Improving customer experience at dealerships is a top priority for the new management team at Mercedes-Benz USA as it prepares for an onslaught of new models and considers adding an assembly plant in North America.
"We're Mercedes-Benz, the top of the luxury market, and we're not behaving like Mercedes-Benz," said Steve Cannon, 51, who took over as CEO on Jan. 1.
"If I can't make you feel special about the experience, then it is all about price," he said, "and then we're no different than any other commodity product in the car business."
Among the West Point graduate's first actions as CEO was to set up a customer experience department and training programs to help dealers raise their game. Mercedes-Benz ranked seventh -- below average among luxury brands -- in the 2012 J.D. Power and Associates Customer Service Index Study. Last year it was eighth.
"We are not in any way satisfied with that, nor are we on a trajectory where I could say we are moving towards No. 1," Cannon said.
"We need to get ready for a growth spurt that will be product driven," he said. "That is going to mean new products in segments where we do not compete."
The product blitz starts next year with the freshened E-class range and a redesign of the flagship S-class sedan.
The most important addition comes next fall when Mercedes-Benz debuts the CLA coupelike sedan as the first in a family of front-wheel-drive compact vehicles smaller than the C class. There will be more additions to the lineup in 2014 that have not been announced, Cannon said.
"All of these new vehicles in new segments will allow us to reach out to new customers and allow us to gain market share," he said.
Mercedes-Benz USA is developing a five-year sales growth plan that will be presented to the company's board of directors in October. Cannon wouldn't disclose the forecast but said the numbers will be the basis of planning. He said the board will decide whether Mercedes needs more manufacturing capacity in North America to meet the growth targets.
"I do know we are at the very edge of our global production capacity," he said. "Demand is exceeding our production capacity. There will be new plants that are up for discussion around the world -- including North America."
In the United States, BMW beat Mercedes-Benz by 2,715 units last year for the luxury sales crown. But through July, Mercedes-Benz had 159,391 sales to BMW's 147,801.
To prepare dealers, Mercedes-Benz launched the Customer One: Driven to Lead program this year and just completed the first round of training with 11,000 customer-facing dealership employees.
"We shook up their expectations," Cannon said. They learned "maybe we aren't as good as we think we are and we need to get much better. But the problem with those programs is once you have done them, they erode over time."
So Mercedes-Benz will launch a second round of dealer training in the fourth quarter. Cannon said the company has recruited "the best from across our dealer body" -- 50 dealership receptionists and sales and service employees and about 20 employees from Mercedes-Benz USA.
They met in June in Las Vegas "to choreograph the Mercedes-Benz way -- an extraordinary reception, service or sales experience," he said.
The group broke down the customer experience from how quickly a service customer is greeted at the service drive to how shoppers are handled in the showroom, Cannon said.
The results of that three-day brainstorming are being developed into a curriculum that Mercedes-Benz trainers will take to each store this year.
Mercedes also wants to tie more of the dealer margin to the higher customer satisfaction goals and is in discussions with the dealer board, Cannon said. He wouldn't disclose details or say when changes would be made.
"We want to make sure that we are rewarding an excellent customer experience," he said. "The dealer margin always reflects the No. 1 priority."
In past years, the Autohaus dealership design program was the top priority. Under a program that ended in 2010, dealers got an extra 1 percent in margin and $400 for each car sold if they renovated their facilities.
"Dealers intuitively know that taking great care of customers is what our business is all about," Cannon said.
Mercedes-Benz invited most of its dealers to headquarters in Stuttgart, Germany, last year and showed them what vehicles it will launch in the coming years.
"We are showing them some volume potential," Cannon said, "and they are starting to see the profit potential inside the Mercedes-Benz franchise -- which has always been good and at the top of the industry."
