Managing customer loyalty in the automobile industry: two case studies

Abstract: Customer loyalty is a concept gaining more and more attention in today’s
business when loyal customers are considered as essential components to
organizational success. Loyal customers tend to purchase more often, spend
more money and usually enhance a positive word-of-mouth. Consequently,
corporations of today strive to identify and manage effective methods of
actively enhancing loyalty, including customer loyalty programs.

Automobile corporations operate in an industry characterized by few
customer contacts with large monetary value. There are major profit
potentials and each customer is worth more than only the sales price for a
car. As a result the management of customer loyalty is an essential
activity within this industry.

The aim with this thesis is to gain a better understanding of how customer
loyalty is managed within the automobile industry, more specifically by
focusing on the design, implementation as well as the evaluation process.
Two case studies of corporations are made based on interviews and
documentation.

The conclusions drawn from the findings indicate that during the design
phase of customer loyalty programs the elements constituting the programs
were similar between corporations, nevertheless the utilization of these
programs differ. One of the most important tools for corporations is their
database containing valuable customer information. When it concerns the
implementation of customer loyalty programs, the organizational structures
behind the programs differ. Either the organization for loyalty programs is
incorporated with another unit or managed by a separate department.
Regarding the evaluation, customer loyalty is only measured by customers’
repurchase behavior. Furthermore this research shows that in order to
accurately communicate with the customers, segmentation of customers
becomes a crucial activity.