Chrysler Ends Bonuses For Strong Customer Service

August 20, 2012

Until recently, Chrysler offered its dealers up to $800,000 per year in exchange for good customer service and sparkling showrooms. According to a report in AutoNews, however, Chrysler's new dealer program nixes the cash bonuses, substituting enhanced training and research to help dealerships succeed on their own merits.

The old way of doing business was called the Dealer Standards program. It was meant to reward dealerships for strong customer service and top-notch facilities.

According to Chrysler, the program had a great effect on showrooms, but did little to boost customer service. When Jeep, Dodge, and Ram came in at the bottom of J.D. Power's 2011 Sales Satisfaction Index, the evidence was clear: the Dealer Standards program wasn't working. On January 1 of this year, CEO Sergio Marchionne pulled the plug.

Nearly eight months later, Chrysler has rolled out a new program called the Customer Experience Initiative, which is currently being piloted at 11 dealerships in Phoenix, Arizona. The program will expand to other dealers in the region by the end of 2012, then move on to other areas of the country.

The new deal

In a nutshell, Chrysler's Customer Experience Initiative stops rewarding dealers for good behavior and instead gives those dealers additional tools to succeed on their own merits.

For example, the automaker has reworked its mystery shopper program, which few dealers found useful in the past. The old program used a checklist -- "Did the dealership do this? Did the salesperson do that?" -- to gather quantitative data about the sales experience. The new mystery shopper program will be more about qualitative data, focusing heavily on the customer's emotional, visceral reaction to her interaction at the dealership.

Chrysler is also overhauling its staff at nine regional business centers, so that they act more like consultants for dealers and less like ruthless enforcement agents.

The good, the bad

If this sounds a little like parents cutting off a kid's allowance and shoving her out into the adult world, it should. And just like that pivotal moment in a young person's life, this one comes with its share of benefits and dangers.

On the "danger" side, there's the dealers' loss of cash from Chrysler. Even though performance rewards represented a mere fraction of dealership income, we all know that money can be a great motivator.

There's also the danger that some dealers might see Chrysler's new stance as one of aloofness. Like some Millennials of our acquaintance, those dealers could let standards slide if they sense that Papa Marchionne isn't watching so closely anymore.

But by and large, we see this as a positive, very beneficial development -- both for Chrysler and its network of dealers. 

For Chrysler, it means that the company will save on cash disbursements, which is no small thing.

It also presents an opportunity for Chrysler to develop stronger, deeper relationships with dealers -- relationships that probably still need shoring up in the wake of Chrysler's reorganization of the dealership network following its 2009 bankruptcy. Under the Customer Experience Initiative, Chrysler is no longer a parent who sits in judgement, it's a mentor who's there to help its kids succeed.

The new program is also empowering for dealers. We all remember what it was like when our allowances dried up: time to sink or swim. Nurtured in the right way, that can be a very liberating feeling.

The program debuts at an opportune time, when Chrysler and its dealers are raking it in. That means that dealerships are slightly less worried about getting money from Auburn Hills and can afford to make improvements on their own. 

From where we sit, the Customer Experience Initiative is a smarter way of doing business -- one that gives a dealership enhanced tools to succeed (or fail) on its own merits. Do you agree? Let us know in the comments below.

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