When things get back on track, your customers will expect a much different experience. Are you ready?
At times like these, we often look to something more fundamental to help us get back on track.
The actions taken to mitigate the spread and the impact on Canadians of the COVID-19 are severe. Most of us have never lived through a time like this and it is likely to change our lives in ways we cannot yet define. A quote from an unknown source sums up the situation quite well:
“Suddenly you realize that power, beauty and money are worthless, and can’t get you the oxygen you’re fighting for. The world continues its life and it is beautiful. It only puts humans in cages. I think it’s sending us a message saying: ‘You are not necessary. The air, earth, water and sky without you are fine. When you come back, remember that you are my guests. Not my masters.” (Author unknown)
These few months of shutdown will have a devastating impact on many businesses, including automotive dealerships. In the short term, assuming things will be somewhat back to normal sometime in mid- to late-summer, all aspects of the business will be impacted.
But what about the longer term? What impact will these few months have on the longer term period? Will consumers have changed? Nobody doubts the impact of what’s happened on the hard, measurable aspects of the business.
That being said, I believe that there will be a more subtle but equally important longer-term impact on all businesses, because the events of early 2020 will have changed us as citizens and as consumers.
There is already a strong narrative emerging about how COVID-19 does not discriminate between people on the basis of nationality, race, religion, social status, occupation and even age. We are currently experiencing a life where many of us are realizing that, while we enjoy all the toys, activities and privileges we have, we can in fact get by without some of them.
We are also realizing how much we take for granted — including the company of our friends and family members. These changes will not be completely lost on us when we come out on the other side. Yes, they will be muted as we get back to our busy, acquisitive and indulgent lives, but I’m willing to bet that there will be a lot that remains — particularly among younger consumers.
Values that drive your business will become more important to your success.
I recently came across a fascinating and very robust study about the importance of values in a business and the role they play in determining performance. I’ve never seen a study like this before and it certainly got my attention. Not just that it was well executed (it was a longitudinal study, done over six years), but it was also done among car dealers — 95 of them in the U.S. The authors took pains to understand the auto retail business and structured their study accordingly.
As just one example, all the data was collected for the same franchise — so there is no franchise bias. They used multiple waves of consistent sales and customer satisfaction data from each dealership, as well as employee engagement data from the widely accepted Denison approach to assessing corporate culture: Culture and Organizational Effectiveness, by Daniel R. Denison.
The study was titled, ‘Which comes first, organizational culture or performance? A longitudinal study of causal priority with automobile dealerships’ — from the Journal of Organizational Behavior, Anthony S. Boyce, 2015.
The authors state this as their key finding:
“The results of our study suggest that organizational culture has causal priority over performance outcomes. Overall, department culture was found to consistently predict higher subsequent levels of customer satisfaction ratings and vehicle sales, with no evidence obtained for a reciprocal performance-to-culture feedback loop.”
In plain English “causal priority” means that one aspect (in this case, culture) is a driver of another (such as customer satisfaction or sales), not the other way around. The findings were consistent for customer satisfaction across both service and sales departments and more importantly, for actual sales themselves.
In addition, the authors found that “the positive effect of culture on vehicle sales was mediated by customer satisfaction”. In other words, the level of customer satisfaction played a role in determining the size of the impact of culture on the performance outcomes, including sales.
This study was also cited in an article in Forbes in 2017 — If culture comes first, performance will follow, Dan Pontefract, Forbes, May 2017. In the article, the author also mentions another study that confirms the role of culture in organizational performance:
“More proof about the causality of culture and performance’ comes from Queen’s University Centre for Business Venturing. Using data over a ten-year period of employee engagement surveys and company results, it found the following for organizations that possessed an engaged culture:
- 65 per cent greater share-price increase
- 26 per cent less employee turnover
- 100 per cent more unsolicited employment applications
- 20 per cent less absenteeism
- 15 per cent greater employee productivity
- 30 per cent greater customer satisfaction levels
An organization’s culture is quickly judged by customers
In a recent column, I wrote about how consumers are placing a growing importance on dealing with companies that they feel reflect similar values to their own. I believe that what we’re going through now will push this trend further.
When things open up again, all of us will have experienced something we could never have imagined. It will have an impact and those businesses that understand the new mindset and recognize the need to address the subtle but important changes, will be successful.
There will be tremendous pressure on many businesses over the next few months to figure out how to manage, in a totally new and difficult environment, how to help employees cope — and essentially how to survive. The nuts and bolts of running an operation will be front and centre; worrying about culture will seem like a luxury.
But how businesses cope, how they handle their employees and how they come out the other end will both depend on and in many cases define their culture going forward.
Where a company’s culture shows most clearly is through its employees. And in this business, like many others, it’s the people who can make a difference. Consumers judge a business by the way they’re treated, by the quality of product or service, and by their perceptions of how the business is run. Much of this comes from their interactions with staff and from simple observation. The values held by the business are projected by your staff.
Unfortunately, culture is still way down on the list of priorities for many business leaders. Despite the evidence that it is critical to long-term success, I saw a recent study that put culture down in seventh place (out of eight) possible priorities — only 21 per cent identified culture as a priority, due in large part, I think, to our traditional short-term focus.
As articulated by one business leader at a conference on culture and engagement: “It takes too long. These engagement things you talked about, it takes too long to implement. I need to drive results, not worry about people’s feelings.”
Do you have a coronavirus exit strategy?
This forced slowdown may be an opportune time for companies to look inwards and make adjustments that will help with recovery. Some of the outcomes of the past few months will be:
- An accelerated adoption by consumers of digital tools in almost everything we do — including the purchase or lease of a new vehicle;
- There will be necessary changes in staffing, training, processes and customer interface protocols; and
- The changes we’ll see are not linear. We are likely witnessing a catalyst and while on the surface, there will be a lot of things familiar about the new environment. There will be a more fundamental change that may be less obvious. Consumers will be thinking differently and I believe that focusing as much on values as on the mechanics of the business, will be a differentiator — perhaps not immediately, but certainly in the longer-term.
Coming out of the current situation certainly won’t be like flipping a switch, although your customers might expect you to do that. Looking more closely at your business from the point of view of what you stand for and how that translates into a customer strategy will be a valuable exercise for the long term.
A final quote from a business leader from Boss magazine: “I don’t know any business that doesn’t say it values its customers. But to consistently deliver a positive experience to customers, a business needs a strong culture behind it.”
Core values are the foundation of a strong culture.
