On top of the automotive sales world today, Toyota Motor Corp. is looking several years into the future and it doesn't like what it sees.
The problem is customer satisfaction. The ugly truth is that Toyota customers don't much like their dealership experience.
The fear is that the incredibly successful retail system created by Bob McCurry years ago could damage the brand during the next few years.
Today the average Toyota dealer sells more than 1,600 new units a year, but the CSI scores stink. This begs the question: How important is CSI?
Some brands have great customer satisfaction but their sales are falling off a cliff. Which would you rather have, customers who say they are satisfied or a lot of sales? Yeah, we know, the two are not mutually exclusive, but, honestly, if I'm a dealer, I'm opting for the sales.
Last year during a conference I asked Mike Musich, a Toyota executive charged with helping dealers improve their CSI scores, why worry about CSI if sales show no sign of slowing down.
Basically, his answer was look to the future. Loyalty to the Toyota brand among its customers is high — surpassing 60%. Meanwhile, loyalty at the dealership level runs above 20%. Will those numbers hurt the brand in the next few years?
Toyota thinks it will.
It's easy to blame dealers but Toyota created the system. On the other hand, some dealers argue it's just lazy for a dealer to blame poor CSI on a retail system.
Toyota dealers, to their credit, ran with the system and have turned the auto maker into one of the all time global success stories. Make no mistake, Toyota would never have become the juggernaut it is today, without its dealers.
There are some dealers that believe Toyota's vehicle allocation process contributes to the poor CSI. The system is based on what dealers sell during the previous allocation period. Some dealers refer to it as a “churn and earn” strategy. If dealers sell their allotted vehicles for a given period (two weeks in Toyota's case), they receive an increased allotment the next period.
The argument is that tying vehicle allocation to sales creates a high-pressure environment in which dealers become desperate to move the metal. Toyota customers complain about the length of time it takes to complete a deal — probably a byproduct of the dealer wanting to close the deal that day.
Only recently has Toyota really begun to look for ways to improve its CSI at the dealership level. There is speculation it may change the way it allocates vehicles to its dealers. Jim Lentz, executive vice president of Toyota's sales and marketing arm, admitted to Ward's recently that perhaps allocation could be done better.
There are other things Toyota is doing to improve the experience. But I have to wonder, why mess with a system that is working?
Besides, does Toyota's example hint at how useless CSI scores are? One person, hearing my question to Musich, leaned over and whispered that CSI scores were a fraud perpetrated upon the industry years ago by a certain “powerful” figure who has several associates. Interesting concept….
If it were up to me, if it ain't broke, don't fix it.