Customer retention is GM's next big target, says quality and service chief Alicia Boler-Davis.
Sometimes, it’s the little things that add up. Just ask General Motors which is making a major push to improve quality and customer service in the hopes of boosting customer retention.
Right now, company officials suggest, about 52% to 53% of GM buyers can be expected to trade in for another Chevrolet, Buick, Cadillac or GMC product next time around. Simply boosting that by 1% would have a significant impact on the bottom line, however.
“A single-point improvement in sales retention is the equivalent of 25,000 (added sales) or $700 million in annual revenue,” explained Mary Barra, GM’s global product development chief, during a discussion of the maker’s plans to enhance quality and customer satisfaction.
Long lagging its import rivals, GM has seen a significant improvement in recent years, notably rising to above-average numbers in the most recent J.D. Power Initial Quality Survey. But company officials say they’re not content with those gains and intend to push higher. Among other things, they are gearing up to more closely link both product development and customer handling efforts to third-party metrics rather than their own internal data, “to make sure we’re properly calibrated,” said Barra.
The new GM push is a multi-pronged effort. The program starts even before work actually begins on a new vehicle, explained Alicia Boler-Davis, the maker’s global direct of quality and U.S. customer experience.
For one thing, she said, the maker has to be more focused on what customers say they want. “In the past,” she admitted, “we focused on what we thought the customer needed.”
Quality is a complicated concept that means more than just preventing defects – though Barra asserted a goal of ensuring that there the goal is to have all of GM’s assembly plants operating at a level above industry average when it comes to defects.
To further isolate potential problems the maker is putting more early prototypes into the field in an effort to clock more miles.
GM also plans to change its approach to design changes. It’s been common for designers or engineers to make tweaks right up to the moment a car goes into production. The goal will now be to limit changes once a new vehicle is 18 months away from production. That’s a policy that has long worked well for competitors like Toyota, reducing unexpected glitches – while also reducing unexpected product development costs.
Studies like Power’s IQS also ding manufacturers when customers experience difficulty using a vehicle. In fact, the latest quality study found that problems operating navigation and infotainment systems has become the single biggest source of customer complaints.
Among the steps GM plans to take will be the addition of 25 specially trained Connected Customer Specialists who can assist buyers who run into problems working a complex system like the new Cadillac Cue or Chevy MyLink.
And a revised customer service call center strategy will now permit agents to more rapidly approve such things as post-warranty repairs, the executive promised.
Meanwhile, GM has begun an intensive training program for dealers and personnel, with thousands of Chevrolet retailers expected to go through a three-day program put together by Disney. A similar program emphasizing the luxury buying experience has been launched in cooperation with Ritz-Carlton.
To ensure dealers are playing by the new rulebook, meanwhile, GM has expanded its use of so-called “mystery shoppers” to actually walk through the buying process.
And the maker plans to add a significant number of district managers, noted Boler-Davis, especially in smaller regions where rural dealers have traditionally had little contact with the company.
Admittedly, “the biggest challenge,” said Boler-Davis, has been getting the company’s employees and retailers to recognize “this isn’t the program of the day (but that) we have to do things differently,” she stressed. “It has a direct impact on our financial results.”
The push to reduce factory defects has already paid off, she insisted, cutting the number of warranty repairs – and the total cost of the GM warranty program – by 50% over the last five years.
If the program can now boost customer retention, as well, the payoff could be massive, GM officials stressed.