Retailing: The Lexus
Two issues ago we published Luka Kostrencic's sorry tale
about how his request to audition a $2500 turntable! tonearm combo provoked a dismissive comment from his
local high-end dealer, where a salesperson said that because the products were "entry-level," he
couldn't be bothered to unbox them for a demo. Kostrencic's letter followed one in Issue 150 from
reader Tom D'Amico, whose budget of $6500 was derided "as inadequate for a high-end
stereo" by another dealer.
Both incidents are far too typical. Should these dealers find themselves declaring bankruptcy
they'll have only themselves to blame. They're committing suicide by attitude. In a luxury
goods business, the prime directive is good customer relations.
No one applies this principle better than Lexus. Last year, my wife Robyn went shopping for a new car. Also in a luxury
business, she considered image important, in addition to reliability, safety, handling, comfort, and amenities. I suggested
that for her, Lexus was the only contender it's consistently at the top of rankings compiled by research firm J.D. Powers and
Casually dressed, we went to our local Lexus dealer. The elegance of its showroom was matched by the charm of its
salespeople. They acted honored that we had come in. They treated us to coffee and croissants, patiently explained the
models on the lot, let us take our time test-driving every one we wished to try, and then carefully described the leasing and
purchasing options. The opposite of hardball sales, it was as if they were inviting us to join an exclusive club. We said we
needed to check out the competition, and they graciously thanked us for coming
in two salesmen, the finance officer, and the general manager.
Visiting other dealers.. .we stood around the Thunderbird showroom for 20 minutes before anyone noticed we were
there; the Volvo dealer was attentive, and his products excellent, but he couldn't approach the deal Lexus offered; the
Acura and Toyota salesmen were greenhorn yahoos with bosses who refused to negotiate; the Audi dealer let us take an A6
for a test drive, then forgot we were there, and we never got as far as a test drive with the Jaguar dealer, who acted as if he
needed to see our pedigree first. Are you sure you're ready for a Jaguar?" the salesman sniffed.
Seventeen days after first strolling in, we returned to Lexus. We thought
you'd be back," our sales guy said. Within an hour Robyn had a pearl-white ES 330 with leather interior.
The service shop detailed it while she filled out the papers. As she did, I enjoyed a cup of tea in the
lounge leather sofa, soft carpet, 50 HDTV with a young salesman, a veteran of several dealerships. I asked him how he liked Lexus.
"Are you kidding?" he laughed. "I'm on staff at the only Lexus dealer in Mann County, California.
It's like heaven."
Lexus owners share his enthusiasm. Robyn has a regular appointment not far from this dealer. About twice a month,
she drops off her car while she goes about her business. When she returns an hour later,
it's been cleaned inside and out, and its performance fully checked for free. A few weeks after she
got it, the in-dash CD changer ate a couple of discs. The dealer offered her a loaner for the day while a new changer was
installed, and after the discs were extracted, they were sent to her in bubble-wrapped protective sleeves via FedEx.
Recently, she sent a friend to Lexus. Despite not making a sale, the dealer sent Robyn a beautiful floral arrangement as a
"thank you" for the referral. In stark contrast to what most folks encounter with car dealers, her Lexus experience has been
100~i positive. When it's time for another car, she'll go straight to Lexus and drive away with another.
They've made a customer for life.
I recently recounted this tale of customer satisfaction to an executive with a group that operates auto dealerships in many
parts of the country. "Yep," he nodded, "Lexus has it all figured out. And you want to know the best part? Our Lexus
dealerships are by far the most profitable. They're way out in front of the
There's no simpler formula for success: great products + superb customer service booming business and fantastic
profitability. Sadly for everyone in this industry, it's a lesson that self-important snobs like the audio dealers who insulted
Kostrencic and D'Amico will probably never learn.