Effect on Value Proposition and customer service
Value proposition is the promise of value that a business entity makes to a client and, the belief by their customers that value and quality will be delivered. Normally, value proposition is a strategy which is part of a long-term business plan of a corporate entity. Consistent quality delivery and meeting of customer expectations for a long time, easily brings a reputation of quality to an organization. Toyota has for a long time been associated with quality and rarely do authorities and customers question its credentials in terms of value proposition.
However, the recall that affected eight million cars worldwide did dent Toyota’s quality image and raised doubts on the company’s stated quality objectives (Lam 2010, p. 36). Though a good number of customers still belief in Toyota’s quality standards, its products are at some point going to be treated with doubt and most customers may not hold the company’s value proposition highly as they used to.
Toyota customer experience has been a cornerstone of the Toyota value proposition. Customer service was crucial in dealing with customers during the crisis. Some analysts allege that Toyota had knowledge of the problems affecting the recalled vehicles but, still did nothing to correct them in time. This allegation somehow cast doubts on the genuine will of the company to address potential problems that may affect customers.
Role of Social media
Since the technology boom of the 90’s, and the subsequent development and widespread use of the internet, online marketing and customer interaction has been a permanent feature in many companies’ plans. In recent times however, social media has been the face of online marketing and interaction. Billions of people are registered in various social sites where information is exchanged continuously.
Sites such as Facebook and Twitter offer huge marketing platforms that businesses can use to reach millions of potential customers. During the recall, customer loyalty to Toyota fell drastically. However, the company managed to retain the backing of the majority of its loyal customers. Through social media, Toyota has a chance to interact with these customers who can easily spread the company’s goodwill message to potential new clients.
Social media offers a direct and affordable avenue through which Toyota can establish a one-on-one relationship with new and existing customers with the aim of repairing the tarnished image and gaining the lost value proposition trust. Through social media, Toyota will be able to deliver firsthand information on new products and also be able to receive up to date feedback from customers for easier planning and delivery of quality products.
Factors affecting Toyota customer loyalty
Toyota has for a long time built a solid reputation of quality and with it, a loyal customer base. The company had, from 2007 to 2009, held the highest rate of customer loyalty as evidenced by repeat customers for all vehicle brands. The recalls however, dented the company’s rating with customer loyalty dropping from 58%-48% (Pride et al. 2011, p. 242).
This change was occasioned by many factors, chief among them the loss of faith in the company’s quality initiatives and failure to respond adequately within the required time. Before the recall, Toyota was the epitome of quality among car makers worldwide.
The belief that the company’s cars were devoid of any quality defects endeared many existing and new car owners to its products. Additionally, many customers had attested to Toyota’s prompt response to concerns raised by customers. The above were the underlying reasons why customer loyalty in Toyota was so high.
Developing customer loyalty
Though customer loyalty has rebounded, it is important for Toyota to focus on building and maintaining lasting loyalty. Through the company’s quality products, Toyota has built a bank of goodwill that will enable it to maintain customer loyalty in the long-term (Wimmer 2011, 89). The company should therefore consider the following recommendations to secure long-term loyalty from customers.
- Toyota should take advantage of the situation goodwill reservoir to restore the loyalty that its customers have lost
- Additionally, there is need for Toyota to develop and implement a comprehensive customer communication strategy. Customer communication will be crucial to overcoming the challenges posed by the recall and the erosion of trust
- Toyota should have in place a strategy based on assured quality to attract both their former customers as well as new ones. During the crisis, Toyota rivals such as Nissan, Hyundai and Ford offered cash incentives to defecting Toyota customers, a strategy that had considerable success. However, cash incentives can only work effectively in the short-term
Improving customer service
Despite Toyota’s comeback, its customer service holds the key to its full recovery and also the possibility to become the biggest car maker in the world again. A few customers have complained that Toyota customer service is not people-oriented anymore. Some have cited arrogance and lack of prompt response. Toyota will therefore do better in customer service if the following recommendations were implemented:
- Toyota needs to ensure timely response and better delivery of services purposely for maintenance of customer loyalty
- Toyota needs to open more customer care centers to take the services to the people through interaction
- Toyota needs to increase necessary customer service requirements especially direct lines for easier access to customer service representatives
Reference List
Lam, P 2010, Toyota’s crisis: Japan’s decline?, McGraw Hill, New York.
Pride, W et al. 2011, Business, Routledge, New York.
Wimmer, E 2011, Motoring the Future: VW and Toyota Vying for Pole Position, Sage Publications, London.