Respect, rapport trump rewards, punishment
Time will tell whether its latest initiative works, but Chrysler Group's elimination of the carrot-and-stick handling of its retail network is a major step -- and a bold move -- toward crafting a positive factory-dealer relationship.
The Customer Experience Initiative doesn't have payments to dealerships for meeting factory goals. Buyer satisfaction is now up to the dealers. The program, which was designed with significant input from Chrysler dealers, is in stark contrast to Detroit 3 dealings in the old days.
Chrysler dealers had grown frustrated with the rigid nature of the Dealer Standards program. That plan used a traditional carrot-and-stick approach, giving dealers cash for meeting standards and penalizing them when they didn't measure up. The company suspended the reward payments program in January.
The goal of the new program -- which will be rolled out to Chrysler Group's dealers, including Fiat dealers, by year end -- is to reset the relationship between factory and dealer.
Chrysler seeks a respectful rapport with its dealers, one in which dealers are treated like adults. In many ways the new initiative is designed to achieve that objective.
n Instead of asking dealers to satisfy a factory checklist, Chrysler now will use a best-practices approach. The first step will be the retraining of field reps. That element of the program is critical. Under the old system, field reps were cops enforcing rules. Now Chrysler wants them to be coaches who teach dealers.
n Chrysler will collect data on customer satisfaction, which will be used to coach and train, but with a key new ingredient: Reps will connect dealers who need help with dealers who are doing things well.
n Chrysler will retain mystery shoppers. But instead of slavishly following a checklist, they will gather information and relay it to dealers in a more personal way, a much better approach.
The Customer Experience Initiative is viable because more than 90 percent of Chrysler Group's dealers are now profitable. Three years ago, when the Dealer Standards program was introduced, only half were, a Chrysler executive said. Dealers now have money available to invest in their businesses, and if they don't do so, there are dealers from other brands seeking to buy underperforming Chrysler stores because they see the opportunity to make money.
David Kelleher, chairman of the Chrysler National Dealer Council, admits that -- with the big exception of reward payments -- the retailers got what they wanted: Chrysler dealers who perform well will be rewarded with higher sales. Perform well, and loyalty will follow.
That means profits and a good situation for all parties.
Dealers have the program they want. The rest is up to them.