Polk Announces Winners of Automotive Household Loyalty Awards
9 December 1998
Polk Announces Winners of Third Annual Automotive Household Loyalty Awards
Ford, GM Capture Top Honors in Nine Consumer Loyalty Categories
DETROIT, Dec. 9 -- The Polk Company announced the winners of
its third annual Polk Automotive Household Loyalty Awards today, revealing
Ford Motor Co. and General Motors Corp. as leaders in
U.S. automotive consumer loyalty in 1998. Ford captured top honors in seven
of the nine consumer loyalty categories, while GM took home two awards.
The awards, based on data from Polk's Manufacturer Loyalty Excelerator(TM)
(MLEX), indicate that customers returned to Ford and GM more than any other
manufacturers in 1998. Consumer behavior determines the award winners as
new-vehicle owners returned to market in 1998 to purchase the same model, make
or manufacturer's vehicle. Polk tabulates results based on all consumer
new-vehicle buying and leasing activity during the model year.
"Loyalty is important to manufacturers and consumers alike," said Glenn
Forbes, Polk's vice president of transportation business development. "When
sound customer treatment practices are put in place, everyone wins. Loyal
customers are so satisfied with the treatment they receive over the life of
their vehicles that they are willing to return and purchase again. They are
also more willing to refer family or friends to the manufacturer," added
Forbes. "It's much easier to keep current customers than to acquire new
ones."
For the second consecutive year consumers drove Ford to a strong finish as
the manufacturer won seven Polk awards, including the Overall Make Loyalty
category. The Ford Explorer regained its top status in the Sport Utility
Vehicle category and the Ford Windstar was a first-time winner in the Minivan
category. GM retained its title for Overall Manufacturer Loyalty and took top
honors in the Midsize Car category with first-time honoree Buick Century, but
its performance was definitely impacted by the UAW strike. Nine months into
the model year GM led in four of nine Polk award categories, and, despite the
strike, still finished second in four of the seven model award categories.
The winners of the Polk Automotive Household Loyalty Awards for the 1998
model year include:
Award Category Winner Loyalty % Avg. Segment
Loyalty %
Overall Awards:
Manufacturer Loyalty General Motors * 67.54 56.73
Make Loyalty Ford Division * 60.27 44.35
Model Awards:
Large Car Mercury Grand Marquis * 40.96 26.74
Midsize Car Buick Century 32.52 19.98
Small Car Ford Escort * 27.72 17.19
Luxury Car Lincoln Town Car * 45.85 22.24
Pickup Truck Ford F-Series * 36.38 25.71
Minivan Ford Windstar 27.95 17.77
Sport Utility Vehicle Ford Explorer 28.17 20.42
* Indicates 1997 Polk Award Winner
GM's annual loyalty performance was based on strong levels of customer
retention during the first nine months of the 1998 model year. On average,
between October 1997 and June 1998, seven out of 10 owners were repurchasing
another new GM vehicle.
"To boost customer loyalty within this time period, GM launched its
'Loyalty First' program which provided incentives to more than 12 million
owners from April through June," said Forbes. "Our information indicates that
owners responded favorably to the program since GM's loyalty peaked at
71 percent during this period."
The widely publicized GM strike occurred during the fourth quarter,
crippling most of its production facilities. Results from Polk's study show a
sharp decline in GM's corporate loyalty during this period, dropping from
71 percent to 59 percent from the third to the fourth quarter of the model
year.
"Customers wanted to buy and they couldn't," said Karen Piurkowski, Polk's
director of loyalty. "When dealers were not able to obtain the models in
demand, GM owners went elsewhere. Estimates show the decline in loyalty for
that single period resulted in a loss of more than 36,000 owners --
translating into a loss of nearly 1.1 billion dollars in revenue for GM during
the fourth quarter," she said. "Not only did GM experience the immediate loss
in revenue for one-time sales, but they will also experience a larger long-
term loss -- the loss of customers for life, estimated to be 10 times greater
than the loss of a single sale. GM will want to target owners that were lost
during the strike with the hope of recapturing these customers in the years to
come," said Piurkowski. "It will be interesting to see how successful they
are in achieving this."
A bright spot for GM was the Buick Century, which obtained a higher share
of its owners with a redesigned 1998 model that was also competitively priced
in comparison to the Honda Accord and Toyota Camry. Both the Accord and Camry
closely followed the Century in the award standings.
Chrysler also experienced a decreased loyalty rate in the fourth quarter
of the 1998 model year, dropping from 54 to 42 percent. The decrease was
observed across the majority of its models, indicating that no single model
was driving the downward trend. "We are still working with Chrysler to
determine why this occurred," said Piurkowski.
As for Ford, the manufacturer's Ford Division defended its 1997 title in
the Overall Make Loyalty category and continues to perform well in the truck-
based categories.
"With the Mercury Villager dominating this segment over the past two years
and the Windstar winning this year, Ford appears to be doing well in meeting
the demands of the minivan owner," said Piurkowski. "Not only are Ford
customers loyal to their minivans, they are also loyal to Ford pickup trucks
and SUVs." This is supported by continued loyalty to the Ford F-Series and
Explorer, which also ranked first in their respective categories.
"Ford and its dealer network place a heavy emphasis on providing superior
customer treatment with the goal of obtaining repeat purchases from its
owners," Piurkowski added. "This focus on customer loyalty is a great
competitive advantage for Ford. They should be proud of their success in
continually retaining customers over time."
Polk's MLEX(TM) product provides the latest insight into this type of
consumer behavior. This study was introduced to the automotive industry in
1995 and was created to provide household loyalty information to manufacturers
at many different levels. This report is being used to determine the awards;
to provide loyalty percentages for the entire automotive industry; to allow
for cross-industry comparisons of loyalty behavior; and to examine loyalty at
various levels -- e.g. from the industry level down to the vehicle line level.
The study measures loyalty throughout the entire model year so that
manufacturers may keep abreast of loyalty trends as they occur in the
industry.
Polk has served the automotive industry for 76 years and is the longest
standing curator of automobile records in the United States. Founded in 1870,
Polk launched its motor statistical operations in 1922 when the first car
registration reports were published. It provides multi-dimensional
intelligence information solutions to companies as a statistician for the
motor vehicle industry; as a direct-marketing resource; as a supplier of
demographic and lifestyle data and database-marketing services; as a publisher
of city directories; and as a data enabler for geographic information systems.
Based in Southfield, Mich., Polk is a privately held firm that is expanding
globally, currently operating in: the United States, Canada, England, France,
Germany, Australia, Spain, Holland and Costa Rica.