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Commerce Matters with Benjamin Akande - Ladue News: Business & Wealth

Commerce Matters with Benjamin Akande

Toyota: Opportunity Born Out of Failure

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Posted: Thursday, February 25, 2010 12:00 am | Updated: 11:11 pm, Tue Aug 9, 2011.

In his bestseller The Tipping Point, Malcolm Gladwell tells a remarkable tale of the relative importance of word-of-mouth and how in the age of e-mails, we may have overlooked this simple yet very valuable and powerful communication tool. The story also speaks directly to the greatest auto recall ever. Toyota is facing the potential death of an illustrious brand name despite doing so much right until just a few weeks ago, when it was revealed that 9 million vehicles manufactured by the company were putting the lives of drivers and passengers at risk due to rapid and unexpected acceleration. Toyota is not new to recalls.   

    In 1990, just after Toyota’s Lexus division introduced its line of luxury cars in the United States, the company realized that it had two minor problems with the LS400 line that required a recall. Lexus had decided from the beginning to build its reputation around quality workmanship and reliability.  Then, just over a year after the brand’s launch, the company was being forced to admit to problems with its flagship model. While most recalls are handled by a public announcement via TV, radio or letters to owners, Lexus decided to make a special effort in contacting its customers in the most personal and direct manner: The company called each owner individually on the telephone the day the recall was announced.  When the owners picked up their vehicle following the repair work, each car had been washed and the tank filled with gas.  If an owner lived more than 100 miles from a dealership, the dealer sent a mechanic to his or her home.  In one instance, a technician flew from Los Angeles to Anchorage, Alaska, to make the necessary repairs. Toyota emerged from what could have been a disaster with a reputation for customer service that continued until this present recall. One automotive publication later called it ‘the perfect recall.’ By going the extra mile, Lexus successfully kick-started a word-of-mouth epidemic about the quality of their customer service, a message that would have been lost in a letter, fax or media broadcast.

    Perhaps Toyota can take a page from its own history to regain the trust of current and future customers by doing whatever it takes to prove the company is dedicated to safety—and providing personal service while doing it. During the repairs, for example, the company could offer free car rental, gas vouchers and even food and restaurant coupons. Toyota is renowned for its manufacturing prowess; it’s time to focus on overcoming its public relations nightmare.

    How effective Toyota is in communicating to millions of customers worldwide will determine whether the world-class automaker becomes a memory in the not-too-distant future. There is a real opportunity here for Toyota to create best practices that could become the reference point and industry benchmark on recalls. Somebody once said that we learn more from our failures than we do from our successes. I hope Toyota takes heed and makes this very serious situation an opportunity born out of failure. Either way, word-of-mouth is going to count. In a few months, will people be singing Toyota’s praises or its eulogy?

Dr. Benjamin Ola.  Akande is Dean of the School of Business and Technology at Webster University.  Follow him on Twitter: @Benjamin_Akande

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