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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