General Motors Implements Ongoing Customer Loyalty Study At Dealer Level23
In November of 2012, General Motors implemented a customer loyalty measurement program across its dealer network. The new program will allow the automaker to measure how many customers return to a specific dealership for their next purchase, and how many jump ship to a rival store.
Spearheaded by General Motors Vice President of customer experience and global quality Alicia Boler-Davis, the program provides a clear overview of the competitive dealer landscape and gives GM the ability to compare customer loyalty rates of a particular store to its peers. The program is part of a dealership scorecard offering by R.L. Polk & Co. — a Detroit-based research firm that tracks registrations of new vehicles.
The new initiative allows The General to gleam interesting findings by increasing the level of detail in the information it can access. “Now we’re working with dealers to identify what are the key drivers of retention to identify what are the key drivers of retention as well as defection”, said Davis.
For instance, the scorecards might result in more mystery shopping of the specific dealers that rank below market averages or the more frequent deployment of GM’s field personnel to identify and solve problems in person.
Polk has offered its program to automakers since 2006, but the firm’s director of loyalty management practice Brad Smith says that demand has increased significantly over the last two years, with most automakers today using some version of the service.
The GM Authority Take
To us, the interesting part here is GM’s approach to the loyalty equation. Just a year ago, The General was specifically focused on the loyalty of its brands; now, it’s focusing on a dealer’s ability to retain customers — which in and of itself is the most direct measure of customer retention, since it monitors the metric on the retail level.
As such, it would seem that GM will be able to gleam with great accuracy and confidence interesting patterns of intra-dealer competition — such as the rivalry of stores in a metropolitan area with (perhaps too) many points of sale, or even how far customers are willing to travel to either avoid a specific store, or to score a better deal. Of course, all that leads to other information about store-level management, possible customer service issues, and other items that matter to General Motors as an automaker.
Let’s see how this benefits The General and its dealer network in the long term.
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While of course there are differences between dealers that result in varying levels of loyalty, GM is contributing to lower loyalty rates themselves with “incentive” programs that result in some dealers being able to offer prices hundreds or thousands of dollars less than others. It’s hard for even a satisfied and loyal customer to stay with their dealer when one across town advertises a much lower price, often under net invoice. And once this dealer loyalty is broken can brand loyalty be far behind? The customer might not like the new dealer as well or feel as comfortable there and decide to shop another brand now that they are a “free agent”.
The GM portion of the incentives should be the same for every dealer shouldn’t they? I do know that dealers can choose to give or take the incentive, so the blame can’t all be on GM.
Rebates, special interest rates, leasing programs, and targeted incentives, etc. are the same at every dealer. And by law, both federal and state, every dealer pays the same for the vehicles. But manufacturers sometime mess with things like “stair-step” programs that set a sales goal and pay an amount per vehicle sold once the goal is attained retro to the first one; potentially tens of thousands of dollars for large stores. So if they are a few sales short of the goal they will sell at drastic prices to get the large money at stake. Also GM has two ongoing programs, SFE and EBE, that favor some stores over others. Too complicated to explain but trust me, along with stair-steps these programs put some dealers on an un-level playing field to start, and tend to favor larger stores. They are a back-door around the law, and are being challenged by some dealers in court, but since these programs help some dealers and hurt others there is division amoung the dealer body. And due to this all of these programs challenge a customers loyalty.
I have never owed anything other than Vauxhall’s, if only dealers was as loyal (multi franchises, brand changes etc).
Sounds like GM is aiming to create another metric as the basis of defranchising dealers.
After they all spent millions branding their dealers to your liking?
Way to show you care GM.
If the dealer is the cause of losing a customer, they should be eliminated. That’s business…
I agree. My local GM dealer, where I have purchased two vehicles and many spare parts and only two miles away, will not sell the Chevy Volt, and are missing out on other GM hybrids. Yet another GM dealer that is 22 miles away does better business.
If the local GM dealer goes out of business, my only problem is getting factory service if my vehicles break down.
Last year I went to my local Chevy dealership to purchase a used Chevy… After reflecting on our experience having had our vehicle serviced (Oil Changes) there a few times and the interaction with the Sales and Service staff ect… We have since stopped going to this dealership. When I purchased the car I was told it had phone bluetooth connectivity and was shown a button on the stearing wheel, yet after several attempts to connect my phone I returned to the dealer to request assistance only to be told by my sales man that infact he did not think I had that option. I went to a different dealership who looked up the build records for the car. Turns out the option was never instslled and the button was now just a glorified mute button for the sterio… The original dealer offered to install an aftermarket component for a price. Before this both my wife and I had our Chevy’s serviced (oil changes) this same dealer put watered down windshield wiper fluid in the dead of winter. Both cars wiper fluid froze and clogged the sprayers… I was outraged and this added to my reasons 4 never returning to that dealership… With things like this GM wonders why people migrate away from there dealerships. There are to many options out there, if I cant trust my Chevy dealership then who should I trust, maybe my Toyota dealership or my Hyundai dealership…
This, believe it or not, was GMs fault, not the dealer. How, you say? Well you bought a used car and I’m guessing it was an off-rental “program” car. GM does build some trim levels (1FL, etc) specifically for fleet and rental that leave out things like Onstar and Bluetooth. But sometime times they build the retail trim levels (1LT, etc) for fleet customers without them too. So when you or the dealer research what comes standard on the trim level all the features are listed. But since GM built it special for the fleet customer they let them delete some features (which they won’t do for a retail customer). The only way to know is to do what you eventually did; look at the build sheet. Bottom line is GM should not have called it an “LT” if it didn’t include all the features that come standard on an “LT”.
^Not the real Bob Lutz…
Nor a correct answer. It doesn’t say anywhere in the original post that it was a LT and even if was there is LT1, LT2 levels within.
It is totally the dealer’s responsibility to understand what vehicle they have with what options.
The answer made assumptions that apparently are true (read the OPs reply). And do you really think its ok for a manufacturer to make features standard on a trim level, then build that trim level without them? Certainly is a recipe for confusion and customer dissatisfaction.
I guess what I am saying is its about the little things…
Thanks bob, agreed… but the sales person should have known and instead of upselling the car the second I sat in it. This vehicle had leather ect so it makes sense it would be percieved as an LT… But in case of fleets maybe they should leave off wether it is an LT or LTZ… Bottom line some lessons learned…
thank you captain obvious… 🙂 I would be shocked if it was…
It’s actually General Knowledge. lol
Seriously though, it’s been annoying to read someone trolling as Mr. Lutz.
This isn’t the first time and it probably won’t be the last.
But, should the real Maximum Bob post on here, it will be difficult for others to believe it.
I also share your frustration with some GM dealerships. There are two around my neck of the woods that I won’t give my business to, based off previous experiences and the words of a few former sales/accounting employees.
I hope this approach will help identify areas for actionable improvement.
Lol, do you think anyone would think Bob Lutz even knows about this blog, let alone that he’d post here?
Well, Mr. Chase. Mr. Lutz *is* aware of GM Authority…
How’s the Family Truckster holdin’ up?
How many customers did they lose when they closed so many dealers and brands a few years ago? The closest Chevy dealer to me is closed and the building still empty. The next closest GM dealer was Pontiac, gone. Just down the road was a Saturn dealer, gone. Now there are VW, Honda, Toyota, Kia, all along that stretch of road. Many people shop local regardless of brand.
Down through the years I have had countless dealer surveys all aimed at some satisfaction bonus for the dealer. But no survey has ever asked what I think about the car. Last year I also discovered that the Powertrain warranty is a myth. It does not cover ANY electrical components even on a four year old 18,000 mile car that required $500 to get it running on more than two cylinders. To quote my daughter, that was her first and last GM car.
I was just thinking about this subject. Let’s assume that most people perceive Chevies to be of at least slightly lower quality than Hondas and Toyotas. Now, GM has been fighting this perception for the last thirty years, and progress has been slow.
Is it possible for GM to make the Chevy dealer experience (purchase and service) so attractive that people would prefer a Chevy over a Honda/Toyota? In other words, let the human touch trump perceived reliability?
I think Hyundai successfully did something similar a few years ago. Hyundais were perceived as less reliable than the Japanese imports. Hyundai stuck a great warranty on their cars and also did their “we’ll buy it back if you lose your job” gimmick. It seemed to work. While almost every other carmaker lost sales during the recession, Hyundai did well.
In my own case, I will probably never buy another Nissan. Not because I don’t like the cars – I do like them and owned several – but rather because every single Nissan dealership I’ve ever dealt with has been a nightmare in one form or another. So I’m done with them, even though I think Nissan makes some great cars.
So I am an example of someone who would buy a GM car if the dealerships are great, even though the GM cars I’ve owned have had (slightly) lower reliability than the Hondas and Toyotas I’ve owned.
Wasn’t Saturn supposed to have been the anti-dealer experience so many years ago?