GM aims for top spot in auto industry customer loyalty
By Ben Klayman
ROYAL OAK, Michigan (Reuters) - General Motors Co (GM.N: Quote) is aiming for industry-leading customer loyalty rates that could add more than $4 billion in annual revenue, product development and quality executives for the No. 1 U.S. automaker said on Wednesday.
GM wants to push its customer retention rates to at least 58 percent - the rate of industry-leader Toyota Motor Corp (7203.T: Quote) - from about 52 percent to 53 percent, the industry average in the United States.
"We believe a single percentage point improvement in sales retention is about 25,000 vehicles, or about $700 million in revenue annually, so it's a pretty big financial incentive," GM global product development chief Mary Barra told reporters at an event outside Detroit.
With more than 70 percent of its U.S. product lineup being redesigned or refreshed this year and in 2013, GM executives see an opportunity to change how consumers view the Detroit automaker, which filed for bankruptcy and received a $50 billion bailout package from the U.S. Treasury in 2009.
"We believe in the auto industry no one really stands out as the clear winner in managing that overall customer experience," Barra said, adding GM was aiming for the even higher loyalty rates of Apple (AAPL.O: Quote) and FedEx (FDX.N: Quote).
"We see this as a true opportunity to really create a differentiated place for General Motors and we're working very hard in that direction," Barra said. "We've got more work to do."
Barra acknowledged all automakers are working to improve product quality and customer loyalty rates, so GM's improvements cannot be incremental.
She said GM in the past was more focused on internal data, such as cutting its warranty costs 50 percent in the last five years. However, scores in external studies - like Consumer Reports and J.D. Power and Associates - that consumers use when shopping for new cars did not reflect that success. Continued...