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Lessons from GM’s Bob Lutz on marketing, selling and customers

This is about the three most important words in business today - marketing, selling, and most importantly, customers.

The scenario is simple: customers have changed, while marketers and salespeople are struggling to figure out what’s happened — and happening.

Nowhere, perhaps, is the scene more dramatic than at General Motors Co. With a litany of customer dissatisfaction, a Neanderthal corporate culture, descending sales and an embarrassing bankruptcy, the company’s “vice chairman,” 77-year-old Bob Lutz, abandons his retirement plans (again), leaves his product development position, only to turn up as GM’s chief marketer.

If nothing else, such a scenario dramatizes the incredible impact the state of the economy is having on business.

The GM/Bob Lutz story has implications for every business in our post recession world, one that has to do with marketing, selling and customers.

1. Marketing is in near total disarray. When Bob Lutz arrived back at GM a decade ago, he said (in no uncertain terms) there was something wrong with GM’s vehicle line up and his job was to fix it. While the reviewers now give most GM cars high marks, the sales fail to reflect consumer confidence. Now, Bob makes it clear that there’s something wrong with the way GM is advertising its products.

Why he is upset is no surprise. A few years ago, he gets the Chevy Malibu ready for the road and the marketers come up with a bizarre advertising theme: “The car you can’t ignore.” It didn’t take an expert to figure out what would happen. Of course, consumers took the bait - and ignored the Malibu.

As GM’s new head marketer, Bob recently delivered a devastating body blow to Buick’s marketers when they told him a new Buick TV commercial had “tested well.” That’s when he gave them a page out of Marketing 101: just because an ad tests well doesn’t mean it’s an effective ad.

Demonstrating how far off the mark marketers are today, a Buick VP commented to Advertising Age on the TV spot this way, “The pretesting landed in the ‘top quartile’ for originality and breakthrough work.” As Bob might say, “So what?”

This is why marketing is in disarray. The legendary marketer Jack Trout points out that Chief Marketing Officers have shorter tenures than NFL coaches,” most of them less than two years. Why? According to Trout, part of the answer can be found in an Anderson Analytics survey of a large group of “senior marketing executives.” When asked to rank the marketing concepts they give most attention to, the responses are revealing: customer satisfaction, 88 percent; customer retention, 86 percent, segmentation, 83 percent; competitive intelligence, 82 percent; brand loyalty 82 percent; search-engine optimization, 81 percent; marketing ROI, 80 percent, quality, 79 percent; data mining, 78 percent; and personalization, 79 percent.

No wonder marketing (and marketers) are in trouble. An ad may test well, but does it sell cars? It appears that too many marketers are more interested in defending their decisions than connecting with customers.

2. Messed up selling. The business of selling is just as messed up as marketing. The images of a Road Warrior and “the hunter stalking the prey” continue to influence the thinking and behavior of salespeople, who are practitioners of what may be the world’s most narcissistic profession. Simply put, too many salespeople have one favorite subject: themselves.

This seems to be what Bob Lutz and others have found at GM. It had become a company focused on serving itself. In good times, salespeople — who think every sale is due to their incredible skills and carefully cultivated relationships — should be treated as heroic figures deserving endless praise and impressive rewards. In bad times, they blame others for their lack of success.

One wonders why selling seems to attract the wrong people. As contrarian as it might be, what would happen if companies, including auto dealerships, hired social workers? Many salespeople will be quick to say, “That’s just plain crazy.” That’s what I felt - until I came across a comment by a social worker, Rob Plotkin, who is also an entrepreneur. On his blog, he writes, “Social workers make great salespeople believe it or not. Why? They listen first. Sell later.”

Salespeople can be so totally focused on wanting to make the sale, they fail to listen to buyers. So absorbed in what they want to accomplish, they actually alienate customers, which may explain why the average salesperson’s closing rate is about 20 percent.

Plotkin is on target when he says, “After all, isn’t a good therapist selling something besides their time? At its basic level, therapists are selling mental health.” And then he adds, “They are selling themselves as the conduit for the person to find solutions.” That may be the most accurate definition of a salesperson.

3. Fickle, frightened and frustrated customers. Customers not only come in all sizes, shapes, ages and income, they come with a variety of mental images. Even though Chrysler products have long been at the bottom of the reliabilitys charts, the company struck gold (at least for awhile) with the “chopped look” of Chrysler 300 and Dodge Charger with their Hemi engines. When BMW adopted the “Ultimate driving machine” tagline in 1974, its sales ballooned from 15,000 annually to more than 260,000 in 2005.

In the same way, many a McMansion was sold to willing buyers who could ill afford the monthly payments but who had a vision of “the American dream.” One car dealer reported that customers bought “loaded” trucks at prices exceeding their annual income. Not surprising, an unemployed 56-year-old man with a bleak job future said recently that he didn’t know what he was thinking about when he bought his truck. Whatever went through his mind when buying the truck certainly wasn’t a need for it.

What caused this truck owner to change his thinking? Protracted unemployment. It was the basic change in his economic situation. He had come face-to-face with facts, not fantasy.

The explosion in consumer acceptance of “store brands” indicates the nature of the change in the customer mindset. Long looked down on, store brands are pushing popular brands off just about every shelf.

Today, “the ultimate driving machine” may well be “the reliable driving machine.” Across the board, customers are experiencing what might be called “a value assessment and realignment.” David Kent of The Right Group offers clarity when he states, “Providing more for less is what today’s customers expect, if not demand.”

It was none other than Bob Lutz who got it right when he said, “We have to reconnect with this depressingly large part of the American public who won’t give us consideration.”

That’s the task of business today.

If we didn’t have a Bob Lutz, we would probably need to create him. He’s what our country is all about. He tells us to take a risk, stop the meetings, forget about the “process,” cut out consensus and all the play-it-safe “team” stuff, quit defending ourselves — get the job done.

It’s very much the American message, as a matter of fact. Author William Martin expressed it when William Pike, the hero of his historical novel at the time of the founding of the nation says, “We might be dreamers, but we have to be doers, too. So we get up in the morning, we go to work, and we solve our problems.” That’s what Bob Lutz is all about. And I’ll bet, “I did it my way,” the old Frank Sinatra favorite works for Bob, even though the words may be politically incorrect.

Well, someone got smart and put Bob in charge of GM’s communications. What a hoot! As Bob said in a recent USA Today article, “I do believe we have to be much bolder and much more self-aware, and in some cases, more controversial or willing to tell it like it is rather than putting out a more sanitized version.”

Let’s hope Bob wins big. If he does, we all do.

John R. Graham is president of Graham Communications, a marketing services and sales consulting firm. He writes for a variety of business publications and speaks on business, marketing and sales issues. Contact him at 40 Oval Road, Quincy, MA 02170; (617) 328-0069; jgraham [at] grahamcomm [dot] com. The company’s web site is www.grahamcomm.com.

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