Lagging Lexus aims at creating exciting, sporty new image
— -- When Toyota was preparing for the 1989 launch of Lexus, the man appointed to birth the luxury brand, J. Davis Illingworth, often said: "We don't have a single dissatisfied customer."
Disingenuous, of course, because the gestating Lexus had no customers at all. But the strongly implied remainder — "… and we intend to keep it that way" — helped raise the bar for luxury car brands.
But now, after phenomenal growth that made Lexus the top-selling luxury auto brand in the U.S. from 2001 through last year, the marque is tumbling. This year, it's unlikely to finish better than third behind BMW and Mercedes-Benz.
Worse, its once-unassailed reliability and its engaging, concierge-style sales process have withered, leaving the previous standard-bearer to chase other brands, according to recent reliability and sales satisfaction surveys by consultant J.D. Power and Associates.
Lexus faltered by failing to have a regular flow of new designs to keep excitement percolating, just as it also ran short of cars to sell after the tsunami in Japan.
And recalls it shared with Toyota over complaints of unintended acceleration tainted its good name, at least temporarily.
"They need a lot of work," says Milton Pedraza, CEO of the Luxury Institute brand tracker. "A lot of brands, such as Cadillac, are catching up."
Indeed, Lexus has gone to work:
•It intends to reinvent itself with new-think, new-look cars, starting next year, that it promises will excite drivers, not just coddle them.
"Customers want cars to be much more emotional," and Lexus should have "been quicker to offer a more emotional experience," says James Lentz, COO of Toyota Motor Sales, the U.S. unit for marketing Toyota and Lexus brands here.
The new look is defined by a massive grille, and Lexus knows that it could trigger a love/hate reaction. Big change for the perennially conservative Lexus, but a worthwhile risk, in Lexus' view.
•Lexus has trouped cross-country, setting up tents at dealerships to train employees in the kinds of customer-first attitudes that Illingworth, who retired from Toyota in 2009, had in mind 22 years ago.
"The people who've been around 22 years need a new dose of it, and the others have never been exposed to it," says Mark Templin, general manager of Lexus and a Toyota Motor group VP.
•It has engineered a series of lavish dinners in Lexus owners' homes in high-dollar ZIP codes to listen to owners and a dozen or so of their invited-to-dinner friends who drive other luxury brands.
"We've always said we should treat customers like guests in our home," Templin says. "So we thought, how about treating them like guests in their own homes" to learn from the candid comments likely in a convivial setting.
"We bring in a renowned chef and cook for the people and their guests. Then we bring out the wine — 'truth serum,' I call it — and just listen."
Insights haven't always been the expected.
A woman at one dinner drove a European brand that was nothing but trouble. Other guests asked her why she kept the vehicle, and she replied, as Templin recalls, "It's like a bad boyfriend. He lets you down but you keep coming back because he looks so good."
Perhaps more useful for marketing:
