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Thoughts on trust, marketing & customer service

2008-07-19

I’ve been working on a business school project: my teammates and I are examining possible marketing strategies for the Chevy Volt, the new electric car from General Motors scheduled for release in late 2010.

It’s pretty well known that GM cars have a history of quality problems over the last few decades. Certainly they are not the only car maker to suffer such complaints. The reality is that GM and GM dealers have a fairly long history of customer dissatisfaction, and that’s one of the reasons their market share has dropped to less than 20%. They need to do more than market the Chevy Volt. They need to build trust.

Building trust in a new, expensive technology is a lot harder than convincing someone to change brands of creamed corn. The key, I think, is transparency. I originally sketched out an agenda for transparency marketingin my head, then started poking around in Google and found out that I didn’t invent it! Well, I guess that’s another vaguely worded business process patent down the tubes 🙂

What is transparent marketing? It’s giving consumers, the primary stakeholder in your product, the ability to watch the process from conception to sale. It means engaging consumers in discussion of problems and issues, and giving them a clear view into the customer service process.  It means giving journalists, or amateurs like Volt fan Dr. Lyle Dennis, access to engineers and corporate labs during the design and testing process. It means being honest with journalists and consumers, even when honesty means criticizing past mistakes and talking openly about the design challenges inherent in the Chevy Volt.

This is very different from marketing in the 20th century. Back then, the buyer had few resources for information: word-of-mouth, maybe some government or insurance company reports, and a few reasonably objective review sources like Consumer Reports. In most cases, the only balanced information about a product was available weeks or months after its release. In this inefficient market, the buyer depended on traditional marketing channels (TV, radio, print) for information about the product.

Why go to all this trouble? It’s simple: the Internet has exposed your product already. The first buyer of the first Chevy Volt is going to take a drive and jump on the Web as soon as they get home. Within hours, every tiny deficiency and glitch in the Volt will be posted on blogs, chat boards, home pages and social networks for all the world to see.

There is no spin doctoring. There is no “managing customer expectations” after the fact. You either get ahead of the steamroller and stay ahead, or get crushed and watch your project fail.

It also means making a committment to customer service before the first Volt touches the open road. There are 4000 Chevy dealers out there, and unfortunately a lot of them are not technically capable of servicing the Volt, and many of them do not particularly care about their customers. When a Chevy dealer blows off a Volt owner, everybody is going to hear about it, and potential buyers are going to get skittish.

Of course, the Chevy dealers that carry the Volt on its initial release will be carefully vetted by GM. But if GM wants to compete with the hybrid big boys, Toyota and Honda, they must rapidly expand dealer support, and that means figuring out how to handle delinquent dealerships. Continuous reinforcement of correct dealer behavior is really the only choice. Every Volt service request needs to be tracked by GM from initiation to completion. Customers need to be notified by phone and e-mail at each step of the process, and given the opportunity to indicate dissatisfaction at the end of the service process.

When dissatisfaction happens, GM needs to swing into action and manage the relationship between the dealer and the customer. If the dealer fails consistently, take the Volt away from the dealer. Simple as that. Make it clear from the start that there is zero tolerancefor abuse of Volt customers. What will all this cost? Maybe not as much as GM thinks. The CRM (Customer Relationship Management) software is already out there, and even available for free. Call centers can be outsourced, and only the actual dispute mediation process needs to be handled by an in-house GM employee. I estimate that if there are 100000 in-warranty GM Volts on the road, the cost to GM might be on the order of $10 million per year or so to maintain this system, if that much. And as the number of Volts on the road goes up and the technology and dealerships mature, the variable cost per unit should go down.

Is $100 per car per year the cost of building trust? If so, I think that’s a small price to pay. Thanks for reading.

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