As a result, several reputed think tanks ad research houses, including Morgan Stanley, NCAER, CRISIL and ICRA are almost unanimous in projecting sustained growth for the Indian Automobile industry upto the end of this decade.
Managing Growth
In preparation for this scenario, one of the important Tasks will be to manage growth. This will involve investments in facilities, scaling up systems and developing people so that the organization can anticipate opportunity and harvest it.
In this regard, I am very happy to note that the automobile dealer community, represented by FADA, is taking initiatives like a systems audit of select dealerships with a view to improve operations and enhance viability. Measures to cut costs, improve efficiencies and streamline operating systems will prove useful in managing growth and maximizing the returns from it.
In my view, dealerships are increasingly appreciating the relationship between customer satisfaction and growth in business. This is a very positive development. Raising satisfaction levels does involve initial investment in areas like manpower, their training and development, Customer Relationship Management systems and indeed in upgrading the quality of dealer facilities.
Customer Satisfaction as Good Business
The returns from these investments are not immediately evident. But there is a sound reason for placing your bets on customer satisfaction. Research has shown that the cost of acquiring a new customer is much higher than the cost of servicing an existing one. Through ensuring high levels of customer satisfaction, we are able to grow our business around the existing customer.
Besides, we all know that the purchase decision in automobiles in driven by positive references or "word-of-mouth'. Understandably, people trust the opinion of an existing friend and relative who is an existing owner rather than a company advertisement before deciding to purchase a vehicle, In this context, the returns from customer satisfaction are enormous.
That such a behaviour pattern exists is reinforced by J D Power's latest study of Sales Satisfaction among car owners. The study found that "customers who are delighted with their sales experience at the dealership say they will recommend their dealer to at least three other people. On the other hand, a highly dissatisfied customer will tell at least two other people not to shop at that dealership."
Win Win
At Maruti, one of our experiences has been that looking after all the car-related needs of the customer helps to enhance satisfaction. The mere fact that a customer has the facility of obtaining finance, insurance, extended warranty and the opportunity to dispose of the existing car under the same roof is proving to be a source of delight for the customer. It is, of course, also contributing to improved dealer viability. The dealer community can consider whether this model works equally well across automobiles companies.
There is occasionally a perception, perhaps even among manufacturers, that dealerships and manufacturers can grow only at the expense of each other. In other words, it is a Zero Sum game. This is a misconception with the potential to cause enormous harm. If we are to indeed make the customer the focus of our business activity, then the manufacturer and dealer have a collaborate role. They have to work in tandem to beat the expectations of the customer where alone lies value for business. |
Jagdish
Khattar, President, SIAM & Managing Director, Maruti Udyog Ltd