TIME: Almanac 1995

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<text id=94TT0981> <title> Jul. 25, 1994: Commerce:Nice Guys Finish First? </title> <history> TIME--The Weekly Newsmagazine--1994 Jul. 25, 1994 The Strange New World of the Internet </history> <article> <source>Time Magazine</source> <hdr> COMMERCE, Page 48 Nice Guys Finish First? </hdr> <body> By Paul Gray--Reported by William McWhirter/Detroit Tom Gill, 38, owns an Oldsmobile dealership in Columbus, Ohio, that in the past year has moved $30 million worth of Achievas and '95 Auroras and whatnots out of its showroom and off the lot. Plenty of people bought new and used cars from this man, and he talks openly about how he got them to do so: "I never let a customer walk in my life. I had just one goal in life: to be the No. 1 volume dealer. What could I do to close that customer on the showroom floor now? Our approach was to deliver them now, sell them now, control the deal now. We didn't have that much trust in the customer. The belief was that he would sell us out down the street for $50." Wait a minute. Tom Gill is still trying to sell Oldsmobiles in Columbus. Why is he describing his methods in the past tense? Listening to Don Flow, 39, who owns nine import, Saturn and GM dealerships, mainly in the Southeast, raises the same question. "The old game," he says, "was let the buyers beware, crush 'em if you can, make as much as you could off everybody. Better to make a kill now than a friend for life. We basically also made our customers turn into s.o.b.s. If a really nice person walked in, they were a lay-down in front of us. The industry had a lot of fun with those techniques." Old game? Had fun? That's what car dealers like Gill and Flow are saying these days, and the valedictory chorus is swelling. Of the 178,000 people who peddle new automobiles in the U.S., most form the brash bottom line between the products of Detroit's Big Three and potential customers. A growing number among these vendors of domestic wares are claiming to have found a kinder, more humane way to do their job. This new breed speaks, often in near evangelical terms, of basic values and touchy-feely sympathies that have traditionally been anathema in the cutthroat race to roll new cars the hell off the inventories as fast as possible. Says Gill: "We've found it's O.K. to be fair to the customer." Flow, whose dealerships last year handled $250 million in sales, insists, "Our focus is on creating friends rather than making deals." Hearing such sentiments, veteran U.S. car buyers might justifiably pat the pockets where they hope their wallets still are and maybe run a pre-emptive check on their dentures, just to make sure. Are automobile dealers really deciding to treat customers like decent, autonomous human beings, or is this just another ruse--call it the integrity scam--to lure suckers back into the showrooms? Whatever the motives, a lot of people in the industry hope that being nicer to the purchasing public will prove it is possible to do well by doing good. There is plenty of room for improvement. U.S. automakers have begun to compete more successfully against foreign imports; American cars last year accounted for 79% of domestic sales, as opposed to 69% in 1987, the year of the industry's worst performance against imports. A prime reason for this recovery is better products. Since J.D. Power & Associates, the auto industry's leading research firm, began tracking consumer satisfaction eight years ago, customers' ratings of the quality of U.S. cars have gone up 34%. On the other hand, satisfaction with how those cars were sold and serviced rose only 22%. This discrepancy worries Big Three officials, who want customers to be so happy that they will keep coming back. Sour sales experiences work against that goal. "One of the 10 least pleasurable things you can do is go out and buy a car," says Ford vice president Tom Wagner, who heads the automaker's customer-satisfaction operations. Chrysler sales vice president Tom Pappert agrees: "We have got to get away from intimidation. Even for people who don't mind shopping and bargain hunting, it's the distrust factor that causes the heartburn." Each of the Big Three has begun taking steps to try to improve its dealers' sales-floor behavior. This spring Ford sent out a list of directions on how to treat the buying public, including such steps as "customers courteously acknowledged within two minutes of arrival," "test drive offered to all customers," and "advisory relationship established by knowledgeable sales consultant who listens to customers, identifies needs and ensures needs are met." Chrysler offers financial incentives; to earn the highest $300 factory payment on each unit, a Chrysler dealer must rate in the 95th percentile or better on Chrysler's internal customer-satisfaction index. General Motors has initiated a ground-breaking project in California for the training--or retraining--of its sales force; the company also gathers some of its most important dealers for round-table discussions and pep talks, usually led by one of their own who, like Don Flow, has seen the light. For if honesty is to break out across U.S. showrooms, it will have to do so as a grass-roots movement. There is only so much muscle the Big Three can apply to change its dealers' ways. To own one of the 23,000 dealerships in the U.S. is to be a member of a clannish, well-to-do and often fiercely independent society. Dealerships are regularly traded or sold among friends or in-laws; 40% of them at present were inherited from a family member. Oldsmobile general manager John Rock, who is the son of a Chevrolet dealer and whose wife is the daughter of a Buick dealer, notes half jokingly, "Most of our dealers seem to come from the same sperm bank." Some see signs of change within this tight circle. Mark Rikess, 45, once ran his family Chevrolet dealerships in Minnesota and now heads a Los Angeles consulting firm that advises other dealers on ways to improve their selling practices. He has noticed that his clients tend to fall into the same pattern: second- or third-generation owners, college educated, between 35 and 45. "They want to change," Rikess says, "not because they are going to see a financial advantage today. They just don't want to run the business the way that Daddy ran it." If this trend continues, somebody will have to tell the salespeople, the ones who deal with customers face-to-face. To help this process along, Oldsmobile has opened a $25 million "Vision Center" in a nondescript industrial park outside Detroit. Inside, the facility resembles a movie sound stage, with flowing spaces and a spiffy, glass-walled showroom of the future. Large framed printed slogans (OLDSMOBILE'S FUTURE IS IN THE HANDS OF OUR CUSTOMERS) hang on the walls. By the end of the year, more than half of the 15,000-member Olds sales force will have spent a mandatory and intensive week of 12-hour daily classes here, rooming and boarding together and drilling on such subjects as "building T.R.U.S.T. with warp speed." One of their instructors, or "facilitators" in Vision Center terminology, is Ken Winkelman, 30, who has been borrowed by Oldsmobile from a Saturn dealership in Orlando, Florida. Winkelman admits that most of his recruits are not, at the outset, happy campers: "The general feeling among people who arrive is that they don't want to be here." Accordingly, he divides his captive audience into "prisoners, vacationers and learners." Under Winkelman's enthusiastic guidance, most of them soon turn into happy collaborators. During a recent class, he asked his pupils to list some of the bad old tricks of their trade. They eagerly volunteered, coming up with: Lowballing. Setting a price ridiculously below dealer costs, knowing that a customer will not find anything cheaper elsewhere, and then "uploading" the package with piffles when the buyer returns. Double Dipping. Billing again for services such as shipping and lot charges that are already included in the sticker price. Grounding. Making it almost impossible for buyers to leave the lot, employing ruses such as fictitious waits for sales managers to arrive to dicker or the temporary "loss" of vital car keys. Flipping/Turning Over. Rotating customers from one sales representative to another in order to confuse them and break down their resistance. As this litany grows, so does the excitement among class members. The atmosphere begins to resemble a 12-step program; they are recovering car salespeople, and these are the habits they are trying to kick. Winkelman skillfully steers them toward repentance and "the new, soft, soft, soft sell. It's not about being wimpy. It's about building your future. It's about professionalism and earning the customer's right to ask for the sale." He then quotes a maxim: "You can shear a sheep many times in its life, but you can only skin it once." Apparently converted, a thirtyish salesman from Chicago blurts out, "That's how we were taught. If you teach us to be nice, we can be nice." Not everyone in the business shares in the warm glow emanating from such sessions. Ed Mullane, 82, a Ford dealer for 40 years, argues that the Big Three created the conditions they now deplore by saturating their markets with dealerships: "There are too many of us. By crowding us in like Dairy Queens, you cannibalize the price, cannibalize the service, cannibalize the reputation of the dealer. That's why we're rated with pirates and bank robbers and lawyers, and all we end up doing is swapping dissatisfied customers." And not all the converts remain converted. Los Angeles consultant Rikess admits that as many as one-third of his dealer-clients drop out of his programs. Even Tom Gill of Columbus has had moments of doubt. During the first three months of his new, nice-guy dispensation this spring, his Oldsmobile dealership's sales dropped nearly 50%, largely, he believes, because his competitors were shiftily using the old, illusory tactics--lowballing him--to undercut his prices. "It got real frustrating," he says. "For me to tell a customer I'm not coming down in price was like steering a ship in reverse. It was hard." Then, unexpectedly, Gill had the best May and June in the five-year history of his operation. Customers came back in droves, bringing Toyotas and Hondas with them as trade-ins, import models he had never seen on his lot before. Was this upward blip an accident or a reward for good behavior? Gill does not know for sure, and neither, at this point, do the many observers who are pondering what has become the auto industry's most intriguing question: Will the era of skinned customers give way to the age of the golden fleeced? </body> </article> </text>