09 November 2015

Another week, another Volkswagen story. This one, however, isn’t about questioning how it happened but rather what Volkswagen is possibly going to do about it. Nothing’s been confirmed yet – hence the emphasis on ‘possibly’ – but news is filtering through of a compensation scheme where owners might be gifted a goodwill payment of sorts.

Now, the details are still sketchy and, unsurprisingly, it’s a US-focused initiative for now, but it would appear that vouchers or pre-paid credit cards will be distributed to placate owners and the sums involved will be hundreds not thousands of dollars.

There’s splitting the bill on a just out of warranty repair and sending flowers or a hospitality ticket to acknowledge a genuine screw-up or repair a dented relationship, but this approach is a bold one. Cynics could view it as buying someone’s loyalty, while the more charitable could see it as ample recompense for a minor reduction in a car’s value.

Curiously, it comes well ahead of any possible legal action from individuals, testing organisations or states. Is VW attempting to diffuse a potentially costly battle in the courts? It strikes me as a slightly clunky apology. Plus, accusations of attempting to ‘buy’ customer loyalty will no doubt be voiced.

And if loyalty is viewed to be cheap, where does that put the retailer? Surely you want the products you sell to be chosen on merit. Plus, a retailer’s connection with a buyer is often stronger than with the brand, thanks in the main to the quality customer service you provide. I’m not saying it would be destroyed overnight but it could become a little, well, awkward. 

I’m not sure such a scheme could work in the UK – the retail and legal landscape is very different to the US. Compensation, where appropriate, can be the right policy. However, if poorly executed the memory will remain in consumers’ minds long after the money has been spent. Chances are you’ll be left to pick up the pieces, too.

Iain Dooley

Editor, Agenda

Auto Retail Network

Tags: compensation, customer, scandal, service, trust, Volkswagen