Building Customer Loyalty – Who’s Winning and How?

By Lonnie Miller

Loy­al­ty is close­ly linked to prof­itabil­i­ty. That’s why automak­ers have long rec­og­nized the val­ue of mea­sur­ing own­er loy­al­ty. Yet with­out mea­sur­ing repeat sales at a deal­er lev­el, where the real cus­tomer expe­ri­ence takes place, improve­ment oppor­tu­ni­ties are ques­tion­able. As a tool for build­ing cus­tomer loy­al­ty, read Polk’s lat­est mar­ket study, “Lever­ag­ing Mea­sur­able Behav­iors to Enhance Deal­er Loy­al­ty,” for insights into:

  • The rela­tion­ship between brand and deal­er­ship loy­al­ty
  • The con­nec­tion between the size of a deal­er net­work and cus­tomer loy­al­ty
  • The link between dri­ving dis­tance to the deal­er­ship and cus­tomer loy­al­ty
  • Prac­ti­cal appli­ca­tions if deal­er loy­al­ty met­rics are devel­oped

It’s not always about who has the largest mar­ket share or the broad­est prod­uct line. Some­times repeat sales for OEMs and deal­ers are fruit­ful when you’re a small play­er, too.

A recent Polk press release of cus­tomer loy­al­ty on automak­ers who beat the indus­try aver­age in the first quar­ter pro­duced some inter­est­ing results:

  • Thir­teen brands exceed­ed the aver­age indus­try increase for make loy­al­ty when we com­pared buy­er behav­ior from Q1 2012 and Q1 2013. The first three months of the cal­en­dar year are tough loy­al­ty months since many OEMs have year-end clear­ance sales, which pull sales ahead so they can make room for the new mod­el years.
  • Porsche, Cadil­lac and Maz­da had the largest increas­es in make loy­al­ty when you take a look at repeat buy­ing over these two peri­ods. These arguable niche brands showed tremen­dous gains ver­sus oth­er brands in the U.S. auto indus­try. Cayenne, CTS and Mazda3 own­ers “gave back” gen­er­ous­ly accord­ing to our research.
  • Ford still holds the largest rate of get­ting cus­tomers to return to a brand — near­ly two-thirds of their cus­tomers stay with the Ford make. Yeah, aggres­sive and fresh prod­uct DOES count!

See the com­plete press release at “Porsche, Cadil­lac Lead Auto­mo­tive Brand Loy­al­ty Improve­ments in First Quar­ter, Accord­ing to Polk.”

Addi­tion­al­ly, if you ever won­dered about what hap­pens at the deal­er lev­el, Polk just put out a new mar­ket study on select dynam­ics of cus­tomer loy­al­ty at a deal­er lev­el. You’ll find some pret­ty inter­est­ing pat­terns in “Lever­ag­ing Mea­sur­able Behav­iors to Enhance Deal­er Loy­al­ty.” The study reveals the fol­low­ing and more:

  • Cus­tomers who live fur­ther away from their deal­er are less like­ly to return to buy again (it’s what you’d expect, but by what degree?)
  • Brands with a larg­er num­ber of deal­ers help the over­all make loy­al­ty fig­ures, but it hurts deal­er-lev­el per­for­mance (what’s the gap between a brand’s nation­al and deal­er loy­al­ty?)
  • There are some help­ful action items that OEMs can imple­ment if they mea­sure cus­tomer loy­al­ty at a deal­er lev­el.

Repeat sales are only one path for an OEM to hit their topline sales tar­gets. Acqui­si­tions are the oth­er route. With the U.S. mar­ket expect­ed to grow this year, it’s still a pret­ty mature mar­ket. So one brand’s loss is anoth­er brand’s gain.

Lon­nie Miller is Vice Pres­i­dent of Polk’s Loy­al­ty Man­age­ment Prac­tice. Read the full arti­cle here.

 

 

 

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