Lexus Australia putting customer experience ahead of sales milestones
The boss of Lexus Australia says the brand is prioritising improving customer experience and satisfaction over hitting sales milestones, despite record demand for its vehicles.
Lexus sales are up 29 per cent so far this year, largely on the back of the popular mid-sized NX SUV, which is currently outselling the BMW X3, Mercedes-Benz GLA and Range Rover Evoque.
With 7446 sales to the end of October, it’s already easily eclipsed last year’s 7000-unit tally.
Its current growth rate suggests 9000 sales should be within reach this year, while the recent introduction of the all-new RX line, the addition of the 2.0-litre turbo petrol engine to the ES, GS, IS and RC model lines, and the expansion of its dealer network from 24 to 27 next year could seemingly make 10,000 a reality for 2016.
But Lexus Australia CEO Sean Hanley was quick to downplay such numbers this week, insisting that chasing sales is toxic for luxury brands’ customers and dealers.
“[We’ll do] 8500 this year,” Hanley started.
“We’ve got a pretty light target for November and December, and largely that’s because we’re launching RX now – you don’t want to carry a heap of brand new models with 2015 plates into 2016.
“So because of the launch timing I’ve had to lighten the sales targets, but I’m building big order banks for next year, so it will give next year a good start.”
Hanley also said 10,000 sales was not a responsible target for 2016.
“No – I’ll tell you why. If you go for the 10,000 next year you start to behave differently, you start to overstock dealers, you start to have big incentive programs on, so you’ve got to stay calm.
“You sound like my boss, he’s telling me ‘10,000!’, and I’m saying ‘Stop, stop, stop!’ Because what happens with luxury brands when you start pushing volume, you run the risk of your customer experience diminishing. It’s such a trap.
“When my boss says to me ‘Seano, new RX, surely you can do 9500-10,000’. Well, probably we could. But let’s just grow steadily and keep the experience intact.
“This is a luxury brand. It’s a different way of dealing and behaving with the market. When he said to me 9500-10,000, I said ‘Please no, let’s not fall into this trap’. It’s a luxury brand, it’s all about the experience, we’ve got to stay true to ourselves, our customers and what we stand for.”
Hanley said 9000 was a more appropriate target for the brand next year.
“I hope we can do 9000. I’ve always said 5 to 10 per cent [growth]. We can’t be market leaders so there’s no point shooting for that, so if we maintain a good brand reputation, life’s good.”
Hanley said Lexus Australia had been down the path of pushing for lofty sales targets in the past and it didn’t work out.
“I reset the business plan two years ago for Lexus, because Lexus was flat-lining a bit in sales. We reset the whole business plan: the way we market, the way we behave, the way we sell cars, everything. That business plan sees us not hitting 10,000 sales for the next couple of years, because if you chase volume, volume, volume, you need incentives. You’re incentivising you’re dealers, you push, push, push, and then what happens? The dealers push, push, push, and that diminishes a luxury customer experience, and that’s the risk you run, and I don’t want to do that again,” he said.
“We’ve been up that road at Lexus some years ago and it didn’t work.”
2015 Lexus RX 350 F Sport
Hanley says Lexus’ most pressing challenge is to reinvigorate its ‘customer experience’ program, that is, what owners get outside of the car and an annual service. He believes Lexus has always led the market for customer experience in Australia but has been caught up by fellow luxury brands, and needs to reassert its leadership in this domain.
“We’re working with our dealer group right now on a special project on how we can reinvigorate,” he explained. “What we did 25 years ago to be so far above the rest is where we’ve got to get to again now, and that’s our number one priority.
“We’ve set up a group of seven very senior dealers and our number one goal in the first quarter of next year is that we can extend our customer service and experience.
“Experiences beyond the car, that could be the Melbourne Cup Lexus Design Pavilion, inviting customers to that. We do drive programs where we invite customers to go in the LFA with Alan Jones the Formula 1 driver, those sorts of experiences.
“Years ago we’d give them 20 CDs in their car. Today we have to give them $150 at iTunes and say ‘What do you like?’ and load it into their car for them, these kind of experiences.
“When customers come to collect their car, we still do some traditional things, we put the big red bow on it and we give them a nice gift, but actually the customers are looking for something far beyond the driving and servicing of the car. ‘What lifestyle choices do the brand give me?’ When we take our customers to that Design Pavilion, they talk about it to everyone, because it’s unique, you just can’t get it.”
In February, Lexus claimed its second Roy Morgan Customer Satisfaction Award, topping Australia’s automotive industry with the most satisfied customers as it did in 2011.
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