Lexus: a Bottom-line Lesson in the Value of CRM

[From iSource Business, May 2001] One of the first things visitors see when they walk into the corporate headquarters of Lexus in Torrance, Calif. is a large version of the Lexus Covenant, developed two years before the first car rolled off the assembly line.

Here you had a Japanese luxury automobile coming into the marketplace, thinking it could compete with Mercedes-Benz, BMW and Volvo, says Marjorie Crosby, Lexus' national customer satisfaction manager. We knew our success would be based on repeat customers. If we wanted to be a viable player in this market, we weren't going to find a customer on every corner. The people we want to sell to have discretionary money. If we wanted them to come back, we had to make it so difficult to move away from us, it doesn't even become a choice.

The Lexus Covenant reads: Lexus will enter the most competitive, prestigious automobile race in the world. Over 50 years of Toyota automotive experience has culminated in the creation of Lexus cars. They will be the finest cars ever built. Lexus will win the race because: Lexus will do it right from the start. Lexus will have the finest dealer network in the industry. Lexus will treat each customer as we would a guest in our home. If you think you can't, you won't ... if you think you can, you will! We can, we will.

Every employee carries a laminated copy of the covenant with him; every supplier is trained in its philosophy and every dealer's franchise depends on it. The result is that, in 10 years, Lexus has become the best-selling luxury car in the business and taken the top spot for customer satisfaction in J.D. Power and Associates surveys for nine out of those 10 years. Consistently, Lexus is mentioned in the same breath with the Ritz-Carlton hotel chain and Nordstrom's department stores as examples of superb customer relationship management.

How does it play across business units?

At the dealership, it means that Lexus customers don't take their cars in for service dealership employees go to customers' homes with loaners, take their cars to the shop for them and then deliver them back to the customers' homes.

On the manufacturing side, it means that the chief engineer asks Lexus owners what they want in new models. In 1993, Lexus made more than 100 changes to its 1993 LS 400, based on suggestions from owners. They wanted the light to stay on longer when they got into the car, so the length of time was doubled. They said the tires wore out too quickly, so Lexus put on bigger tires. They wanted some warning that the brakes were wearing out besides that annoying, high-pitched squeal that bad brakes make, so a brake-pad-wear-indicator light was added to the dash.

In information technology, a nationwide customer service history system allows any dealership service department, plus the Lexus corporate call center, to have access to a customer's vehicle history, no matter where the car was bought. Yes, they use CRM technology.

Calls that come in to the national customer service line are handled with a contact system. Call center agents can see immediately if there are unresolved service issues, plus the value of a customer in terms of the number of Lexus vehicles he's bought and the financing he's used.

Unlike other organizations that send those contacts out, we manage that from the time it's received until the time it's resolved, Crosby says. That includes placing a follow-up phone call to the customer to make sure it's resolved. We take very careful care of our customers. It's a combination of technology to allow us to do that, but it's also the processes, procedures and policies.

The most impressive of those policies is, Just say yes.'

Whenever and however you can, find a way to just say yes, Crosby explains. Associates in the call center have full authority, full accountability and full responsibility to take care of the customer. There isn't an associate here who can't pick up the phone and do something. That's up to and including buying back a car. We don't put dollar amounts on it.

The company quickly learned that it was a commitment that offered a solid return on investment. Most people say this costs a lot of money, Crosby says. They don't take it to the final sum of the fact that this makes the company a lot of money. We outsold Mercedes this year. Yeah, it costs money, it's a lot of hard work, but the success does pay off. We would bet with you that if times become tough, we'll still be successful because we take care of our customers.

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