Print this article

Comment

25 September 2001

The Customer Is Always Right

by Edward A. Ross

Buying a car should be a fun experience.

I don't like to buy one, though, if the old car still runs. I try to keep old Dobbin until it has a final accident or breakdown that costs more than the Bluebook value to repair. I do like a new car, but I know that the value declines steeply in the first year and that I have to pay Massachusetts' stiff sales and excise taxes.

My wife, however, doesn't feel quite the same as I do. Inger is willing to put up with the depreciation and the taxes in order to own a shiny new car, especially when she never did like the one she had. (How we got the old one is another story I won't go into now.)

We decided to purchase a top-of-the-line Honda Civic with side air bags and manual transmission. It also has a CD stereo, antilock brakes, and a "moon roof," which is like a sunroof except that sunlight gives you skin cancer, so I guess you're supposed to use it at night. You can't get the CD player or the antilock brakes unless you get the moon roof, so I guess these devices all run on lunar power.

We had a Honda Civic before, and my wife loved it. Consumer Reports also loves the new Honda Civic EX and recommends the side air bags and the moonbeam package. So we went to our local Honda dealer, which used to service our previous Civic, and got a quote.

I also decided to see what the Internet had to offer in the way of Hondas.

I found a URL for CarsDirect.com and filled out a form requesting a quotation on a green Honda equipped as above with five-speed manual transmission. The price was about $1,000 lower than the local dealer's quote. We telephoned the dealer about CarsDirect.com's quote. A salesperson called back later to say that the dealership had the car in stock and would meet the Internet price. We said, "Great!"

At this point, you may be asking, "What has this got to do with motion control?"

Well, motion control is a business, and it must follow the same rules that other industries do. One rule is, "Don't try to build a business entirely on low price!" Another is, "Don't depend too much on a gimmick."

I really felt sorry for CarsDirect.com. It had saved us $1,000, and I felt grateful. But how could we turn down a car we could drive away in favor of an unknown entity that didn't furnish any information on delivery?

As a management consultant, I tend to try to find solutions for companies with problems.

This company depends on offering a low price and on the gimmick that it sells via the Internet. A very low price gets attention. To turn the attention into profit, it would have to provide something more.

Think about this: How big a success was the Yugo? Are the stripped-down models the best-selling cars? How well did People Express do when the airlines targeted it by matching its prices?

The CarsDirect.com site claims "service from top local dealers" and "full warranty protection." But we get these from our local dealer.

The name "CarsDirect.com" implies that the company thinks it's a joy for the consumer to buy "direct." "Direct," in this case, means CarsDirect .com buys the car from the dealer at a discount and sells it to you, rather than finding a dealer for you and you buying the car yourself.

The story of the new Ross car didn't end there, however. It turned out that the dealership, Honda Village, didn't actually have the car we were looking for. Cars were available with side air bags and automatic transmission or with manual transmission but no side air bags. Or else they didn't have the moon pack. "We are searching throughout all of New England," Bill Elbaum, the Honda Village representative, told us. After a couple of weeks, I told Inger that maybe we should buy the car from CarsDirect.com.

In our family, I'm recognized as having the earth-shaking ideas, some of which I tell you about in my columns; Inger has the good practical sense. She asked, "How do we know what CarsDirect.com is?" This sounded like a good thought. I've bought lots of things on the Internet; while most of them turned out well, there were some horrible exceptions.

I turned to the Minuteman Library system (through the Internet, of course). Mostly, it was reassuring. CarsDirect.com was funded, at the start, with $30 million from Michael Dell. The Dell is the fifth PC I purchased and the first one that ever really made me happy. When I had trouble with the Zip drive, a replacement drive was at my house the next morning, delivered and installed by a friendly, competent, and helpful technician.

Cars Direct.com was also funded with $300 million from venture capitalists. It seems to have lost millions of dollars in each of its 14 months in operation, but it appeared that it could certainly fund another car sale. I also sent a communication via CarsDirect.com's Web site asking whether, when giving a price quote on a car with specific equipment, that meant the car was in stock. The printed answer was that unless otherwise specifically noted, it was.

As I've already said, Inger has the good practical sense. The printed answer satisfied me but not my wife.

"This car may be in Hawaii," she said. "Or Katmandu. We need to talk to a real live person!" she declared.

I called a number I found on the Web site. I asked the voice at the other end if it was really true that the car we wanted could be delivered, as the printing on the Web page indicated. We were a little worried about whether this could really be done, since the local dealers had been unable to find it in New England.

"Of course we can't get that car if your dealer can't get it," he said. "We look to see if a car is available within 20 or 30 miles of your location. Why would you think we can find a car when the dealer can't?"

I can see why he was nettled. There really was no way for him to get around the fact that he had nothing to offer except price. As a result, he was asking questions instead of answering them. He was doing nothing to sell us a car.

"I've looked up your company, and I see you're losing millions of dollars every month," I told him. "Now I can see why."

"Why did you come to us if we are such a bad company?" If he had waited for an answer, I would have told him that I don't think CarsDirect is a "bad" company; he just wasn't giving us any reason to deal with it.

"Why don't you get a quote? It doesn't cost you a cent." If he had waited for an answer, I would have answered, "I did get a quote. What you mean is that if we click on 'order' and send you the required $200, your company will start looking for a car in earnest. Although your site states that the money can be returned 'for any reason,' it seems like another complication that we don't want."

Although this CarsDirect employee was loyally trying to defend his company, he wasn't helping it. I believe that he should have asked himself just what the company president ought to be asking: "What business are we in?"

Selling cars direct? That's part of it.

I believe, though, that what a really successful car salesperson sells is a pleasurable car-buying experience. During the Great Depression and for some time afterward, there used to be an expression, "The customer is always right." It didn't mean that he was right legally or ethically or even factually. It meant, simply, that the customer is the one who decides whether your business is going to continue to exist.

Finally, we got a call from Elbaum. "We located your car. In Saco, Maine."

If you don't know New England geography, I have to tell you that you must go through New Hampshire to get from Maine to Massachusetts.

"We'll have to drive it down. It will put 116 miles on it."

"Fine."

"It's black," he said.

"Great."

When it arrived at Honda Village, we went over to give the dealer both the cashier's check and the information required to get the plates. Bill asked if we wanted to see it. We did, of course.

We gazed at it in rapture. It was breathtakingly beautiful!

We got it home just in time for me to write a happy ending to my column. It's been a fun experience. MC

Author Information

Edward A. Ross is president of Ross Associates in Needham, Mass., and author of The Ross Guide to the Motion Control Industry. Contact Ed at (781) 449-5123; fax: (781) 449-2942; edross@mediaone.net.