Earl Wallace

Expect Toyota to rebound from its recall challenges of 2009 - 2010. Toyota, the world's top carmaker since 2008 is noted for a culture of innovation and quality.  As the cultural values that invented the Prius prevails, and its quality focus is reinforced, Toyota will overcome challenges and keep its competitive position.  Toyota already has followed the 3-D Leader’s five R’s model to rebound from product problems:

1. Toyota Reestablished Trust. President, Akio Toyoda, grandson of founder, Kiichiro Toyoda, publicly said he “can’t begin to express remorse,” over the grave concern this has caused. “I apologize from the bottom of my heart for all the concern that we have given to so many of our customers." 
2. Toyota Recalled Problematic Products to mitigate further injuries, liabilities and damage. This impacted sales, which declined by almost 9% since the massive recalls began September 2009. Yet the sales drop was far less than analysts predicted. 
3. Toyota Replaced Defective (or Suspicious) Items in about 10 million vehicles recalled globally for faulty floor mats, sticky gas pedals, braking software glitches and steering malfunctions.
4. Toyota is Reinventing Products with new features and safeguards that ensure the problem is fixed and never happens again. Recently Toyota unveiled the new 86 coupe to appeal to sports car lovers, and displayed a plug-in version of its best-selling Prius hybrid. 
5. Toyota Reported andPublicized recall fixes, and dealers stayed open all night to accommodate customers seeking them. 

Toyota recently reported $1.2 billion quarterly profits as sales rose the first time in seven months, but must overcome supply chain disruptions from natural disasters and over 300 U.S. lawsuits because of alleged defects.  Toyota attributes current profits in part to cost reductions. Its culture of efficiency, innovation and quality leads me to believe it will recapture market share.

The Three-Dimensional Leader: Negotiating Your Mission, Resources and Context provides an interview of Bill Dake, the architect of the Stewart’s convenience store chain that achieves $1 billion in annual sales. Dake emphasizes the relational aspects of selling through what he calls the “GREAT” sale strategy.  GREAT stands for greet, read, evaluate, associate and try.  He trains store partners (sales staff) that selling is achieved by striving to meet customers’ needs by doing the following: 

1. Greet the customer by acknowledging them with eye contact, a nod, and a smile Greetings include speaking with the customer about the weather, a local, regional, or national event, etc... 
2. Read the customer to determine if he or she is a “rusher,” a “shopper,” or a “regular.” Do not detain a rusher, but engage shoppers and regulars.
3. Evaluate effectiveness by determining the ROI on sales from your efforts, such as the gross profit (GP) from products.  Evaluate if marketing and discounts achieve multipliers (increased sales of non-discounted items), and if a “tail,” or residual increased sales continue after items no longer are discounted.  
4. Associate selling achieves up-selling by reminding customers of products they may have forgotten that go well together with their primary purchases. So recommend milk or orange juice to a customer buying eggs, a hard roll to one who requests chili, and suggest dry gas to a gas buyer. 
5. Try Again is a requirement for anyone experiencing frequent rejections. So for each successive customer keep asking questions, offering samples and making suggestions.

These techniques not only apply to in-store shoppers. These steps can be followed during any sales meetings.  Frequent attempts and the deployment of multiple strategies will lead to “GREAT” sales.  Why not respond to this blog and share your favorite sales strategy?

Companies like Toyota can bounce back from adversity (such as the sticking accelerator pedal problem) if they follow these five steps, modeled after how Johnson and Johnson bounced back from the Tylenol tampering scare of 1982.  The Three-Dimensional Leader: Negotiating Your Mission, Resources and Context, notes that “Many readers are too young to remember how Johnson and Johnson bounced back from the Tylenol tampering, but analyzing it’s response to the crisis gives us a template that all should follow.” 

J&J modeled these steps to overcome adversity:

1. Reestablish Trust by Acknowleding the Challenge Today (ACT), or as soon as possible. 
2. Recall the Problematic Product to mitigate further injuries, liabilities and damages
3. Replace Defective (or Suspicious) Items at no expense to the consumer 
4. Reinvent the Product with New Features and safeguards that guarantee the problem is fixed and never happens again.  
5. Report andPublicize Your Good Corporate Citizenship 

Remedy and ACT

Johnson and Johnson responded to Tylenol tampering localized to the Chicago area by undertaking a nationwide notification. 

Recall the Product

It is estimated J&J recalled 31 million bottles of Tylenol with a retail value at that time of over $100 million. 

Replace Defective Items 

J&J offered to exchange solid tablets for any or all capsules consumers had purchased.

Reinvent the Product with New Features

About a month after the recall, J&J reintroduced new, triple-sealed capsules, a safety feature in which consumers had confidence.  

Report/Publicize 
Over the next several years, Tylenol was effectively priced and advertised to become the most popular over-the-counter pain medicine in the nation.

Johnson and Johnson’s conscientious, straightforward, values-driven action, coupled with its ability to negotiate the new context posed by the threat of product tampering, resulted in an amazing product rebound less than a year later.