Archive for the ‘Automotive’ Category

The Modern Suggestion Box

We read recently on research-live.com that auto maker Ford Motor Company has boasted of going “beyond traditional market research” with the launch of a website where members of the public can share ideas about the types of features they would like to see in future car models.

This initiative – to be found within TheFordStory.com – invites people to make suggestions for vehicle improvements. Ideas that appear on the site can be reviewed and rated by others, with the most popular due to be forwarded to Ford’s advanced product marketing and planning teams for review.

Now, don’t get us wrong. We fully support asking customers to get involved, offer thoughts, feedback, suggestions and ideas about what they really value. After all, it’s pretty much what we do day-in, day-out – so we know it’s of vital importance to the ongoing growth and development of any company.

We would warn, as always, that you can’t just rely on this, though – you cannot expect customers to do the job of new product development by themselves. Their feedback can certainly shape what you choose to do, but it should not unquestioningly dictate it. You still need to investigate, research and test any new concept thoroughly.

Our only question is whether this is really such a ground-breaking and innovative idea as the article would suggest? After all, it does kind of seem like that good old-fashioned ‘suggestion box’ you might find located in your local supermarket for customer comments… A suggestion box for the 21st century, perhaps? We applaud Ford nonetheless for listening to their customers and encourage more organisations to do the same.

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Posted in Automotive, Market Research, Marketing, Product Development |
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Marketer of the Year

Who would be your vote for marketer of the year? Well, according to a recent survey by AdAge, there was one clear winner – auto manufacturer Hyundai. So, why Hyundai?

Earlier in the year, at a time when the economy was hitting the depths of doom, gloom and despair, most advertisers were trying to cheer us up with promises of happiness and escapism. Not so, a certain South Korea-based car manufacturer.

Instead, the message from Hyundai was “Now finance or lease any new Hyundai, and if you lose your income in the next year, you can return it with no impact on your credit.”

This message acknowledged the concerns felt by many consumers and really struck a chord – so much so that, when asked, 40% of AdAge readers selected Hyundai as their top marketer of 2009.

In an industry that has had a notoriously difficult year, many auto competitors slashed their budgets. Yet Hyundai went from strength to strength, with sales and market share increasing and its brand image receiving a real boost.

U.S. market share in fact jumped to 4.3% in the first ten months of 2009, which compares favorably to 3.1% in the same period of 2008. Indeed, when, in September, the U.S. automobile industry overall suffered a 22% sales drop, Hyundai actually increased its new vehicle tally by 27%.

Originally entering the U.S market in 1986 with small, affordable models, early success was followed by a mixture of highs and lows. But the introduction of their Hyundai Assurance program at the start of this year, allowing buyers or lessees to return their new vehicles for up to a year if they lost their jobs – as well as the ‘Gas Assurance’ program the company rolled out over the summer to cap its customers’ gasoline costs at $1.49 a gallon – has heralded the start of a period of marked success.

According to a post-Super Bowl survey in February of this year, 43% of respondents watching the Hyundai Super Bowl adverts said their opinion of the brand had improved. The adverts, combined with positive press concerning the Assurance program, meant that consideration for new Hyundai vehicles jumped to 59% in the first two months of the year. Despite the recession, June 2009 marked Hyundai’s best monthly sales tally ever, and in the same month the brand ranked fourth in J.D. Power and Associates’ annual Initial Quality Survey in which consumers rate their new vehicles at 90 days of ownership; in 2008, Hyundai had ranked thirteenth in the same survey.

All of this goes to show that brands can triumph in the face of adversity. Times have been tough but Hyundai did not slash its marketing budget. Nor did it slash it prices, change its fundamental brand messages, or adopt some other knee-jerk reaction to the recession which could easily have undone all the work it had put in to building its brand values over the course of 20 years or more. Instead, it listened to and even anticipated the concerns of its target market, seeking to reassure customers that Hyundai continued to offer a quality product but adding value by offering extra guarantees and assurances. Of course other car manufacturers have since followed suit, but Hyundai has certainly benefited from being quick off the mark.

Posted in Automotive, Marketing, Marketing Strategy, Recession |
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Keep It Short, Keep It Focussed

The market research industry and its clients love surveys.  There is nothing wrong in this – intelligence is at the root of all good marketing.  However, as market researchers, we sometimes feel a little guilty about the 20 minute customer satisfaction survey interview which has become the norm in customer satisfaction surveys now-a-days.  Do we really need to explore the importance and satisfaction of myriad issues? 

The following article by Stefan Stern is a story that we know too well and yet so often we ignore.  It is about doing simple things well.  It is a story about the huge success of Enterprise, the rent-a-car company.  The car rental business is highly competitive and almost entirely dependent on customer satisfaction if it is to encourage customers to return again and again.

Enterprise has grown to become a $9 billion company in just 50 years and has been built on the back of customer satisfaction with surveys of all its customers in which they are asked just two questions – "Were you completely satisfied with the service provided, and are you coming back?".

Of course, any low score on either of these questions begs the question "why?" and this should uncover any issue that needs correction.  There is no need to ask 39 detailed questions and irritate the satisfied customer or bore them to death.

As we move into 2009, a year in which we should be examining areas of excess and where we can cut down, why don’t we bear in mind the success factors for Enterprise?  Keep it simple, keep it focussed.

Revealed: the secret to survival in 2009 (pass it on)
By Stefan Stern

Financial Times: December 23 2008

Usually I would hesitate before taking issue with Larry Summers, the former Financial Times columnist and soon-to-be chair of the National Economic Council for Barack Obama, US president-elect. I feel certain that his grasp of economics is firmer than mine.

But on one specific point I find I must challenge him. Prof Summers once observed that: "In the history of the world, no one has ever washed a rented car." The remark has always been seen, rightly, as a telling insight into the nature of ownership.

But on Saturday July 3 2004, at a self-service car wash on the outskirts of the Italian city of Pisa, my wife and I shattered Summers’ first law of rented cars. Reader, we washed one.

Our grey Nissan Micra was covered in two weeks’ worth of Tuscan and Umbrian topsoil. It was in a shocking state. Perhaps our behaviour that day should be seen as a British corollary to Summers’ law. Fear of financial penalty, and shame at the thought of handing back such a filthy vehicle, spurred us on.

But really, what could be more boring and predictable than the car hire business? Talk about "commoditisation": a car is a car is a car. It is designed to get you, as the cliché has it, from A to B. Hiring a car is a more or less impersonal transaction. It is all about price. How many management lessons could you ever hope to draw from that?

Well – several, actually. But I have only come to realise this after finding out a bit more about Enterprise Rent-A-Car, the St Louis, Missouri-based business, the market leader in the US and a growing force around the world.

The company was founded 51 years ago by Jack Taylor. Mr Taylor, then 34, had been a US navy pilot during the war. A decade later he was working as a salesman at a Cadillac dealership in St Louis.

Hiring (or leasing) a car was not a new idea. But Mr Taylor backed his hunch that there was a growing market for hire cars, not only at airports where travelling executives or holidaymakers might want to pick one up, but also in towns. With the backing of his boss, he took a 50 per cent pay cut to start the business.

Enterprise (or "executive leasing", as it was originally known) developed strong links with insurance companies. It recognised that customers often needed a car urgently – after an accident, if repairs to their existing car had not been completed on time, or when a car had been stolen.

Enterprise grew from being a tiny company in the Midwest to one that, half a century later, has sales of more than $9bn, generated in 6,000 offices by 64,000 employees internationally. So how has the company taken the seemingly dreary business of car hire and made such a vast fortune out of it, earning the Taylor family, which still owns it, the number 18 slot in Forbes magazine’s list of richest Americans?

The short answer is: by focusing obsessively on customers. Enterprise has developed what it calls its ESQi (Enterprise Service Quality index), a measurement of customer satisfaction. The data are generated by asking customers two simple questions over the phone, as Donna Miller, European head of human resources, told me: "Were you completely satisfied with the service provided, and are you coming back?" That’s all there is to it.

"I’m always interested to see those customer satisfaction questionnaires you find in some hotels," Ms Miller says. "The ones with 39 questions on it – ‘how did you like the pillow?’, and so on." Enterprise keeps it simple. (Hertz, by contrast, asks four questions, and conducts surveys via e-mail rather than on the phone.) Enterprise’s growth has been as steady and simple as its approach to researching its customers’ views. Even now, it operates in just five countries: the US, Canada, the UK, Ireland and Germany.

ESQi figures drive the business. They also get the employees’ attention. If the numbers at your branch are not good enough, no promotion. Being innovative and entrepreneurial should help to get the numbers up – Enterprise was the first major car hire business to offer to pick up customers from wherever they were to take them to their vehicle. And if customer feedback is bad? "We call it going to ESQi jail," Ms Miller says. "Until the numbers start to improve you’re going nowhere."

Enterprise has a policy of hiring only graduates. So even humble front-of-house staff have been educated to a relatively high level. "Unless you’ve seen the business from the bottom up you won’t be able to run a branch yourself," Ms Miller says. Several members of the Taylor family work for the company. All started out washing cars and performing basic tasks.

Jack’s son Andy has been chief executive since 1991. But, he says, his father, now 85, is still the "minister of culture", checking up on customer satisfaction and what the staff are doing about it.

Because, in the end, this is all about culture. "Today, corporate culture is the strongest driver of radical innovation," according to Jaideep Prabhu, a fellow of the UK’s Advanced Institute of Management Research. Getting through 2009 is going to require cultivating a strong culture of customer service – and quickly.

Posted in Automotive, Customer Satisfaction, Market Research |
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Driven To Distraction

In his latest Thursday Night Insight post, B2B Research Executive Oliver Truman reflects on his own experiences with the automotive industry and concludes that it isn’t just financial assistance that’s needed – it’s also a fundamental reappraisal of what customers actually want and need from their cars.

An awful lot of ink has been spilt in recent weeks and months over the state of the automotive industry, not only in the US, but globally in these times of worldwide economic decline. And since it’s an issue that is an important bellwether of the wider state of the world’s industrial activity, I see no harm in adding to the chorus this week.

The subject of car sales is one that has been brought into much sharper focus for me in recent weeks as I passed my driving test in mid-October. Keen to exercise my newly acquired skills as a qualified driver, I thought I’d have a look at the used car options available to me at a nearby car supermarket.

Ever-the-researcher, I thought I’d head to the car forecourt armed with all the knowledge I’d need to make an informed decision about what to buy. As I pored over magazines, pricing books and websites teeming with data and opinion from self-styled experts in the automotive field, I began to think about what my priorities were for this major purchase. With all the thrift and common-sense that might otherwise be expected of a stoic Yorkshireman (I’m from the Western side of the Pennines), it appeared that straightforward factors like running costs, reliability and resale value were going to be my key considerations.

Even so, I was also aware of other “intangibles” that couldn’t be measured and that these were, in view of a vast swathe of similar-ish options, just as likely to guide my ultimate decision. What does the car look like? Is it built to last? Will my choice result in endless of laughter and cheap jibes from friends and colleagues? These were just a few of the pressing questions I’d asked myself.

Almost without even being aware of it, I was performing my very own trade-off exercise in my head. As it had become apparent that I couldn’t have everything I wanted and that perfection was unattainable (again!) I would have to whittle down my options to those that would best deliver on the criteria I’d set and the priority given to each. This continued until I was left with a handful of cars in my “consideration set”, whereupon I’d planned to set about trying to get the best deal.

This seemingly trivial process is one that’s familiar to most of us, but at the same time is devilishly difficult to pin down, measure or replicate. And to make matters worse, when this computation is put in the context of business-to-business decision-making, the nature of the process becomes even muddier, owing to the complex web of considerations that companies routinely face. Thankfully, in the world of B2B research, we’ve a series of tools at our disposal to cope with this such as SIMALTO or conjoint analysis (which you can read more about here). Unfortunately, the civilian (non-researcher) me would have to rely on ingenuity alone.

Even so, I now felt able to stride into the salesman’s lair with all the confidence of a man whose brain had been swelled with the accumulated knowledge of the world’s automotive press. This, I was certain, would result in me leaving the dealership with a crackerjack of a deal, leaving all parties involved satisfied.

How wrong I was. Aside from initially learning that virtually none of the cars I’d seen advertised online were available for sale in the real world, my will was to be slowly and gracelessly crushed by a salesman with all the tact of a drill sergeant. When it had become apparent that the car I was after (or one at least vaguely matching its description) wasn’t on offer, he resorted to the tactic of browbeating me into buying a larger, older and most expensive car that met virtually none of my needs. This, coupled with several statements that I knew to be complete, verifiable untruths about the car’s specification and performance, resulted in my leaving empty-handed and frustrated.

Was this just an unfortunate, isolated incident? In my case, it seemed not; I went to another couple of dealerships on the same day and experienced largely the same, slimy, smug and, I suspect, underlyingly duplicitous treatment as before. The upshot: I didn’t buy a car and still haven’t.

And although my latest contribution to Thursday Night Insight feels as if it’s descended into a bitter, thinly-veiled rant against used car salesmen, there’s a wider point about the automotive industry underlying all this. You see, even though the current crisis in the car industry may well be caused in the most part by declining consumer confidence and spending power, there appears to be a real issue here in terms of adequately meeting needs.

Chrysler’s and General Motors’ woes in the US are not just a product of people tightening their belts, it is also partly a reflection of their inability, or even aloof unwillingness to offer the market what it truly wants. In fact, GM recently released an advert apologising for their products, acknowledging that they’d "disappointed" and "betrayed" customers. Coming back to the case of my (non-)buying experience, my modest needs for a small, economical and reliable car also went utterly unfulfilled, even though they should have been easily attainable.

And since it is this smaller car segment that will grow most in the next few years, this poses a very serious question for those in the car (or any other) industry that appears perpetually predisposed to under-delivering (and it’s not a pleasant one): If you cannot meet even modest customer needs, what hope is there of survival in these troubled times?

Posted in Automotive, Customer Satisfaction, Oliver Truman, Thursday Night Insight |
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