A completely redesigned and improved lineup of new trucks is helping Navistar International Corp. recapture lost sales and market share in the U.S. and Canada.
Navistar is selling thousands of its International Trucks brand models to giant motor carriers such as US Xpress and Werner Enterprises. But the company still trails arch-rival Freightliner and Paccar’s combined Kenworth and Peterbilt brands.
To catch those competitors, Navistar has launched its Vision 2025 initiative. The plan is to retool customer service just as it redesigned all of its International Truck models.
Friedrich Baumann, Navistar’s president of aftersales and alliance management, heads Vision 2025. Baumann sat down with Trucks.com recently and explained how improved customer service would grow market share. Here is an edited version of that conversation.
What is the goal?
The goal is to make sure that everything we do between the OEM, or original equipment manufacturer, and the dealer network is driven by creating value for the customer. That also means we need to listen and understand what the customer really wants and what they need.
We need to deliver value. We can all compete on price. You can look at any truck product as basically a commodity so that everything is being worked out around price. However, the true value you generate is from making the truck exactly as the customer needs for their application. It’s not just about the hardware and the truck itself, and it is about the entire service you fold around that.
That is something specific to our industry. The level and quality of service are not driven only by the dealer selling the truck. That distinguishes us from the car business. Car owners have their home dealership. For a trucker, it’s totally different because they’re running in some instances coast to coast. They are dependent on the level of service at any service point along that road where they have an issue that needs to be fixed. Therefore the strength of the service network is driven by how good your dealer service points are across the country.
It’s also extremely important that we have dedicated dealers to a specific brand because they all have the same interests. They want to make sure that the neighboring dealer and even that faraway dealer deliver the same kind of service as they do because that ties the customer to the brand.
Are dealers the key?
We are in the B2B business. Our customers don’t wake up one morning and decide, “Hey, I feel like I want to buy a new truck.” No, our customers buy a new truck because they need to stay competitive and need to make money. That’s the foundation of our industry.
The dealers are an integral part of the business system because state laws require that you have a neutral third party or bridge between the customer and the OEM. Then you have the customer there who runs a business that they want to be profitable and competitive. It’s extremely important to have a very close alignment between the OEM who wants to compete against the other OEMs and the dealer network who are competing with the dealers of the other brands.
Most of the customer interaction is managed through the dealership. What Vision 2025 does is create this alignment with the dealer. It becomes the foundation of trust and respect between these two business partners. We must make sure that we are all on the same bus, driving in the same direction to deliver customer service better than anybody else.
What are some of the first Vision 2025 achievements?
Number one is we are building a renewed level of trust between the dealer network and us as the OEM. That helps us to move more customer service initiatives within our network.
We have much improved how we work with the dealer committees. We are publishing agendas ahead of time and exchanging information ahead of time. We are communicating after meetings. We are much more alert to what we’re hearing from our dealer network, and we are not ignoring those messages.
The third piece is working very actively on data transparency. We have an agreement with our dealers on what kind of data we share so that we can improve our operations and we can improve parts availability at the service points.
How will it help you grow market share?
We grow market share by serving our customers better than our competition. It means you are competitive in your pricing. You have to be competitive on fuel efficiency. It’s one of the major expenses our customers have. You need to be very good at avoiding unscheduled downtime for our customers’ trucks. Our trucks must have more uptime so that they can generate more revenue than a competitor’s product. They must have a residual value that makes it worth buying the truck considering its life cycle for the customer. All of this will increase customer satisfaction. The higher the customer satisfaction, the more loyal the customers and the more chance you have to conquest additional accounts.
Is your goal 25% market share?
Our goal is to grow market share. We ended 2018 at 17.4 percent. We clearly expect to finish 2019 at least one percentage point higher than that. And we are not done. I would not limit ourselves to 25 percent. But would that make us happier than where we are? Yes, it would.
How does the new truck lineup play into this?
I see product as a foundation. If your product is not competitive it’s very difficult to maintain and increase your market share. We have done the homework and we need to keep investing in the product side of the business. But then comes the service aspect of the business. We must make sure that our customers can generate the profit that they are looking for operating our vehicles. But changing the service equation means also changing the mindset on how to look at service. It is going to get much more into the predictive space – fixing vehicles before the breakdown. That is a cultural change. We need to be way more forward-looking, more predictive and way more focused on avoiding downtime than what we have seen in our industry at this point.