Intro to Business Lesson 4.2.4

Customer relation-the relationship between a business and its customers. 
Customer retention-keeping the customers you have. 

Customer Relations

Companies should always practice listening to their customers. General Motors listened to its customers by building strong customer relations.

Customer relations is the relationship between a business and its customers. 

Hummer Scenario:

https://ccalms.blob.core.windows.net/production/155742/c14997c5-cd12-4b48-9e0f-0cd03bcd4719-20230316162638343-ITB_U4_KnowingYourCustomer_HummerVideo.mp4

Hummer is a product that came about completely from listening to customers. If it were not for a celebrity getting a military vehicle, the interest in creating this car may not have existed. In this lesson, we will explore the importance of listening to the wants and needs of your customers.

First, the Hummer gave someone status because of its sheer size and tough exterior.

On top of that, an actor who played tough guys in Hollywood was the main spokesperson for the business.

Others looking to get their hands on a Hummer wanted to drive something larger than life and live out a fantasy. Even more petite celebrities, like Brittany Spears, bought Hummers.

Secondly, the Hummer did not get any cheaper after Arnold Schwarzenegger’s demands. The vehicle continued to sell for $100,000 or more.

 If you drove around with this on the road, it was an instant symbol that you had money to spend.

Between 1999 and 2006, sales of the Hummer continued to go up every year. Because Hummer listened to their customers, they knew their vehicle sold a status fantasy. They opened up many Hummer dealerships across the U.S. in order for customers to see the vehicles in person and for the salespeople to play into the dream.
Decline of Hummer Sales

2006 was Hummer’s most successful year, as it sold over 71,000 new vehicles. Apart from being successful, that year also marked a decline in the business.

Although Hummer had great customer relations throughout the 90s, they stopped tuning into their customers in the 2000s, when major changes took place in the world.
The Rise in Gas Prices

The war in Iraq posed many challenges to the US economy, and one of the largest ones was the sharp rise in gas prices in 2007. This was only one year after Hummer made record sales.

Hummer’s vehicle was known as a gas-guzzler. Not only was the vehicle itself expensive, but owners were going to be paying much more to drive it.
The Rise of Eco-Consciousness

Throughout the 2000s, awareness of global warming and energy consumption started to become more widespread.

The Hummer burned a lot of gas and also let out a lot of emissions. The public began wanting vehicles that were more friendly to the environment, and Hummers did not fit the bill.

By the 2000s the Hummer vehicle was impractical to own. Even those who already owned Hummers were selling them due to the gas costs. By the 2010s, Hummer dealerships were nearly all gone, and Hummers were no longer seen on the roads.

Customer Retention

After a ten-year break, Hummer has tried to redeem itself with the release of an EV (electric vehicle) Hummer in 2022. With a focus on climate and economic concerns, General Motors hopes to retain customers by maintaining the status everyone loves.

Customer retention means keeping the customers you have. 

If General Motors were to continue to ignore the public's desire for products that were greener, they would risk not having their existing customers come back to buy their next vehicle.

Lego became scared of what they believed were the new customers of the 1990s. With kids drawn to flashy toys like video games, Lego feared the simple brick was not going to be what kids wanted in the future. However, when Lego started to make all these drastic changes and grow into new toys and entertainment, profits decreased, and their business was in danger of shutting down.

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Jorgen Vig Knudstorp decided he was not going to make changes to the company based on what he thought the issues were but rather was going to hear the opinions of the customers solely.

 He put Lego's customers first. It meant learning how children play with Lego and what they enjoy. He discovered that the theories that kids were going to hate the brick because of video games turned out to be false. 

Next Class: Monday, 4/20/26

Quiz--Review in Class! Be sure to complete the review game before completing the quiz!