The Holy Grail in any industry is customer loyalty. All manufacturers are fighting to improve their retention rate, that is, the percentage of customers who, when the time comes to replace a product, will remain loyal to the brand.
The automotive industry is no different. In the U.S. market, the current leader is Toyota, with a 58 percent retention rate. General Motors’ percentage is around 52-53 percent, close to the automotive industry average. Clearly, GM execs think that this should change; and there’s a very good reason for that.
“We believe that a single percentage point improvement in sales retention is about 25,000 vehicles, or about US$700 million in revenue annually”, said GM global product development Mary Bara, “so it’s a pretty big financial incentive”.
Mara stated that in the past, the company was more focused in cost cutting and there’s a lot more room for improvement as far as brand loyalty is concerned.
“We believe in the auto industry no one really stands out as a clear winner in managing that overall customer experience”, she said and added that GM’s target is to achieve the rate of brand loyalty enjoyed by companies such as Apple.
With more than 70 percent of its U.S. range being redesigned or replaced until the end of next year, GM execs believe that they have a good opportunity to change public perception of their brands.
GM’s head of customer experience and product quality, Alicia Boler-Davis, has set a target of achieving industry-leading rates within the next two years, adding more than US$4 billion in the company’s annual revenue.
Boler Davis also said that the real benefit would be even larger since it costs five times as much to attract a new customer than to retain an existing one.
In order to achieve this goal, 88 percent of GM's U.S. dealerships have or are currently undergoing renovations, mystery-shopping programs have been increased and customer specialists have been added across the automaker’s dealer network.
By Andrew Tsaousis
Story References: Autonews