of how effective customer service is provided, utilizing DaimlerChrysler as the example, compared against the next best or best company in this area in the automotive industry. We will look at what makes these companies revered, and why, and how they stack up against the industry as well as each other.

In order to equate customer service as it applies to the automotive industry, we will need a standard of measurement as well as some baseline areas from which to make an assessment. To do so, we will utilize the ranking and rating system employed by JD Power and Associates (2006a) who are recognized as the foremost independent authority in this area. According to the JD Power and Associates ‘2006 Customer Service Index (CSI) Study’ in the United States conducted among

“… 79,580 owners and lessees of 2003 to 2005 model year …” (JD Power and Associates, 2006b) automobiles.

Lexus, a Toyota Motor Corporation (Wikipedia, 2006) ranked as the number one company in customer service with a ‘Customer Service Index Ranking’ of 912 out of a possible 1,000, with Mercedes ranked at number 22 with a ranking of 872 (JD Power and Associates, 2006b).

Surprised?

This means that there are 21 companies rated ahead of Mercedes in terms of customer service satisfaction, yet mention Mercedes and it still conjures up images of superior craftsmanship and quality.

So, what exactly were the determining factors in arriving at the preceding rankings and what were the reasons?

According to JD Power and Associates, customer satisfaction is the overall experience one has with the dealership, and particularly the service department, whereby they interface with the personnel regarding routine as well as other vehicle service needs during ownership (JD Power and Associates, 2006b).

The importance of the preceding is that those customers who are satisfied with service as well as their experience with the dealership, which represents their point of contact with the automobile company, will be likely to not only return for service, they will likely purchase their next vehicle from the company as well.

And the preceding 22^nd ranking has not been lost on the executives at Mercedes. The company has announced they are focusing upon a new image that “… emphasizes service …” (Crain Communications, Inc., 2006), with the label for this new direction termed as “Appreciation”.

The foundational pillars of Mercedes strategy are centered upon service, value, comfort and safety in a push to win back buyers who have been put off by a decline in quality, the centerpieces of success which Lexus has focused on. The company’s group vice president, Bob Carter, stated that the goal of Lexus

“… is to deliver 100% customer satisfaction” (PR News Today, 2006).

To understand the success of Lexus, and the repositioning of Mercedes, one needs to understand that customer service means (Carlaw and Deming, 1998, p. 4):

“ – Doing ordinary things extraordinarily well.

• Going beyond what’s expected.
• Adding value and integrity to every interaction.
• Being at your best with every customer.
• Discovering new ways to delight those you serve.
• Surprising yourself with how much you can do.
• Taking care of the customer like you would take care of your grandmother.”

Introduced as an automotive brand seventeen years ago (1989), Lexus has captured the number one spot in this category eleven times (PR News Today, 2006).

Effective customer service is not what the company thinks it is, it is what the customer thinks it is, and this is the important distinction in understanding effective customer service.

The measurements entailing the rating of customer service include (USA Today, 2004):

• obtaining a service appointment at a convenient time,
• having the maintenance and or repair work performed correctly the first time
• the quality of work performed
• user friendliness pertaining to the service
• the overall customer service experience
• fairness of charges for service and repairs
• speed in completing the service appointment

A big aspect of customer service rankings lies in the initial vehicle quality, meaning the improved quality of new vehicles thus necessitating the need for repair visits (USA Today, 2004).

The preceding aspects represents one of the most important facets in garnering high levels of customer service satisfaction in that the lower the need for the customer to contact the company regarding things that need fixing, the higher their satisfaction will thus be.

The foregoing has been consistently mentioned in customer service rating comments regarding the surveys conducted by JD Power and Associates which stated that brands have moved up in their customer service rating through

“… improving the quality of new vehicles …” with this aspect thus resulting in “… fewer repair visits” (USA Today, 2004).

With this in mind, along with the other customer service points, lets look at the reasons behind Lexus high rated performance versus Mercedes

2006 Vehicle Brand Ratings

5 Star Rating Points

(With 5 representing the highest)

(JD Power and Associates, 2006c)

The preceding, as pointed out by JD Power and Associates provides a strong correlation between the high customer service ratings achieved by Lexus, and the lag Mercedes has felt in this quarter, and the resulting lower customer service satisfaction scores.

Conclusion

As stating in the beginning of this presentation, consumer perceptions regarding the aspects of customer service varying according to what they individually find and deem as important to them.

A long wait on the telephone, a missed service appointment call back, an out of stock part, an automotive rattle, a mechanical breakdown, warranty areas for areas that might be borderline in terms of coverage are all facets that figure into the broad world of customer service.

Thus, an automotive manufacturer’s best defense against all of these variables is the building of a quality product that results in fewer potential problem areas for their customers.

This has been the approach of Lexus, Lincoln BMW and other brands, and now this mantra has been taken up by Mercedes as well. And while the best customer service is a result of not needing to contact the company at all, as a result of a worry and defect free product, the fact is that taking care of customer needs in every contact represents the opportunity to build upon their purchase experience and gain their loyalty.

Mercedes has this lesson to build upon.

Bibliography

Blacharski. D. (2006) Superior Customer Service: How to Keep Customers Racing Back to Your Business – Time Tested Examples from Leading Companies. Atlantic Publishing Company. ISBN: 0910627525

Crain Communications, Inc. (2006) Mercedes’ new image emphasizes service; Sporty is downplayed, brand focus returns to value, comfort, safety. Retrieved on 20 October 2006 from http://www.accessmylibrary.com/comsite5/bin/pdinventory.pl?pdlanding=1&referid=2930&purchase_type=ITM&item_id=0286-15953710

FinFacts Ireland (2005) World’s Most Respected Companies 2005. Retrieved on 20 October 2006 from http://www.finfacts.com/biz10/worldsmostrespectedcompanies.htm

JD Power and Associates (2006a) Autos. Retrieved on 20 October 2006 from http://www.jdpower.com/autos

JD Power and Associates (2006c) JD Power Consumer Center. Retrieved on October 21 2006 from http://www.jdpower.com/autos/brand-ratings/

JD Power and Associates (2006b) Lexus Ranks Highest in Customer Satisfaction with Dealer Service. Retrieved on 20 October 2006 from http://www.jdpower.com/corporate/news/releases/pressrelease.asp?ID=2006119

Lilien, G. (1974) An Application of a Modified Linear Learning Model of Buyer Behavior. Vol. 11. August 1974. Journal of Marketing Research

PR News Today (2006) Lexus Reclaims Top Spot in JD Power and Associates Customer Service Index Study. Retrieved on 20 October 2006 from http://www.prnewstoday.com/release.htm?cat=auto&dat=20060720&rl=LATH10120072006-1

USA Today (2004) Lincoln owners rate service best. Retrieved on October 20 2006 from http://www.usatoday.com/money/autos/2004-07-20-dealer_x.htm

Wikipedia (2006) Toyota Motor Corporation. Retrieved on October 20 2006 from http://en.wikipedia.org/wiki/Toyota_Motor_Corporation