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

March 15, 2010

By John R. Graham

This article 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 happened –– and what is happening.

Perhaps nowhere 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, abandoned his retirement plans (again) and left 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 reviews now give most GM cars high marks, the sales fail to reflect consumer confidence. Now, Bob makes it clear there’s something wrong with the way GM is advertising its products.

The fact he is upset is no surprise. A few years ago, he got the Chevy Malibu ready for the road and the marketers came 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 effective.

Demonstrating how far off the mark marketers are today, a Buick VP said to Advertising Age about the TV spot, “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. 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 observe most often, the responses are revealing: customer satisfaction, 88%; customer retention, 86%, segmentation, 83%; competitive intelligence, 82%; brand loyalty, 82%; search engine optimization, 81%; marketing ROI, 80%; quality, 79%; data mining, 78%; and personalization, 79%.

No wonder marketing and marketers are in trouble. An ad may test well, but will it sell cars? It appears that 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 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 at GM have learned. 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 –– thought they should be treated as heroic figures deserving of endless praise and impressive rewards. In bad times, they blame others for their lack of success.

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

Salespeople can be so totally focused on wanting to make the sale they fail to listen to buyers. They are 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%.

Plotkin is on target when he says, “After all, aren’t good therapists selling something besides their time? At its basic level, therapists are selling mental health.” 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 reliability charts, the company struck gold (at least for awhile) with the “chopped” look of Chrysler 300 and Dodge Charger and 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 McMansions were sold to buyers who could ill afford the monthly payments but had a vision of “the American dream.” One car dealer reported that some customers bought loaded trucks at prices that exceeded their annual income. Not surprisingly, an unemployed 56-year-old man with a bleak job future said he didn’t know what he was thinking when he bought his truck.

What caused the 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 change in the customer mindset. Long looked down upon, store brands are pushing popular brands off many shelves.

Today, “the ultimate driving machine” may well be “the reliable driving machine.” Across the board, customers are experiencing “a value assessment and realignment.” David Kent of The Right Group offers clarity when he says, “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 that won’t give us consideration.”

That’s the task of business today.

If we didn’t have Bob Lutz, we would probably need to create him. He’s what our country is all about. He tells us to take risks, stop the meetings, forget about the “process,” cut out consensus and all the play-it-safe “team” stuff, quit defending ourselves, and 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 during the founding of the nation, said, "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.
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, or [email protected]. The company’s Web site is grahamcomm.com.