consumer purchase behaviour

What drives the loyalty of the customer?

Many times, we have seen advertisements which promote that dealers will sell two cars – one now and one in the future. As customer lifetime value is so dependent on retention rate, no car company can ignore loyalty index (ratio of cars purchased to cars recommended). Our conclusions on loyalty based on different surveys are as follows:

  • What drives the loyalty of the customer? Is it product features, shopping experience, service or something else? We found that product usage experience drives the priority. We believe that customers are setting minimum acceptable criteria for service and shopping experience. This makes the study of customer experience with the car, a higher priority for product innovation in order to improve customer retention and peer recommendations.
  • Gen Y does not own their favorite car. 72% of secondary survey GENY participants said that they do not own their favorite car therefore a strategy of having a low-end and luxury car from the same company can help Gen Y in making transition as they age and moves to a higher income level.
  • No correlation between WOM and loyalty Index. Many brands had low loyalty index even when that brand was recommended by many non-purchases. At the same time, there were brands that made a lot of sale and still had low loyalty index.