Article

After-sales service key to retaining car buyers

A new study shows that excellent after-sales service is a powerful technique for converting buyers into die-hard fans.

By Lori Flees and Todd Senturia

Published on September 24, 2008
min read


With the latest numbers showing U.S. vehicle sales slumping to a 15-year low, automakers are wondering where their next buyer is coming from. Clearly, winning new customers will require them to develop more reliable, exciting, and fuel-efficient vehicles, a task that could take years. But a recent survey by Bain & Co. suggests that automakers have opportunities to improve their business performance in the short term by focusing more on the customers they already have. Especially in these tough times for the industry, one of the most powerful techniques for converting buyers into die-hard fans is providing exceptional after-sales service. Bain & Co. surveyed more than 1,800 customers who had purchased all the automotive brands sold in the U.S., to better understand their ownership and sales experience and to assess their brand loyalty. We asked owners to rate, on a scale of zero to 10, how likely they were to recommend their vehicle to a friend or colleague. By subtracting the percentage of "detractors" who gave scores between zero and 6, from the percentage of "promoters" who gave a score of 9 or 10, we can calculate a "Net Promoter Score" [NPS]. NPS is already used in dozens of industries to determine how deep loyalty to a particular company runs among its customers, and how it stacks up against its competitors when it comes to customer loyalty. The NPS survey for automakers revealed two important findings. First, promoters are nearly 10 times more likely than detractors to repurchase or lease a vehicle of the same make or brand as their current one. Second, promoters are far more likely to recommend their vehicle brand to a friend. Each promoter provides nearly five purchase referrals, while each detractor dissuades two prospective buyers. For manufacturers that emerged as loyalty leaders—Lexus, Toyota (TM), and Honda (HMC)—the value of promoters was reflected in increased revenues. Indeed, high NPS correlated with healthy new-car sales growth; name plates with lagging scores had flat or declining unit sales. Read the full article at BusinessWeek.com.

With the latest numbers showing U.S. vehicle sales slumping to a 15-year low, automakers are wondering where their next buyer is coming from. Clearly, winning new customers will require them to develop more reliable, exciting, and fuel-efficient vehicles, a task that could take years. But a recent survey by Bain & Co. suggests that automakers have opportunities to improve their business performance in the short term by focusing more on the customers they already have. Especially in these tough times for the industry, one of the most powerful techniques for converting buyers into die-hard fans is providing exceptional after-sales service.

Bain & Co. surveyed more than 1,800 customers who had purchased all the automotive brands sold in the U.S., to better understand their ownership and sales experience and to assess their brand loyalty. We asked owners to rate, on a scale of zero to 10, how likely they were to recommend their vehicle to a friend or colleague. By subtracting the percentage of "detractors" who gave scores between zero and 6, from the percentage of "promoters" who gave a score of 9 or 10, we can calculate a "Net Promoter Score" [NPS]. NPS is already used in dozens of industries to determine how deep loyalty to a particular company runs among its customers, and how it stacks up against its competitors when it comes to customer loyalty.

The NPS survey for automakers revealed two important findings. First, promoters are nearly 10 times more likely than detractors to repurchase or lease a vehicle of the same make or brand as their current one. Second, promoters are far more likely to recommend their vehicle brand to a friend. Each promoter provides nearly five purchase referrals, while each detractor dissuades two prospective buyers. For manufacturers that emerged as loyalty leaders—Lexus, Toyota (TM), and Honda (HMC)—the value of promoters was reflected in increased revenues. Indeed, high NPS correlated with healthy new-car sales growth; name plates with lagging scores had flat or declining unit sales.

Read the full article at BusinessWeek.com.