How Tesla Managed to Alienate Their Most Loyal Customers

[juschilin]

I believe the issue is that there are a ton of moving parts to this company. For it to be viable the model 3 must be release. Right now model s and model X are paying for this vision. We are early adopters. This is what we are and I think some of us are forgetting this. It may be linked to the feeling we get from driving or knowing that we will own one of these beauties.

Being transparent would be the worst thing this company could do. Everyone would be posting that communication on these forums and before you know it the market would be responding.

After the model 3 is release I expect to see some changes in the long term. Right now we are early adopters - when you're an early adopter you should expect things to be a different.

 

[bhuwan]

DaveT thank you for your insightful post - I've missed them. You are one of the most well liked and respected members on this forum. It's rather sad to see the number of people that don't see that and are attacking you.

 

[Cattledog]

I'm gonna think of myself as more of a "getter" Ha! Semantics

You're a go-getter MikeL! Hang tough, the lucky ones who've slipped through the cracks and accidentally received our Model Xs love 'em. At least we do.

Why exactly? They're selling as many cars as they can make, have pre-orders for thousand more, will sell tens of thousands of model 3s years before they even make them.....
Why should they change again?

Because we're about to hit 'the chasm', either in two years when Model 3 starts shipping or two months when it starts being reserved. Those people on the right of the chasm won't write a post on a forum to help explain things to the company they appreciate so much. They'll just cancel reservations and look at probably less compelling, but easier to deal with electric options the the big auto companies will be offering by then. Not all, but many of us, and certainly DaveT, criticize Tesla in public only when we have tried to make things right through private channels and have found that difficult or impossible. Our goal isn't bashing, it's betterment.

 

[aznt1217]

Having had to recently fire a customer, I didn't take it that way. I guess we all filter things through how we are feeling in other areas of our life. And I'm sorry you're feeling this way, Dave.

I did see that somehow you were somehow left off the invite for the Model X drive events in your area and that was inexcusable. I'm sure that was the last straw for you. You should have been first on that list.

I am fine with most of DaveT's posts and contributions here, but I will say NONE of us are in anyway shape or form allowed to judge the actions of Tesla on this Stewart Alsop deal because none of us know all of the facts. Nor do we need to. This is one of those cases where Tesla gets 1000x more unnecessary scrutiny.

 

[AnOutsider]

Mod Note: Some posts moved to snippiness. apologies to anyone who may have gotten caught up in the quotes. Also please remember that TMC's policies apply even in the investor's section.

 

[aznt1217]

Dave I am really sorry that you feel let down by Tesla.

My take on your post is that perhaps your expectations in respect of Tesla do not match reality and that may lead to disappointment.


Some examples, your bullet points:

1. You expect and ask for ultra transparency regarding future production numbers. I highly doubt Tesla will ever be ultra transparent and will share specifics on how many cars they will produce and when, and when people can expect to receive their cars. This is asking Tesla to be ultra precise regarding future. That is just not possible for rapidly growing business. Any such attempts at precise projections are bound to be wrong and to bite Tesla back.


2. You expect Tesla to share the reasons for delays. I highly doubt they will always do that. They might, they might not, whatever works for them, but often it might not be appropriate to share for various business/legal reasons.


3. You expect continual communication and openness with Model 3 customers, (hundreds of) thousands of people. Sometimes revealing too much just invites customers venting and vile reactions. It is quite difficult to do a daily job and to manage a wide range of customers and expectations.


4. Your expectations: head roll in case of delays - I am sure Tesla deals with the delays appropriately and in a measured way. There were examples of suppliers and executives parting ways with Tesla due to subpar performance. More often than not these partings are not publicized as publicity may be inappropriate or not legal in some cases.


Regarding taking a deposit and not communicating the way some people desire, Tesla is setting the terms of the deal and it is obvious that one of the terms of the deal is not over communicating on micro/personal level, for whatever reason that might be. These terms can be changed if and when there is competition with better terms.


Regarding stock price, perhaps it is where it needs to be at the moment. My expectation for Tesla is that if they manage to stay going concern, I do not worry too much about share price. The market will value it right.

When macro conditions improve, all stocks will go up and so will Tesla, more than other stocks.

Dude you nailed it. I'm guessing you have some sort of supply chain background or manufacturing. If we look at what happened, a lot was supplier driven. From what I understand the best system and what I believe Tesla uses is the Japanese model of supply chain where is is heavily partner/relationship based for performance and collaboration. If they were super transparent about delays, this can lead to harm for Tesla AND the supplying company in so many ways and deviate from getting things done and solving the problem.

 

[Hogfighter]

DaveT, your frustrations are warranted.

There are 2 separate issues here: One, delays in manufacturing with could only have been prevented by designing a vehicle that's easier to produce. Two, lack of communications with reservation holders concerning the delays in production.

My hope is that TM has learned from the X and make the 3 much easier to manufacture, which will make their communication flaw moot. They've said that the 3 will be easier to manufacture, but the proof will be in the pudding.

Regarding communications, it's a tricky thing to get right. What they should have done is communicate with the customers the same way they've communicated with the analysts. Send out an e-mail stating, 'we are hopeful to have your Signature X delivered by December. There are potential issues with suppliers and processes in manufacturing that could delay that delivery by a few months. As we get more clarity, we will keep you informed'.

 

[Mark Z]

Flexibility is the key.

When the hot sun prevents the falcon wing doors to rise properly, I override by holding the door control button up.

Tesla Motors solved it a different way at the "Meet Model X" event. They had cans of compressed air used to cool the door sensors.

Driving a Tesla vehicle or owning TSLA stock is an adventure, just like the best thrill rides in the world. But like any theme park, to ride you gotta put up with the crowds, the lines, the attraction downtime, the expense and at WDW, the horror of advance dining reservations 180 days in advance.

OT: I do look at things differently. As a ride operator at Disneyland during the opening of Space Mountain in 1977 we had to stand next to the track and physically push the rockets through the load station for weeks while the engineers devised mechanical pushers to speed the process without human intervention. All the best plans can't always predict the unexpected.

 

[Discoducky]

DaveT - Great post and it feels balanced, well thought out and sincere. Consistent with your other posts and is appreciated.

My 2 cents is that Tesla is experiencing something unprecedented. Leading the transition to sustainable transportation from the ground up. It starts and ends there as the top priority. Underneath that, actually, directly underneath that is one thing; innovation. Tesla does nothing else. Let's be clear on that point and I'm happy to discuss it. Below innovation is one thing that stands out as the next priority; engineering. A somewhat close 2nd priority is managing finances. Engineering always takes priority over finances.

You may ask, "ok, but where do customers fall in that priority?" Answer: Depends and you have to pose the question in terms of the other three priorities.

Your examples - Explanation based on priorities

Big deposits - You do this to show enough 'real' demand to inform your supply chain ramp versus a low deposit wouldn't show 'real' demand as much. It is a supply chain balance and financial.

Delays - Nature of the beast and is inherent in the way that innovative engineering complex products comes to market. There are ways to make this better, but it flys in the face of innovation. It is balance of innovative passion and time to market. Other Program Managers and Product Managers can add more color here, but it really boils down to what you want to optimize for and compensate for.

Communication issues - These are real problems that are NOT getting enough attention; that is not a discussion IMO. However, it is not a priority unless it impacts one of the three priorities. I believe changes are in flight and the folks working these issues are professionals. It is just a function of priority. While the issues have been pretty bad they are simply not impacting the three priorities. I hope Tesla will innovate here prior to Model 3. They must do it as it will truly impact the transition to sustainable transportation.

Big event for Founders - This is purely for financial reasons as opposed to a big event when sigs go out or production goes out. Wall Street cares about the first shipped cars as a 'big splash media event'. This is the major milestone that Tesla communicates for financial reasons

Handling customers - Let's be clear here; Tesla, overall, treats their customers better, I'd say leaps better, than any other car company, possibly better than any tech company or any company on the planet for that matter. Why do I say that with such confidence? I follow this forum and have had a great experience as well as my friends. Yes, there is a bell curve associated with everyone's experience, but this is fundamental constant. With special regards to the order cancelled, that is simply setting a precedent that is largely a function a product that is in such high demand.

 

[Krugerrand]

I can relate to Alsop in some ways because I had a troubling experience at the Model X launch. It was by far the worst-run Tesla event I've ever been to (and I've been to almost every single one over the past few years). People were squished like sardines and told to stand for a ridiculous long time as the event started almost an hour late. Elon comes up and makes no apology. And this is after I had to see my friend's 8-month-pregnant wife stand/sit on the ground for 2 hours. The least Elon could have done was to apologize. But anyway, I'll give him the benefit of the doubt. He's probably under a huge amount of stress, press conference probably went over, etc.

It was mentioned somewhere else on the forum that this event wasn't put together by Tesla, but that Tesla hired an event company to do it. I'll also remind people that there was never going to be an X event, but there was such outrage here on this forum that at the last minute one was put together to satisfy that outrage. So they do the event to try and make people happy, and what happens...people aren't happy. It's never seemed to matter what Tesla does, they're damned if the do and damned if they don't.

It was also discussed that Elon being late had to do with the media. So, Elon can either piss off the media and watch the headlines the next day rip his company apart, or he can piss off the people on the other side of the curtain and watch those headlines rip his company apart. And yes, an apology sometimes (because not for a second do I believe had he apologized we'd have a group of all happy people) can go a long way, and it was an oversight on his part. He made a mistake. I'm not sure why it keeps being rehashed all this time later. There's nothing he can do about the past.

And for the hundredth time, it was not Alsop's blog that got his X reservation cancelled. It was the private phone call with Elon.

I've had about 5-10 encounters with Tesla employees this past year where I've felt a disconnect, like the employees where in their own "Tesla is great and can do no wrong" world. Any complaints get brushed off as "we're trying our best". I know this is not true of all Tesla employees because I've met plenty that are very empathetic. But it's just concerning that my experience is so mixed.

Anyway, I think Elon doesn't have a clue that so many X reservation holders have had such a poor and frustrating experience. If he did, I think he'd try to change it.

This isn't surprising when a company grows as fast as Tesla and everybody and their brother want to work there. That's not an excuse, that's a fact of life. Indeed, I'd say no company anywhere in the world that grows this fast and has become this big has been able to figure out how to keep that personal touch of a much smaller company. Bad people get through and with a CEO who's got as much on his plate as Elon, he can't possibly oversee it all. He has to delegate and trust those closest to him. Eventually those covering up or otherwise will be found out...China anyone?

If all of this is so important to you and how it relates to your wishes for the company to succeed then contact Elon. You know enough people, who know enough people.

 

[LargeHamCollider]

I think a lot people invested in the stock market are pissed right now. Maybe that also contributed to his concerns? I know it bothers me every time I think about it, to the point where I've stop looking daily and tell myself I'm in it for the long run. The only upside for us Canucks, is a lot of us bought when our dollar was at par, so our gains haven't shrunk as much, or our losses are less.

Yah I'm in the same boat with TSLA.

 

[blakegallagher]

Having had to recently fire a customer, I didn't take it that way. I guess we all filter things through how we are feeling in other areas of our life. And I'm sorry you're feeling this way, Dave.

I did see that somehow you were somehow left off the invite for the Model X drive events in your area and that was inexcusable. I'm sure that was the last straw for you. You should have been first on that list.

This! I don't know the whole story with that guy but being a small business owner who is very flexible I have had about 5 customers over the years that I have had to cancel my business with. I understand Dave T's frustration and he feels that by canceling that order it could be a snub to the other model x orders but some customers end up being way more troubleb than they are worth. If he had got a Model X expect he would have been in the service center once a week with some minor issue never being happy over the life of the vehicle. Good riddance to customers like that!

That being said sorry your x roll out has been sub par DaveT.

 

[Gwgan]

I agree with DaveT’s plea for high-touch customer service when things don’t go well. This is not the same thing as giving out company secrets but about managing expectations. When I started reading these forums there were tales of the Fantastic Mr Balankenship. When Tesla made a mistake handling my late Sig upgrade Mr. Guillen saw to it that I received a box ‘o swag. If there is someone else in that position at the company now I have not heard their name and that is worrisome to an investor. An engineering solution to the expectation problem, scalable for Model 3, could be reporting acurate and detailed status information on the my.tesla… site. High-touch doesn’t have to be personal (for $35k cars) but it should be informative and trustworthy.

 

[omarsultan]

Simple question: if you want high touch customer service, which engineers are you going to lay off, because in the real world, that's how it works.

 

[RDoc]

Simple question: if you want high touch customer service, which engineers are you going to lay off, because in the real world, that's how it works.

So how many engineers has Apple laid off? And Mercedes? How about Amazon?

I'd suggest that in the actual real world, good customer service leads to higher sales and profits which supports more engineers. Poor customer service doesn't have a great history when it comes to building large successful companies.

 

[bonnie]

So how many engineers has Apple laid off? And Mercedes? How about Amazon?

I'd suggest that in the actual real world, good customer service leads to higher sales and profits which supports more engineers. Poor customer service doesn't have a great history when it comes to building large successful companies.

Omar is right. When you're running lean, you have to make choices like he says. Apple has cash reserves. Mercedes & Amazon, same. If you've worked for a lean org, still in startup mode, you know the tradeoffs being made.

It doesn't make it right. But it IS reality. Another option is to hire more experienced older customer service folks, rather than fresh-out-of-college. At a higher salary. Again, tradeoffs. Elon cares about innovation. When he cares about communication, it will be a higher priority. And it will be at the expense of something else we care about. Sadly.

 

[AnOutsider]

I agree with DaveT’s plea for high-touch customer service when things don’t go well. This is not the same thing as giving out company secrets but about managing expectations. When I started reading these forums there were tales of the Fantastic Mr Balankenship. When Tesla made a mistake handling my late Sig upgrade Mr. Guillen saw to it that I received a box ‘o swag. If there is someone else in that position at the company now I have not heard their name and that is worrisome to an investor. An engineering solution to the expectation problem, scalable for Model 3, could be reporting acurate and detailed status information on the my.tesla… site. High-touch doesn’t have to be personal (for $35k cars) but it should be informative and trustworthy.

Oh what I wouldn't give for a GeorgeB at Tesla right now.

Omar is right. When you're running lean, you have to make choices like he says. Apple has cash reserves. Mercedes & Amazon, same. If you've worked for a lean org, still in startup mode, you know the tradeoffs being made.

GeorgeB isn't gone because Tesla is running lean though. There's no reason that I can see to not have someone like him publicly advocating for customers.

 

[omarsultan]

So how many engineers has Apple laid off? And Mercedes? How about Amazon?

I'd suggest that in the actual real world, good customer service leads to higher sales and profits which supports more engineers. Poor customer service doesn't have a great history when it comes to building large successful companies.

You reference companies that have $234B, $162B $107B in 2015 revenue, respectively (Apple's PROFIT just for last qtr was $11B). When Tesla gets in that territory, we can talk about their investment priorities, but they are currently a $4B company.

In every well run company, every one that has P&L level responsibility is making investment decisions on where to invest. Sure, customer service is great but do you invest there instead of on engineering resources for the Model 3 to keep that on-time, or more service techs and service centers to reduce wait times for current owners or capital to build out the production line and raw material inventory so you can actually build the Model 3? All are important, no?

The thing that seems to be implicitly assumed in these threads is that Elon & Co are happy with the status quo. I would venture that the mgmt team would love to have enough staff for high-touch customer service, reduce service wait time to under a week and give people the navigation way points, but that's not going to happen in the real world, so they make compromises and take the abuse.

As cranky as you might be about current customer service, I guarantee you will be much more cranky if Tesla stops being a viable business because they could not get a handle on costs (see Fisker and Better Place) or they get technologically lapped by their more well-capitalized competitors.

And, since we are in the investor forum, on the last earnings call, you heard that the company is trying to fund the business from operations instead of tapping the credit or equity markets again, so I would not expect any big hiring sprees in the near future.

 

[GreenT]

It was mentioned somewhere else on the forum that this event wasn't put together by Tesla, but that Tesla hired an event company to do it. I'll also remind people that there was never going to be an X event, but there was such outrage here on this forum that at the last minute one was put together to satisfy that outrage. SNIP

That's irrelevant. The fact (if it is fact) they hired an outside company still makes Tesla responsible as the contractors client.

 

[omarsultan]

That's irrelevant. The fact (if it is fact) they hired an outside company still makes Tesla responsible as the contractors client.

Agreed - Tesla maintains culpability for their customers' experience. From experience, it seems Tesla follows a model where they depend on sub-contractors unless they don't perform, then they bring the work in house. We saw that with the seats and the FWD and, now, with their own event folks--makes sense to not commit capex unless/until you need to.

My experience is that they are listening and making adjustments, not always in ways that are readily apparent--if we had not done the cookie thing in December, we would not know about their new events folks.