M-B stores to get cash for top CSI ranking
Cannon: No Hyundai loaners
Mercedes-Benz USA will spend $50 million annually to reward dealers who achieve the highest scores in a new customer satisfaction survey, said CEO Steve Cannon.
Starting Jan. 1, dealerships that rank in the top 70 percent of the survey will receive a "customer experience leadership bonus" that could push their profit margin from the maximum 13.5 percent to 14.1 percent, or about $300 per vehicle sold.
All of Mercedes' 358 stores will be ranked quarterly, giving dealers in the bottom 30 percent a chance to improve in the following quarter. Bonuses will be paid at the end of year.
Mercedes-Benz said the bonus reflects its priority on customer service and the need to improve scores in ratings such as J.D. Power and Associates surveys.
Mercedes ranked seventh -- below average among luxury brands -- in Power's 2012 Customer Service Index Study. Last year it was eighth.
Each quarter, Mercedes will rank stores based on their scores in a customer experience survey e-mailed to each sales and service customer. The $50 million will be divided among the top 70 percent based on the number of vehicles sold in the quarter. Cannon estimates dealers could earn an annual bonus of about $300 for every vehicle they sell in a year.
"The margin expansion is very well thought through and most welcome," AutoNation CEO Mike Jackson wrote in an e-mail. "The program benefits dealers with the right facilities and those who really focus on the customer experience."
In addition, Mercedes-Benz is investing $40 million in 10 different programs, including training, to improve customer experience. But the change in the margin "is like the engine that makes this thing work," said Cannon.
"Now dealers have a clear goal and they have money on the line," he said. "Offer them customer experience training and you can be sure they will take it."
Among other new programs announced at a dealer meeting in Las Vegas on Oct. 15-16 are a loaner program and plans for a fleet of Mercedes vehicles for dealership employees to drive.
As of Jan. 1, dealers will be required to use only Mercedes-Benz vehicles as loaner cars for service customers.
"You cannot loan out Toyotas or Hyundais," Cannon said. "We have instances where dealers do have non-Mercedes-Benz loaners."
Dealers have complained that the loaner fleet is a big expense, which is why some have put in less expensive cars, he said.
Mercedes-Benz will now subsidize the loaner car program by an additional $30 million a year, cutting the average dealer's cost of maintaining a loaner fleet by more than 20 percent, he said.
"Loaner fleets are part of the customer experience," said Cannon.
Mercedes-Benz also will spend $4 million to put 700 vehicles into a new program that allows dealership employees to drive the cars they sell. The program, called DASH, for Drive a Star Home, will begin in the fourth quarter and will run for six months.
Mercedes-Benz discovered that about 70 percent of the 11,000 dealership employees who took customer service training in the past eight months have never driven a Mercedes vehicle, Cannon said.
Under the DASH program, each dealer employee will get a vehicle for two nights.
"How can a customer-facing employee be passionate about the brand if they have not experienced them?" he said.
Mercedes-Benz also gave dealers the results of a survey it sent to 22,000 dealership employees. More than 15,000 responded anonymously to the survey, which asked about each store's leadership and its culture.
Mercedes executives received overall results from the survey but not information about specific dealerships. That information was given to dealers in sealed envelopes.
Mercedes also has hired outside consultants to help interested dealerships. Cannon said consultants will spend a day and a half at each store this year to review survey results with dealership managers and discuss ways to make improvements.
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