Global architectures create economies of scale, saving auto makers millions of dollars in development costs, but the move can prove risky because what a customer wants in one part of the world, a car buyer in a different region may dislike.
Alicia Boler-Davis point person on GM quality, customer-retention push.
ROYAL OAK, MI –squeezes the throttle on its quality- and customer-experience- improvement initiative, a 2-year global effort now at the midway point, juggling a delicate balance between commonizing vehicle platforms and meeting the unique demands of car buyers in different regions.
“There is a balance,” says Alicia Boler-Davis, GM’s newly appointed vice president-global quality and U.S. customer experience.
GM says 40% of its current worldwide sales volume rides on global architectures. The auto maker would like to boost that to 60% within two years and to more than 90% by 2019. Engine architectures will go from 20 today to 10 in the next decade.
Global platforms create economies of scale, saving auto makers millions of dollars in development costs. For GM, the strategy promises to solidify its turnaround from bankruptcy and insulate its business from future economic swings.
But the move can prove risky, because what a consumer in one part of the world might want, someone in another region may dislike. And customer complaints over content choices, while not representative of a true defect, leads to poor perceived quality and less return business.
Responding to the whims of each region on a global product program also risks escalating costs and eroding profitability.
“This is where the discipline comes in. What are the items a market absolutely has to have and what are the things that would be nice to have,” Boler-Davis tells WardsAuto after updating journalists here on the GM initiative. “That’s what we zero in on. What are the ‘absolutes’ and what are the ‘nice-to-haves.’”
The greatest difference is in the powertrain, she says. Interior components are a close second.
Boler-Davis took over GM’s U.S. customer-experience responsibility in February and added global quality after the auto maker merged the two departments. She is tasked with making GM an industry leader in both areas.
Customer experience means enhancing consumer perception of GM products, as well as the purchase and ownership experience, with the aim of gaining return buyers, the auto maker says. A single percentage-point increase in customer retention translates into 25,000-unit sales and $700 million of added annual revenue.
In the U.S., GM’s customer retention averages between 52% and 53%, trailing industry-leaderat 58%. “We don’t want to be just the best. We want to go beyond that,” Boler-Davis says.
GM in recent years has ranked among the industry leaders in initial-quality improvements, according to J.D. Power & Associates. The auto maker says its warranty claims and related costs have dropped 50% in the past five years. But consumer perception continues to trail reality.
To improve the customer experience, GM has undertaken the most ambitious dealer-renovation project in its history, with 88% of its stores either having completed or in the middle of upgrades.
The auto maker also has started “mystery shopping,” having completed 2,1,00 anonymous shopping visits so far this year and sending evaluations to 2,500 GM dealers on how to improve their performance.
Additionally, call-center employees now are empowered to make decisions to solve customer complaints faster, and a new social-media team has taken on customer perception and problem-solving, conducting more than 8,800 interactions per month.
“We’re no longer waiting for people to come to us; we’re reaching out to them,” says Boler-Davis, who leads a global staff of nearly 3,000 workers.
Every GM dealership in the U.S. now employs an expert to assist customers on the new technologies in its vehicles, such as Cadillac’s CUE and Chevrolet’s MyLink infotainment systems, and 25 specialists strategically located across the nation support dealers and customers with those new technologies. The two units share their findings with the global quality team.
Boler-Davis says the new strategy already is bearing fruit. She cites one example where the owner of a new Cadillac XTS and an audio-book lover complained that when she received a telephone call through her sedan’s hands-free system, it muted the CD player but did not suspend play.
“Thanks to the weekly conference call we have with our infotainment specialists, we’re now working on a fix to address that,” she says.
The XTS case underscores the difficulty auto makers are experiencing with new technologies, such as advanced infotainment systems incorporating smartphones. The complexity has led to a drop in initial quality across the industry as consumers continue to demand greater connectivity.
Product cycles in the mobile-device industry also are shorter than automotive, often leaving auto makers to play catch-up.
Boler-Davis admits it’s difficult to keep pace with the mobile-device industry, which includes smartphones and tablets, and maintain quality. So this year, GM formed a unit with its infotainment group to research what lies ahead in the field and keep the auto maker in front of the technology changes. The same group studies how people interact with the systems to improve ease-of-use on future products.
Keeping pace with the mobile-device world will lead to a day when vehicle infotainment systems will require updates, just like a desktop computer, Boler-Davis says. GM is wrestling with how often it should call owners back to dealers for those updates before it can perform the task remotely.
Perhaps the midterm solution is mailing out updates in a USB stick, she offers. “We know (the infotainment) we put in our vehicles now will (require) updates. We know it is not a static system. There will be upgrades as different technologies become available. The customer’s expectations have changed.”
Infotainment-technology developments also will “absolutely” lead to more running changes in product introductions and more midcycle enhancements, Boler-Davis adds.
GM now solicits customer input earlier in the vehicle-design and development process to incorporate that feedback into production sooner and with higher quality. The auto maker also has begun broader and more effective use of tools to enhance what it calls Human Vehicle Integration, which includes infotainment use, and drivability.
One role of the HVI tools is to take the subjectivity out of determining a vehicle’s drivability, Boler-Davis says. Next to infotainment, most customer complaints center on drivability issues such as shift quality.
“We’re not the only ones using (HVI tools), but we think we’re using them better than anyone else,” she says.
Additionally, GM has set new quality benchmarks for its stamping, powertrain and assembly plants; expanded a strategic sourcing initiative to increase collaboration with the best suppliers on complex components, affecting up to 60 systems across seven architectures and 20 powertrains; and begun validating new engineering and manufacturing processes earlier to ensure glitch-free vehicle launches.
The auto maker also has implemented the latest engineering tools and validation processes to ensure long-term reliability and durability, because more buyers today want to own their vehicles a couple years longer than the warranty might cover, Boler-Davis says.
A new test program is looking to rack up 1.5 million miles (2.4 million km) on 20 vehicles to iron out issues that might develop at 150,000 miles (241,395 km), before the model goes into production.
“These are critical months for customer retention, she says. “Wear-out failures can tarnish an otherwise valuable ownership experience.”
Boler-Davis was appointed to her current role after serving as plant manager of GM’s Orion Twp., MI, assembly plant, where she worked with the United Auto Workers union to introduce a 2-tier wage structure, making production of the Chevrolet Sonic and Buick Verano small cars at the facility profitable.
She reports to both GM North America President Mark Reuss and product-development chief Mary Barra.
“The Orion experience was a highlight for my career, and I hope this one surpasses it,” Boler-Davis says referring to her new job. “Working with the UAW on the common goal of building a small car here in the U.S. is a great example of what we can do when we focus on what we have in common.
“I believe we’ll have a similar result (with the quality initiative). It is not easy. It is about changing behavior and convincing people it is required, and that there will be a positive impact to the employees personally.”
Boler-Davis admits the clock is ticking. “But we have great product,” she says, pointing to a vehicle portfolio that will be 70% new by the end of 2013. “We’re going to take advantage of that.”