Everyone knows: the customer is the real boss in any industry. The auto industry is not an exception and this is why all manufacturers are trying to improve the retention rate. This is actually the percentage of customers who choose the same brand when they decide to change their cars. It does make sense.
For example on the North American market the current leader is the Japanese Toyota. They have a 58% retention rate. Next, General Motors has a 52-52 % rate, somewhere close to the auto industry average. They have good reasons to want more. After some complicated math, they have reached a clear conclusion. Each percentage point improvement in sales retention means about $700 million in revenue annually and around 25.000 vehicles sold; we think we can all agree it is not something to neglect. So far, the American carmaker was more concerned in cost cutting than the brand loyalty.
After seeing these numbers for sure the specialists will change their main focus. The specialists want numbers indicating the loyalty similar to Apple. This will be a tough one, but it is worth the shot. Before the end of next year, GM will replace of redesign 70% of their products. This is the perfect time to demonstrate customers they are the best choice for them. Will it really work? We will see. Alicia Boler-Davis, GM head of customer experience and product quality has set a target of achieving industry-leading rates within the next two years. If everything goes according to plan, the company will register more than $4 billion in annual revenue.
After another calculation, Boler-Davis said it costs five times as much to attract a new customer than to retain an existing one. Some of the measures taken refer to the renovation of the US dealerships, mystery-shopping programs and more specialists were hired in the dealer network for customers.
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