What Cadillac Is Learning from the Ritz

Last year, with its corporate survival on the line, General Motors still managed to spend $354 million on marketing for its Cadillac division, according to industry estimates—more than any other luxury car maker in the U.S. The branding campaign was largely ineffective: In 2009 Cadillac sold all of 109,092 vehicles, its worst year since 1953. The brand's product lineup needs refreshing, the average age of its buyers is a less-than-youthful 62 (13 years older than typical BMW owners), and Cadillac hasn't been the top-selling luxury auto brand in the U.S. since 1997.

It's hard to see GM Chief Executive Officer Edward E. Whitacre Jr. pulling off a full-fledged recovery at his company without far better performance at the company's luxury car division, which sells the Cadillac CTS sedan, Escalade SUV, and other models. "We know we've got a lot of work to do on the product side, the marketing side, and the customer service side," says Kurt McNeil, Cadillac's U.S. vice-president of sales and service. "We think we do pretty well, but...we have to do better."

What to do? Sell like the Ritz. In its effort to reconnect with upscale customers, GM has brought in trainers from Marriott International's (MAR) Ritz-Carlton Hotel chain to show Cadillac dealers how to create a consistent sales experience across the U.S., similar to what customers expect at Ritz-Carlton Hotels, says Jeff Hargett, corporate director of learning and content delivery at the Ritz-Carlton Leadership Center in Chevy Chase, Md. So far he's led nine training sessions in cities from New York to Atlanta to Los Angeles, with more than 2,100 dealership owners and salespeople.

Cadillac has copied Ritz's pocket-size "Credo" cards, which explain how customers should be treated, with a version it is handing out to all company and dealership employees. Ritz employees also have $2,000 that can be used to make up for a bad experience or surprise a guest with a better one, Hargett says. He suggests Cadillac dealers find similar ways to let sales and service people "wow" customers.

So Cadillac service chiefs are now given greater flexibility to extend OnStar subscriptions, provide free maintenance, or even reduce service charges for customers who are unhappy, says Steve Hill, GM's manager of customer care. Gary Grossinger, who owns Grossinger Cadillac in Palatine, Ill., near Chicago, says he gave employees $300 to $500 in "wow" money after learning about the Ritz policy at a presentation to dealers in early June. He recently began phoning customers to gauge their satisfaction.

GM also is trying to garnish the brand image. Cadillac recently removed most references to mass-market icon GM from its Web pages and e-mails. Gaudy showroom displays—inflatable animals, neon letters, balloons to advertise sales—have also been banned, says Ed Peper, Cadillac's general sales manager.

Still, analysts say no image remake can fully succeed until Cadillac comes up with more stylish models that can attract younger buyers. The automaker could gain some traction when it introduces an all-wheel-drive XTS sedan next year and a smaller entry-level Caddy the year after. For now, the company's image will likely remain dinged as it continues churning out land yachts such as its DTS, which researcher Strategic Vision says appeals mainly to buyers in their 70s. Says John Wolkonowicz, an analyst at auto forecaster IHS Global Insight: "You no longer need a geezer-mobile."

The bottom line: After years of decline, Cadillac is trying to regain its luxury aura. But given its older and less affluent owner base, that's an uphill battle.

    Before it's here, it's on the Bloomberg Terminal.