A Customer Service Story (Part II)

Thirteen years ago I bought my first electric car from Steven Cain, now the CEO of Coles in Australia, which was the tiny little REVA G-Wiz, made in India. It was one of the easiest purchases I ever made – only for sale online with virtually no options to choose from, it was delivered to my door with no fuss and I paid for it with my credit card. Two batteries later, it still goes – albeit not very fast – but last November I decided it was time for a new car. Time for an update in technology, heated seats, a digital radio, no more filling it up with distilled water and a battery that lasts for at least 50 miles as I am in a constant panic that I am going to be stranded in the G-Wiz, unable to get over Primrose Hill.

The decision made, I ubered over to Colindale on a cold Saturday morning. Arriving at the Smart car dealership, I had no idea that I should have called and made an appointment. They begrudgingly assigned me to Kirstin, who turned out to be a fabulous person and an excellent saleswoman. After a quick jaunt around the block in their electric smartfortwo, I chose my extras from the menu, paid my deposit, and left a little disappointed because I had to get into the queue and wait until March 2018 to take delivery.

The Smart EQ fortwo

In February of this year, Kirstin called to say there was a delay and the car would only be here in June and then finally a call to say July. On Friday, 13th  July, off I set  to pick up my car from the dealership, where I found three men were pushing it along the forecourt.  I was told that the service team had not charged the battery and that I should come back on the Monday. By Monday I had a call to say that actually the car was faulty, they were waiting for a part, and that it would be 15 days for the part to come. Kirstin told me that she could not be sure as she had no way of speaking to the parts department in Germany.  Three weeks later, and still not a word.

As someone used to retail customer service, I was taken aback not only by the seeming lack of clarity but also a lack of ownership around who was going to solve the problem or communicate with me as the customer. When I sought help from Smart/Mercedes UK – the company with whom I thought I was doing business – centrally, I was even less impressed. Somewhat impersonally, I was assigned a customer number, promised that ‘a case file’ would be opened for me and sent a fairly meaningless customer service charter – all I wanted, was to know what was happening! It was this experience that reminded me of Alan Leighton’s story about customer service and the car industry, as I recounted in my column a couple of weeks ago.

“The era of centralized, command-and-control, extraction-resource-based energy sources… will end because these energy sources, the business models they employ, and the products that sustain them will be disrupted by superior technologies, product architectures, and business models” – Tony Seba, University of Stanford

This got me wanting to understand the car industry better and I now realise it’s much more complicated than I thought. The supply chains really are complex, and speaking to the former CEO of one of the world’s largest car dealership networks and then an automotive analyst for a major bank, both confirmed that customer service as we know it in retail just doesn’t exist in this industry.

A large part of the problem is car manufacturers don’t have stores, they have dealerships – almost all of which are franchises of separate businesses, rather than manufacturer-owned. The first focus of a dealership is sales – not customer service or brand experience. Employees wear the logos of the car brands we associate them with, but they don’t work really work for the brand. Their pay is predominantly commission-led and the people who do best are dealmakers.

As customers, the dealership is typically the main point at which we think we interact with car manufacturers – but rather than being the embodiment of the brand, the reality is actually a disconnect between the customer and manufacturer. A disconnect that is only exaggerated when it comes to the after sales ‘service’, where there is not only a point of remove between the customer and the manufacturer, but also between the service and sales department of the dealership itself.

My sources explained to me that car manufacturers are led first and foremost by research and development. Testament to that fact, the top 5 brands have R&D budgets topping $7bn, while just this week it was announced that the long-standing CEO of Mercedes’ parent company, Daimler will be succeeded by current R&D chief, Ola Kaellenius, next year.

Ola Kaellenius, the current R&D chief of Daimler and its next CEO

Especially now, it’s easy to see why R&D is so important. We’re witnessing a period of profound change in the industry, according to Tony Seba, an automotive expert at Stanford University: “The Stone Age did not end because we ran out of rocks. It ended because a disruptive technology ushered in the Bronze Age. The era of centralized, command-and-control, extraction-resource-based energy sources (oil, gas, coal and nuclear) will not end because we run out of petroleum, natural gas, coal, or uranium. It will end because these energy sources, the business models they employ, and the products that sustain them will be disrupted by superior technologies, product architectures, and business models.”

Tony Seba giving lecture in Seoul
Stanford University automotive industry expert Tony Seba

“This is a technology-based disruption reminiscent of how the cell phone, Internet, and personal computer swept away industries such as landline telephony, publishing, and mainframe computers. Just like those technology disruptions flipped the architecture of information and brought abundant, cheap and participatory information, the clean disruption will flip the architecture of energy and bring abundant, cheap and participatory energy. Just like those previous technology disruptions, the clean disruption is inevitable and it will be swift.”

Audi e-tron launch
The new Audi e-tron, the first all-electric car from the Ingolstadt carmaker revealed earlier this month

But these changes are not limited to the technical products themselves; they’re coming at the industry from all angles. Take the way we buy cars for example: on the one hand there are businesses like Balderton Capital-backed Carwow, where you can spec up the car you want on their easy-to-use online platform and wait for 5 dealers to come back to you with their best price. On the other hand, various manufacturers from Volvo and BMW to Porsche are exploring ways to build on the popularity of car financing by offering bundled subscriptions that include the car, maintenance and servicing, insurance and so on, all for a set monthly price.

Carwow car and founders
Carwow founders Alexandra Margolis, David Santoro and James Hind

After-sales support is also changing. With the complex computing and fewer moving parts on-board, much of the servicing of a Tesla can be completed through software and firmware updates ‘over the air’ – whether that’s for patches and bug fixes or even for upgrading the software and bringing in new features. Should a problem require the human touch, they can even despatch someone to your car, rather than the other way around.

All in all, we’re in for an exciting time in the years ahead. As the gap between car manufacturers and the customer continues to be eroded from multiple angles, I’m sure we’ll see an increase in the importance of customer service in the car industry. As for my own story, in the end the problems were probably a blessing in disguise. While I was waiting for my car to be fixed, Smart briefly loaned me their electric four-seat model and it made me realise that a slightly bigger car would be more practical – I swapped my order and the new car is now due on the 18th November 2018…