On Friday January 24th, Senior Vice President of General Motors Global Quality and Customer Experience Alicia Boler-Davis spoke to the J.D. Power & Associates Roundtable at the National Automobile Dealers Association convention. Her prepared remarks are below (speaker’s words are definitive), and we present the GM Authority take (way, way) below.
Thank you… good afternoon… it’s great to be here at the J.D. Power Roundtable and the NADA convention.
The size and scope of this event reminds me of what we all love about the auto business – the great history and tradition we share… and the fact that we’re part of an industry that really makes a difference for so many people.
At the end of the day, we truly are an industry of people… and that’s what my opening video is all about. People and culture. Because we can have the best strategies in the world at our companies… but if we don’t get the culture right, we’re simply not going to succeed.
Peter Drucker said it best: “Culture eats strategy for breakfast.”
Well, at GM, we set out several years ago to consciously change our culture, including the way we do business. If the new GM was going to win again, we simply had to do this. It was as important as any of the strategic actions taking place inside the company at that time.
So, working with our dealer partners, we set out to make the customer front and center in everything we do… from how we interact with them to how we design, engineer, and manufacture our vehicles.
Fundamentally, it was about changing behaviors. It was about making GM a customer-centric company again… and working to ensure that everything we do is driven by the customer.
So, who are these customers?
- Well, around the world, our customers are changing.
- People now send more than 500 million Tweets per day…
- There are now 1.5 billion smartphone subscribers…
- And there are some 2.8 billion Internet users.
- Today’s customers are empowered!
Increasingly, they are also global… which means that many come from emerging markets and are new to vehicle ownership.
For example: in GM’s largest market, China, 75 percent of car buyers are first-time car buyers.
- Our customers are increasingly female.
- In Western Europe and the U.S., more women than men now graduate from college.
- And women spend an average of 4.5 months researching online and in person prior to purchasing a vehicle.
- And our customers are increasingly young.
The “Millennial Generation” is currently between the ages of 13 and 32… and in the U.S. alone, they number 80 million.
- They have collective spending power and influence of almost $1 trillion.
- And the youngest of them don’t remember a time without Facebook.
- They want to buy from companies that engage them and ask their opinions.
- So, what do these customers want in their cars and trucks?
Consider that, around the world, 65 percent of people spend some time commuting each week.
- The average is 7 hours a week.
- Little surprise that people want their vehicles to have many of the conveniences and comforts of home.
- And this goes beyond entertainment and technology… to include design elements like materials and lighting.
- As an industry, we need to ask ourselves if we are best positioned to meet our customers’ changing needs and expectations.
And too often, I think the answer is no… not yet.
When we look across the industry today, we believe that no one automaker stands out as the clear winner in the customer experience area.
Some companies do it better than others, but even the best in the business can’t compare to the outstanding reputation that companies like Apple or Amazon enjoy in satisfying customers today.
At GM, we see this as real opportunity not just to deliver winning products, but to take the overall customer experience to a whole new level.
We want to create true customer advocates – customers who not only repurchase our brands and products, but who also go out of their way to recommend them to others.
To help articulate what we’re striving for and what our customers can expect from us with every interaction, we developed an external customer pledge.
We see it as much more than words on paper. It’s a statement of where we’re going as a company… and about making GM a more customer-centric organization.
Our pledge promises a lot – in fact, many customers are surprised to learn it’s from GM.
As a company, the pledge requires us to provide consistent and compelling customer experiences across all functions. In other words, it’s an enterprise approach.
It’s designed to help guide our actions… to be our “true north”… something that everyone in our company can embrace.
It helps guide us when we’re making decisions. And it helps us remember the reason why we come to work every day.
So, to deliver on our pledge and take the overall customer experience where we want it to be, we took the unusual step of linking the customer experience and product quality areas of our company about 18 months ago… and I’ve been fortunate to be the first person to run both organizations globally.
GM is the first automaker to combine these two functions under one leader. It has allowed us to build a customer-centric strategy focused on exceeding expectations before, during, and after the sale. It’s about improving the overall perception of our brands and the relationships we have with our customers, and – of course – the quality of our cars and trucks.
The Global Quality components of our strategy are focused on three areas:
- Initial Quality
- Long-Term Reliability and Durability
- And Product Excellence, which includes Human Vehicle Integration (HVI) and the overall driving experience. As we saw in the video earlier, customer expectations are changing. In previous J.D. Power IQS studies, customers complained about things that broke. Today, customers are much more concerned about things that don’t look, feel, or function the way they should. Customers want to be surprised and delighted. That’s Product Excellence.
So, just as J.D. Power measures performance in many areas – Sales & Service, Customer Satisfaction, Initial Quality, Vehicle Dependability and so on – we’re working to improve in many areas to create a great customer experience throughout the entire ownership cycle.
Above all, our strategy is based on starting with the customer in mind – always.
It’s designed to ensure that every touch point the customer has with GM is exceptional… and to build customer relationships that drive retention.
Consider that a single percentage point improvement in U.S. sales retention equates to about 25,000 car and truck sales at GM… or about $700 million in annual revenue. That’s a big incentive, and that’s one reason we’re so intently focused on this effort.
We are determined to make GM a leader in all these areas. Let me give you some examples of how we’re working to do just that.
One area where we’re intently focused right now is in-vehicle technology or infotainment. This area of Product Excellence continues to rank very high with customers when it comes to the overall performance of their vehicles. In fact, according to J.D. Power, customers across the industry report more audio, entertainment, and navigation problems than any other category.
Infotainment research at GM actually started many years ago. Back in 2007 – the same year Apple introduced the iPhone – we embarked on a five -year study to understand how people use their car radios and navigation systems, as well as their phones, iPods, and other portable devices in their cars.
We watched others venture into this area early on, so we wanted to make every effort to do the best we could with our new systems.
In fact, we went so far as to send our infotainment system designers into the field to ride with customers to work, on errands… even on vacations!
We learned a lot. Then we applied what we learned to new designs and interfaces. We tested our designs at customer clinics, then redesigned them and tested again.
Of course, I’m simplifying the process here. The point is that we used exhaustive methods to incorporate the voice of the customer into our new infotainment systems from the start. We streamlined the hardware and software, we made the technology more intuitive and easier to use, and we built in brand differentiation along the way.
The result is the connected systems now appearing in our vehicles: MyLink, IntelliLink, and CUE, the Cadillac User Experience. The systems are excellent – but that’s really just the price of admission.
As vehicles become increasngly complex, the winning automakers will be those that make the complex simple for the customer. So, while the design and execution of the technology is important, it’s also a matter of how well that technology is explained and introduced to the customer.
That’s why we now have 50 Connected Customer Specialists working across the U.S. This team partners with the Certified Technology Experts employed by our dealers to provide customers with a great experience right from the start.
This approach enables our dealers to offer customers expert advice and immediately answer questions about connectivity and infotainment systems. And it works. The feedback and results have been very positive.
Now, we are working with our dealer partners to take the additional step of creating “Connection Centers” in their facilities. Think of them as our version of the Apple Genius Bar. They’re a convenient space where customers can find out more about the connectivity options in our vehicles and learn how to make the most of them.
Chevrolet, Buick, GMC and Cadillac dealerships across the U.S. are voluntarily implementing the centers in their facilities and staffing them with their in-house Certified Technology Experts.
Beyond that, we’ve also opened a dedicated infotainment Call Center in Austin, Texas. It’s staffed with advisors specially trained in infotainment and mobile devices. The center includes vehicle simulators with fully functioning infotainment systems, so advisors can re-create exactly what their customers are experiencing.
So, by integrating the Quality and Customer Experience functions, we’ve been able to take a comprehensive approach to infotainment. By really listening to our customers, we’ve been able to improve both the quality our technology and our customers’ experience with it. And that’s not the only way we’re working to incorporate customer feedback into our vehicles.
Last month, we opened a new Customer Engagement Center on the campus of our Tech Center in Warren, Michigan. By locating the center in the heart of our Product Development programs, we’ve created new opportunities for our engineers and designers to hear directly from customers. We’re then taking what we learn in those forums and pushing it upstream into engineering and manufacturing. And we’re getting engineers and designers into dealerships now for the same reason.
And I should also point out that we’re not waiting for customers to come to us – we’re increasingly reaching out to them, proactively, to offer support and assistance. That’s especially true with our Social Media Team, which consists of professionally trained advisors actively involved in social channels like Facebook, Twitter, and automotive enthusiast forums. They monitor a huge number of online conversations and interact with customers when it’s appropriate to offer assistance.
We’ve constructed a 6,500 square foot social media “command center” at our corporate headquarters in Detroit. It acts as our state-of-the-art listening, monitoring, and engagement platform that allows social media teams from marketing, communications, and customer care to work together to address customer needs.
A good example is the customer who recently posted on an auto enthusiast forum about a negative experience with a vehicle repair at his dealership. One of our social media advisors engaged the customer directly, then worked with the servicing dealer to resolve the issue.
Afterward, the customer thanked us publicly and told our advisor:
“I appreciate your help, Gregory. I hopefully won’t have an issue again in the future but am pleased to know that there’s tremendous support should I need it. Thank you.”
Our advisor was able to help convert a vocally unhappy customer… into one who was willing to share his positive experience with others.
This is the kind of experience that led to our recognition last spring as a Fortune 500 “social media star.” We were one of nine companies that made the list, along with others like Coca-Cola and Facebook – companies well known for their progressive, youthful attitudes and online presence.
So, these are a few examples of how we’re working to improve the experience for our customers while enhancing our ability to incorporate their feedback into our vehicle development process. And of course, that’s one of the tangible benefits of bringing the Customer Experience and Product Quality teams together under one roof.
Another example – again, from our work in Product Excellence – is drive quality. Drive quality is simply a measure of how the driver experiences the performance, feel, and feedback characteristics of the vehicle – things like the responsiveness of the accelerator pedal, shift smoothness, and so on. And like infotainment, it’s a real hot button with customers right now.
Now, until recently, drive quality has been highly subjective… and developing a scientific quantification for it has been extremely difficult. But we’re now using a fairly new measuring tool that we purchased from an Austrian company called AVL. This tool provides us with a numerical assessment of drive quality – and enables precise benchmarking of the competition.
Essentially, the AVL tool allows us to take the customer’s requirements and translate them into technical specifications that our engineers use to deliver the driving experience that customers expect. It’s amazingly helpful, and it has now been fully integrated into the development process for all our vehicles.
While we’re not the only manufacturer to use the AVL tool, we understand that we’re using it more extensively than anyone else, given our global footprint and diverse propulsion strategies. It puts us on the forefront of defining a deeper understanding of how to use the tool to our competitive advantage.
It’s another example of how we’re doing a better job getting customer insights to the people doing the design and engineering work in a consistent and reliable fashion. It allows them to design beyond their own individual knowledge and experience, and work toward delivering what the customer truly wants. Again, it’s thanks to the marriage of quality and customer experience.
In the area of Initial Quality, let me speak for a few minutes about some of the things we’re doing to launch with the best possible quality the many new vehicles we’re bringing to market in the U.S. right now. And that’s a lot of vehicles – 28 in 2013 and 2014 alone.
One of the things we’re doing across our brands is “front loading” the major aspects of our vehicle programs – locking in our designs, for example, much sooner in the vehicle development process.
This means we’re also validating the designs for our parts and components much sooner.
It has also allowed us to advance the initial test build of our new products by a significant margin. In other words, we’re now treating our prototypes as the first production vehicles, as if we were building them for the customer. And responsibility for these prototypes has moved from Engineering to Manufacturing.
This is forcing more discipline into the process – giving us much more time to:
- Get more test properties on the road sooner
- Identify issues sooner
- Incorporate customer feedback sooner
- And really refine the build process before the first saleable unit ever rolls off the line.
These are huge changes for us, affecting nearly the entire team.
They require a change in our mindset that says everything will be production intent, from the first vehicle on.
That means less prototype tooling and more production tooling earlier on.
In turn, that means we’re streamlining the process, eliminating cost, and allowing more time to focus on what’s most important: executing the launch.
We also have a lot going on to provide customers with exceptional long-term reliability and durability.
Using a standardized process of Robust Engineering, new vehicle programs get a thorough part-by-part analysis of reliability and durability. When gaps to quality leadership exist, we apply engineering tools to develop solutions to close that gap.
Our FNC brake rotors are a great example of what we mean by Robust Engineering.
Accumulation of rust on a brake rotor can lead to premature or uneven wear – and they’re expensive to replace. So, a team of GM brake experts went to work and developed an exclusive corrosion protection process that makes rusty brake rotors a thing of the past – and doubles the life of the rotors.
This patented hardening process is called Ferritic Nitro-Carburizing, or FNC and has most often been used to treat powertrain parts. These new rotors have dramatically reduced brake rotor service claims on vehicles with FNC rotors – resulting in 80 to 90 percent fewer repairs.
So we’ve expanded their application to include many of our US models in 2013 with additional nameplates making the shift based on upcoming architecture upgrades.
In short, our goal is to achieve the highest levels of long-term reliability and durability possible… so that customers not only come back to GM when it’s time to buy their next vehicle, but also go out of their way to recommend them to others.
And that brings me full circle… right back to the lifelong customers we’re working to earn and retain.
So, to wrap up, we’re doing business differently at GM today. We’re changing our culture.
As you heard in my opening video, cars and trucks aren’t the only things we build these days. We also build trust – with one another… with our partners and suppliers… with our dealers… and with our customers.
Our goal is to provide the best overall customer experience in the industry. We’re doing that by integrating the Quality and Customer Experience functions… and, above all, by working the voice of the customer into everything we do.
We think we’re on the right track. And we think it’s going to make all the difference in the world.
With that, let me thank you for your attention… and I’d be happy to take any questions you might have.
The GM Authority Take
Those are some interesting developments that provide a glimpse into the way in which The (New) General is doing business differently today. Of course, as Boler-Davis repeatedly noted in her speech, it all starts with unifying product quality and customer experience under one leader. More importantly, however, is the culture-related shift, as it’s pretty much a certainty in the modern business environment that “culture eats strategy for breakfast”.
In addition, we found the customer insights as well as the goals the New GM has for its customer experience (to create true customer advocates) very appropriate and vital to an organization that truly intends to be a leader. To that end, it’s great that the automaker has also identified its True North by forming a customer pledge (which we’d love to see, by the way).
We’re also impressed with the realization that the measure of initially quality today is as much about things not breaking as it is about things not looking, feeling, or functioning the way they should, and that GM wants customers to be surprised and delighted, which leads to product excellence. On the customer retention side, Boler-Davis confirmed the notion (one that has been floating around the industry for the last few months) that a single percentage point improvement in U.S. sales retention equates to roughly 25,000 car and truck sales at GM, or about $700 million in annual revenue. That, in and of itself, explains why GM (as well as the competition) is so focused on the effort.
Meanwhile, the examples presented by Boler-Davis that stood out to us include:
- The development story behind GM’s current range of infotainment systems; ironically, we know a few customers who wouldn’t call some of the systems “excellent” (we’re looking at you, CUE)
- GM’s social media team, and the sheer scope of its efforts
- The full integration of precise, quantitative benchmarking of drive quality into the development process of all vehicles
- “Front loading” in the development process sounds interesting, as engineering is longer responsible for making prototypes; that’s now the function of manufacturing, which means less prototype tooling and more production tooling earlier on in the development process
But what’s perhaps more important than anything else for enthusiasts is that GM will launch 28 models between last year and this year. Who can list those off?