Alicia Boler-Davis Remarks to Motor Press Guild

LOS ANGELES--October 9, 2013: General Motors Senior Vice President of Global Quality and Customer Experience spoke Tuesday to the Motor Press Guild in Los Angeles. Here are her prepared remarks. As always, the speaker’s words are definitive.

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Thank you for that kind introduction. And thank you all for coming here today.

Many of you heard Mark Reuss speak at an MPG breakfast six weeks ago. As you know, Mark heads up our North American operations. He spoke about some of the many exciting things happening at GM these days:

from our U.S. product offensive – 28 new vehicles in 2013-14 alone, as we turn 70 percent of our North American lineup by the end of next year… to our improving financial performance – 14 consecutive profitable quarters… and from higher residuals for our new vehicles… to our keen new focus on improving the GM customer experience and product quality.

It’s this last item – improving the customer experience and product quality at GM – that I will dive into more deeply today.

Now, when we look across the auto industry, we see that no one company stands out as the clear winner in the customer experience area.

Some companies do it better than others, but even the best in the business can’t compare to the outstanding reputation that companies like Apple or FedEx enjoy in satisfying customers today.

At GM, we see this as real opportunity not just to improve customer service, but to take the overall customer experience to a whole new level. We want to create true customer advocates – customers who not only repurchase our brands and products, but who also go out of their way to recommend them to others.

To do this, we’re completely reinventing our approach and transforming the entire company. We’re making the customer front and center in everything we do… from how we interact with them to how we design, engineer, and manufacture our vehicles.

Fundamentally, it’s about changing behaviors. It’s about making GM a customer-centric company… and working to ensure that everything we do is “driven by the customer.”

So, to take the overall customer ownership experience at GM where we want it to be, we linked the customer experience and product quality areas about 15 months ago… and I have had the good fortune to be the first person at GM to run both organizations globally.

GM is the first automaker to combine these two functions under one leader, and we believe it gives us a real competitive advantage.

The Customer Experience side of my job is mainly about how we interact with our customers. And we focus on two key areas:

Our customers’ perception of our vehicles, brands, and image before they step into the dealer showroom. And the relationships our customers have with GM and Dealership personnel throughout the sales, service and ownership experience.

The Product Quality side of my job is equally important to the creation of life-long customers. Here we are focusing on three main areas:

Product excellence – which includes the overall design, the driving experience, and Human Vehicle Integration or HVI. Basically, all the things that attract you to a vehicle in the first place. Then there’s initial quality And finally, long-term reliability and durability.

Our focus is to ensure that every touchpoint the customer has with GM, including our products, is exceptional. Our goal is to build a relationship that drives retention.

Consider that a single percentage point improvement in sales retention equates to about 25,000 U.S. car and truck sales at GM… or about $700 million in annual revenue. That’s a big incentive, and that’s one reason we’re so intently focused on this effort.

We are determined to make GM a leader in all these areas… so let’s get into some details about what we’re doing, starting with the Customer Experience side of my job.

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For most customers, the dealership is where the rubber meets the road – where they purchase the vehicle and where they get it serviced or repaired. So, the facility itself needs to create the right environment for a quality retail experience that reflects the character of the brand.

That’s why I’m happy to report that we are in the middle of the most significant dealer renovation project in GM’s history. Our dealer partners are making great progress having either completed renovation or getting ready for construction.

Beyond that, nearly all of our dealers have gone through customer service training:

To date, nearly 2,500 Chevrolet dealerships have completed three-day customer-focused seminars at the highly regarded Disney Institute.

Similarly, Cadillac dealers have participated in a customer service initiative with Ritz-Carlton and Buick-GMC dealers have focused on executing the Buick Experience. Now Cadillac and Buick-GMC will participate in the Disney Institute, as well.

And all dealerships are focused on standards that deliver to our customer’s expectations. In fact, we’re training our field teams to work collaboratively with our dealers to help them execute to those standards.

All of this is helping us build on a retail experience that is already scoring well with customers. For example, in the latest J.D. Power Customer Service Index study, GMC ranked the highest among mass market brands, with Buick and Chevrolet also in the top five. Cadillac ranked second among luxury brands.

That’s good, but we want to do better . So, one area where we’re making a big push is in-vehicle technology and infotainment – which continues to be a hot button for customers across the industry.

As vehicles become increasing complex, the winning automakers will be those that make complexi ty transparent to the customer. It’s not just in the design and execution of the technology – it’s also a matter of how well that technology is explained and introduced to the customer.

So, we’re working to streamline the hardware and software for the user, but we’re also training our dealership personnel and our GM field employees to assure our customers have a great experience from the start.

To date, we have placed 50 in-vehicle technology experts in the field, allowing us to cover 85 percent of our U.S. markets. We call them Connected Customer Specialists.

These specialists work with customers and dealership staff to quickly address customer questions about vehicle connectivity and infotainment systems. They also work with the Certified Technology Experts that are at every GM dealership nationwide. We believe it is important to have at least one person at every dealership fully knowledgeable and responsible for helping customers with all their infotainment needs.

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So, that’s a glimpse at what’s happening at our dealerships. We are also making big changes to the way we engage with customers through our call centers and online through social media sites.

At the moment, we’re bringing our new state-of-the-art Customer Engagement Center online in Warren, Michigan, where our GM Tech Center is located. Move-in started in mid-April, and we’re now about 85 percent staffed. By the end of the year, we’ll officially open the facility and have about 300 advisors located there.

But this effort is about much more than a new building. It’s really part of a very broad effort to interact more closely with our customers. In short, we now recognize that our bottom line depends on our front line customer advisors. We’ve made the job of listening to our customers a core competency. We want to own it and directly manage the relationship with our customers.

What that means is we’re eliminating the standard escalation process where a customer might be passed from one representative to another to resolve an issue. Instead, we’re now relying on well-trained advisors who are empowered to interact with customers and resolve their issues on the spot.

We’re taking what used to be seen as a customer complaint department and we’re turning it into a Business Development Center. We’re now working to provide the best possible experience for our customers with each and every encounter. And if every encounter reinforces a customer’s decision to buy GM in the first place, we are increasing the likelihood that he or she will buy another GM product down the road. That’s really what it’s all about.

Also, by locating the new center in Warren, we have brought our advisors closer to the engineers and other people who can support quick decisions for our customers’ immediate concerns. Instead of focusing on closing cases as quickly as possible, we’re now focused on satisfying customers as quickly as possible.

We’re also bringing the voice of the customer to the designers and engineers who work at the Tech Center, allowing us to implement product improvements faster.

And, our engineers can now spend time at our call center to hear first-hand from our customers. At the same time, we’re now getting engineers out to dealerships for the same purpose.

In addition to the new Customer Engagement Center, we’ve also opened a dedicated Infotainment Call Center in Austin, Texas. It’s staffed with advisors specially trained in infotainment and mobile devices. The center includes vehicle simulators with fully functioning infotainment systems, so advisors can re-create exactly what their customers are experiencing.

We’re also not waiting for customers to come to us – we’re increasingly reaching out to them proactively to offer support and assistance. That’s especially true with our Social Media Team, which is actively involved in different social channels like Facebook, Twitter, and especially popular automotive forums.

Our team consists of professionally trained people who monitor social media conversations and interact with customers when it’s appropriate to offer some assistance.

In the last year, we’ve also co-located our different social media teams from marketing, communications, and our customer care group onto a single floor at our corporate headquarters – actually right next to my office there. This allows for greater cooperation among the teams and a better understanding of customer needs.

Each team member is equipped with the information and resources they need to handle whatever might come their way. That includes reaching out to our dealer body when it makes sense.

And there’s a central command center with big monitors displaying what’s trending on-line, so advisors are aware of the topics that are currently most important to GM and our customers.

By pro-actively addressing problems or concerns voiced on-line, we’re often able to turn a dissatisfied customer into a satisfied and loyal one.

In fact, we were recognized by Fortune magazine this past spring as one of its “Fortune 500 social media stars,” along with eight other companies like Facebook and Coca-Cola. That’s pretty amazing when you think of the number of customers we have out there and the complexity of the products and services that make up our business.

So, these are a few examples of how we’re working to improve the experience for our customers and enhancing our ability to incorporate customer feedback into our vehicle development process. We are taking what we’re learning from our Customer Engagement Centers and dealers and we’re pushing that data upstream into engineering and manufacturing.

That’s one of the tangible benefits we’re seeing by bringing the Customer Experience and Product Quality teams together under one roof: And that leads me to the other part of my job: Product Quality.

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As I mentioned earlier, we’re focused on three main areas in Product Quality: product excellence, initial quality, and long-term reliability and durability. In the past year, we’ve seen some significant improvement in third-party recognitions in these areas.

For example, in the 2013 J.D. Power Initial Quality Survey, GM was ranked the best automaker for initial quality for the first time ever. In fact, we were the only automaker to have fewer than 100 problems-per-hundred-vehicles.

What’s more, eight of our vehicles placed first in their segment. No other automaker had more than three. And half of our models scored in the top three in their segment.

It’s a similar story with the 2013 J.D Power “Vehicle Dependability Study.” GM vehicles ranked highest in four separate segments… and 11 GM models either received a segment award or placed in the top three in their category.

Also, in the 2012 Consumer Reports “Annual Reliability Survey,” all four of our U.S. brands improved their scores and are now ranked above the industry average. Cadillac improved 15 places and is now ranked the most reliable U.S. brand. All told, Consumer Reports now recommends 16 GM vehicles… up from 11 the previous year.

And this summer, following the launch of the all-new 2014 Chevy Impala, Consumer Reports named it the best new sedan – the first time an American sedan has held that distinction in at least 20 years. More recently, Silverado was named Consumer Reports’ top rated truck.

Warranty costs are another way to gauge the quality of our products, and so I’m also pleased to point out that – on a per-vehicle basis – we have spent less than, for example, Toyota on warranty repairs for the last five years.

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So, the latest third-party evaluations of our products are pretty good – but we know we have much more work to do. Two areas where we’re intently focused right now are Human Vehicle Integration, or HVI, and drive quality.

These two areas rank very high up with customers when it comes to the overall performance of their vehicles. And it’s important to note that we’re not alone when it comes to them. Throughout the industry, people report more audio, entertainment, and navigation problems than any other category. And Engine/Transmission problems are not far behind.

HVI is basically how easy or difficult it is for a customer to interact with a vehicle. Problems in this area could include a poorly positioned seat adjuster or maybe a door lock switch. But lately, most problems across the industry involve infotainment.

Infotainment research at GM actually started many years ago. Back in 2007 – the same year Apple introduced the iPhone – we embarked on a five -year study to understand how people use their car radios and navigation systems, as well as their phones, iPods, and other portable devices in their cars.

We watched others venture into this area early on, so we wanted to make every effort to do the best we could with our new systems.

In fact, we went so far as to send our infotainment system designers into the field to ride with customers to work, on errands… even on vacations!

We learned a lot. Then we applied what we learned to new designs and interfaces. We tested our designs at customer clinics, then redesigned them and tested again.

Of course, I’m simplifying the process here, but the point is we used exhaustive methods to incorporate the voice of the customer into our new infotainment systems – employing hard science and brand differentiation along the way – all in an effort to meet the expanding wants and needs of our customers.

The result is the connected systems now appearing in our vehicles: MyLink, IntelliLink, and CUE, the Cadillac User Experience.

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Another aspect of Vehicle Excellence – and another hot button with customers – is drive quality. Drive quality is simply a measure of how the driver experiences the performance, feel, and feedback characteristics of the vehicle – things like the responsiveness of the accelerator pedal, shift smoothness, and so on.

Until recently, drive quality assessment has been highly subjective… and developing a scientific quantification of drive quality has been extremely difficult. But we’re now using a fairly new measuring tool that we purchased from an Austrian company called AVL. This tool provides us with a numerical assessment of drive quality – and enables us to precisely benchmark the competition.

Essentially, the AVL tool allows us to take the customer’s requirements and translate them into technical specifications that our engineers use to deliver the driving experience that customers expect. It’s amazingly helpful, and it has now been fully integrated into the development process for all our vehicles.

While we’re not the only manufacturer to use the AVL tool, we understand that we’re using it more extensively than anyone else, given our global footprint and diverse propulsion strategies. It puts us on the forefront of defining a deeper understanding of how to use the tool to our competitive advantage.

So, the AVL tool and our infotainment research are two examples of how we’re doing a better job getting customer insights to the people doing the design and engineering work in a consistent and reliable fashion. It allows them to design beyond their own individual knowledge and experience, and work toward delivering what the customer truly wants.

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Now, when Mark Reuss was here, he spent a lot of time talking about the many new vehicles we’re launching in the U.S. right now – as I mentioned earlier, 28 new vehicles in 2013 and 2014 alone.

So, let me talk for a few minutes about some of the things we’re doing to launch these products with the best possible quality. And it’s a lot. For example:

We’re now “front loading” the major aspects of our vehicle programs – locking in our designs, for example, much sooner in the vehicle development process.

This means we’re also validating the designs for our parts and components much sooner.

It has also allowed us to advance the initial test build of our new products by a significant margin. In other words, we’re now treating our prototypes as the first production vehicles, as if we were building them for the customer. And responsibility for these prototypes has moved from Engineering to Manufacturing.

This is forcing more discipline into the process – giving us much more time to:

get more test properties on the road sooner identify issues sooner incorporate customer feedback sooner and really refine the build process before the first saleable unit ever rolls off the line.

These are huge changes for us, affecting nearly the entire team.

They require a change in our mindset that says everything will be production intent, from the first vehicle on.

That means less prototype tooling and more production tooling earlier on.

In turn, that means we’re streamlining the process, eliminating cost, and allowing more time to focus on what’s most important: executing the launch.

Beyond that, we’ve developed a plan to improve the “Built-in-Quality” levels at our plants around the world – working not only in-house with our product design, engineering, and manufacturing teams… but also with our suppliers.

That reflects our belief that Product Quality is a team sport… that everyone has a role to play and, together, we can achieve the goal of “no defects.”

In terms of our suppliers – again, we’re changing our mindset. We’re looking for longer-term partnerships with our very best suppliers based on higher levels of collaboration and cooperation. And we have various efforts in place to help us get there:

We’re introducing a new Supplier Quality Excellence Award to recognize and reward our very best suppliers We’re taking some of the development engineers at our suppliers and training them on our quality tools, techniques, and terminology And we’ve launched an initiative that we call “Strategic Sourcing” to engage our best suppliers earlier in our vehicle production process. We gain better access to new technology, the suppliers get a longer-term contract with GM, and the result is better technology, better quality, and lower overall costs over the long term.

As you can imagine, all of the things I’ve mentioned are having a big impact on Initial Quality. We also have a lot going on to provide our customers with exceptional long-term reliability and durability, which we won’t have the time to get into right now. Happy to discuss during Q&A if you’re interested. Suffice it to say that our goal is to achieve the highest levels of long-term reliability and durability possible to ensure that customers come back to GM when it’s time to buy their next vehicle.

And that brings me full circle… right back to the lifelong customers we’re working to earn and retain.

So, to wrap up, our goal at GM is to provide the best overall customer experience in the industry. Some of the changes I’ve mentioned are bigger than others. Some have already taken place and others are being implemented right now.

Taken together, I hope you agree that all these changes point to how we’re doing business differently at GM today… and how we’re working to give our customers the best ownership experience in the business.

With that, let me thank you for your attention… and I’d be happy to take any questions you might have.