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Customer first is key to VW’s future growth

Volkswagen will soon roll out a significantly broader product portfolio in a bid to strengthen its position in the UK new car market.

But UK managing director Paul Willis is convinced that an all-out assault on customer satisfaction will play the leading role in steering the German group to 230,000 annual registrations over the next three years.

“Our model introductions will win us incremental business, but keeping the customer happy is central to our plan for growth. We’ve come a long way in recent years and our 194,000 total units for this year will be a tremendous performance – yet we still have to do better,” says Willis.

‘Doing better’ is the driving force behind what Willis calls Customer First, a major initiative to improve VW’s current third ranking in the sales charts.

The major thrust of Customer First is due in January when the next version of the company website is launched, along with a fresh focus on driving down repeat repairs, revised point-of-sale material and a new margin structure with added emphasis on customer satisfaction.

“We spent four months benchmarking every automotive site. We’ve taken the best features and put them together to create what I believe is the best site of its type. We’ve made it more engaging and more involved – and features like a spray can to colour the car you choose make it a lot more fun to use,” he says.

The website also allows customers to rate dealers for performance. Willis accepts that this courts controversy. How did it come about?

“I looked at the ebay website and found you could buy the same item in 15 different conditions and at 15 different prices from 15 different people who are graded based on what customers think,” he says.

“As a result, we thought we would allow our customers to rate our dealers on the web. For the last 20 years, we have been trying to convince everyone about customer satisfaction, but telling retailers what to do leads to difficult discussions and I respect that – so now we have cut ourselves out of the way we measure it.

“We’re asking people what they think and it will all happen without me seeing it, which I think is really important because the rating system is all about retailers wanting to be good and serving their customers. Those who do, have a higher loyalty rate, higher CS and higher profitability.”

Buyers will be contacted by phone, letter or email and asked to grade their dealer from one to five. The results will be fed back to the dealer sites in less than 72 hours.

Willis insists that clear measurement of loyalty and repeat business is the foundation of the world-class retail network he is seeking.

#AM_ART_SPLIT# “Our research shows that if a car is serviced in the Volkswagen network, loyalty is likely to increase by up to 18%. Loyalty is driven by product, finance plans and how you’re treated and there’s a clear correlation between good service and repeat purchase.

“Volkswagen is second to GM in loyalty and we need to be the best,” he says.

Not surprisingly, the new margin structure is based on a sliding scale accounting for performance and CS. According to Willis, the move to a ratings system fills some retailers with horror while others regard it as a “fantastic” development.

“The system will go live in May. I’m not doing this to lose retailers – I’m doing it in order to put Volkswagen at a different level,” he says.

“Nowadays, the quality of vehicles tends not to vary much between brands. What makes the difference is how people are treated, which is a cultural thing and harder to improve than vehicle quality.

“Trying to re-engineer how we treat people is really important. There will be more money for CS and better performing retailers will earn more.

“The difference between good and bad could be up to one per cent, which is considerable. We don’t want to give our dealers a problem – that’s not the idea.

“We want to link them to the best website in the world. By 2011, we will hit 230,000 volume and we need a world-class retail network to handle it. I’m spending £1m next year alone on the new team to cut down on repeat repair.

“The strategy of the network will be centred around the customer,” Willis says.

#AM_ART_SPLIT# Move to keep improved satisfaction ratings

Volkswagen may have put customer satisfaction at the top of its agenda, but dealer satisfaction remains a key factor.

Next month, the move to capture more business among its retail network will get under way properly with a low-price servicing plan promotion on high-volume small and compact cars.

Embracing the Fox, Polo, Golf and Jetta ranges, the three-year/ 30,000-mile deal will cost just £200.

Meantime, VW is making efforts to put the brand on more consumers’ shopping lists. A mere 1,500 deliveries of Polo BlueMotion models are being backed by a £4 million spend to promote fuel-efficient engine technology and an even bigger campaign is planned for next year to underpin additional environmentally-friendly cars.

The Sewells Dealer Attitude Survey 2007, published last month, shows the VW franchise has made a massive improvement in retailers’ opinion. It is now ranked the 12th most satisfying dealer-manufacturer relationship of the 34 brands surveyed, a rise of 10 places since 2006.

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