Chevrolet has best retention rate, study finds

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By: Wise Marketer Staff |

Posted on January 5, 2004

The customer retention rate for Chevrolet vehicle owners in the US is the "highest in the industry", according to the newly published J D Power and Associates '2003 Customer Retention Study', which measured the ability of motor brands to retain their owners for new vehicle purchases.

On average, the study found that approximately 50% of consumers will repurchase the same type of vehicle. Chevrolet ranked highest in customer retention, retaining 60.8% of its owners. Chevrolet models with the strongest retention rates include the Avalanche, with 74.5% of owners purchasing another Chevrolet model, TrailBlazer (73.8%), Impala (70.1%), and Silverado 1500/2500 (68.7%).

Chevrolet was followed by Toyota (59.3%), Mercedes-Benz (58.7%), Ford (58.1%), Honda (57.1%), Lexus (55.5%), Hyundai (54.3%), Cadillac (52.9%), Subaru (50.8%), Saturn (50.2%), BMW (50.1%), and Kia (49.9%). The industry average was 49.3%, while the remaining brands were trailed by Isuzu, which retained 3.5% of its customers.

Reasons for change
The study found that one of the most influential reasons that customers do not purchase another model in the brand's vehicle line-up is that the brand doesn't offer the type of vehicle they want. A large number of customers who defect to another brand do so because they believe their previous manufacturer does not make the type of vehicle they want when they re-enter the new-vehicle market.

"Chevrolet is an example of a broad product line that offers customers many options to fit their needs," said Joe Ivers, a partner at J D Power. "While manufacturers tend not to expect each of their brands to retain customers for life, many have realigned themselves through mergers and acquisitions to accumulate a portfolio of brands that give customers a place to move up as they age and become more affluent. However, manufacturers vary in the degree to which they have integrated their brand portfolio into a coherent cross-brand strategy."

Defections from a brand can occur due to owners' poor experiences with their previous vehicles, or because they are captured by positive aspects of the new brand they buy. Among these captured customers, nearly two-thirds purchased a model from a different brand because the new vehicle met their practical needs. And more than 50% felt that the new vehicle they bought has a better look or style or because the brand is known for better quality than the brand of their previous vehicle.

"Customer retention is critical to manufacturers, not just because the cost of keeping a customer is generally lower than gaining a new one but because it's also a test of whether or not the brand has staying power," said Ivers.

According to Ivers, customer retention can be predicted to a great degree based on sales and service experiences, along with the vehicle's quality, durability and appeal. However, a large portion of vehicle owners are open to the idea of defecting to a different brand. Being able to identify those defectors (both within the brand and those of the competition) can help develop and implement remedies.

The 2003 Customer Retention Study was based on responses from 177,000 new-vehicle buyers, of which 106,418 replaced a previous vehicle that was originally purchased from new.

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