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GM Wants to be the Best in Customer Loyalty, Gain More than US$4 Billion Annually

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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

PHOTO GALLERY

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2 Comments:

Life is Short said... »September 20, 2012

Why would anyone want to stay with one brand/manufacturer? Too many great choices, so why not explore what others have to offer versus coming back to the same watering hole?

Wax_Lyrical said... »September 21, 2012

 a good point, but one could also argue that a person identifies with a particular brand eg. BMW vs Mercedes one could argue that quality/performance aside; some would pick BMW over Merc because of personal reasons i.e mostly emotional and impractical ones. So any manufacturer who is not aware or exploiting this loses out....brand identity/image/heritage ...Citroen/Peugeot have only just lately realised what their strength has been, ensuring Citroen are distinct from Peugeots, by being more quirky, innovative, etc and Peugeot's are starting to tap into their sporting heritage....Audi saw this gap, by bringing the Quattro into the fray and never looked back.

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