Mercedes-Benz USA CEO Steve Cannon says customer service will be "the next major battlefield for all luxury manufacturers" and will be Cannon's main priority over the next five years.
"That is going to be my legacy," he said.
Cannon said products from luxury-car makers "keep getting better, and the game is going to be fought and won with customer experience."
He has already tied a new dealer margin program to customer satisfaction.
Cannon, 52, was appointed CEO in January 2012 after serving as vice president of marketing. He was interviewed at Mercedes-Benz USA headquarters in Montvale, N.J., last month by Staff Reporter Diana T. Kurylko.
Q: How is 2013 shaping up?
A: We are coming off a record first quarter and ... we haven't launched any of our new products: E class, S class, followed by CLA. They are all volume products.
We are seeing sustained momentum in the automobile industry supported by improving consumer sentiment, a record stock market and the recovering housing market. We think 2013 will be record-setting year for us.
With the restyled E-class coupe and sedan, redesigned S-class sedan -- due in September -- and all-new CLA front-wheel-drive sedan -- also due in September -- will you be the No. 1 luxury brand in the United States this year?
If we naturally get to No. 1, I will celebrate that accomplishment with dealers and our team -- but we will not force the issue.
This is a historic year for us. We are at the beginning of an amazing product offensive that will encompass 30 products in seven years. Nineteen are replacements, and 11 are all-new, which averages to a new launch every three months. There is a real focus on interior design that you will see with our brand over the next several years. It will really kick off with the S class and follow with the C class. This level of commitment to the interior we believe will set a benchmark in the segment.
CLA marketing began early this year with a bang -- a Super Bowl commercial that created a lot of buzz. How will you continue the momentum for a car that doesn't go on sale until September?
We have partnered with a young filmmaker, Casey Neistat. Most of what you will see is a real focus on social media to keep the conversation alive. Running television so far in advance is hard to justify.
We understand that if we want to be relevant with younger buyers we have to connect in a language and a style that is appropriate to them. We are going and meeting them more on their own turf.
What kind of work will Neistat do for the CLA?
[He is a] Gen Y supercreative kid who has a point of view. It's fun, and it's engaging and a little bit surprising for Mercedes-Benz.
For any of you out there thinking of Mercedes-Benz as a stodgy Teutonic brand, this will push hard on any of those perceptions. If there are still kids out there that think Mercedes-Benz is "the brand of my parents," this will push hard against it as well.
We know we will probably have to get a bit out of our comfort zone. But we would be crazy to partner with someone young and creative and ask him to do it in the traditional Mercedes-Benz way.
How do you see demand for the CLA?
Anecdotally, we have the early adopters. We are not concerned about driving an order bank because the volume will be limited in the first year.
We are going to be launching in mid-September. Younger buyers aren't order-bank people. They will do their research, show up at the dealership and make a decision when it is time for them to buy. Most will buy off the lot.
What new benchmarks will you set in the luxury-sedan segment with the next S class?
When we launch a new generation, there are proof points that show we have raised the standard. Starting with the interior space, you will see the combination of form and function that will deliver a cockpit experience that we have never been able to deliver before.
Can you elaborate?
It starts with the instrument panel that uses the available space in a different way. We have one contiguous space that is not compartmentalized that creates a high-tech luxury impression -- very modern and clean and Apple-like.
The center console will have an integrated touch pad on top of the controller to move seamlessly through menus and to pinch, grab and enlarge like you would with the iPhone and iPad -- features people are used to with their smartphones and other devices.
You just showed the front-wheel-drive GLA crossover at the Shanghai auto show. How will the GLA fit into your range?
It is the CLA's sibling counterpart in the sporty crossover segment. They will be our two new entry points.
Will the front-wheel-drive B-class Electric Drive that you unveiled at this year's New York auto show be the only Mercedes-Benz full electric vehicle?
It will be our first and only full electric. The only other full electric is the SLS, and we are not bringing that car to the United States because the market for $750,000 electric cars is relatively small at this point. What we love about the B-class electric is that there are no trade-offs; it has a full trunk and a 115-mile range and a price point that we think will make a very compelling package as a second car.
What kind of price can we expect?
We will get that out pretty soon. It will be more expensive than the CLA [which is $30,825, including shipping].
There is buzz that Mercedes will get a crossover smaller than the GLA from your joint venture with Renault.
It is not on our radar.
You instituted a new dealer margin program in 2013. What results did you see in the first quarter?
It kicked in fully on April 1. Because it was new and because we converted to a new CSI/SSI measurement tool, we gave dealers a bye for the first quarter so they could get used to the metrics and the new measurements.
What are you doing to improve Mercedes-Benz customer service?
We are at the very beginning of that process, and we understand that everyone else is focused on this space. We improved slightly in our overall score, but a couple competitors passed us ... in the latest CSI measurements. The message to us and our dealers is everyone is focusing on this and if we want to raise our game we have to do more and create a trajectory that is even steeper than what we had anticipated. It was a great wake-up call for me.
The next major battlefield for all luxury manufacturers -- and they are all honing in on it -- is CSI and customer service. Our products keep getting better, and the game is going to be fought and won with customer experience. The dealers know that we will have to create improvement. Money is on the line.
How much money has Mercedes-Benz put into the margin program to pay dealers who meet the new requirements?
The stakes are high -- $60 million is on the line. It is a net new payment focused on sales satisfaction and customer satisfaction. Dealers know we have put our money where our mouth is.
You became CEO 16 months ago. You're only the second American to run Mercedes-Benz USA. What's your game plan five years out?
I am 100 percent serious about this customer-experience program. That is going to be my legacy. I am taking on what seems to be our biggest challenge and finding a way to collaborate with our dealers and leverage our resources to propel this brand where it belongs -- to create a customer experience that fits with our tag line "The Best or Nothing."
How long will it take?
I have said to the dealers this is a five-year plan to get as much cultural change as will be required to put our brand out there with the Four Seasons, the Ritz-Carlton and the Mandarin Oriental -- some of the best purveyors of customer experience.
You've benchmarked those companies?
Sure we have. We put a video together for our next chapter of dealer training. It will start with a video that benchmarks some of the best, and it will tell you where we are trying to go.
If I can accomplish this in five years, I will be pretty proud. That, along with what we have in the product pipeline, is what will differentiate and propel this brand to the place where people will say, "That is the most dynamic luxury brand in the business -- bar none." That is where we want to be.
Why are you studying customer-service exemplars outside the auto industry, such as the hoteliers Four Seasons, Ritz-Carlton and Mandarin Oriental?
The bar is too low in the car business.
