Car dealers court existing buyers

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While waiting for their Lexus to be serviced in Plano, Texas, consumers can sit on the sofa and watch a big-screen TV in the waiting room, surf the Internet or sip lattes in the beverage area. The Park Place dealership is even studying whether to add a manicure area. "We try to make it like a den would be in your own home," said Jordan Case, president, likening each customer to a houseguest.

Whether through waiting-room niceties, faster service or other means, retaining good relationships with existing customers is becoming a larger part of automotive dealers' marketing mix as consumers confront a bewildering array of new models, increased product parity-leading to a decline in brand loyalty.

retention cheaper

"It's easier to maintain a customer than conquest a new one," said John Bulcroft, president of an auto consultancy bearing his name. While current figures aren't available, car executives estimated in 1998 it cost about $200 to retain a customer vs. $800 to draw in a new one.

A dealership can have all the amenities in the world, but if the store doesn't do a repair right or on time, all the extras are for naught, said Mr. Case. So, he started a "client-concern resolution process" to get to the bottom of owner issues and ensure they don't happen again. "I'm not in the car business," he said. "I'm in the service business."

California dealer Mike Sullivan said his Lexus and Porsche customers have money, "but what they don't have is time." So, he's testing a system that uses three technicians instead of one for 35,000-mile service checkups to cut the wait in half. If owners ask, he'll pick up their cars for service and give them a loaner. He's also buying a $50,000 golf-putting machine for his Lexus dealership so customers can brush up on their game.

His Lexus store got high scores in a recent customer study he did with the Gallup organization. Citing his customer service, Mr. Sullivan said he sells more cars and does more service work every year.

The Toyota Motor Sales USA's luxury arm is trying to improve its fourth-place positioning behind Infiniti, Saturn and Acura in last summer's annual Customer Satisfaction Index study by consultancy J.D. Power & Associates.

Building a longstanding relationship has been the strategic cornerstone of General Motors Corp.'s Saturn since it launched in 1990.

While Saturn has required training for dealership staff on "how to deliver an outstanding customer experience," each retailer decides how that is done, said Scott MacGirr, retail strategies manager at the division. For example, a dealer may choose to surprise new owners with a CD of their favorite kind of music when they buy a Saturn or gather the showroom staff at delivery to give the "Saturn cheer."

Saturn loyalists

Dealer Mike Schramm holds Owner Workshops once a month at each of his four Saturn stores in the Schaumburg, Ill., area, mostly for recent buyers. His dealerships are also visited once a week by Girl Scouts trying to win their auto-care badges.

Saturn said its loyalty rates rose in the past couple of years as more than 40% of Saturn owners returned to buy another. That's partly due to the brand's expanded product lineup.

Chris Denove, a partner at J.D. Power, said it's easier for niche automakers to create relationships with existing customers because their owners tend to be more passionate about their cars. He cited the Internet and the increase of available online auto data as contributing to buyer defections. "The Internet makes it easier to be disloyal."

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