Ford and Honda Tops In Customer Retention Study

According to the annual customer retention study conducted by J.D. Power and Associates, the Ford and Honda brands each managed to retain 62 percent of their buyers during 2010, putting them in the top spots among brands sold in the US.  The former top brand in customer retention, Mercedes-Benz, saw its loyalty rate slip from 66 percent in 2009 to 59 percent in 2010.  Ford coincidentally showed an improvement similar to the size of Mercedes’ slippage.

On the bottom end of the scale, Saab showed a pathetic 4 percent retention rate, but for quite a while, there were nearly no new Saabs available to purchase while the small Swedish automaker actually began wind-down proceedings before Spyker swept in and rescued the company.  Jaguar, however, has no such excuse for its 16 percent retention rate.  Another interesting brand is Toyota, which – at 60 percent customer retention – is right on the heels of the leaders, despite what we might expect to see in the form of fallout from its recall crisis earlier this year.  Hyundai and Lexus share the 60 percent mark with Toyota, and Kia made a dramatic 21-point leap, from 37 percent to 58 percent, in just a single year.

Aside from the actual retention rates – which show an industry average retention rate of 48 percent – the study also provided the reasons that survey respondents cited for remaining loyal – or not loyal – to a particular brand.  As the economy improves and new-vehicle sales recover, matters of practicality and economics (such as resale value and seating arrangements) have declined in importance, and fun-to-drive has gained in importance.

Though fun-to-drive is growing in importance, it’s still not the most popular reason buyers come back to the same brand again.  That would be seating arrangements:  70 percent of buyers cited seating arrangements as a reason they remained loyal to a brand.  The second-most popular reason was look/style (65 percent) and third-most popular was safety (64%).

Finally, the Power study looked at conquest rates – in other words, the opposite of loyalty, when a brand scoops up owners of another brand.  Domestic automakers showed some improvement in this area for 2010; some 14 percent of domestic-brand buyers in 2010 previously owned an import, while that number was 10 percent just a year earlier.  Perhaps the dreaded “perception gap” is finally shrinking, and perhaps the quality and safety luster that Toyota could previously bank on has disappeared.