Almost all companies talk about caring about the consumer experience. I dare you to find a company who doesn’t say this is a priority. But this rarely translates into a truly, consumer-centered design and innovation process. The reason is because the systems, processes, and people aren’t always aligned to think first about the consumer and then to design around their needs, wants, wishes, and dreams.
Jim Lyski, the CMO of CarMax presented to students at the Darden School of Business (UVA). He talked about agile marketing and a new methodology they are employing at CarMax to drive rapid innovation. I followed up to get his thoughts on this new methodology and how marketers could leverage it to generate better innovation solutions to drive customer and financial success.
Jim Lyski's Thoughts: A New Methodology To Put Customers At The Center Of The Innovation Process
As background, the automotive industry is one that historically hasn’t been known for its integrity. In general, automotive companies can take advantage of the consumer a number of ways—through the price they charge you for the car, or the amount of money they give you for your trade-in, or the amount they charge you for financing, or the number of “accessories” they try and sell. All of these are mechanisms to drive a higher price and maximize the profit from every customer. This approach to selling cars results in a terrible customer experience and consumers lacking trust in these traditional dealers.
CarMax was founded as the antithesis to this approach, providing a no-haggle and no-hassle purchase process that delivers up front pricing on vehicles, trade-ins, extended service plans and financing. This transparent and customer-centric approach led to many years of success for our company. So the current question is: How can we best continue to drive growth? We are in good shape; we have a net promoter score of 81 (better than Apple and Amazon). We are big--the nation’s largest retailer of used cars and a $15 billion company. However, we only have a 5% market share. In addition, our customers are changing and our industry is evolving into an e-commerce industry. We asked ourselves, how do you get a company, that has always been successful, to do something in a different way and to innovate more quickly to drive the customer experience?
How do you do it? The way we did it was to shock the system. We organized into small cross-functional product teams who are empowered with discovering solutions that customers love and will drive business results. These teams operate like small start-ups within our large organization.
We also changed the environment—got rid of cubes and went to an open working environment. We have stand-up meetings with regularity. We have a transparent, open, rapid communication system to ensure mutual understanding of what is happening and where we are going. We share the latest results from testing. People are involved and engaged.
We also changed the process by which we innovate. The traditional product development approach—idea, research, roadmap, requirements, design, build, QA, deploy, learn—takes a very long time, 9 months or more, and is very high risk.
Employing agile methodology from the tech space, the teams started developing quick experiments where they would ideate, test, and get feedback within weeks. The objective is speed and low cost—which leads to low risk. We learn, perfect, and then continue the iteration process. The goal is fast learning and feedback—to get the consumer involved as fast as possible.
Let me give you an example. One thing some consumers would love is to not have to step foot on a car lot. So one of our leads suggested delivering the car to the house. The customer would pick the car out online and then we would deliver it to their home. If you put paper to pen, this idea is terrible. High cost, lots of labor, and it would be killed before it ever has a chance. Despite the importance to the consumer, we would have killed it in the traditional approach.
Using agile, we tested the idea within weeks. At first, we were upside down on the numbers (as you would expect). It required 1.5 hours to create four different contract packages depending on what would happen at the consumer’s house. We then had to take five people to the home visit (finance, paperwork person, the person who created the experiment, etc.). Financially it was a no-go. However, the consumer loved it. We’ve now iterated the process and are down to two people and have created a mobile office, making the entire process more efficient. We continue our testing of this new customer offering and are learning a lot in the process by staying anchored to delivering a better customer experience.
The key in agile is to fail fast and fail cheap.
Join the Discussion: @KimWhitler @CarMax
Interested in more CMO Insight? Check out the following: Deepak Advani (IBM); Duncan Aldred (Buick/GMC); Matthew Boyle (CMO, AAFCPAs); Bill Campbell (CMO, Chatham University); Steve Cook (former CMO, Samsung); Rishi Dave (CMO, Dun & Bradstreet); John Dillon (CMO, Denny’s); Kristin Hambelton (CMO, Evariant); Jeff Jones (CMO, Target); Michele Kessler (CEO, thinkThin), Josh London (CMO, IDG); Antonio Lucio (CMO, HP); Josh London (CMO, IDG); Jim Lyski (CMO, CarMax); Tim Mahoney (Global CMO, Global Chevrolet and Global Marketing Operations Leader, GM); Jim McGinnis (Intuit); Jim Melvin (former CEO and current CMO in Tech); Kristin Merlo (Chief Marketing, Sales, and IT Officer, Delta Dental); C. David Minifie (CMO/EVP Corporate Strategy, Centene Corp); Margaret Molloy (CMO, Siegel+Sale); Joanna O’Connell (CMO, MediaMath); Anne Pritz (CMO, Sbarro); Martine Reardon (CMO, Macy’s); David Roman (CMO, Lenovo); Robin Saitz (CMO, Brainshark); Ajit Sivadasan (Lenovo); Ron Stoupa (CMO, Sports Authority); Ken Thewes (CMO, Regal Entertainment Group); Scott Vaughan (CMO, Integrate); Brent Walker (CMO/Co-Founder, C2B Solutions); and Barry Westrum (EVP, International Dairy Queen).
