Friday, February 12, 2010

What can business owners learn from the Toyota recalls?

In the last 2 months, the news has been flooded with information about the recent recall of over 7 million Toyota vehicles. The safety issues with these vehicles has left many Toyota owners stressed out and has future car buyers reluctant to buy a Toyota. As a business owner, safety issues with your products can kill your business (for example, Chi-Chi’s). As always, you should strive for constant safety checks. But what if you find previously sold products that are deemed unsafe? In this post, I will discuss some of the steps Toyota has made to help ease their customers’ minds.

On their website, Toyota lists the vehicles affected, steps to take if your vehicle has been recalled, and multiple videos. The videos include descriptions of the safety problems and how Toyota will fix it. The first video describes the pedal sticking issue. Also included is a video message from Toyota President, Jim Lentz (video 2 below). He offers his deepest apologies for the problems, guarantees that Toyota will fix the problems quickly, and asks customers for the opportunity to earn back their trust. To further reach out to customers, Toyota recently started airing a commercial described their commitment to fixing the recall issues and restoring customers’ faith in the company (video 3 below).

At the dealership, Toyota is again trying to ease customers’ minds. The company has given each dealership between $7,500 and $75,000 to de-stress customers. To do this, some dealerships have hired a manicurist to do nails while people wait for their cars. Other dealers are driving customers to the movies and paying for tickets while waiting for their car to be serviced.

I don't believe there is any set of steps that will completely erase this (or any) recall from the minds of consumers, but Toyota has stepped up to the plate, fully accepted responsibility, and has worked quickly to fix the problem, which I think will impress future car buyers.

Some analysts predict this recall will cost Toyota between $1.1 and $2.2 billion. As a consumer, have the commercials and apologies from the Toyota President regained your confidence in the company? Do you think Toyota can survive this +$1 billion hit? Do the “stress relievers” like manicures and movie tickets strengthen your perception of Toyota? As an agricultural entrepreneur, have you ever faced a safety issue where a recall was needed? How did you regain the trust of your customers?

1 comment:

Calvin said...

I personally think Toyota has mismanaged the situation. They under-estimated the size and impact of the problem. Then they responded too slowly.

I think part of this is the cultural differences between countries. I'm not sure that people in Japan expect an apology. Traditionally, they expect more. Also, Japanese are known to be very thoughtful about decision-making. Perhaps they were simply slow because they were trying to analyze the situation to get the best answer.

I think the lesson from an agricultural entrepreneurship point of view is that decision-making in a crisis must be different than normal decision-making and that if we have customers from different cultures, we must meet the expectations of their cultures, not ours.