Customer loyalty needed to maintain competitive advantage

In a recent article Ford Motor Company commented on figuring out how it can improve customer loyalty and have a longer relationship than they do at the present. They stated that customers stay with manufacturers as long as the new warranty lasts, and then move on to independent service providers. Ford also claims the change of ownership within the warranty period makes it difficult to reach the next owner. Ford claims that going to a dealer for work outside of the new warranty period may initially present as being more expensive, however in the long run the dealers have better processes, training, and parts as to Ford products. When asked if Ford might consider lifetime warranties, the company commented that longer warranties allow customers greater potential for abuse.

Customer relationships are based on a company’s service especially in the auto industry. The automobile brand owner looks to the future hoping today’s buyer will purchase another Ford. He wants advocacy, a willingness to pay a premium for his brand, and the possibility of more than one Ford parked in the owner’s driveway. Then comes the perks of loyalty; there is a greater resale value down the road, and stronger negotiating powers with the manufacturer. With all of this in place, can a brand owner then count on more Ford owners coming back for service work after the warranty period is over?

Actually retention rates, metrics, and analytics are all necessary for success, and it is based on customer experience. Does lifetime warranties add up to consumer negligence or can it be the most positive part of  customer service? Ford can not afford customer service slip ups, and they need to communicate with the customers more often. Educate the customer on proper care; a typical owner’s manual consisting of hundreds of  pages isn’t likely to be read by most new car owners, so keep it simple. Companies can not take the customer for granted and need reliability and flexibility. Sometimes the warranty period needs to be extended; sometimes the warranty period needs to address particular needs of particular clients.  Another barometer of success is employee loyalty; the people working in the front lines of service need to be enthusiastic and well-trained for their positions.

Satisfaction alone does not build a loyal customer. Even though a customer may be satisfied today with the luxury hybrid competing with Lexus in the mid-size sedans, it doesn’t predict how customers will behave in the future as to what brand they will purchase. They may or may not return, however loyal customers consistently come back. Will Ford be able to lay claim to that in the future?

photo credit: aresauburn™