Is The Customer Always Right?

We've been led to believe that all product manufacturers live by the creed, "The customer is always right." I've wondered for some time, though, if that statement is just a figment of my imagination and a thing of the past for many types of products, but especially in the automotive sector. My sentiment was echoed and confirmed this week in a report on a survey conducted by the Automotive Practices Group of Cap Gemini Ernst & Young ( www.cgey.com), a large consulting, technology, and outsourcing services provider.

The fifth annual study revealed that consumers are not getting everything they want from automotive dealers and vehicle manufacturers. Across the vehicle lifecycle, consumers demonstrate needs, wants and preferences that the industry does not appear to be aware of. As a result, automotive companies are missing important opportunities to unlock hidden value.

The study, which surveyed consumers, dealers and manufacturers in Canada, United States, United Kingdom, France, Germany, Sweden and Italy, compares consumers' actual needs, demands, and preferences with dealers' and vehicle manufacturers' perceptions. The report focuses on topics such as consumer behavior, data capture/demand sensing, the Internet, and the aftersales experience.

"Cars Online 2003 makes it clear that the automotive industry must gain a better understanding of how consumers shop for vehicles and what factors lead them to buy," said Michael Wujciak, Vice President and leader of Cap Gemini Ernst & Young's Global Automotive Practice. "Gaining this understanding is absolutely vital to unlocking hidden value and improving performance throughout the industry, particularly in today's challenging environment. At a time when the industry faces generally stagnant sales, eroding margins, oversupply of vehicles, and heightened competition, this study provides valuable insight into the factors that drive automotive buying behavior and impact consumers' relationships with vehicle manufacturers and dealers."

The Cars Online 2003 study revealed a number of key findings, including:
  • Dealers and OEMs are wasting money focusing primarily on broad-based marketing/advertising efforts instead of taking a more integrated campaign approach that includes increased use of targeted direct marketing with a more 'personal' touch.
  • Loyalty lies with the brand not with the dealer: Three-quarters of consumers said they expect to purchase the same make as their current car, while only 38% said they were likely to go back to the same dealer. Leading the brand loyalty list were Toyota, Audi, Volvo, BMW, and Ford.
  • Consumer segmentation is critical to profitability but goes largely unrecognized by the industry. Dealers and vehicle manufacturers appear to treat consumers as one mass market rather than a segmented group of individuals with varying needs and preferences.
  • Manufacturers' Internet capabilities are misdirected and inadequate to meet consumers' needs. A high proportion of consumers start the vehicle research process six months before purchase, with the Internet increasingly being used as a research tool.
  • Improved speed of response will keep customers from going away silently. Most consumers surveyed said they expect a response to an e-mail or Web query within 24 hours.
  • Incentives are here to stay - 57% of consumers said "0%/low financing" was an important factor in their buying decisions, but only 30% of vehicle manufacturers believed financial incentives were important to consumers.
  • Dealers are missing the mark with many of the aftersales service features they emphasize - "Friendly staff" ranked as the leading feature consumers look for when choosing a dealer for servicing and was named by 81% of respondents. However, only 42% of dealers said they focus on friendly staff.
The Ernst & Young study was telling in many respects but really drives the point home that automotive manufacturers are not listening enough to what their customers truly need and want. Instead, they try and force what they think the customer wants. And although the automotive industry was singled out for this study, it is hardly alone in the way it treats its customers. Unfortunately, this behavior is pervasive in many other product market segments, as well. Because of what I perceive as an increasing disregard by many manufacturers for what people really want in the products they produce, I'm beginning to wonder if the customer is ever right anymore.

--Jeffrey Rowe is Editor and Publisher of MCADCafé and MCADWeekly Review. He can be reached at Email Contact.

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