Study Rates Recalls, Customer Loyalty

SOUTHFIELD, Mich.--It takes more than one recall to undermine the loyalty of customers for their favorite vehicle brands, according to an automotive industry study conducted by The Polk Co.

In fact, loyalty stands firm until a customer experiences three or more recalls, and then customer loyalty quickly erodes. Polk found that in light of the recent rash of recalls in the automotive industry, it is vitally important for a manufacturer to keep the number of recalls per customer at a low level to avoid future loss of its customer base.

When a customer experiences three or more recalls, special consideration should be given to boost loyalty.

The Polk study compared loyalty of consumers affected by manufacturer recalls with the loyalty of those who were not. Data was gathered through a survey research study conducted with a sample of new vehicle buyers during the first six months of the 2000 model year. It showed that, for new-vehicle buyers on average, loyalty to the previous manufacturer decreased by 9 percent for owners affected by a third or fourth recall, and by 16 percent for those with five recalls or more.

“We can surmise from this that consumers are willing to tolerate mistakes, as long as they are taken care of immediately, honestly, and with minimum disruption,” said Karen Piurkowski, Polk’s managing director of Loyalty. “Having one or two recalls does not necessarily drive owners to defection, but as the number of recalls increases, consumer confidence decreases.”

Although Ford Motor Co. has been the focus of press attention over the past several months, the Polk study showed that owners of cars from most major manufacturers are experiencing recalls. In fact, more than four out of every ten owners who purchased new vehicles during the first half of the 2000 model year claimed they had a recall on their previous vehicle.

The manufacturer with the best recall performance (lowest percent of customers being impacted by a recall) was Mercedes-Benz. Less than one of five Mercedes-Benz owners experienced a recall during ownership. Toyota Motor Sales was in second place closely behind Mercedes-Benz--a testament of the high quality of the products it delivers. Interestingly enough, General Motors Corp. ranked fifth for having the lowest percent of recalls and was ranked No. 1 in terms of owner loyalty during the first six months of the 2000 Model Year.

“Keeping the lines of communication open with consumers and the press is key to retaining customers when recalls occur,” said Piurkowski. “In addition, implementing special purchase incentives and offers may help to avert defection for those impacted by multiple recalls. Not only will this treatment help a manufacturer maintain its current owner loyalty rate, it will also help in attracting new customers to the brand.”

For more information, contact www.polk.com