DETROIT (Bloomberg) -- General Motors Co. CEO Ed Whitacre wants Cadillac to treat customers better.
At a June 3 meeting in Chicago, GM managers told 300 salespeople how a Texas salesman had dissuaded a friend of Whitacre's from buying a Caddy. When his buddy test drove a CTS- V sedan, it ran out of gas. Whitacre's e-mailed response was projected in large letters on a screen: “If true, awful.”
The gathering -- a combined pep rally, lecture and confessional -- was part of a GM offensive to revive Cadillac, which has fading appeal, aging customers and trouble persuading buyers it's worth paying a premium. GM brought in trainers from Ritz-Carlton Hotel Co., a unit of Marriott International Inc., to show dealers how to reconnect with customers.
“It's truthfully a new beginning for us,” said Kurt McNeil, Cadillac U.S. vice president of sales and service. “We know we've got a lot of work to do on the product side, the marketing side and the customer service side. We think we do pretty well, but we know we have to do better.”
Cadillac, which once called itself the “Standard of the World,” ended a six-decade run as the top-selling U.S. luxury brand in 1998 and hasn't placed higher than third since 1999. Though U.S. sales rose 32 percent through May, Caddy's results last year were the worst since 1953.
The GM brand finished eighth among 12 upscale makes in the Luxury Institute's 2009 survey of buyers who make at least $150,000 a year, said Milton Pedraza, the New York-based group's CEO. About a third of the wealthy respondents said Cadillac was worth paying a premium, compared with 57 percent for BMW and 63 percent for Mercedes.
Cadillac buyers are older and less affluent than buyers of BMW, Mercedes and Lexus models, say researchers at J.D. Power & Associates, a division of McGraw-Hill Cos. A J.D. Power survey found the average Cadillac buyer is 62 and earns a median household income of $129,656. That is 13 years older and $39,633 poorer than a BMW buyer and 9 years older and $44,902 less than a buyer of a Daimler AG Mercedes, J.D. Power said
GM brought in the Ritz trainers to help Cadillac create a consistent sales experience across the U.S., similar to what customers expect at Ritz-Carlton hotels, said Jeff Hargett, who is corporate director of learning and content delivery at the Ritz-Carlton Leadership Center in Chevy Chase, Md.
So far he has led nine training sessions in cities including New York, Atlanta and Los Angeles with more than 1,800 dealership owners and salespeople.
Cadillac has copied Ritz's pocket-sized “Credo” cards with a version it is handing out to all company and dealership employees. The card explains how customers should be treated. All Ritz employees are required to produce it on demand.
Ed Peper, Cadillac's general sales manager, told dealers during the June 3 presentation that spotty service from store to store has hurt sales everywhere. He played audio of employees on the phone dismissing poor service experiences or failing to explain pricing to customers who opted to get service elsewhere.
Ritz employees have $2,000 a day, per customer, that can be used to make up for a bad experience or surprise a guest with a better one, Hargett said. He suggested Cadillac dealers find similar ways to let sales and service people “wow” customers.
Cadillac service chiefs are now allowed greater flexibility to extend OnStar subscriptions, provide free maintenance or even reduce service charges for customers who are upset, said Steve Hill, GM's manager of customer care.