by: Mike Gorun
In the wake of the backlash from the recent United Airlines incident, it has been widely reported that many airline CEO’s salaries are, at least in part, connected to customer satisfaction scores. In the case of United’s CEO Oscar Munoz, poor customer satisfaction ratings can cost him about $500,000 in bonuses. The CEOs of Southwest Airlines and Delta have similar contractual clauses.
On top of that, one poor experience – especially if it’s perceived by many as being egregious – can, by itself, ruin an airline’s entire quarter, or even the year. In fact, in the case of United Airlines, at one point their valuation dropped about $1 billion, according to USA Today.
But what about an industry closer to our hearts, that is similarly hyper-competitive and also has financial repercussions for poor customer satisfaction scores?
Yes, I am talking about the automotive industry.
Manufacturers penalize franchisees that fail to meet customer satisfaction expectations through loss of revenue including stair step money and other incentives. And some dealers even include CSI expectations in their managers’ and salespeople pay plans. Failure to meet these goals can have a trickle-down effect that costs everyone in the dealership money.
Poor customer satisfaction can also lead to outraged customers who defect to your competitors – taking friends and family with them. This can then force your dealership to increase spending on acquisition, which is much more expensive than retention.
As consumer choice continues to expand, customer experience is increasingly more important. Customers are no longer willing to put up with a bad experience – and they are more than happy to share that poor experience with the world via online review sites and social media.
It really doesn’t matter whether the customer is right or wrong. It’s about how the experience is perceived. That specific United flight needed four volunteers to leave the plane. Three complied without incident. One customer chose not to. While it’s probably safe to say the other three people also had a poor experience and were inconvenienced, we don’t know their story. However, because that one person was treated extremely poorly, and it was captured on video by several customers, we know what happened on that flight. And, because of that, while it did not happen to them directly, other United customers are cutting up their United loyalty and branded credit cards. They are outraged that a company they had been loyal to would allow such a poor customer experience. A single bad experience – and arguably poor employee handling at that time – put United at risk and became the catalyst for a mass defection.
While your dealership probably doesn’t have to worry about an incident of this magnitude, it’s all a matter of scale. The United incident is simply a good illustration of the backlash that can happen due to a poor customer experience, along with poor employee decisions and actions in the heat of the moment.
In the end, it’s far less expensive to suck it up and fix the problem and/or apologize, than it is to take the chance that a customer chooses to share their experience with the world.
Customer experience has grown into one of the biggest differentiators for any business – so the choice is to either embrace that change and ensure a great customer experience, or watch your customers flock to competitors.
Bio: Mike has a variety of professional automotive and business development credentials having of 18 years of operational management experience on the OEM side with Ford, Nissan and General Motors. As a true Internet pioneer, Mike combined his knowledge of wholesale and retail dealership operations with emerging internet technologies and created CarSmart.com in 1994. Later acquired by a publicly traded corporation it was the largest automotive internet acquisition at that point in time. Mike is a graduate of the University of Wisconsin with degrees in Industrial Education and Process Engineering.