ORLANDO, FLA — Steve Cannon, president and CEO of Mercedes-Benz USA, laid out a universal plan for dealers to focus on customer service. And it starts by changing the culture, he said last week at the National Automobile Dealers Association Convention & Expo.

“It’s becoming harder and harder to differentiate on product alone,” said Cannon, who believes the stakes are higher for dealers to deliver a good customer experience. With Mercedes-Benz, he noted, it either has to be “the best or nothing.”

Cannon noted that prior to the rise of social media, customers could walk away and tell maybe three people about a bad experience. But that number has grown exponentially with the amplified audience from the Internet. “The rules of the game have been changed permanently,” he says. “You need to deliver an exceptional experience every time.”

Cannon cited an adage attributed to consultant and educator Peter Drucker, who said about workplace environment: “Culture eats strategy for breakfast.” And that’s what Cannon said he found among his employees when he began conducting an annual culture survey. The survey was designed to identify changes needed to improve the workplace environment. Since the survey’s implementation, Mercedes-Benz went from No. 49 on FORTUNE magazine’s 2010 best workplaces to No. 12 in 2012.

Part of Cannon’s strategy also extended to the company’s dealer network. The plan called for the deployment of a dealer engagement survey to help dealers determine employee issues within their own organization. The initial findings were brutal, with only 63 percent of employees reporting to be ‘engaged’ in their job, 28 percent were ‘not engaged’ or close to apathetic, and 9 percent were flat out ‘disengaged.’

Additionally, Mercedes-Benz found that the most engaged dealerships were the most profitable. The high return on investment proved to Cannon that culture really matters. “It affects the bottom line,” he says.

One surprising finding that came out of the surveys was that 70 percent of dealership employees had never driven a Mercedes-Benz. So the carmaker invested in its Customer One initiative and deployed a fleet of 700 vehicles solely for the purpose of giving dealership employee a chance to test drive the vehicles. Cannon referred to the plan as a “leap of faith you make when people start mattering more than process.”

Cannon encouraged dealers to “do some soul searching” as well, and to seek out feedback from employees to identify their engagement level. For the sake of a successful customer relations strategy, he added, those employees who are disengaged to the point of no return need to be weeded out.

“Identify the obstacles that stand in the way of success, and remove those obstacles,” Cannon says.