The Toyota Recall, Satisfaction and Value

“Will Toyota’s Recall Severely Impact Customer Satisfaction?” reads the headline of an article appearing on QualityDigest.com by Raissa Carey. This is a good question on several levels.

First, it highlights the use of “customer satisfaction” as a driver of future purchasing. The premise is if customer satisfaction is severely damaged, future sales of Toyota products, certainly the ones involved in the recall may drop. Many companies, consultants and writers do not understand the relationship between “customer satisfaction” and performance. To understand this relationship you have to understand what customer satisfaction actually is. If you are not a customer or Toyota, can your satisfaction be lessened? If you do not own a Toyota, can you be satisfied or dissatisfied with it? Customer satisfaction relates specifically and only to actual purchasers of your brand and your customers, not potential purchasers. So, the question about harming future sales relates specifically to repurchase issues. Clearly, some will be dissatisfied while others will not.

A lot of repurchase decisions will be made in response to how the dealers handle the recall. If the dealers have the essential technical skill, know how and customer handling capability, many Toyota owners will be satisfied and may choose to repurchase. If, on the other hand, dealers are not equipped to provide the requisite service, many will be dissatisfied. Does that mean that they will not repurchase a Toyota? Not necessarily, but they may choose to repurchase a Toyota from another dealer. Or, they may find another brand of similar quality but lower price and buy that one.

Overall Toyota market share is comprised of three elements:

1. Current owners repurchasing a new Toyota

2. Current owners upgrading to a higher priced name plate

3. New customers buying Toyotas

Clearly, the first two elements of market share are more directly impacted by customer satisfaction because satisfaction cannot be judged unless the product is experienced. However, an equally important issue is how are future buyers affected? This is an issue of customer value, not satisfaction.

An evaluation of customer value results from the assessment of the interaction between the quality of the offering and the price that is being charged. It answers the “worth it” questions – is the product or service worth it. The quality component of customer value is comprised of a number of CTQs. Best in market companies understand that value and quality mean absolutely nothing unless those factors are actually based on what the market says. Among the factors that continuously emerge in value analyses of industries such as the auto industry are dealer factors. It is with the dealer that the customer interacts, not the manufacturer. Product focused companies will tend to ignore the dealer factor and instead be concerned solely with the product. This will leave many product-focused companies behind the eight ball and their recovery from a recall less complete and rapid.

I have written extensively on the difference between satisfaction and value which can be found in my new book, Best in Market: The New Imperative for U.S. Manufacturing. Satisfaction represents the conventional wisdom, while value is the new boy on the block. Value’s importance, and that which accounts for its increasing adoption as a strategic metric, is its link to market share and top line revenues that satisfaction does not have. Value has been shown to be the best leading indicator of market share. Given all of this, the headline of the article might be better phrased as “Will Toyota’s Recall Severely Impact Customer Value?”