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Study: Chevrolet Has Highest
Customer Retention Rate in Industry

The customer retention rate for Chevrolet is the highest in the industry, according to the J.D. Power and Associates 2003 Customer Retention StudySM released recently.

The inaugural study measures the ability of nameplates to retain their owners who are once again in the market for a new vehicle. On average, the study finds that about one-half of consumers will repurchase the same nameplate.

Chevrolet ranks highest in customer retention, retaining 60.8 percent of its owners. Chevrolet models with the strongest retention rates include the Avalanche, with 74.5 percent of owners purchasing another Chevrolet model, TrailBlazer (73.8%), Impala (70.1%) and Silverado 1500/2500 (68.7%).

Chevrolet is followed in the ranking by Toyota (59.3%), Mercedes-Benz (58.7%), Ford (58.1%) and Honda (57.1%). Isuzu trails the industry, retaining only 3.5 percent of its customers.

The study finds that one of the most influential reasons that customers do not purchase another model in the nameplate's lineup is that the brand doesn't offer the type of vehicle they were looking for. A large number of customers who defect to another brand do so because they believe their previous manufacturer does not make the type of vehicle they want when they re-enter the new-vehicle market.

"Chevrolet is an example of a broad product line that offers customers many options to fit their needs," said Joe Ivers, partner at J.D. Power and Associates. "While manufacturers tend not to expect each of their brands to retain customers 'for life,' many have realigned themselves through mergers and acquisitions to accumulate a portfolio of brands that give customers a place to move up as they age and become more affluent. However,
manufacturers vary in the degree to which they have integrated their brand portfolio into a coherent cross-brand strategy."

Defections from a brand can occur due to owners' poor experiences with their previous vehicles, or because they are "captured" by positive aspects of the new brand they buy. Among these "captured" customers, nearly two-thirds purchase a model from a different brand because the new vehicle meets their practical needs. More than one-half feel the vehicle they buy has a better
look or style or because the brand is known for better quality than the brand of their previous vehicle.

"Customer retention is critical to manufacturers, not just because the cost of keeping a customer is generally lower than gaining a new one, but it's also a test of whether the brand has staying power," said Ivers. "Customer retention can be predicted to a fairly strong degree based on the sales and service experiences with the brand along with the vehicle's quality, durability and appeal. However, a large portion of vehicle owners are up for grabs. Being able to identify defectors, both within the brand and those of the competition, can help a brand to develop and implement remedies. Also, identifying these 'fence-sitters' helps marketers know who can be influenced one way or the other."

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