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.