Cover Story: SATURN
MAY WE HELP YOU KICK THE TIRES?
With deliberate steps, Jimmy Snyder climbs five rungs up a ladder fashioned of 2x4s. After a pause, he counts to two, releases his handhold, and topples backward, falling into the upraised arms of 17 men and women he barely knows.
Sound like a '60s-style group encounter? Guess again. For Snyder, general manager of a Jacksonville (Fla.) auto dealership, the "trust fall" is part of learning a new way to peddle cars. The auto is General Motors Corp.'s Saturn. The weeklong training session takes place at Saturn headquarters in Spring Hill, Tenn. And the new way of selling involves--hold on to your warranty--listening to customers and actually treating them like human beings.
SMITTEN. For veteran car-hawkers such as Snyder, the new approach represents a radical change. In the past, car salespeople usually trained for their jobs by watching showroom veterans twist customers' arms. Saturn, by contrast, teaches its "sales consultants" to hand tire-kickers printed sheets of fixed prices, explain the no-haggle policy, and invite them to comparison-shop. While most shoppers expect a fight, "we can erase that kind of fear," says Gordon Walker, a suburban Chicago Saturn dealer. Customers agree: "I liked dealing with the Saturn people. They were low-key," says Saturn buyer Dan Rossmiller of Madison, Wis.
Low-key works. Market researcher J. D. Power & Associates Inc. recently ranked Saturn's customer-satisfaction level right below those of luxury carmakers Lexus and Infiniti and above Mercedes-Benz and Lincoln, whose cars sell for at least $20,000 more than a four-door Saturn. The Power report gave Saturn particularly high scores for its treatment of customers--some of whom are so smitten they volunteer to schmooze with shoppers on busy Saturdays at dealerships. "I even have my relatives buying them," says Ann Snyder, 67, a 1991 SL1 sedan owner who wants to form a Saturn owners' club in Allentown, Pa.
A top-10 seller since March, Saturn has a scant 17-day inventory of unsold cars, compared with 62 days for the industry. Individual dealers' sales are more than twice the industry average, and some dealers are so low on inventory they've even sold salespeoples' personal cars. All this for an auto that offers good quality but little in the way of innovative styling or engineering.
Keeping an edge in selling will be crucial if Saturn is to fulfill its role as GM's laboratory for new ways to make and sell cars. With GM strapped, the pressure is increasing to reverse Saturn's losses of $800 million last year and recoup GM's $5 billion investment. Saturn will turn a profit only if it can sell about 300,000 or more cars a year--three times what it sold in 1991 and 33% more than Saturn's workers can currently produce.
So a lot depends on the training at Spring Hill. Based in part on programs devised by companies such as Scandinavian Airlines, the Saturn course pinpoints 40 critical "moments of truth," such as greeting customers, that can make a sale and get repeat business. Trainers prompt frank discussions about how hardball selling alienates customers. "Integrity is the key ingredient missing from the car retail business," trainer and veteran salesperson Sharon Smith tells Snyder's class. To break bad habits, trainers lead the class in acting out lessons. The "trust fall" shows how a team can protect members from landing on their heads--an interesting lesson for dealership employees who often compete for the same buyer.
FREE WASH. The classes spur Saturn dealers to better service. For instance, a salesman for Ron Marhofer's dealership in suburban Akron drove 100 miles to Cleveland to get a co-signature for a loan application and expedite a sale. Lots of Saturn dealers now wash customers' cars free of charge, whenever they want. Saturn also tries to create esprit de corps, an alien concept on most car lots. Trainees all learn the Saturn cheer, used at meetings and to salute customers as they drive off in new cars.
Cheerleading is nice, but more substantive changes are at work. To ensure that dealers make a profit selling small cars without haggling, Saturn built a gross margin of 17% into sticker prices, vs. an average 12% for competing models. And to blunt a salesperson's zeal to fill a quota by any means necessary, Saturn encourages dealers to pay salaries instead of commissions. More than half pay salaries only: Others augment them with bonuses, tied to sales and customer-satisfaction ratings.
The changes are helping persuade salespeople, a nomadic bunch, to stay put. That's key to making them feel committed to the Saturn brand and its customers. Marhofer says only 2 of 14 salespeople have left since he opened his Saturn outlet a year-and-a-half ago, compared with 100% annual turnover at his non-Saturn stores. He's so taken with Saturn's sales approach that he's adopting it at his other dealerships. "This is the way to do business in the future," says Marhofer, who also runs Lincoln-Mercury, Chevrolet, Hyundai, and Mitsubishi outlets. "The old way, as far as I'm concerned, doesn't work anymore." Car buyers can only hope he's right.David Woodruff in Spring Hill, Tenn.