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Customer LoginsAutomotive loyalty: back to basics
It has been quite a while since my last post and I thought for this entry I would get back to basics by reviewing some of the most important Polk owner loyalty metrics. These metrics provide OEMs and dealers with a better understanding of who's returning to market and when, but more importantly provide detailed insights into their repurchase activities. With this data in hand, OEMs and dealers alike can tailor specific owner retention strategies that drive profitability.
Return to Market (RTM) - represents the number of owners who have returned to market and purchased a new vehicle during the loyalty study period. These are owners of a vehicle that was purchased new within the last 10 years and it is still retained when the new vehicle purchase is made.
Manufacturer Loyal - represents the number of manufacturer RTM owners who repurchased a new vehicle from the same manufacturer during the study period (e.g., a Buick Regal owner who purchases a Chevrolet Malibu would be General Motors loyal).
Brand or Make Loyal - represents the number of brand RTM owners who repurchased a new vehicle from the same brand during the study period (e.g., a Subaru Outback owner who purchases a Subaru Forrester would be loyal to Subaru as a brand).
Model Loyal - represents the number of model RTM owners who repurchased the same model brand during the study period (e.g., a Ford Edge owner who purchases another Ford Edge would be loyal to the Ford Edge as a model).
Dealer Loyal - represents the number of dealer RTM owners who repurchased the same brand from the same dealer during the study period (e.g., a Mazda 3 owner who purchased the Mazda 3 from ABC Mazda and returns to ABC Mazda to purchase a Mazda CX-9).
Defection - represents the number of RTM owners who purchased a new vehicle that is different than what they own (e.g., a Chevrolet Silverado owner who purchases a Ford F-150 would be a General Motors defector at the manufacturer level, a Chevrolet defector at the brand level and a Silverado defector at the model level).
Conquest - represents the number of new purchases from owners who did not have a previously purchased new vehicle of the target manufacturer, make, model, dealer in the garage but own a vehicle that was purchased new the last 10 years when they made their new vehicle purchase. Using the Chevrolet Silverado example (above), the Silverado would be an F-Series conquest. One OEM's defection is another OEM's conquest.
Conquest/Defection (C/D) Ratio - represents the total number of owners who were conquested divided by the total number that defected. C/D ratios are typically used to assess the competitiveness between brands (e.g., when evaluating Honda against Toyota, a C/D ratio of 1.2 would indicate that for every 100 defections from Honda to Toyota, Honda conquests 120 from Toyota). Numbers greater than 1.0 indicate a healthy organization or competitive strength with more conquests than defections.
Loyalty Rate - The number loyal divided by the number RTM expressed as a percentage.
The Polk owner loyalty metrics outlined above are just the start of understanding how to measure insights into repurchase activities. Stay tuned!