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02 JUNE 2018
Why Lexus went back to the track

by Jeff Haden: Bestselling non-fiction ghostwriter, speaker and columnist for Inc.com.

I've probably seen hundreds of Lexus ads over the years. Given "Lexus TV commercial" as a free association prompt, the "December to Remember" campaign immediately springs to mind.

That's a good thing, since memorability matters in advertising.

But that doesn't mean I've ever considered buying a Lexus sedan. All those ads I've consumed hadn't budged my purchase consideration needle from zero - even though, having owned two Lexus SUVs, my brand affinity is well established.

Then I saw a Lexus RC F GT3 racing in the GTD class at the IMSA Rolex 24 in January. (Take a look at this photo and tell me it's not an awesome-looking race car.) Then I took a tire-smoking, brake-glowing ride in a Lexus GS F driven by an ex-professional racer on the Daytona road course. Then, just one year after entering the series, the programme notched its first win at Mid-Ohio last month.

Now would I consider buying a Lexus sedan? Oh, hell yeah.

That's why 17 manufacturers are actively involved in IMSA and 13 of them compete full-time in the WeatherTech Championship. Racing does something for the Lexus brand - at least for potential customers like me - that no advertising will ever accomplish.

Even so, advertising has the benefit of being relatively simple: Develop a strategy, throw money at a campaign... advertising is easy (although hard to do well.)

To find out why Lexus decided to re-engage in racing I talked with Jeff Bracken, the Lexus Group Vice President and General Manager who oversees all aspects of U.S. automotive operations. (He's retiring later this year after 40 years with Toyota - awesome for him but less so for me since he offered me a test-ride in a Lexus LFA the next time I'm in Dallas.)

Small business or major brand, there should be a strategy behind every marketing initiative. So: Why racing?

Before I answer, let me ask you a question. When you think of Lexus, what comes to mind?

There are two answers to that question. Until today I would have said Lexus is  definitely a luxury brand... but not necessarily a performance brand. Then I took a ride with one of your pro drivers. I had no idea the car could do that.

That's the perfect answer: You had no idea. And that's one of the reasons we're in IMSA.

When the general public thinks about Lexus, they think quality, they think styling, they think dealers who really take care of you... We love that about our brand image. But it's not enough.

We want to be known for more: For performance, for driving dynamics, for personality... all of the things that truly speak to our vehicles.

We know that gap currently exists. Racing is a great way to help the public understand that there is more to Lexus than what they may be familiar with.

I get wanting to be in racing. But there are a number of series and options. Why IMSA, and why the GTD class?

We wanted a series where people could see a car they're actually able to buy on the racetrack. We want that natural connection.

Of course we could have entered the prototype class, but for us that seemed like a less natural market connection. At least for now.

So it's a little like bicycles. I can buy a Trek road bike that looks like what their pros ride in the Tour de France.

Yes. And of course it goes beyond the end customer. Our dealers are also customers.

We can talk about racing at a national dealer meeting, or in smaller meetings... but when we bring them to the track, it's visceral. They can see and hear and smell... it's a very exciting environment, and it's exciting for them to be part of.

That's why we have a number of our dealers and key opinion leaders here this weekend to see it firsthand.

Do some dealers push back and say, "Wait. Why are we in racing? Why not spend that money on another marketing strategy?"

We do get that question. One thing we do is assure them the transfer of what we learn on the track to our production vehicles is very, very real.

One example is our design studios. Designers and engineers work on aerodynamics, driving dynamics, etc. The young engineers in Japan that literally designed this race car will eventually design production cars. The knowledge transfer is seamless.

So, when a dealer expresses concern over, say, whether money is being taken away from general marketing funds, we can walk them through the technology transfer aspect, the image building aspect...

Ultimately, they just want to know money is well spent, and we work extremely hard to make sure it is.

A friend's bicycle company is involved in racing, but to him participation alone is enough. For Lexus, how important is winning?

We're not here to make up the numbers. We're here to win.

Of course that was hard in our inaugural season. We were starting from scratch and competing with extremely well-established teams. So to not win a race... we're competitive people. We didn't like that.

But at the same time, we're in this for the long haul. Our company culture is to take a long-term view.

We made a lot of progress last year. This year we think our cars are as fast as any out there. But we've been away for a decade and there are phenomenally talented competitors that have been at this for a long, long time. So we have high expectations - but not unrealistic expectations.

That's important whenever you get involved in something new: The balance between high expectations and realistic expectations is key when you're trying to maintain excitement and enthusiasm... but at the same time not risk your people getting demoralized.

We talked about the branding gap. Whenever a brand shifts, even slightly, there's a risk that a certain segment of the core customer base won't like it.

Absolutely. We have owners that over the years have bought 10 Lexus vehicles, and when they see us taking a more aggressive approach to styling... yes, I do take calls from customers who express concern.

So I'll spend 30 or 40 minutes on the phone with them, helping them understand why we're going down this path.

We never want to lose those baby boomers. We never want to lose the people who have a more traditional view of how our cars should look or perform. But at the same time, if we don't stretch ourselves, we will never be on the consideration list for Gen X, Gen Y, Millennials...

But you're right. That's a tough balance because, whatever your business, you have a core base... and when you try to extend past that core, the core may start to look sideways at you. (Laughs.)

But that's also where brand loyalty comes in.

Clearly the vehicle itself is the primary point of interest. But so much of the Lexus DNA is how we take care of customers. The amount of money we spend on customer goodwill is significant even by comparison to our big brother Toyota.

So we hope that if there is a tiny bit of a disconnect on, say, how a new vehicle is styled... our customers know they will be taken care of.

We know that matters. We've seen customers leave... and then come back primarily due to they way they know Lexus treats them.

You're a year in to being back on the track. What turned out to be different than you expected? What have you learned?

From a marketing standpoint, we're definitely building awareness and word of mouth just by being involved in motor sports. That aspect has gone as planned.

And we've definitely learned a lot about working with our race teams. Take 3GT Racing (the team that won the Mid-Ohio race.) We think very, very highly of them. They're used to maintaining a tremendous amount of control; giving up some of that control goes against their DNA.

That's not unusual in racing; many teams are used to only getting minimal support from whatever factory they happen to affiliate with.

And while we do have tons of resources we can provide, we needed to make sure there wasn't a heavy-handed approach from the factory.

There was a learning curve for both organisations, one that we anticipated... and we feel really good about how that relationship has come together.

So in a broader sense, if you're a company planning to partner with someone, know that it will take effort to build a great relationship.

And know the effort you put building a great relationship will be worth it.

I'm sure that's true inside Lexus as well. Effort becomes its own reward when it helps build the right culture.

No matter what we're doing or where we're doing it... we feel our performance is never, ever good enough. That's another thing that's hard-wired into our DNA.

Being involved in racing provides a constant reminder that whatever makes you successful today just won't be good enough tomorrow.

Reinforcing our constant drive for excellence? That's a "win" that pays off beyond any results on the track.
Useful resources:

BlackBird Media
Jeff Haden learned much of what he knows about business and technology as he worked his way up in the manufacturing industry from forklift driver to manager of a 250-employee book plant. Everything else he picks up from ghostwriting books for some of the smartest innovators and leaders he knows in business. He has written more than 30 non-fiction books, including four Business and Investing titles that reached #1 on Amazon's bestseller list. Visit our InfoCentre or website.

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