24
Aug
08

Automotive Loyalty – A huge challenge

Automotive customer loyalty at the manufacturer level has dropped by 9.2 percentage points, from 49.1% in 1998 to 39.9% in 2008, and costing some automakers more than US$3 billion in annual sales, according to a study by Experian.

Loyalty challenge
“However, the increased number of available manufacturers and models make engendering customer loyalty a bigger challenge than ever before,” Waldron warned. “Automakers that have a firm understanding of what drives their customers to remain loyal will have a significant competitive advantage in such a challenging market.”

The company suggests that even a small rise in customer loyalty can lead to significant increases in revenue. For example, a manufacturer with 10 million current customers will have approximately 1.5 million of those customers return to market in a given year. A 1 percentage point rise in customer loyalty would produce 15,000 additional annual sales, or approximately US$405 million in additional revenue (based on an average vehicle sale price of US$27,000).

But if that same manufacturer could improve loyalty performance by the 9.2 percentage points lost since 1998, it would generate an additional US$3.726 billion in annual sales.

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At Cequity, we believe customer intelligence will be the biggest competitive advantage enterprises will have in the next decade or two. Successful enterprises of tomorrow will be the ones who can organize and leverage this information at speed to optimize their marketing performance, increase accountability, improve profit and deliver growth. Cequity insights will bring to you trends and insights in this area and it’s our way of sharing best practices so as to help you accelerate this culture and thinking in your organization.
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