Friday, December 2, 2011

Musings: A Tale of Seven Cities - by David Carlisle

Make that seven OEMs. We collect tons of data on parts and service performance for dozens of OEMs here, in Europe, South America, Africa, Australia, and Asia. Let’s just focus on seven OEMs where we have monthly Market Watch (“MW”) parts sales data, Parts Manager (“PM”) satisfaction data, Service Manager (“SM”) satisfaction data, and JD Power CSI data. I normalized the data based on high and low scores for each data line item, and used a bit of dead reckoning for representing JD Power data at an OEM level. This is in the chart below. There is no single equation that relates all the data to a key performance metric – in this case, change in sales per 5 year UIO for 2011 vs. 2010 – call this “sales per UIO”. What emerges are seven different stories.

The Basics is all about an OEM who is very focused on availability satisfaction – getting the parts to the point of sale – perhaps at the expense of returns policies and pricing. Sales per UIO for the past year is just short of mid-pack, but last year was better than most due to brilliant digital strategies. Dealer purchase loyalty is lackluster, but not surprising given returns satisfaction. The messages here are consistency over time, point of sale availability, and being at the leading edge in digital strategies. These are the basics, and it is difficult to argue with this sort of strategy.

Nailing the Top is all about significant improvements to sales per UIO this year as a consequence of a broad focus on point of sale availability and customer retention. This is a company that takes metrics seriously and has a more traditional focus on customer retention that comes from field organization touch-points. Couple this with progressive terms and conditions and fairly brilliant digital strategies and you start to sell some parts. The big question is, will all this be enough in 2013-2015 when the sweet spot of customer pay UIO starts to sour?

Blessed 4Ps is all about great people, products, prices, and policies. Just having the first two puts you in a leadership position, where you don’t have to worry very much. Purchase loyalty is, not surprisingly, on the low side, mostly due to the relatively sparse dealer network that hampers dealer-to-dealer wholesale support.

Know Thy Place is all about the power of the brand and the respect within an organization of their brand. Respect is the key word here.

Rocky IV is all about attitude and aggressiveness. It’s Rocky butting up against that enormous Russian fighter. And winning. It is all about the power of leadership and the focus of an organization.

At the Limit is the story of a great and mature brand, great product, but, ultimately, the lack of resources. Here, there is very little difference between this “city” and “Nailing the Top” (they know what to do across a broad spectrum) and Rocky IV (really smart leadership and some stunning talent). There really is no reason for the low normalized positions in purchase loyalty and sales per UIO.

Need the Green is the story of a comer. Corporate has their sights set very high, great brand getting stronger, great product, very smart leadership, scrappy talent, and empowered. Empowered to nail the key stepping stone metrics. Normalized sales per UIO is at the bottom of the group simply because they did not falter during the recession – kept going strong with a consistent strategy and consistent investments. They need the green to get where they are going.

Bottom line: The efficacy of our business strategies cannot be tested with a universal equation populated with standardized variables. Rather, the variables themselves tell a story. And, it is pretty important to understand your story, because circumstances might change, …or, you might need to change. What do I see in this chart? I see “power”: brand, product, people, leadership, programs, measurement, attitude, and aggressiveness. I see “threats”: resources, investment capital, and commitment. And, I see “strategies”: digital, point of sale availability, pricing, and terms & conditions.

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