GM Product, Not Promotions, to Win Back Lease Customers, Reuss Says

WARREN, MI – General Motors next year arguably will get its best look at how favorably its product quality, customer service and public perception has improved since bankruptcy, when thousands of lessees decide whether to purchase another car or truck from the automaker.

But for all the marketing dollars GM will spend to keep those buyers in a Cadillac, Buick, GMC or Chevrolet vehicle, the automaker will have one arrow in its quiver it has not had in a decade: new product.

“We are targeting our repeat customers, but more (important) than any other incentive or offer, we have brand-new showrooms and brand-new products,” GM North America President Mark Reuss says.

“I don’t know if there is anything more important to (a buyer) coming back than that, and the service experience,” he tells WardsAuto at the opening here of GM’s Customer Engagement Center, a call center underpinning the automaker’s 2-year-old customer service initiative. “That’s the whole game.”

While most U.S. automakers cut back on leasing during the recession and subsequent industry restructuring, GM halted the important sales practice altogether.

But since rebuilding its captive finance unit in recent years, the automaker’s lease penetration has grown to 21.3% of sales. It has posted six consecutive quarterly gains in lease penetration to move closer to the industry average of 25.5%, according to industry leasing expert Swapalease.com.

GM expects the number of owners turning in leased vehicles next year to rise to between 14,000 and 20,000 per month from about 5,000 currently.

Leasing has become one of the most important selling tools in the U.S., giving consumers a flexible alternative to buying. It’s a good for automakers because lessees are dependable shoppers who return to the market every couple of years and typically have greater satisfaction levels because they lease well-equipped vehicles and keep them for a short time.

When GM phased out Pontiac and Saturn, for example, the automaker used promotions such as juicy discounts and free oil changes to make up for a lack of new products and keep those customers.

But a new-product push has turned GM’s portfolio into the industry’s newest from the oldest, winning numerous awards and third-party endorsements. Nearly all of GM’s 4,000 U.S. dealers either have conducted or are just completing showroom upgrades, and many of those employees have undergone special customer-service training.

GM last year received higher initial-quality scores from J.D. Power than any other automaker.

The lease expirations also will occur just weeks after the U.S. government fully divested its stake in GM, which might erase a black mark against the automaker in the eyes of consumers boycotting its products on opposition to the $49.5 billion taxpayer-funded bailout of the company. The U.S. Treasury said yesterday it had sold its remaining shares in GM, a controlled exit of the automkaer that began earlier this year.

GM previously has said it expects Americans to view it more favorably after the divestiture, which results in a loss to taxpayers of about $10 billion, according to most estimates.

“I think some people will begin to consider us right away, maybe the next day,” Reuss says ahead of the Treasury's announcement.

Markets where GM sells a high mix of trucks, such as Texas, are expected to see the greatest bounce from the government’s stock sale.

“Truck buyers are more vocal than other buyers,” he says, adding that he’s looking forward to losing the “Government Motors” nickname as much as anyone.

“This has been a long, hard road with no repeat customers. I’m pretty excited, personally. A lot of people who work for the company feel that way,” he says.

A newly released report from the Center for Automotive Research in Ann Arbor, MI, says the bailout saved 1.2 million jobs and preserved $39.4 billion in personal and social insurance tax collections in 2009 and 2010.

“Those are the facts,” Reuss says of the report. “I feel good about that.”

The Customer Engagement Center will field complaints and queries from customers and use state-of-the-art technology and processes to resolve issues as quickly as possible. It consists of 300 advisers and 30 managers working telephones and Internet chat portals to listen and respond to customer needs.

The facility, located on the automaker’s suburban Detroit technical center campus, underpins GM’s quest to put the customer first and foremost in its business.

Alicia Boler-Davis, who was appointed two years ago to lead GM’s global customer service and quality, says at its core the facility represents a change in thinking at GM.

“This is not a complaint center,” she says, calling GM’s approach “very different” from call centers at rival automakers and one built using the best practices of customer-centric companies such as Disney, Ritz-Carlton hotels and Apple.

GM expects the facility will enable it to get feedback from customers to its product-development groups more quickly, so problems can be avoided in future vehicle designs. Feedback also is sent to engineers and designers on current products for potential running changes.

A unique “Listening Lounge” at the facility allows designers and engineers to directly monitor calls with customers, and office colors and layouts are lively and open to encourage positive moods and collaboration among the workers.

GM receives 5.7 million calls annually from U.S. customers and dealers, Boler-Davis says, and lessons from the Customer Engagement Center will be used as the automaker rolls out similar units globally in the coming year.

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