TOYOTA Case : Talk Session Report

There is nothing as educational and stimulating as raw feedback from our client company.

We invited Mr. Kimura in charge of promoting reform at Toyota dealerships to our Customer Value Strategy Summit 2015 to give us some details and opinions about what he does. The words of "happy" and "smiles" appeared more frequently than "sales" and "profit" in his talk, which reminded us once again of the power of the global corporation of Toyota.

Aiming for "a system to make everyone involved with Toyota happy."

Mr. Kimura, the head of Toyota Dealership Sales Department, who is responsible for providing policies and backup to Toyota vehicle dealerships nationwide, is aiming to realize "a system to make everyone involved with Toyota happy" in the continually shrinking domestic automobile market.

He is advocating, specifically, for a changeover from the business model specializing in new car sales to the business model focusing on "lifetime customer value" including aftermarkets and used vehicles. He is engaged in such activities as the introduction of NPS at dealerships as an indicator to measure customer value.

We asked Mr. Kimura for his frank opinions on what it means to be customer-centric in operating business in the shrinking market, and on whether customer-centricity can coexist with the pursuit of sales.

From left, beBit CEO Endo, GM of Toyota Mr. Kimura, and beBit evangelist Miyasaka.

Shrinking domestic market requiring a changeover from "a lot" to "continuous"

Mr. Miyasaka (beBit Evangelist):
"Mr. Kimura, we've heard that you have a concept from "a lot" to "continuous" as Toyota dealerships' direction for the future. Can you please tell us why you have this kind of concept?"

Mr. Kimura (the Head of Toyota Dealership Sales Department):
"Toyota is a manufacturer, so making lots and selling lots is a common practice. I myself thought this too. But around 15 years ago, I was told by one of my superiors, "your job is not to sell lots, but to make everyone involved with Toyota happy." The sales campaigns I come up with would give an impact on whether people at dealerships would be happy or not. Ever since then, I have been engaged in my work with the theme of 'making everyone involved with Toyota, including people at dealerships, happy.' "

"But, the number of new vehicles sold is half what it was during the bubble days. As new cars were sold in great numbers, the number of dealerships increased and one day you might become the head of a dealership yourself. If that is the definition of happiness at dealership, they won't become happier in our current age. When I was pondering and debating over what to do, a university professor pointed it out to me, "there is something wrong with the idea that we wouldn't become happy if the number would not increase."

"For example, if you think about local restaurants in town, there are two kinds of restaurants, small scale ones that focus on the quality of taste and big chain ones that run restaurant business by expanding their stores. Of course, those people who operate the former type and don't chase after a number game do have a hope and a dream. This means one can still have a dream even when the market is shrinking."

"We actually ask people in the frontline when they feel happy at work, it is apparently when they see their customers' smile. That's where the idea of a shift from the "a lot" of chasing new car sales figures to the "continuous" of deepening a relationship with each individual customer."

Mr. Shunichi Kimura
General Manager
Toyota Channel Operations Div.

Domestic businesses in Japan as an opportunity for problem-solving to lead the world

Mr. Miyasaka:
"What is the difference between a shift from "a lot" to "continuous" to make everybody happy and 'giving up on "a lot" because it no longer sells and going after "continuous" as no options'?

Mr. Kimura:
"Japan is a super-mature market for the auto business. The US and European markets aren't expanding, but they are not shrinking either. Japan is the only country that is directly facing the issue of how to preserve business under the market decline."

"Eventually, the other countries of the world will find themselves facing the same issue. I believe that it is the role of our department, responsible for car sales in Japan, that steps ahead solving issues and accumulates knowledge."

Aiming not for "not dissatisfied" but for "happiest moments" for customers

Mr. Miyasaka:
"But, I myself am the head of Sales Department for my company, and in the sales world, selling "a lot" is an objective, which gives a motivation to salespersons. How are you transforming your company from "a lot" to "continuous"?"

Mr. Kimura:
"I became the head of Toyota's Dealership Sales Department last year. It was the first time for me to have direct meetings with all the dealerships nationwide. What I discovered there was that the dealerships that were selling a lot were in good spirits, whereas the dealerships that were saying that their relationships with customers were more important than making sales weren't in such good spirits at all. Until that point in time, I had been aiming for "continuous" on the basis of the assumption that customers should naturally buy if they are satisfied. It made me think that perhaps the reality might be different."

"So I thought about it again from the customer's viewpoint. And I realized that the happiest moment for the customer is of course when they get to ride in a new car. Even if there is a long-standing relationship in place, not so many customers would feel "happy" simply because their car is undergoing a vehicle inspection there. A customer trading in his/her car is a happy moment - for both the dealership and the customer."

"In short, what is important is how you get the customer to trade in his/her car and increase sales as a result - within the context of maintaining the "continuous" relationship. It is a question of how to generate and regenerate the customer's happiness in the system, happiness-metabolism."

Measurable indicator of happiness-metabolism, not satisfaction but NPS

Mr. Kimura:
"As the market shrinks and cars sell less, more and more dealerships say they are fine as long as customers are satisfied and come in for their vehicle inspections even if they don't buy cars. However, as there is no profit increase there at dealership, business will gradually get worse and worse, and their spirits will go down."

"In other words, the dealerships with their focus on the "continuous" were thinking that if they tried too hard to make sales to customers, they might harm their relationships with them or make them uncomfortable. It was difficult for them to make any proposals. Yet, if that is the case, you can't create any happiness-metabolism."

"This year, we introduced NPS at some of the dealerships to conduct customer loyalty analysis. As a result, we found that "making proper proposals to customers" was an important factor in lifting NPS. The data showed that no happiness-metabolism takes place and NPS will not increase if no proposals are made. Through this analysis, we were able to sort it out why just being "continuous" by itself is not enough."

"We have conducted customer satisfaction surveys for a long time now, but we could not make this kind of impact just by following the results of customer satisfactions/dissatisfactions. These convincing results of the analysis earned our trust in NPS, and we are planning to extend the NPS program nationwide next year."

"Continuous" = customer purchasing because of love and appreciation of cars

Mr. Kimura:
"As an automobile manufacturer, we pursue manufacturing good cars. We make cars this way, so we shouldn't sell them by saying, "I'll give you a discount if you buy today." Instead, we should sell by explaining how amazing and awesome our car is."

"When you chase after "a lot," you tend to focus too much on selling a car than explaining your customer how good it is. For example, a regenerative brake used in hybrid vehicles creates a strange noise when you push down on the brake pedal. It will make a huge difference in the customer's understanding whether a salesman would say, "Don't worry, it's not a malfunction" or when he/she would explain, "That's the sound of this kind of car making use of the thermal energy that has been wasted, when a customer is on a test drive.

"We want to create a flow where we make customers understand the cars, they grow to love them, and they purchase them as a result. We believe that that is the "continuous" that we should be aiming for."

"Yes, we are closing our yearly sales targets this month. To be honest, we want to sell as many as we could. In this regard, we are not consistent in this regard (audience laughter). Once we set up our target, we achieve it; otherwise, our energy levels will go down. If it is achievable with a little bit more efforts, we'd better push it. We achieve our targets once we set up, which creates vivid energy in the group, leading to the pursuit of our ideal at the end."

Have a vision, never give up and cherish every day

Mr. Miyasaka:
"In closing, would you give a message to us all here, who are in the same shoes of pursing customer-centricity? "

Mr. Kimura:
"I am afraid I don't have much to say, but at least what I could say is…to have a vision, never give up and cherish every day of your lives."

"Also, I try to meet as many people as I could. Even if we have a vision, there is a limitation on what we can do by ourselves. If we talk about our vision when we meet people, we will get closer to what we want to accomplish, by being given some information that we didn't have. I try to talk about this kind of having-a-vision story in my interactions with auto dealers."

After the talk session

Mr. Kimura is the man who gives sincere consideration to how to create a system to make everyone involved with his company happy in the shrinking Japanese market. He is also the man who implements his ideas.

After his talk, we received a lot of feedback telling us that the "'a lot' and 'continuous' will not be against each other" and "creating happiness-metabolism for your customers" left an impression on participants. It may well be a case of the discovery to other companies that an excessive pursuit of customer satisfaction may be making them difficult to establish a closer relationship with customers.