Toyota’s problems with unintended acceleration of its vehicles culminated with a $1.1 Billion USD settlement of a class action lawsuit in Dec 2012. Call it the cost of customer dissatisfaction.

The Embarrassment of Being Wrong

Thursday, April 28th, 2011

No one like to realize that he or she is wrong. Customer Satisfaction is about ensuring customers are happy with your products and services. But sometimes things don’t work out right and need to be fixed. If an organization and the people within have difficulty accepting that they are ‘wrong’ and the customer is ‘right’, they fall into a trap of trying to blame the customer. See a Ted Conference Video by Kathryn Schulz on Being Wrong talks about error blindness and rationalizations used by businesses. The root causes of the Ford Pinto exploding gas tanks are exposed.

If there ever was a poster child to prove the cause and effect of poor customer satisfaction on loyalty and future purchases, one need look no farther than Toyota. One of major consequences of their customer satisfaction challenges is the loss of prospects. Two recent studies have shown that Toyota did, in fact, take a hit during the worst of its crisis of confidence.

One of the best practices to maintain high levels of Customer Satisfaction is to prevent known problems. This post is the sequel to a prior post called Customer Satisfaction Tip: Notification of Known Problems. The earlier post dealt with why alerting customers to known problems was important and what some key elements of a notification system might be. This post covers the 5 steps needed to set up an Notification system.

One of the best practices for Customer Satisfaction is to prevent known problems. One technique to help with this objective is to create systems to notify customers of issues that might affect them, that are affecting them or that they should be aware of. This post covers why is it important to set up a notification system and what constitutes a notification system.

On Aug 26, 2010, Toyota announced two recalls affecting Corollas and Matrixes, one for engine stalling problems and one for the power brake issues. Customers are already outraged at the plans to deal with the power brake recall. These new recalls are negatively affecting Toyota’s Quality Reputation.

Toyota has issued a new recall on July 29, 2010 for its Avalon and Lexus LX 470 brands. The Avalon recall is for the 400,000 Avalons from the 2000 – 2004 models in the US, Canada, China and Saudi Arabia. The recall is designed to repair a problems with flawed steering locks. The Lexus LX 470 recall is for 80,000 LX 470s (also known as Land Cruiser 100s outside the US) from the 2003 – 2007 model years. This recall is related to steering shaft disengagement. This recall tarnishes Toyota’s reputation in a new way.

Customer Satisfaction techniques apply to many stakeholders, not just direct customers. Toyota faced its shareholders for the first time since the start of the recall crisis. The three proven customer satisfaction techniques of acknowledge, apologize and show action, were used with shareholders.

Toyota’s Reputation Management efforts took another hit with a new investigation by the US Government National Highway and Traffic Safety Administration. It appears Toyota stalled on a recall concerning a Steering Defect for Toyota pickups, T100s, and 4Runner SUVs built between 1989 and 1998. The steering problem had been identified in 2004 and recalls were done in Japan but failed to alert the US authorities for as much as a year. Some positive news for Toyota includes improved sales and profits and the removal of Consumer’s Reports ‘Don’t Buy’ Designation from its 2010 Lexus GX 460 SUV after electronic stability issues were resolved with a software fix.

Toyota’s customer satisfaction woes continue to climb. On April 5, 2010, Toyota US may face a $16.4 Million fine for the delay in announcing the recall of Toyota vehicles over accelerator pedal flaws. The US government claims that Toyota was hiding the defect and was slow to report it. This action will also be a warning to other auto manufacturers and manufacturers in general about the seriousness of dealing with customer satisfaction and safety issues.

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