Last week, Audi Canada lost a customer.
The customer currently has a 2009 A3 and 2007 A4 in their garage and was considering a Q5 for their next new vehicle. They also lost the brother-in-law of that customer who drives a Q7.
Plus there is all of the friends and family that will hear the story that I am about to tell you.
It seems that Audi decided that saving $1,000 — the cost to repair a leather driver seat in a 4 year old A4 — is a better financial decision that investing in the good will to stand behind their product and keep a customer loyal.
Back in 2007, when this customer was considering a new vehicle, the decision was between BMW, Lexus and Audi. The customer had been driving BMW’s since the 80’s and still had a 1990 BMW 325 convertible — which he loved to drive. But it was time for a new car for his wife. The final decision came down to the BMW, which they had a great family history with and the Audi A4.
One of the key tipping points for the Audi was the leather seats — you see BMW had started to use leatherette in the lower end models. The costs of similar vehicles were very close, but the leather seats just stuck in their minds as “going cheap”. In the end they liked the sales rep and they purchased the Audi.
They told all their family and friends about the experience with Audi and the brother-in-law also purchased a Audi Q7 when they replaced their Lincoln Navigator.
Fast forward to 2009, and the original customer needed another new vehicle. Since the sales rep was very good and the A4 was running beautifully, they decided to get an A3. There was no shopping around this time — since they now had an established relationship with Audi and the local dealership/sales rep. They were more than “satisfied”– they were now “loyal”.
However, this past week, the wife — who was the main driver of the A4 — noticed a crack in the “leather” of the driver’s seat. The dealership was approached about this issue and they agreed that a crack of this nature was unacceptable and agreed to ask Audi Canada for some assistance although the car was no longer under warranty. After all, they were good customers who already had 2 Audi vehicles and had been bringing all their service work to the dealership (which is where the dollars are made in the car industry).
Much to their surprise, Audi Canada refused any assistance. The car was out of warranty — “too bad so sad”.
However, in an effort to salvage the deteriorating situation, the dealership offered to absorb the cost of the labour ($480) if the customer would pay the cost for the new seat cover from Audi Canada ($580). The dealership also advised the customer that if they called Audi Canada directly and complained that Audi Canada may back down and pay part or all of the claim — because the customer refused to go away.
My Perspective: Audi Canada needs to re-think their customer service policy.
They are throwing away hundreds of thousands of dollars of sales to save thousands of dollars. Their cost benefit analysis is broken.
They have turned a loyal advocate into a vocal critic who is now telling everyone who will listen to not buy Audi’s because they have cheap leather seats and refuse to stand behind poor workmanship in their vehicles.
How much smarter to look after this customer and then ask for a recommendation.
Are you looking at the short term value of a transaction against the long term value of a customer?
Do you know the long term value of a customer? What about their value as an ambassador of your organization based on the number of people they influence who might use your product or service based on their recommendation?
If you are not clear on the number, make sure you think then through. Then make sure you are making decisions for the long term vs. simply the short term.
Postscript: That customer in this story was me and will now be shared with thousands of people as a great story to illustrate my message of building long-term, profitable relationships with customers when I speak at conventions and conference across North America. Hopefully I will see you at one soon 🙂
