Summary
Retention of owners to a brand is driven by many factors. Increased sales objectives need to assume conquesting will also be critical. Treatment of owners is just as important as treatment of first time customers. Loyalty is a means to a larger goal - profitable sales.
Analysis
To name a few, niche brands like Volkswagen, Subaru and Mazda suffer from relatively poor owner loyalty when their "scores" are compared to the rest of the industry. Repeat sales to these brands, are partially challenged because of a fairly narrow product line offered by these brands (and others). When loyalty (based on repurchase patterns) is compared for smaller portfolios, it is a no-win game when someone can jump into a wide range of vehicle from a GM, Toyota or other mass brands. So is it fair to hold loyalty objectives up to the industry standard? No. And while owners are the easiest source to propel further referrals, the experience must be genuine to existing owners. Volkswagen does an incredibly strong job of differentiating its brand (via creative and memorable advertising) to a small set of hard-core enthusiasts. Loyalty will still suffer overall for this brand because they only offer a relatively narrow range of vehicles (despite the fact that they are a performance-driven organization and they are one of the few brands in the US to offer diesel sedans). But dealer treatment and follow-up communication regularly prove to be critical drivers of repeat sales to a brand among US owners. These are "soft" factors that are harder to address beyond what variety of models you offer. A recent study conducted by the Polk Center for Automotive Studies showed that 18 percent of the influence among new vehicle buyer to be loyal or not was dictated by whether the seller was honest and trustworthy and another 18 percent was defined by the overall shopping and sales experience. These are tough operational and tactical variables to improve when they may be criticized by existing owners.
Ultimately, sales is king and that means executives at any auto company want the targets to be reached. Whether the share of sales come mostly from owners or first time customers, that matter tends to be irrelevant. If the target is reached, that is what matters. If sales targets are reached with more efficiency, this seems to be a secondary "win", but it's not a deal-breaker in the short-term. In the case of Volkswagen, they hope to sell 8 million U.S. units by 2011 (three years from now via 20 new models in new segments including vans, pickups and SUVs - see article from Washington Post here). Loyalty will certainly be part of this strategy, but they have a lot of conquesting to take care of and part of that is the positive experiences today's owner base is willing to share with others. The dealer network at Volkswagen has long been criticized for "firing their own" and outside parties know VW takes this issue seriously. Advertising will keep consideration and awareness high, and it will need to do so more than ever with the expected product onslaught toted in the next three years. But sales gains will assuredly be driven by getting new customer to enter this brand. In the case of Mazda, they have successfully started to reposition their offering away from the classic "zoom zoom" only brand to one with aggressive styling and an expanded model lineup evidenced by the Mazda CX-7 and CX-9. Despite this, Mazda still shares the same dilemma as Volkswagen with loyalty and that metric itself will not grow overnight. In the case of Subaru, its product line-up is fairly narrow with minimal announcements of new product in their pipeline. The same applies to them. Loyalty in and of itself is not the end-goal. It's a means to a larger goal - profitable sales.
