Perception vs. Reality

Domestic auto makers must erase existing perceptions that their vehicles are of lesser quality than those made by foreign competitors, says Chris Denove, chief researcher for J.D. Power and Associates. Such lingering perceptions allows Japanese and German brands to command higher prices. Customer satisfaction is meaningless if it doesn't inspire customers to pay more for vehicles and even become advocates

Domestic auto makers must erase existing perceptions that their vehicles are of lesser quality than those made by foreign competitors, says Chris Denove, chief researcher for J.D. Power and Associates. Such lingering perceptions allows Japanese and German brands to command higher prices.

Customer satisfaction is meaningless if it doesn't inspire customers to pay more for vehicles and even become advocates for them, he says, citing four basic touch points to total owner satisfaction:

  • The shopping experience, because first impressions are lasting.
  • Product execution.
  • Product quality.
  • Product experience.

Loyalty, reputation and price also count, says Denove. Ultimately, however, customers will pay a price premium for products that produce a more satisfying experience, he tells the International Motor Press Assn. in New York.

He cites the Chevrolet Malibu and Toyota Camry as contrasting examples.

“On paper, in terms of pure specifications, those products are almost identical,” Denove says. “In fact, in a lot of ways, the Malibu looks better than Camry.”

Despite that, customers are willing to pay $2,000 more for a Camry “because they believe it will provide them with a better experience,” says Denove.

He has high praise for the Malibu. “A Malibu today is one of the finest cars that GM has put out, and quality-wise is just about as good in every way as a Camry,” he says. But perception has not caught up with reality. General Motors and its domestic counterparts are paying for past sins that affect customer satisfaction, he says.

Auto executives' focus on short-term financials prevents them from investing in customer satisfaction because the results of those initiatives may not show up for a decade. It's difficult to get them “to spend significant amounts of money on something that may not pay off until the future,” Denove says.

Meanwhile, he says dealership shopping-experience improvements have not kept up with U.S. vehicle quality that is exponentially better than before.

Many dealers think the most effective way to sell a car is to press customers for an immediate sale and stall on giving “a straight answer on price,” says Denove. “That is the root cause of dissatisfaction with a shopping process.”

But he says his data show that dealers with the highest customer satisfaction scores close the highest percentage of customers. “They may not close that customer today, but they close them tomorrow, or a week from now.”

In examining satisfaction scores of 1,000 dealerships, Denove says those that improved customer satisfaction by 10 points or more increased sales by about a third. He also notes that businesses with the highest employee satisfaction cultivate the highest customer satisfaction.

Dealership Service Study Shows Surprising Results

Auto analyst Chris Denove discovered surprising results while analyzing dealership service-experience data.

In a study of two groups of car owners, one designated group had no problems with their vehicles. “They didn't have to go into the dealership for anything other than maintenance,” Denove says.

But when asked whether they would buy the same trouble-free car again, there was a surprising comparative result.

The group of customers who had vehicle breakdowns, but experienced a perfect dealership experience in getting the vehicle fixed, were more likely to be repeat vehicle purchasers than the ones who had no trouble and didn't visit the service department for repairs.

“The message is just because the product breaks down, doesn't mean you can't have a happy customer,” Denove says.

He says the initial Lexus LS 400 is an example. The luxury car had a couple of non-safety related defects. “Despite the fact that they were minor problems that only occurred with a couple of cars, (Lexus) recalled every LS 400 they sold.”

What followed was a watershed experience in customer satisfaction. Lexus picked up the cars from the owners' residences and gave customers a loaner car, along with a gift and a letter of apology.

“(Customers) were more in love with them than if there hadn't been a problem,” Denove says. “Service really is an opportunity.”
By Herb Shuldiner

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