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Lessons from the 3 greatest comebacks I witnessed

Listening to customers is easy when you like what they have to say. When they love your product and want more of it, when they express high levels of satisfaction and indicate a willingness to promote you to others, things are great.

What’s not so easy — and what some companies seem almost congenitally unable to do — is listen to the customer when the news is not so good. But that is the most critical time to do so.

Three car companies impressed me by their ability to listen to customers when what they had to say was tough to hear. And by doing the tough work to address customer concerns, they enjoyed improved sales as well as bolstered images. Although they share a common industry, the lessons they teach are universal.

Volvo, Jaguar, and, to some extent, Hyundai all had stretches of success before problems with quality caused their customer satisfaction numbers to tank. In all three cases, the facts were not pretty: Volvo, which was founded in Sweden in 1927, had long enjoyed a reputation as a safe and durable automobile; beginning in the early 1990s, Volvo’s rankings with owners who’d had their cars for two, three, and four years started to drop — undermining one of its cornerstones of its marketing campaign — its durability.

Jaguar, introduced in 1922, was a luxury brand with high rates of customer loyalty. By the early 1980s, loyalty metrics started to dip as customers grew weary of the amount of time their Jaguars had to be in the shop. At the same time, Jaguar’s warranty costs were killing the British company.

Hyundai had established itself in 1967 by manufacturing cars for the Korean market originally using technology mostly licensed from other manufacturers. In the early 1980s, Hyundai was ready to move to the U.S. market, selling cars under its own marque. Hyundai contacted J.D. Power and Associates for advice on breaking into the U.S. market. Understanding how hard it is to build a car company from the ground up, I advised the still young manufacturer to take its time and start out in the Canadian market.

Hyundai took my advice about Canada, but it was so encouraged by strong sales numbers that first year that it accelerated its plan and introduced its first car into the U.S. in 1986. Sales were terrific for the first few years ,but quality problems hurt their image and caused a severe drop off in sales.

But these problems were surmounted by all three companies because they decided to address rather than reject unfavorable customer feedback.

When Volvo started to see its rankings on J.D. Power’s Initial Quality Study sink, top executives approached the news with unblinking determination. “We must become humble, swift, honest, brave,” wrote a Volvo senior executive in the company’s internal newsletter. “We have to dare to admit that a problem is a problem, and a customer complaint reflects our shortcomings in providing quality. Every problem brought to our attention must be taken seriously and solved.”

And that’s what Volvo did. Volvo took a quaint yet effective approach to conveying the need for change to its employees. Starting with that first feature in 1991 and continuing for the next five years, the company newsletter depicted Volvo’s situation with cartoons that would be amusing were they not so serious. The first cover showed a hand-drawn Volvo sinking under water as a lightning bolt with the acronyms for J.D. Power studies loomed overhead. As improvements started to be made, a cartoon that depicted a Volvo mounting steps appeared on the cover of the newsletter. Ultimately, Volvo’s company newsletter showed drawings of a Lexus, an Infinity, and a Volvo atop an Olympics — like winners stand, with Volvo triumphantly in the third spot along the first- and second-place luxury brands.

At every level of the company, the commitment to quality was renewed. Tweaks that could be made to existing models on the factory floor ticked up quality a bit, but it was a commitment to solving major flaws at the design stage for new models that really turned things around. By 1996, in our surveys of quality in the U.S., Volvo ranked among the top brands.

Jaguar also faced dismal customer satisfaction ratings head-on, but there were no whimsical cartoons providing levity to the hours upon hours of audiotaped customer complaints Jaguar managers grimly waded through in the process of identifying areas for improvement. J.D. Power and Associates worked with Jaguar on a proprietary basis to better understand what the customers were experiencing.

Recording these telephone interviews was a service that J.D. Power provided in addition to its more widely known mailed surveys. Normally the interviews would take 15 minutes — 20 at the most. Jaguar customers had such long litanies of complaints that many of their interviews ran an hour or an hour and a half.

One executive tasked with listening to these interviews was so infuriated by what Jaguar drivers had to put up with due to sloppy manufacturing that he was forbidden by his wife from listening to them on his ride home from work. But listened he and others did, and company leaders divvied up responsibility for fixing each issue the customer interviews revealed. As a result, and over time, Jaguar improved its quality; Jaguar even saw the most dramatic one-year improvement in Initial Quality Study history.

For Hyundai, the climb to quality and strong customer satisfaction was not nearly as swift as Volvo and Jaguar’s. Hyundai’s was a journey that took more than a decade of diligence, but that is understandable for a young company still establishing its footing.

Hyundai’s focus had been historically very production-driven, with a belief that delivering a high-value, low-cost car would guarantee strong sales. The high quality standards of U.S. drivers was a wake-up call for Hyundai, but one they answered. Hyundai engaged J.D. Power and Associates to consult on improving customer satisfaction, and made the most of our advice by quoting my presentations on large banners that hung in their headquarters conference room in Seoul.

Over time, Hyundai began to feel that its quality was improving, but sales were still lagging. Hyundai received advice, with which J.D. Power concurred, to institute an unprecedented 10-year warranty.

By standing behind its quality in such a bold manner, Hyundai not only dispelled any lingering concerns about its previous quality problems, but it also maintained an internal commitment to quality: because warranty fixes would be so costly, Hyundai’s bottom line relied on the design and production teams to keep quality levels up.

All three of these companies made impressive comebacks by facing customer complaints and doing the hard work to correct quality problems. They did not turn away out of fear that acknowledging problems would shine a media spotlight on them. Instead, they amplified customer concerns internally and expected employees at every level of the organization to dedicate themselves to improving.

Dave Power is the subject of “POWER: How J.D. Power III Became the Auto Industry’s Adviser, Confessor, and Eyewitness to History” (2013: Fenwick Publishing Group), in bookstores now.¬†For more information visit DavePowerBook.com.