Standing up for the rights of the customer even when it hurts the business in the short run

The year was 1983. The technocrat CEO was an avid motorcyclist.  He surveyed the market that was dominated by just two Indian manufacturers who offered motorcycles as a mere means of transportation, not as a medium of ‘motorcycling excitement’. He decided to change the market. He flew across to Japan and persuaded the Japanese company to sell him the kits for a 350cc machine that will be assembled in India. Within three months, the product was ready to hit the Indian roads.

The overzealous technical team went all out for a Pan-India campaign asking people to book the vehicle with a token down payment. Against a targeted sale of about 500 units, the bookings grossed 15,000. Since only one out of 30 people were likely to get the bike, speculation was rife that the bike would fetch a healthy premium for the lucky few who will get to own it first. Going by the overwhelming response to the booking, the marketing campaign was a spectacular success. Nonetheless, three aspects of the introduction of the product left the CEO with an uneasy conscience:

1. Technical performance: Since the marketing campaign was designed without understanding the real behavior of the product, the technical claims made about the product were somewhat overstated. It was assumed that the product that performed well in Japan would fare equally well in India. Hot weather, poor roads and excessive dust choked the engine and wore out the lubrication quickly making the maintenance of the bike a nightmare.  Riders were unhappy that the bike spent more time in the repair shops that on the road. Since the bike was capable of riding at top speeds of 130 Kmph, the customers were unaware that at such speeds, the mileage of the bike will drop to almost half of the claimed 35 Kmpl. A high cost of acquisition and an equally high cost of running and maintenance was something the customers had not bargained for.

2. Dealer indifference: The disenchantment of the customers grew in volume and people wanted returned the money they had invested as a booking advance. The trade found it hard to keep the stocks longer in their showrooms and complained about their working capital being locked up. The levels of service demanded kept going up with time that the resale prices kept dropping. The bike did not offer the excitement it had promised originally.

3. Customer care: Perhaps what upset the CEO most was the fact that a sizable section of the riders were succumbing to serious injuries. Unlike Japan where any bike beyond 250 cc requires a special license, India had no such restrictions.  In addition, with the protection of the helmet not being made mandatory in India, there simply were too many casualties on the road. A few fatalities too.

For a while, the sales team continued to be on a denial mode. They kept underplaying the technical limitations and filtering out the noise from the trade. Yet the concerns about the safety of the riders could not be denied.

He convened a meeting of the heads of production, marketing and sales and shared his painful dilemma. He stated his dilemma: “Either we take responsibility for the safety of the riders or withdraw the product altogether. What do you suggest?

Continuing with the product would mean turning the dream of ‘motorcycling excitement’ into a nightmare for the riders. In addition there was the loss of dealer support attended by financial loss from a product launch that raised too much expectations and failed miserably.

Should we forego the short-term benefits and focus on the long-term goal of maintaining their credibility as a responsible manufacturer? If we did, at the very least we could protect the promise of the Japanese brand.”

The team came up with a three-pronged solution that was later implemented:

1. Police modernization: They would shift the focus of marketing from consumer segment to the institutional segment of the Police and the Armed forces who needed high-powered bikes as an operational necessity.

2. Sports clubs: They would propagate the excitement in motorcycle sports clubs who understood the racing attributes of the bike better and were equipped with their own garages to take care of the needs of maintenance of the bikes.

3. Campaign for rider safety: A few safety conscious dealerships were authorized to periodically check the vehicles for safety and performance. In addition the company conducted camps to educate the riders on safe riding and taking basic precautions to avoid inviting personal injury.

The follow on product, a 100 cc bike was positioned in between the mileage conscious Honda and the cost conscious Suzuki as an ‘Authentic biking experience’

This is the story of how Yamaha RX 100 came into being in India. While RX 100 became a motorcycling sensation, the courage to stand up for what was right, rather than succumb to the dictates of commercial expediency, was an act of exemplary leadership.

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Shekar is a thought catalyst. Sustainable growth, personal and professional, institutional or National is his mission in life and business. He promotes System Intelligent Living as a vehicle for personal coaching and as a mantra for organizational transformation. Based out of Chennai, India, he writes, teaches, coaches and consults for clients in India and the Middle East. He can be reached at rshekar@me.com.