With 2008 already being predicted to be a tough year for automotive marketers, the latest 'Relationship Builder' research from Carlson Marketing and Peppers & Rogers Group, which also highlights Carlson's top ten brand loyalty building strategies, has directly linked the intensity of car buyers' repurchase decisions with their recommendations to friends.
The report, entitled 'Turning the Corner in Automotive Marketing', details the factors involved in brand loyalty in relation to the automotive industry, and reveals which brands have the strongest consumer relationships.
Car makes with the greatest relationship strength were found to be BMW, Lexus and Cadillac, followed closely by Subaru, Toyota and Honda. Interestingly, the position within the relationship strength ranking was found to be directly linked with consumers' intention to repurchase or recommend each brand of car.
According to Luc Bondar, vice president of loyalty for Carlson Marketing, "Creating and maintaining a strong relationship with a customer basically is dependent on treating different customers differently. This is accomplished by understanding that relationships are developed with individuals, not market segments, and it requires an exchange of knowledge between the customer and the seller. It also necessitates behavioural change in both parties."
Find out what consumers want
The research found that the traditional method of using customer satisfaction as an indication of future purchases is now inadequate, and that examining the various components of the customer relationship is more helpful.
Another interesting finding of the consumer survey was that those who have a high level of relationship strength with their primary vehicle manufacturer also tend to be much happier in life in general, compared to those with lower levels of relationship strength.
"Brand relationship strength is a better driver of profit than market share, quality, cost per labour hour, or sales leads and close rates per marketing dollar," noted Jim Schroer, president and CEO for Carlson Marketing, who was also the executive vice president of global sales, marketing & service for DaimlerChrysler and vice president of global marketing for Ford.
What influences brand relationships?
The study found that brand relationships are influenced in varying degrees by several factors, including:
- Loyalty initiatives, such as dealership programmes, affinity credit cards, and special pricing;
- 1-to-1 communications, with particular attention being paid to communication customisation, relevance, and frequency;
- Dealership experience, which includes 'soft' factors such as keeping promises and expressing concern as well as 'hard' factors such as fair prices, a clean facility, convenient hours, and location;
- Vehicle features, including technology, luxury, and status.
Carlson asserts that understanding the impact that each of these factors has on the relationship between an automobile brand and the purchaser can help improve both repurchase and recommendation rates. "The road of the future will be built on authentic, productive, 1-to-1 relationships with customers," said Bondar.
Top ten brand loyalty builders
The Relationship Builder research explained ten key factors in building brand loyalty, especially in the automotive marketplace. According to Carlson Marketing, these particular factors are significant because of the direct link observed between brand loyalty and future purchase decisions:
- The dealer makes a difference
Individuals who are satisfied with a manufacturer's dealer are considerably more likely to encourage family and friends to purchase from the same manufacturer (54% versus 17%).
- Relationships tend to be kept in the family
A customer's relationship to the specific brand of her or his primary vehicle extends to the entire scope of the manufacturer's family of brands, resulting in a 15% increase in intent to repurchase within the family.
- Loyalty is a good defence
Nearly two-thirds (65%) of individuals participating in an automotive loyalty initiative state that they are more likely to disregard offers from other manufacturers.
- Loyalty encourages information sharing
Participation in a loyalty initiative makes a majority (67%) of individuals more likely to provide personal information about themselves to the manufacturer of their primary vehicle.
- Customers want to feel special
Over two-thirds (71%) of individuals expressed interested in special programmes and incentives from the manufacturer of their primary vehicle or one of its dealerships.
- Customers want to be understood
Individuals who perceive that the manufacturer of their primary vehicle understands their needs are more than three times likely to recommend that manufacturer to family and friends than those claiming that their needs were not known.
- Relevant e-mails are remembered
Twice as many individuals were able to recall a relevant e-mail from their own auto manufacturer as compared to one received from a competing manufacturer (24% versus 12%).
- Relevant e-mails affect repurchase decisions
Individuals receiving e-mails from the manufacturer of their primary vehicle show a 10% difference in intent to repurchase from the same manufacturer as compared to those not receiving such e-mails (53% versus 43%), and the incremental impact rises by 27 percentage points to 71% among customers who perceive the communications as highly relevant.
- Integrity matters
Individuals who rate the integrity of the manufacturer of their primary vehicle low are much more (63%) likely to have taken a test drive of competitive manufacturer's product.
- Satisfaction is not sufficient on its own
Four out of five individuals (80%) are highly satisfied with their primary vehicle, but less than half (45%) report that they are very likely to purchase their next vehicle from the same manufacturer.
Download the full study
The complete study and research results have been made available for download from Carlson Marketing's web site - click here (free registration required).