Do you want a warning sign to alert you when an organization or industry is in big trouble and total denial? Simply listen closely to their leaders, especially when times are tough, for words along these lines:
"Our real problem is a perception problem folks. Customers simply don't understand and appreciate our value."
What is a "perception problem" anyway? Isn't "perception" knowledge gained by perceiving something? Of course it is. Perceived value is value in the eyes of the beholder, plain and simple. And don't we all understand by now that a customer's views are shaped by her past experiences, as well as by her relationships and her sense of self? That her "truth" is her reality? I certainly hope so.
So what's the "problem?" I'll tell you what the problem is: Organizations want to change our perceptions rapidly, through communication, rather than by the hard work of shaping our memories and feelings through experience. And they're increasingly finding that they can't. And that's creating a very big problem for them.
Just listen to how Mark LaNeve,
GM Vice President, North American Vehicle Sales, Service and Marketing describes his organization's problems over at the GM FastLane Blog:
On TV, I’m watching the action in Washington, listening to speeches based on outdated perceptions that persist among some of our most experienced leaders and media pundits. Apparently, many of them haven’t been into a GM showroom lately, talked to our customers, or driven our vehicles.
But change is upon us, and the news from J.D. Power today tells us that every GM brand scored above industry average in their latest Sales Satisfaction Index (SSI) Study. We continue to improve, and our dealers are providing the best service to customers in the industry — better than the imports, I might add.
Let’s look at today’s reality. In its launch year, the Chevrolet Malibu led the ultra-competitive midsize segment in the 2008 J.D. Power and Associates Initial Quality Study, which is unprecedented in the industry. The Malibu’s performance far exceeded that of both Honda and Toyota in the same segment.
Reality? Forget reality Mark. Perception of value is what drives customer preference. Here's the perception of one of your readers:
“Sure, between 2002 – 2006 General Motors reduced its warranty repairs by 40 percent … then reduced repairs again in 2006 and 2007 by about 14 percent, consecutively. We’re on track to do the same thing in 2008. That’s a testament to our quality.”
Could it be the reduction is instead a result of more and more dealers saying, “Sorry, that’s not covered.” Based on my experience, that’s the more likely reason the number of warranty repairs have gone down.
Your testament to real quality should be to expand the length of your warranties and broaden their coverage.
“…test one of our 20 cars that get 30 mpg or more.”
Of these “20 cars that get 30 mpg or more,” how many are really the same car only sporting a different badge? What is the actual number of distinct GM cars that get over 30 mpg? Can you provide a list of the 20 so we can see for ourselves which are re-badges?
And here's the perception of another:
JD Power’s Initial Quality Study is a bunch of bunk. I don’t care what goes wrong in the first 90 days of a vehicle’s operation, what I am concerned about is the long-term reliability. Are those piston rods forged or cast? Was the engine designed to last 100,000 miles in order to exceed the warranty, or was it designed to last 300,000 miles? It’s all the little cost-cutting measures by using slightly lower standards that make the GM vehicles difficult in the long-run.
Just ask the owner of a Chevy Cavalier. (All of my friends who have owned one have mused that there was a reason why it was cheaper than a Honda of comparable size… Because it was CHEAPer.)
GM also keeps talking about how many cars it has that get 30MPG or better, which are re-branding of the same vehicle across different lines. That Chevy Cavalier was also the Pontiac Sunfire, and now I’m sure it is the Cobalt that is the G5. Even so, 30MPG is nothing to be proud of.
35MPG or 40MPG is something to be proud of. In a world where my 1985 CRX routinely gets over 40MPG combined city and highway, and my 2000 Civic HX also gets over 40MPG combined, I can’t help but laugh when 30MPG is touted. So what when my 23 year old car gets better? Are you telling me no technological improvements have been made in over 20 years?
And one more:
I had a Malibu rental car recently. To even imagine that car is in the same category as a Toyota or Honda is pure comical fantasy. That TRUTH, that REALITY is the reason why you’re arguments about this survey or that one continue to ring hollow - from YouTube (2 star rating for your little propaganda video) all the way to the US Congress. Not to mention the parking lots full of unsold product.
We’re NOT stupid. We actually DRIVE the cars your competitors make. That Malibu had the same plastic feel as always.
Are there positive comments on Mark's post? Many. So what? That's irrelevant to my point and to the fact that GM is losing $1 billion a month. Their business model has been producing cars that fewer and fewer people want with a cost structure that generates thinner and thinner margins. THAT's the problem. It has nothing to do with perception.
Do you believe that you have a perception problem? Is business slow, and do you wish desperately that people would simply perceive the value of your offering? Here's the simple solution: Demonstrate that value. Give them an experience that unequivocally conveys the compelling value of your offering. Stop trying to change their perceptions through communication. You're wasting time and money. Remember, they're NOT stupid.
