Chrysler Ending Dealer Incentives Program

Chrysler Group is killing dealer incentives for customer satisfaction and eliminating penalties for dealers who don't build stores that meet the company's requirements.

In a sink-or-swim approach to customer service, the automaker is leaving buyer satisfaction up to its dealers. The new program, called the Customer Experience Initiative, is a change for Chrysler. It's a stark break from the carrot-and-stick approach used by rival General Motors and is more akin to Toyota's relationship with its retail network.

Chrysler dealers who perform well will be rewarded with higher sales, not checks from the factory. "If you perform at a higher level based on customer experience, your percentage of loyalty will grow, your percentage of service retention will grow," said Mark Engelsdorfer, Chrysler's Director of Market Representation. "With that will come a pretty substantial growth in your operating profit."

The Customer Experience Initiative will rely on customer surveys that measure buyer satisfaction. But without penalties for negative scores, it shifts the responsibility to the dealer to fix flagging customer service.

Chrysler will gather customer feedback through follow-up phone calls, e-mail surveys, and a reworked mystery shopper program, said Peter Grady, Chrysler's Vice President for Network Development and Fleet. Dealers will get updated consumer survey information electronically, Grady said.

"If I sell you a vehicle and you're treated well, you'll become an advocate for me, and you'll tell other people that I'm a great dealer and this is great product," Grady said. "The same thing happens on service."

On January 1, 2012 Chrysler suspended its Dealer Standards program, which was designed to improve many aspects of dealer operations. Chrysler-Fiat CEO Sergio Marchionne said that the program had improved stores but that customer-satisfaction scores had plateaued.

The program, introduced in 2009, awarded as much as $200,000 per quarter to large dealerships that met factory standards for customer service, facilities, and management. The group's smallest dealerships could earn as much as $4,500 a quarter. A separate facilities program may be implemented in the future, the company said. Existing standards will remain in place, but dealers won't be penalized for failing to comply with them.

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