More Lessons from Lexus—Why It Pays to Do the Right Thing
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I am just back from chairing the first-ever Source Media Customer Engagement Symposium, and my notebooks are overflowing with good ideas, smart practices, and fun stories.
There’ll be more “Game Changer” entries inspired by the conference over the next few weeks. But I thought I’d highlight just one point from one of my favorites talks, a presentation by Nancy Fein, vice president for customer services with Lexus (TM).
The story of Lexus’s launch, rise, and position of leadership in the US luxury-car market is well known, as is the familiar (but still-impressive) Lexus Covenant. The covenant aims high: Lexus automobiles, it declares, ” will be the finest cars ever built.” As for creating a unique luxury experience, “Lexus will treat each customer as we would a guest in our home.”
Those are the sorts of aspirations that stir the soul—but what happens when big dreams get mugged by reality? That’s what Nancy Fein addressed in her talk. As soon as the first Lexus 400 sedans hit the market, she said, the company learned that there were three minor technical problems with the car. Rather than cross their fingers and hope customers wouldn’t notice, or issue the standard notice to ask customers to come in for repairs, Lexus saw this small problem as a chance to make a huge statement about what made the company different.
So more than 300 Lexus officials organized into small groups and traveled to all parts of the country. They visited the affected customers at home, brought them a gift, apologized for the glitches in person, and, of course, brought along a technician who fixed the problems. On the spot. In their driveways.
It was a bold move that sent a loud message that Lexus was taking its covenant seriously.
Last year, another small problem developed with a Lexus model—this time, the new ES 350 sedan. Something about the transmission skipping second gear and slipping from first to third. (Don’t ask for more details, I’m not a car guy.) The problem affected about 700 cars before the Lexus factories fixed it. This time, rather than visit customers at their homes, Lexus did ask them to visit their dealer. But instead of just fixing the problem, Lexus gave all the affected customers a brand new car. No questions asked.
What was the upshot of the free-car move? Based on surveys, the affected customers were more loyal to Lexus than buyers who didn’t have the problem in the first place. And Lexus was able to repair the transmissions on the original cars, put them up for auction, and sell them for as much (if not more) than the company would have gotten in the first place.
Two small stories that underscore one important point: It pays to do the right thing. In a world filled with companies that spend most of their time cutting costs, outsourcing jobs, and reshuffling org charts, it doesn’t take much to separate yourself from the crowd. And when you do go the extra mile, you earn the appreciation and loyalty of customers who have come to expect so little from the companies with whom they do business.
In the words of the Lexus Covenant: “If you think you can’t you won’t…If you think you can, you will.”
So what’s stopping you from doing the right thing?
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William C. Taylor is an agenda-setting writer, speaker, and entrepreneur. His new project, Practically Radical, chronicles the radical shifts transforming business and the practical steps that will determine who wins. His most recent book,Mavericks at Work, has been a New York Times, Wall Street Journal, and BusinessWeek bestseller. As cofounder of Fast Company, he launched a magazine that earned a passionate following around the world. He is an adjunct lecturer at Babson College and a former associate editor of Harvard Business Review.
Comments
Large organisations all seek to employ the same unimaginative people who all have similar CVs and are similar in shortcomings to those selecting and the company as a whole. So companies end up all doing the same things. Take google. Supposedly a different firm yet when push came to shove the potential profits in china were so great the company executives joined in the chinese government's oppression of it's own people. No one asks what damage this association will do when china becomes free. Because by then the executives will have moved on taking credit for rising profits during their tenure.
It's all about honour, imagination and honesty, the 3 characteristics that are shunned by corporate america.
- Posted by sizzler
December 12, 2007 7:42 PM
Sir,
In an imperfect world, it is quite heartening that there are a few organizations that are willing to stand up and be counted.
Since such instances are the exceptions rather than the norm, it has been my long-held belief that we can learn more from our failures than we can from our successes.
A comparison with the (once) big three of the automobile industry reinforces the point. One of the big three released thousands of automobiles in the full knowledge that an accident could result in an explosion of the fuel tank. It took an accident with loss of life and grievous injuries for all the internal records to be brought to court and one of the highest damages in automobile industry history to be awarded. In hindsight, the organization could have fixed the problem for a fraction of the ultimate cost, and could have earned loyal customers too in the process.
The second of the big three has suffered due to what might be termed perpetual self-sustaining leadership. Has anything changed much from the days of the now (in)famous proclamation - you can get any color so long as it is black, through the unceremonious exit of a proven performer, to the present that places dynastic credentials above professional capability?
The third entered into a partnership (merger) with a German company with little insight into cultural differences only to part ways a few years later.
Which reminds me of an interesting question in a competitive examination - name the most important part of an aircraft. The person who topped the batch got the perfect answer - the missing part. If only this had been understood by the managers who gave the go-ahead for the space shuttle mission in 1986 with tragic consequences, all due to a O-ring of little commercial value that could not expand as needed in the ambient temperature of that fateful day, history would have saluted their wisdom.
As the Commission that went into the tragedy pointed out: "Don't ever try to fool nature." Or Customers, for that matter.
Warm regards
- Posted by B V Krishnamurthy
December 13, 2007 5:58 AM
Lexus has indeed had a winning formula of customer service from the very beginning. If anyone questions how consumers vote with their dollars - witness a personal example with a Volkswagen Passat as a contrast. Their sales have actually declined since 1970 with losses in the US market since 2003. My guess is that my experience with a Passat is the norm of Volkswagen's arrogant attitude towards their customers. I had the, later acknowledged, ignition switch problem early in ownership - only to be met with denials from several dealers that there was a problem, resulting in much inconvenience to me. I spent months having to find a tiny "sweet spot" in the ignition switch to even start the car. I still love the handling and ride of this car, but many people heard about my frustration and regrettably I will probably never buy another VW product. Even if the rest of the world accepts such behavior from manufacturers, even if a manufacturer has clever advertising - we continue to reward the quality products with good customer service with our buying decisions above all else.
- Posted by Christy Stadelmaier
December 14, 2007 11:57 AM
I wish Lexus provides the same services across its branches around the world. Based on my experience, I can regrettably confirm the opposite service by Lexus' staff. However, it does not stop customers from flowing into Lexus showrooms and buying new cars.
My conclusion is that company behavior largely depends on customer sophistication prevailing in that particular market and, of course, level of competition.
- Posted by Rauf Mammadov
December 15, 2007 9:46 AM