Thursday, August 21, 2008

Automotive Customer Loyalty Drops

In an article dated August 13th, Experian Automotive released findings that indicate customer loyalty at the manufacturer level has dropped 9.2 percentage points in the last 10 years from 49.1 percent in 1998 to 39.9 percent in 2008.

The key point to the article was to demonstrate the value of customer loyalty. The article uses as an example of a manufacturer with 10 million customers. That manufacturer will have approximately 1.5 million of those customers returning to the market in a given year. A one-percentage point increase in loyalty translates to 15,000 additional cars sold. At an average vehicle sale price of $27,000 per vehicle, this represents $405,000,000 in additional revenue.

To take it to the obvious next step, consider the financial impact of regaining all 9.2 percentage points of customer loyalty. This increase in loyalty would yield $3,726,000,000 in additional revenue. However, there are many other factors that would have to be considered and managed to achieve the total loyalty recovery such aas the economy, financing, etc. However, it seems to be a prize worth seeking. I wonder what the automobile manufacturers are doing? Hmmmmmmmm.

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