Posts Tagged ‘Toyota’


I wasn’t sure what the reaction would be to last week’s column on customer experience.  Maybe I hang around with vendors and other analysts too much because customer experience is a hot topic among us and it’s generally seen as a good thing.  But judging by last week’s mail and some further digging at the Harvard Business Review’s website, it appears that there are at least two camps with decidedly different views on customer experience.

The mail from last week was very positive and many people wrote to tell stories about encounters with vendors that were very pleasant but unproductive.  For instance, Cary Fulbright wrote about an experience with PacifiCare Health insurance that took nine months to resolve.  And another writer, Mark Hochhauser, wrote about difficulty upgrading Comcast service that should have been free but wasn’t.

I decided to do more digging at Harvard Business Review and got more of the same.  HBR’s blog has numerous articles by business gurus who describe similar situations.  The common denominator I see in all these sources is that companies — wittingly or unwittingly — leave their support people hanging with nothing between them and irate customers but scripts and pleasantries or scripts about pleasantries.

Too often companies are using “customer experience” as a firewall between themselves and customers.  Instead they should see that customer experience is only half of what they need to be doing.  Customer service is often a repair mechanism for something that went wrong up the line.  In manufacturing we learned a long time ago that building quality into a product has to be done at every step of the manufacturing process.  If you wait until the end and perform a perfunctory quality inspection, you will only catch the most egregious problems and your service and repair business will boom, which is not a good thing if you are providing a warranty.

The other half of customer service and the thing that balances out “Have a nice day!” is overt and outbound customer engagement.  If you want to build quality into your products and especially your services, you have to know what works and what doesn’t and if you wait for a customer satisfaction survey to do it you have missed the opportunity.

Instead, this is where social media should come in.  We’ve done a good job of using social media to market and sell, to the dismay of some, but what we haven’t wrapped out brains around — at least not enough — is how to use social media to proactively reach out to customers.  It’s too bad because the result of that outreach is intellectual property (IP) and by not gathering it a company is leaving money on the table.

Most often we think of IP as the stuff that the engineers, designers and others develop and patent in the back office or in operations.  There’s no need to patent the IP of the front office because it is unique to the company and at any rate a patent would spill the beans to your competition.  But think about it, if your customers open up (and they will) and tell you how to make your products, policies and services better isn’t that worth a lot?  Companies that use customer experience to deflect haven’t figured out yet that they are deflecting IP and with it the ideas that can help make them great.

Getting back to last week, if Toyota had been more customer focused over the last couple of decades they might have seen the braking and acceleration problems as opportunities to gain valuable IP and help burnish their image as a company you should want to buy a car from.  But multiple recalls suggest that the company’s attitude was that it would like to be customer focused if the effort wasn’t too costly.

So what was the cost?  Set aside the dead people for a moment.  According to the AP, in February 2010 car sales were up 13 percent over the same month in 2009.  Ford was up a whopping 43 percent while Toyota was down 8.7 percent.  Prior to the recalls Toyota had been challenging GM for leadership but as of last month Toyota’s share was 12.8 percent, GM was 18.1 percent and Ford had 18.2 percent.  Ford sold more than 42,000 more cars than Toyota in February.

The tough thing about customer experience is that a company has to feel it in its bones.  A software vendor can provide products that enable you to implement your vision for customer experience, but that’s it.  If the vision doesn’t extend from fixing the problem in customer service to fixing root causes and sustaining a culture of customer focus fueled by harvesting the IP that customers can provide, you might be toast.  If I was a CRM vendor I would be sensing an opportunity right now.

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Customer experience reared its head in my life this month.  My phone service went out which was not a catastrophe for me because in addition to the landline (which went out) I have a cell and a nifty VoIP line that lets me talk through my computer.  Parenthetically, I love my VoIP line because — though I live in the Boston area, the VoIP line has a 415 area code, which you may know is San Francisco.  I don’t know if it’s my heart that’s out there but certainly a piece of me lives in San Francisco and for some reason that makes me happy.

At any rate, the landline went down, first with an annoying background hum and then I lost dial tone.  I’ve become an old hand at diagnosing the problem because it happens every winter when a certain manhole gets some water in it.  When the weather dries up the problem recedes into memory but it comes back every winter.

I am also something of an expert at summoning the phone company by filling out the obligatory form on the web site and, because I am a repeat customer, I have a special phone number that I can call directly.  Actually, after this latest round I have multiple numbers down to supervisors’ and technicians’ cell phones.

No matter.  The problem I had got fixed a couple of times and each time I got calls from customer service, some of which were automated, telling me that the phone company had wrestled the problem into submission.  In one incredibly ironic moment, when the phone company’s survey team called to check on my satisfaction with the service, the hum came back on the line and the person on the other end had to admit that she couldn’t hear me well because of it.  So, the problem is solved as I write this but the weather is threatening so it remains to be seen whether the fix is permanent.

I thought I could use this experience as sort of a thought experiment in customer experience.  I am happy to admit that the way the phone company handled my problem was top notch.  Everyone seems to have been trained in customer empathy — a term that I prefer over customer experience.  But empathy only goes so far.

Over the years I have seen a parade of empathetic phone company representatives, usually the technicians who stand outside on rainy days or climb down into the wet manholes to make the repairs.  These people do everything that they can to provide service but what’s management doing?

The technicians fix the problem and they do a great job but it’s management’s job to zero in on the root causes and spend the money necessary to eliminate the possibility of repeat.  So the question I have is this: Does management hide behind customer experience optimization in order to deflect more serious problems?  And if so what does this say about the proper use of CRM?  In helping deflect customer issues, has CRM become part of the problem instead of the solution?

I have always been skeptical of the customer experience movement for this reason, because if you can focus on the generic “experience” instead of putting processes in place that actually solve problems this is what you get.

My landline woes are a tempest in a teapot; being without phone service these days is not a hardship since most of us have multiple lines that get to us one way or another.  So it’s easy to watch the resolution play out with a sense of detachment but consider the mess that has become the Toyota recall fiasco.

As the congressional hearings investigating the problem of sudden acceleration played out I heard about and read story after story of customers who experienced unintended acceleration and the common denominator was never found to be a mechanical or electrical problem.  Toyota refused to believe an electrical problem could exist.  Instead the common thread was dismissal by the company or by the US Department of Transportation of the complaints.  Often the finding was operator error.

What I saw was stonewalling over ever really trying to locate the problem wrapped in polite letters and diligent dealers trying to figure it out.  Customer experience.

All this has a tragic dimension because people have died due to the problems with these cars.  Even more tragic though was this heartbreaking revelation.  I was watching Ed Shultz on MSNBC on the day of the hearings before the House Energy and Commerce Committee.  Shultz was interviewing Bruce Braley (D-IA), one of the committee members, and mentioned the case of Koua Fong Lee of St. Paul Minnesota.

Mr. Lee was sentenced to eight years for criminal vehicular homicide because his 1996 Toyota Camry accelerated on an off ramp and plowed into another car, killing a father and son and leaving another child a quadriplegic who later died.  Lee’s defense at trial was sudden uncontrollable acceleration but the jury didn’t believe him because, heck, he was driving a Toyota and we all know how reliable Toyotas are.  Sadly, Lee’s story is not unique.

As far as I am concerned, customer experience had a part in killing those people.  It gave a company a way to deflect a serious problem while pretending that it was doing the right thing.  Customer Experience is an important part of dealing with customers but it should not be seen as a panacea.  Companies have to take responsibility for top notch business practices that address root causes.  Customer experience is table stakes at best and when it comes to building sustainable customer relationships it is not good enough.

Hope

Posted: February 10, 2010 in CRM, Current Affairs, Technology
Tags: , ,

Two issues in the news lately have shown me that CRM is more than technology and that companies are trying to walk the walk.  The Toyota recall and the way at least some airlines have handled the snow nightmare in the mid-Atlantic states say a lot about how CRM ideas have penetrated business.

Now, with Toyota, I think you need to try to tease apart some cultural issues and I am not sure how you do it.  But there is a distinct difference between the way Toyota’s CEO met with the press (and bowed to the assembled audience before he took questions) to discuss the first recall regarding gas pedals potentially sticking.  I can’t imagine, nor have I ever seen, an American car company chief facing the music like that.

And Toyota’s recent ads are poignant.  The company that has lived for decades by selling its quality story was prepared to follow that message down an unfamiliar and distasteful path.  The ad I am thinking about says, and I am paraphrasing here, we didn’t live up to our own standards and we are working to regain your trust.  If such recalls don’t become a regular part of life, the company will salvage much good will from that one.  Maybe that’s why they decided to glom together the gas pedal recall and the Prius braking recall.  One big snafu is better than two smaller ones bleeding out over time.

Some people blame Toyota for dragging its feet on the recalls but I know that collecting data from a few hundred customer complaints takes time and it takes more time to determine if there was something systemic.  I am not absolving the company for this but I do understand that dealing with millions of units over time is not as simple as refunding a retail purchase.  So Toyota gets high marks from me (I do not own any of the company’s products or stock) for their handling of this crisis and dealing with customers in a forthright way.

The next CRM manifestation comes from the airlines flying into Washington, DC this week.  I can’t speak knowledgeably about all of them but I had a ticket on a JetBlue flight from Boston to DC on Monday of this snowy week.  As a New Englander, my opinion of the Mid-Atlantic’s snow removal capability is somewhat jaded.  Former DC mayor Marion Berry once said of the snow, “God put it here, let God take it away” and that has colored my perception ever since.  More than two feet of snow dropped on the metro area over the weekend and I had zero expectation that the city would be functioning for days after that.  So I was fine with cancelling my flight and eating the cost of the airfare if it came to that.

I called the vendor who sold me the ticket to cancel but they told me they couldn’t and turfed me to the airline, not a good sign I thought at the time.  I went to the airline’s website and thought I was home free but at the last mouse click the site refused my refund (less fifty bucks just for grins) and I had to call the help desk.  My hackles were raised at that point and visions of losing the fifty plus having the airline hang onto the balance, as a credit, did not sit well with me.  Neither did the fact that the phone queue was estimated at over sixty minutes.  I put the phone on speaker mode and did some work.

About an hour went by and then something magical happened.  An agent got on the line, said she was sorry about the wait and began helping me.  The airline, it turns out cancelled my flight, which wasn’t even supposed to leave until 4:00 PM.  I was calling at about 10:00 AM so you can see how bad the situation was.  The agent credited me the full amount of my ticket and that was that.

Now, having a friendly agent is good and having an hour-long queue is not though in an emergency it is understandable.  But what makes this story interesting to me from the perspective of CRM is that the company made firm decisions to cancel the flight and refund the costs.  They didn’t keep the possibility of a flight alive (on time is one of the world’s great lies), which would have drawn some intrepid souls to the airport and into a nightmare.  It was a small thing but it showed an awareness of the customer and an interest in doing the right thing.  No doubt it was motivated at least in part by the same forces that drove Toyota to say sorry.

At another time and in other circumstances I could easily see each of these companies playing hardball.  But from these experiences I can also see that everything we’ve been saying about customers over the last decade has penetrated some corporate cultures beyond the software licenses.  It’s like Robin Williams’ famous gig about golf in which he says the flag in the cup on the green is just there to give you hope.  Well, there’s hope in CRM too.


They have been discussing General Motor’s loss of market share in business schools for decades already and the added denouement of the company’s bankruptcy filing will doubtless drive many academic papers for decades to come.

The roots of GM’s fall from grace are numerous and it would be incorrect to attribute the fall to any single factor.  Like Rome’s fall there were many root causes and it took so long that when the end came, life as people knew it simply continued.  Far more traumatic and catastrophic was the instantaneous obliteration of the city of Pompeii. 

At least part of the fall can be attributed to GM’s being out of touch with its customers which has been documented for many years, including in a wonderful 1984 book by David Halberstam, “The Reckoning.”  Thought the book is mostly a comparison of the number two car companies in America and Japan (Ford and Nissan, at the time),  there is ample discussion of GM as well. 

In the book Halberstam tells an illuminating story of how company executives were all given company cars that were kept in heated garages and scrupulously maintained during the workday.  These pampered cars never hiccupped and the executives who drove them never had the same experiences with the product as their customers. 

For a long time, GM, Ford and Chrysler all dealt with the customer in ways appropriate that were appropriate to their times.  They were manufacturers running large factories and in order to get the economies of scale needed to make their complex products affordable, they found ways to make customers want the relatively undifferentiated things they mass-produced.  It was a twentieth century mind set and it worked brilliantly — so well in fact that GM actually made money every year during the Great Depression.

Everything changed with the Pepsi Generation.  People like you and I decided we were individuals and wanted to be treated that way.  Manufacturers tried to catch on and car makers were a prime example offering every conceivable option a la carte down to five or six engine choices.  Lead times lengthened, quality was never high but it declined too, and production runs over shot and undershot demand.  Car dealers nonetheless found ways — through discounting and sales — to fit round customers into square cars.

Japanese and other foreign manufacturers took a different approach to the American car market.  With long shipping distances and no dealer network to speak of, they realized that they would either have to build to very high quality standards (Honda, Toyota and Nissan for example) or not play in the market.  Remember Yugo and Sterling?  Foreign car makers took a Zen approach to selling cars.  Simplify the process, reduce the number of choices, make the most popular options standards.  There would be less haggling and animosity as a result.

You already know this, but there is a point. 

CRM entered the picture around this time, though even today both American and foreign dealerships are among the least well penetrated CRM markets.  But CRM is more than the technology; it is a way of doing business.  Car dealers need to move units, there’s no way round it.  But look at how they do it.

A typical American car company ad on TV positions the product as secondary to the great deals now being offered.  Discounts, reduced or eliminated interest rates and free options are what we hear about from Detroit.  In marked contrast, foreign vendors talk about higher values like reliability and security.  They have taken the lead in vouching for the reliability of their products and have taken the radical step of even guaranteeing the security of your job.  If you lose your income, they say, bring the car back with no penalty.  Some will even make your payments for a short time.

Detroit’s troubles and their mirror images in foreign fenders is emblematic of the failure to implement CRM concepts.  A mature market like autos should not be a late adopter of the ideas if not the tools of CRM but that is exactly what has happened in Detroit.  The bankruptcies of GM and Chrysler point to that failure but there is also reason for optimism. 

It won’t be a sale that gets Detroit back to full strength.  It will take many months and probably years of carefully listening to customers and ditching once and for all the 20th century mindset of mass production and huckstering.  In my view I don’t see a lot of alternatives for Detroit than for the automakers to embrace CRM and social networking.  There are proven things they can do that will result in better products and finer tuned messages to a public that still needs reliable transportation. 

If they go more in a CRM direction I expect that the car companies will give CRM a new boost at a time when this market could use it.  You might say that what’s good for GM is good for CRM and vise versa.