Posts Tagged ‘BMW’

WSJ: How Auto Makers Keep You Coming Back

steveparkhurst | January 23, 2013 in Branding,Marketing,Promotional | Comments (0)

Tags: , , , , , ,

Wall Street Journal - The Parkhurst Group

The Wall Street Journal has a great article today about customer loyalty, or lack thereof. We have used this blog to talk about branding and loyalty before. We have also used the blog to talk about how it is easier to keep a current or previous customer, as opposed to getting a new customer (a point which this excerpt also points out).

The interesting thing to watch here is what the car makers are doing to attempt to both get new customers and keep current customers. Brand loyalty is one thing with lower priced items like laundry detergent or deodorant. But when you’re talking about something of a higher value like an automobile, that is a whole new ballgame. There are some interesting hooks here

Auto makers are paying close attention to consumer attitudes about sticking with a brand, because loyalty isn’t just an admirable personal virtue to them. It’s money in the bank. That’s something every driver should bear in mind when car shopping or wrangling with a dealer.

The latest R.L. Polk study of brand and vehicle loyalty in the auto industry, released last week, found that 48% of people who bought a car in 2012 bought from the same brand they were already driving. Polk says the three brands with the most loyal customers were Ford, with 61.2% repeat buyers, Mercedes-Benz (57.7%) and Toyota (54.4%).

Reasons for staying loyal can vary. For buyers across the vehicle and price spectrum, the top attributes that inspire a purchase include fuel economy, reliability and pricing, according to consumer research firm J.D. Power and Associates. In the luxury segment, though, the top three criteria include performance, quality of workmanship and exterior styling.

For car makers, it costs far less to sell to a satisfied repeat customer than it does to win one away from a rival brand. Loyal buyers tend to spend more with a brand over time, but analysts say the days when a car dealer could charge loyalists a lot more than a first-time buyer are mostly gone—due to the easy availability of price information.

The article continues:

German luxury car maker BMW AG has for several years offered buyers of new BMWs four years of free maintenance. The deal has an obvious benefit to owners, but it helps BMW and its dealers, too, because, as BMW North America’s executive vice president for operations Peter Miles puts it: “They’ve got to come back.”

Before BMW offered the free maintenance program, only about 42% of customers got service at the dealership. Now, close to 100% do during the first four years. That gives dealers more opportunity to nurture a relationship with customers, and potentially pre-empt any wavering toward, say, Mercedes-Benz.

What are your thoughts on this? Is your brand creating loyalty? If not, what can you do about that? If you do not have this answer, maybe we need to talk.