People, Service Drive Customers Back to Dealerships
24 January 2000
People, Service Drive Customers Back to Dealerships; Polk Study Reveals Dealership Personnel, Service Departments Greatly Influence Loyalty ORLANDO, Fla., Jan. 24 -- A recent study conducted by The
Polk Company revealed that the dealership salesperson and service department
play a greater role in creating dealer loyalty than manufacturer, product and
financing related factors. With an average dealer point loyalty rate in the
first half of the 1999 Model Year of 42.6 percent, it was found that loyalty
was influenced most by relationship-building efforts of the dealership staff,
and not influenced as much by the product the dealership sells.
"This is great news for automotive dealerships," said Bill Barrett, Polk's
Managing Director of dealer programs. "It means that the dealership has
direct control of its destiny in terms of customer retention. By
understanding its owner base and by offering superior customer treatment at
all points of contact, a dealership can develop superior customer loyalty
performance."
The Polk study identified nine key drivers of dealer loyalty during the
first six months of the 1999 model year. Salesperson-related factors were
responsible for nearly one-third (28.3 percent) of the total impact on loyalty
(sales attitude and negotiation process). An additional 27.9 percent of the
impact included factors related to servicing the vehicle itself (reliability,
warranty coverage and service experience). Other areas impacting loyalty
included dealer location and the delivery and financing processes.
Key Drivers of Dealer Loyalty*
1. Attitude of Sales Staff 35.2%
2. Service Experience 19.4%
3. Location of Dealer 14.6%
4. Vehicle Features 7.5%
5. Warranty 7.3%
6. Delivery Process 6.8%
7. Sales Negotiation Process 4.3%
8. Financing Process 3.8%
9. Reliability 1.2%
Source: Polk's Manufacturer Loyalty Excelerator(TM)
* Dealer Loyalty defined as loyalty to a particular dealership location.
"It's not surprising that customers who feel they are treated fairly
throughout the sales process will return to the dealership," said Karen
Piurkowski, Polk's Director of Loyalty. "But the strength of their loyalty is
surprising -- our results show that almost one-third (31.8 percent) of loyal
owners reported four or more purchases from the same dealer, and three-
quarters (75.5 percent) of dealership loyalists repurchased from the same
salesperson."
The role of the service department in generating loyalty to a specific
dealership, however, should not be underestimated. Owners who were loyal to a
dealer were also more likely to report higher usage of a dealership service
department -- used by 75.8 percent of dealer loyalists compared to 60.6
percent of dealer defectors.
"Dealers need to capitalize on the relationship-building opportunity that
is created when owners service their vehicle at the dealership," said
Piurkowski. "Results from our study show that providing a service experience
that exceeds owners' expectations plays a major role in whether customers
return to the same dealership. Loyal owners were more likely to report better
experiences involving all aspects of their service visits, including having
work completed when promised and being provided with a loaner or pick-up/drop-
off service."
Polk's study also showed Ford Division of Ford Motor Company took the lead
in dealership loyalty. "With 41.7 percent of Ford customers returning to the
same dealership to purchase another vehicle, it appears that Ford Division
dealerships may have customers that are more satisfied with their sales and
service experience overall than customers from other brands," said Piurkowski.
Ford was followed closely in the rankings by three luxury makes:
Cadillac, Mercedes-Benz and Lexus, all known for providing superior products
and service to customers. Toyota, with a wide variety of models offered,
placed fifth. On average, Dealership Loyalty by make was 32.9 percent for the
industry.
Dealer and Make Loyalty -- Top Five Makes
Make Dealer Loyalty Rate*
1. Ford 41.7%
2. Cadillac 41.1%
3. Mercedes-Benz 40.0%
4. Lexus 39.5%
5. Toyota 38.3%
Industry Average 32.9%
*Based on Polk's Household Loyalty Methodology
Polk's Manufacturer Loyalty Excelerator(TM), the basis for these findings,
provides consumer behavior insight and was created to provide household
loyalty information to manufacturers at various levels. Polk's Manufacturer
Loyalty Excelerator(TM) study determines loyalty percentages for the entire
automotive industry, cross-industry comparisons of loyalty behavior, and
examines loyalty at various levels, e.g., from the industry level down to the
vehicle-line level. Loyalty is measured during an entire model year to
identify trends as they occur in the industry.
Polk is a global company delivering multi-dimensional intelligence to the
auto industry to enhance the relationships consumers have with brands.
Through lifetime understanding of individuals, Polk helps clients maintain
current customers, win new ones and build brand loyalty. Based in Southfield,
Mich., Polk is a privately held firm currently operating in Australia, Canada,
China, France, Germany, Holland, Spain, the United Kingdom and the United
States.
Visit the Polk Web site at http://www.polk.com
