Return to Greatness
Thursday, May 18, 2006
As was well known prior to last year's Annual Stockholders' Meeting, the call was made for Rick Wagoner to resign, based upon his record. Security at the event refused to allow distribution of the following report to fellow shareholders. At the conclusion, a line formed to receive the material. Here it is for your review. For a transcript of the meeting call 313-556-5000 and ask for shareholder relations. More soon...
RETURN to GREATNESS
For Market Share
Customer Long Term Care
1st PILLAR - CUSTOMER LONG TERM CARE
Step Six Got GM - Get GM
Step Ten AARP
Step Eleven Brand Merchandise
Step Twelve Auto Shows
Step Fifteen Referral Savings Accounts
Step Nineteen Direct communication
2nd PILLAR DEALER TRAINING
Step Four Destination Detroit
Step Five Home Deliveries
Step Eight Dealer Margin
Step Eighteen Sales Guilds
Step Twenty Regional Sales Training
3rd PILLAR COMPANY POLICY
Step One Elimination of Destination
Step Two Mid Year Price Increases
Step Three Quarterly Incentives
Step Seven Fall Annual Model Introduction
Step Nine Day at the Dealer
4th PILLAR - VETERAN INVOLVEMENT
Step Thirteen Profit Sharing
Step Fourteen Executive Vehicles
Step Sixteen GM Smartcare
Step Seventeen GM Card
This outlines the first twenty ideas for improvement. Many more exist; however, this illustrates the existence of rational, executable ideas. GM management complains of health care costs, retirement expenses and exchange rates while continuing their empty promises of new products, processes and restructuring. We all are aware of the repeated failures in the marketplace. These past decades of decline are attributable to GM's failures in merchandising rather than these costs, which are, in truth, incidental to the real problem. Sales executives at General Motors don't understand marketing. They don't know how to sell cars. It's all about image and perception. A winning image in the marketplace can overcome product weakness, assuming the product is not glaringly inferior. Given today's relative equality of merchandise, my experience is that the presentation makes the difference.
Since 1997, after watching the missteps of GM management, I began developing a marketing plan specifically for General Motors. It uses proven techniques learned through decades of successful selling and sales management. In addition to retailing well in excess of ten thousand new vehicles, I have also studied the corporation's historical development. I've attended annual meetings since 1982 and hosted luncheon PowerPoint presentations on market share. As the nation's leading Buick salesman six times, and the General Manager of different GM stores, my success has been significant.
This year, for the fifth year in a row, I have been nominated for the Board of Directors. In support of that nomination, I offer a few of the ideas from The Plan - A Return to Greatness. I ask those of you who receive this to please keep the information confidential as to the specifics. Feel free to write and/or talk about The Plan's existence, but keep the details under wraps, as to not enlighten the company's competition.
Any plan is only as good as it's implementation. Having a successful outline is one thing, but if it is not put into effect in a logical sequence, the odds of success greatly diminish. Alfred Sloan, the architect of the modern GM, years ago instituted an idea called the Ten Day Report. The implementation of The Plan builds upon this idea. Once A Return to Greatness is announced, GM releases the first step. Subsequently, we issue another improvement in ten days, continuing a pattern of every ten days with another step. This will create anticipation and the image of leadership. The groups targeted for action will look forward to the next event, and come to understand that there is a purpose and direction emanating from the company. I will assume each of you will visit www.GeneralWatch.com where background information can be found, and a copy of the PowerPoint presentation detailing strategy and structure may be downloaded.
RETURN to GREATNESS
STEP ONE: Elimination of Destination Charges. "The Return" announcement proclaims, "If you want to pay freight, get a foreign car". This is mindful of Iaccoca's proclamation, "If you can find a better deal, take it." This worked for Lee, and showed his tenacity. He earned Chrysler respect and admiration by showing true leadership. He had gumption and people like that. It's an attraction. The problem with GM is that we are seen as softies, and losers. Taking a stance, and actually giving customers something easy to understand, and appreciate, will be a tremendous opening salvo. It will set the competition back on their heels, and let people know we are serious. This step begins our weaning process from the devastation of rebates. We can work towards effective net pricing, and earn goodwill in the process.
STEP TWO: Elimination of Mid Year Price Increases. Ten days after the original announcement, we release the next step. The deceptive practice of incremental increases only clouds the purchase process. Customers will perceive us as doing something positive and beneficial, rather than sneaky, and underhanded. We will earn more goodwill without any true expense.
STEP THREE: Quarterly Incentive Changes. No more pressure to buy now, hurry before it ends, only to be followed by another program. This repetitious process, which has been our norm, destroys credibility, and works against us in many ways. How many times has a customer purchased, only to have the rebate etc. increase the very next day? The effect of this goofiness has customers riding around in their new cars and upset that they just missed an opportunity. Let's create some stability, and simplicity, in the marketplace. Give customers confidence in their decisions, and provide the right amount of time to make informed choices. Give the customer the opportunity of ordering the vehicle of their liking, without worrying what the deal might be. Also, allow the retail personnel an appropriate amount of time to properly sell, and deliver, the unit. This would be preferable to slam dunking folks who are under the gun to meet a deadline, and who end up less than completely satisfied with their delivery process. Quarterly adjustments only make sense, and give the business a well-needed sense of order.
STEP FOUR: Destination Detroit. This idea brings all future award-winning dealers and salespeople to the Motor City. The benefits are countless. First, we would be more effective in focusing the meetings, and events, on the business at hand. Rather than desert tours and polo matches, we entertain showing Motown's finest offerings. Have the individuals tour Milford Proving Grounds, drive on the test track, witness a crash in order to illustrate safety testing, go through the Styling Studio and expose future designs. Allow them to meet with engineers, and see the inner workings of corporate headquarters. We pamper the spouses with our city's best services. At the conclusion, we send them back home ecstatic about GM, and Detroit. These actions would build goodwill for our city and company, and spread it throughout the country. Meanwhile, our executives can stay at home, which would be very good for their family lives, and our expense column.
STEP FIVE: Home Deliveries. We announce an effort of working with our dealers to bring to the customer the vehicle of their choice, directly to their place of employment, or residence. Most customers either dread, or dislike, the dealer experience. Offering this free service would further build goodwill, and lead to customer appreciation. I've made an entire career out of this offering. People absolutely love it, and this is responsible for more sales than anything I've ever done is. Once we begin this process, our competition will probably follow, but hey, we'll be seen as the leader for a change.
STEP SIX: Got GM - Get GM. It is a loyalty incentive that anyone can comprehend. If you currently own, or lease, a GM vehicle, you receive $1,000. It is stackable, and compatible, with any offering, transferable to family member at the same address. No goofy rebate if you own a non-GM car. Who thought of that one anyway? Why reward disloyalty, or have to ask customers if they own a competitive product? Let's only give something to those who already support us. If the customer is not eligible, oh well, next time they will be. The program should be renewed annually, and left in force all year.
STEP SEVEN: Annual Model Change. This is big. Sloan came up with this idea for a reason. It evened out the seasonal fluctuations in sales. Whoever got the bright idea to come out with a car whenever it's ready really did not understand the car business. How many of you remember the anticipation of the fall's New Model Introductions? Let's return to the regular release of new products after Labor Day, and return a sense of order to the business. These days we're selling three different model years side by side. That is very confusing and damaging. Some things should never change, and this is one of those things.
STEP EIGHT: Dealer Margin. We will let our retail partners know they have something to gain in our quest to regain share. For each full point of share we regain, we give the dealers another point of margin. They can use this additional margin to do more advertising, or salesperson incentives. They could increase levels of service, carry more inventory, hire additional staff, or retain extra profit. They are the ones with the investment, and best understand their local markets. Let them decide what to do with the money. Maybe multi-line dealers will see the benefit in moving our products, rather than those of the competition.
STEP NINE: Day at the Dealer. Each month, every salary member of VSSM would be required to spend one day in a randomly selected dealership service department, preferably in write up. This activity would build tremendous goodwill, and give our employees valuable insight into the customer's needs and wants. Actually getting to know GM employees would give customers a sense that GM has a face. They would begin to see us as human beings, rather than an impersonal Corporation. The dealers would benefit by having additional support in their service lanes, and be able to offer quicker, more responsive service on those days when executives were there to assist. Customer satisfaction would increase, as would repeat and referral business.
STEP TEN: AARP. This is a fantastic demographic, and another opportunity to simplify incentives. Make it a year-round program. If you belong to AARP, you get $500 off any GM product, buy or lease. Make it compatible with all other offerings, and leave it alone. People ask about it all the time anyway. They feel cheated seeing it after they've already made a deal.
STEP ELEVEN: Brand Merchandise: Include with each delivery a coupon for $50 off, or towards, merchandise from an affinity catalog. For each brand, have a booklet full of things such as shirts, sweaters, gym bags, coats, golf bags, etc. The end result would be people going to nightclubs and health clubs, churches and stores, sporting our logos, and providing us with free advertising. This activity is of a personal nature, and would do wonders toward building strong brand image and awareness.
STEP TWELVE: Auto Shows. Instead of the current practice of giving rebates to certain residents of surrounding counties, let's offer Auto Show tickets to those who test drive our products. This would bring people into the stores, and provide an inexpensive gift that would be remembered as the customers enter, and exit, the shows. We would be the good guys who gave them something concrete as the sponsor of their attendance. The gift could possibly be made to include early entrance, or access on special days.
STEP THIRTEEN: Profit Sharing. At year end, instead of giving our employees a cash award for profit sharing, give them the choice of common stock. Have them become true partners in the company's success. Owning stock would increase the employee perception that they are part of something, and would be more meaningful in the long term than a few dollars easily disposed of.
STEP FOURTEEN: Executive Cars. Quite often, GM executives turn in their factory demos for sale with the odometer just under the next price discount level. This practice is both frustrating and annoying. The inconsiderate action toward fellow employees, and retirees, is inexcusable and unacceptable. GM needs to announce a policy of driving the unit to the next mileage category whenever the driver is within say 250 miles of the next price break. How can the company promote unity when a few individuals think they are being cute? I've seen units turned in three miles short of the next discount, more than once. What does this do for morale?
STEP FIIFTEEN: Referral Savings Account. Similar to the GM Card (another crisis), GM announces a program to accumulate savings of $50 for each referral who buys, or leases, a new vehicle. The referral must be disclosed prior to delivery, and would be similar to what we commonly refer to as a birddog. The account holder could then cash the savings in at the time they take delivery of their own unit.
STEP SIXTEEN: Free GM Smart Care Maintenance Agreement to all GM Retirees. This 36 month/36,000 mile program would offer free recommended maintenance to all GM retirees. The benefit would be great in the number of customers brought in for dealer service. This group of people has tremendous purchasing power, and exerts a large amount of influence over their family members buying decisions, often contributing financially to the transaction. Also, increased showroom traffic by our service customers, would lead to increased sales to those individuals, and to others who feel more comfortable buying when there is heightened activity.
STEP SEVENTEEN: GM Card. This was one of the best programs GM ever had. That was until someone decided to take earnings away from eligible GM family members, and thereby alienate thousands of employee cardholders. Many people swore off GM for the move. Some form of retribution needs to be made. Consultations with the legal staff could result in some form of program to attempt to bring those lost, back into the fold.
STEP EIGHTEEN: Sales Guilds. For years GM had brand specific sales guilds. Now, everything is combined into the GM Mark of Excellence. It's a decent enough program, but there would be a greater impact if we returned to the old days of Buick Salesmaster, and the Chevrolet Legion of Leaders. These former groups built a sense of loyalty and awareness for each carline, and gave salespeople their own individual rankings within respectively common professions.
STEP NINETEEN: Direct Factory Communication: Imagine going to your local dealer and ordering a new vehicle. From that point on, you might receive a call from your salesman with an update as to the order status. Usually though, no contact is made until the vehicle arrives. Utilizing the internet, GM could send information directly to the customer, informing them of their order's progress at the various stages, including when the vehicle is scheduled for production, after it is actually built (including the new VIN), and the estimated shipping, and arrival, dates. This increased communication would lead to greater awareness and satisfaction, as well as anticipation.
STEP TWENTY: Reinstatement of GM Regional Sales Training Classes. Years ago, GM offered professional sales development classes at the Regional Training Centers. As one who attended these seminars, I can attest to the benefit of the experience. I learned many things that still contribute to my success, even to this very day. Who better than GM to train salespeople as to the proper way to present our products, and follow up with our customers? The manufacturer knows more about the product than anyone, and should be able to give competitive information beneficial to those who need it in today's hotly contested environment. I believe this is far superior to our current system of computer testing in order to fulfill merit award requirements. I'd say roughly half of the time today, savvy salesperson's subcontract out their testing on the computer to those adept at answering multiple choice, and working online. This process sidesteps the purpose of giving our salespeople the information, which improves their competitive performance.
These twenty illustrations from The Plan are an indication of the kinds of marketing that will lead to a rebound in GM's sales. As you can see, there would be hardly any expense involved, and in fact, many of the ideas would actually serve to reduce costs. GM needs to get off of the fire sale, deal of the day, mentality. The full page, distress ads currently being run only harm image, and create a sense of desperation. GM needs to let it go, and save the dough. We spend tens of millions of dollars unnecessarily, including huge amounts for useless spokesmen, who bring nothing to the table. Additional steps in The Plan include things like further doing away with rebates. If there is a problem with days supply, don't increase the rebate. Instead, add a point, or two, to the residual value and have the image of a good car with a great lease, as opposed to a slow mover with a big rebate. GM needs to wake up and realize, as the book says, "Your Marketing Sucks". GM worries about health care costs and pension benefits, yet wastes untold millions in the name of marketing. To quote my friend Jerry Flint, senior automotive writer at Forbes magazine, "It's not that the leaders of GM are bad people, they're not. They just don't understand the American car business". He further states, "This business really isn't all that difficult, all it takes is a good car, and someone to sell it". This excerpt from The Plan - A Return to Greatness shows that this someone does exist. Articles about my achievements and ideas have been showcased in major publications such as The Detroit News and Automotive News. However, there is nothing better than a first hand look at specific examples and detailed explanations.
May 2000 $66 Billion
May 2001 $48 Billion
May 2004 $25 Billion
May 2005 $15 Billion
Under the leadership of G. Richard Wagoner (Executive Vice President and President North American Operations 1994, President and Chief Operating Officer 1998, Chief Executive Officer 2000, and Chairman 2003) General Motors has closed, sold, or spun off:
Delphi Detroit Diesel
Defense Electronics Light Armored Vehicles
American Axle Electromotive
EDS and more!
In replacement we have:
Saab Disastrous Marketing
Daewoo Record Recalls
Shanghai (may work) Huge Long Term Debt
No Innovative Buicks Diminished Profits
FIAT FIASCO JUNK BONDS
In Japan, they fall on their sword for any of these failures individually. When added together, the real question appears. Who is RESPONSIBLE? Hardly anyone questions the BOARD, even with over 75% of the company's value GONE in five years. The answer is The Plan, which calls for virtually no investment, and will, in fact, serve to significantly reduce expenses. The specific steps are based upon decades of successful experience as America's top Buick salesman (six times). Here are sample responses from dealers, Wall Street analysts, marketing research companies, GM employees and retirees, and the media:
"I can't thank you enough for sending The Plan. It is clear and logical. Implementation would be relatively easy and I have little doubt, based on our customer surveys, that such a program would be effective." Art Spinella, CNWMR
"Frankly, your twenty points could not have made any more sense." Gitas Jamekis, John Crane Inc.
"Wow, Jim, this is amazing. Some of these ideas might just work, by God. And Mark LaNeve dismissed this? I have looked at the website, and there is a ton of interesting stuff in there." Dan Neil, Los Angeles Times
"Everything makes perfect sense in its appropriateness and simplicity." Ed Garsten, Detroit News
"So, the legend grows." Ed Lapham, Automotive News
"I think you hit the nail on the head." Ed Wright, GM Plant Manager, retired.
"It is a blessing to hear your thoughts about GM. Being a Nissan dealer, I have watched the company do a 180 turnaround because of vision and dynamic leadership." Ben Keras
"You remind me a little of the legendary Ed Cole." Robert Harless, Preferred Media
"First of all, let me say that I think you're doing everyone a great service." Jason Stoddard, Centric
"Jim, just read your plan to return GM to Greatness. It all makes sense but how do we get the brass at GM to pay attention?" David Bruckman, Clay Matthews Auto Group
"Rick ran GMNAO directly for four years and indirectly for two more: what you see at GMNAO today is a direct result of his strategy and actions." Gary Lapidus, Goldman Sachs
"I will gladly put your name on my proxy." GMAC Branch Manager
"I think it is the best thing to have happen to GM." Anonymous, Bellagio Resort
"Buickman, Who knows more about selling cars than just about anybody." Jerry Flint, Forbes Magazine