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CEM in Automotive
Moments Of Truth @ Experience in Practice
Mr. Sampson Lee
President of G-CEM
www.g-cem.org
This article is exclusively written for G-CEM.
Most Automotive Dealers are Efficiency-driven
Most automotive dealers are efficiency-driven, but it does them no good. Their efficiency helps neither customers nor manufacturers. Why?
Customers Don't Want a Zero-Defect Experience. Do you want a zero-defect product? Ten out of ten customers will definitely answer with a big 'YES'. That's why the Six Sigma Methodology is so well received in manufacturing sectors and vital in quality control management. However, it induces challenges when adopting similar methodologies in service environments. We, as human beings, are to a very large extent driven by emotions. We want to have great experiences and enjoy and memorize the pleasurable moments. According to the Peak-End Rule coined by the Nobel Prize-winning psychologist Daniel Kahneman, people recall only two moments during an experience--peak and end. The level of pleasure and displeasure during an experience and the amount of time an experience lasts has almost no influence on our memory. When automotive dealers make a tremendous effort to ensure that every customer has a perfect experience from beginning to end, whether it is a service experience at the service center or a purchase experience in the showroom, only a tiny portion of the total experience will be retained in the customers' memories. Pursuing perfection in all aspects of an experience may be efficient, but definitely not effective for customers or for automotive dealers, it is just wasting resources. An experience is not effective unless it is remembered, agreed?
Diminishing Returns On Service Investments. Most of the time when considering any investment, people ask the same fundamental question, "What is the expected ROI (Return On Investment)?" It is quite easy to understand that always there comes a point where further investment does not generate increasing returns, but diminishing returns. People do not follow this same rationale when evaluating investments in service. Companies want to believe that better service leads to higher levels of customer satisfaction. Thus, continuous increases in investments in service enhancement should be unquestionably good, especially in the automotive industry. True, it is necessary to raise the service standards from 'average' to 'good', as good is the minimum to stay competitive nowadays. But does it really make economic sense to improve every aspect of an experience from 'good' to 'very good' or even 'excellent', perhaps at the expense of diminishing returns on investment? Does it make sense to eat into the already slim (or negative) profit margins for selling cars? Should dealers continue to suffer from the huge price gaps between their service centers and non-manufacturer service stores?
Current Systems Reinforce Ineffective Behavior. Although there is no substantial proof, it is a widely held belief, especially among auto manufacturers, that if they enhance customer satisfaction, customers will buy more and over a longer period from them. We show you otherwise--some attributes or sub-processes within an experience may be important in creating high levels of satisfaction to customers, but not necessarily important in delivering differentiated brand values and driving repeat sales--in the upcoming white papers on MODTM (Moments Of DifferentiationTM) and MOBTM (Moments Of BuyingTM). Even if we assume that there is a strong correlation between satisfaction and loyalty, there are still three critical questions to address in order to enhance genuine customer satisfaction: 1) Do we measure the right things, i.e. are we designing experience-centric satisfaction surveys to reflect the genuine emotions of customers, or just a comprehensive process-centric checklist aimed to improve efficiency? 2) Do we collect accurate data, or just the distorted gaming results generated by the salesmen or dealers in order to get better scores, incentive rebates and inventory priority? 3) Do we act on the results appropriately, i.e. by enhancing the most critical attributes (for customers, dealers and the manufacturer) and not trying to improve every single aspect? Sadly, the conventional satisfaction surveys and approaches drive automotive dealers to focus on efficiency rather than effectiveness.
Migrating from Efficiency-driven to Effectiveness-driven
In order to migrate from efficiency-driven to effectiveness-driven, automotive dealers need a paradigm shift in management philosophy, strategic choices and operations tactics.
Allocate Resources Differently. The chart above illustrates three Emotion CurvesTM (in blue, red and green) representing different emotional states of customers from the beginning until the end of a showroom or service center experience in a natural time sequence. The experience ratings of each sub-process are linked and formed into an Emotion CurveTM. Suppose the Emotion CurveTM in green represents the basic standards automotive manufacturers and dealers focus on to stay competitive in the industry. The Emotion CurveTM in red denotes the good experience targeted nowadays by most companies as they try to improve from delivering an average to a good overall experience. As suggested by the Peak-End Rule, each moment during an experience is not equal in importance; customers only remember the peak and the end moments (shown in red). However, if we allocate resources differently, in an unconventional manner, this creates the significant highs and lows illustrated by the Emotion CurveTM in blue. When comparing this approach with the conventional approach (Emotion CurveTM in red)--a more effective experience is achieved, i.e. higher peak and end experiences. Does this approach use more resources? On the contrary, companies may actually spend less to achieve more! (Compare the aggregate areas in burgundy and navy.)
Identify Moments Of Truth @ Experience. To maximize the return on service investments, you ought to apply the 80/20 Rule and focus your limited resources on the few moments that are most important to your customers. Don't try to improve every attribute. In other words, you have to identify the Moments of Truth @ ExperienceTM that create highly positive emotional responses and will be remembered by your target customers. This approach will guide you to optimal resource allocation. Notice, the highest peaks are not necessarily the X-MOTTM. You have to take into consideration CIWTM (Customer Importance Weightings). CIWTM will be covered in the next session: Moments Of Truth @ Experience in Practice.
Measure Effectiveness of Experiences. Without changing your existing approach to measuring satisfaction, you cannot effectively allocate resources and identify X-MOTTM. To do so, you have to adopt the X-VOCTM (Voice Of Customer @ ExperienceTM) Research Methodology to map the experience process in a natural time sequence with an experience-centric perspective. It will help you to uncover the sub-processes and attributes that affect customer emotions and customer return visits. You will be amazed at how important the five senses are--e.g. the leather smell inside the car, the sound of closing car doors, etc.--in the buying decision made in the showroom; and how clean washrooms and meals provided at service centers influence customers' satisfaction and their propensity to return to the dealership.
Moments Of Truth @ Experience in Practice
By focusing on the X-MOTTM (Moments Of Truth @ ExperienceTM), rather than trying to improve every attributes at the same time, Mr. Mazhar Soorty, CRM Manager of Balubaid Automotive (the authorized dealer of General Motors located in Saudi Arabia, being in automotive industry since 1952), has successfully taken Balubaid to be number one in the region in terms of CSI (Customer Satisfaction Index) for sales, service and the composite scores, in just two years. Seven X-MOTTM are derived which have the highest correlations with the overall satisfaction at showroom and service center respectively. They are identified in the areas of Salesman's Performance, Test Drive and Delivery Performance (for sales) and Customer Receiving & Write-up Quality, Repair Quality and Delivery Condition (for service).
(source: Mr. Mazhar Soorty, CRM Manager of Balubaid Automotive)
Based on our experiences, to put X-MOTTM into practice effectively, you cannot ignore the following insights:
Don't Ask Customers to Weight Importance. To determine the importance level of each sub-process to customers, you can either use correlation analysis just like Balubaid, or derive the implied Customer Importance Weightings (CIWTM) by regression analysis, a more reliable methodology when dealing with large quantity of variables. Based on our X-VOCTM research results across various industries, price is always the most important factor affecting overall satisfaction when stated by customers, but one of the least important attributes when derived by correlation or regression analyses.
Different X-MOT for Different Segments. Saudi Arabia, Mainland China and the United States have different X-MOTTM. Within the same country, different regions have different X-MOTTM. Customers who buy high-end cars will have different X-MOTTM than those who buy low-end cars. New customers will have different X-MOTTM than long-time customers. The conventional approach, to apply the same set of importance weightings across the entire customer population, would be both dangerous and wrong when determining the X-MOTTM for different segments.
Every Dealer Should Have Unique X-MOT. Every automotive manufacturer has it own unique brand values in order to compete with other car brands. Every automotive dealer should have it own unique brand values in order to differentiate it from other dealers and non-manufacturer service stores. The X-MOTTM of Balubaid suit them well as one of their core brand values is service excellence, but your firm may excel at different things. Complying with industry standards is not the path leading to success. The next white paper on MODTM illustrates how to reflect your target brand values at Moments of Differentiation? and integrate your X-MOTTM to deliver an effective and branded experience.
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About the Author
Mr. Sampson Lee the founder of G-CEM, has invented three U.S. patent-pending Customer Experience Management Methods. He applies modern psychology and human behavior disciplines to business practices to create effective customer experiences for today's business organizations. Lee and his International Partner team deliver the Global CEM Certification Program in Amsterdam, Dubai, London, Paris, San Francisco, Shanghai, Hong Kong and Singapore. He provides training and consulting to Fortune 500 companies and local conglomerates and deploys X-VOC customer experience research in developing Multiple Touch-points Experience Process model and Total Customer Experience Evaluation (TCE). Lee is the visiting Ass. Professor of the University of Hong Kong teaches the CRM module of the Master of e-Commerce and Internet Computing since 2004. He also sits on the Advisory Council of CustomerThink.com - the world's largest customer management community serving 300,000+ members.
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