Lock & Load

Maybe this article will get Mazda moving in the right direction and retain more of its customer base .

Mazda aims to boost owner loyalty; retention scores are 4th worst in J.D. Power study
MARK RECHTIN | Automotive News
Posted Date: 11/9/04
LOS ANGELES -- Mazda North American Operations is staging a comeback. But much of the automaker's success will depend on its ability to enhance customer loyalty.

Mazda's U.S. sales are up 4.8 percent through September. The company successfully launched the Mazda3 compact sedan and hatchback. Sales remain strong for the Mazda6 mid-sized sedan, hatchback and wagon.

The RX-8 sports car survived an early snafu regarding overstated horsepower and is close to meeting sales objectives.

Mazda dealers and executives attribute much of the automaker's success to its ability to attract a large number of customers who are new to the brand. At the same time, Mazda has one of the lowest customer loyalty rankings in the industry, market research studies conclude.

According to the J.D. Power Customer Retention Study released last December, Mazda had the industry's fourth-worst loyalty scores. Only Suzuki, Oldsmobile and Isuzu did worse.

The industry average for repeat customers was nearly 50 percent. That is, half of all consumers were loyal to their brand when they bought a new car.

Mazda's loyalty score was just 22.2 percent. By comparison, Mitsubishi scored 36.2 percent and Hyundai scored 54.3 percent, the study reported.

Badly treated buyers

Dan Lawlor, senior analyst for quality and customer satisfaction research at J.D. Power and Associates, says customers complained about poor treatment by Mazda sales and service employees, as well as poor quality and poor resale value of Mazda vehicles.

As John Mendel, COO of Mazda North American Operations, puts it: "You can't treat people like crap and expect them to keep coming back to you."

Mazda is starting a comprehensive program to bolster customer loyalty. Steve Odell, senior managing executive officer of Mazda Motor Corp., cites three elements of that effort: better product, more exclusive dealerships and better treatment of customers in the back shop.

Mazda needs to fill in the gaps in its lineup, such as a sport wagon and a larger SUV. It also is preparing replacements for some of its aging vehicles.

"We're in 50 percent of the industry categories by volume," Odell says. "There's an opportunity to broaden our appeal, and that will help our loyalty and retention."

A stronger product line will improve resale values. The Mazda3 has gained 11 percentage points in its 36-month residual value over the Protege it replaced. That gives the Mazda3 the best value in its segment, Odell says.

Mazda is pushing its dealers to build more stand-alone stores. Employees of an exclusive store will give the brand greater attention, Odell asserts. Mazda also wants dealerships to build customer satisfaction and loyalty through improved service.

"It's about processes and after-sales care and attention," Odell says. "It's about customers being able to book service calls online. That's the long battle for us."

Dealers want more

Some dealers express resentment at Mazda's entreaties. George Pelton, owner of the multiline First Team Auto group in Chesapeake, Va., says Mazda is not giving dealers adequate advertising and incentive support.

"The Mazda3 and Mazda6 are a wonderful change," Pelton says. "But it takes more than just good product to get the job done.

"Mazda is not as supportive as they need to be," he says. "If they continue to support the dealers with consistent advertising and programs, then the image will grow."

There are positive signs. In a survey of owners of 2004 model vehicles by AutoPacific, a consulting firm in Tustin, Calif., 82 percent of Mazda owners said they would consider buying the brand again.

But AutoPacific President George Peterson says even that impressive-sounding performance by Mazda "would put it right in the middle of the pack."

In the latest J.D. Power APEAL survey of vehicle performance, Mazda finished 16th among automakers. Still, Mazda was the top-rated volume brand. All marques that finished higher are luxury brands or sell to narrow niches.

The results of Mazda's loyalty initiatives won't be known for a few years, when current Mazda3 and Mazda6 owners trade in their cars.

Says Lincoln Merrihew, an analyst with the Compete Automotive consulting firm in Boston: "Mazda's low loyalty may not be such a bad thing right now. Mazda is charting new waters.

"If its loyalty remains low three years from now, I would be concerned," he adds. "That would mean its new wave of shoppers did not stick around for the second wave."


cheers
michael

RXE16T

Probably. Big brother is always watching.

Will they do anything?

Probably not. Big brother is exclusively a voyeur. :p

DMRH

Mazda Australia would be watching this but as for listening, dont hold your breath.

Buyers are smart enough to know whats going on & when the Australian arm increases the price of the same car in Japan by a whopping 60% then many will stay away in protest.

Imagine if the Mazda 2 - 3 - 6 etc where bumped up by 60% over the RRP in Japan. Nobody would be buying a Mazda at all here down under.

My USA friends freak when they find out the level of profitering by Mazda Australia.

With just a 8% price difference for the RX-8 in the USA (over Japan), the dealers there scratch their heads in astonishment at the level of mark up we cop & wonder how Mazda Australia can get away with it.

If Mazda Australia showed some loyality to the customer by charging the same 10% - 15% mark up they do over the other cars in the range then perhaps the customers would show some loyality back.

RXE16T

Eh, as far as I am aware, Mazda customers are quite loyal to the product.
Many are repeat buyers of the brand, so I don't know how you arrive at that statement.

One only has to look at some of the forum members just here in Australia.
For example, our esteemed Hymee has his 8 and his missus has a 6, AMG has his 8, an FD and a MX5, Ezzy has had an Astina and his 8 and that's just off the top of my head.

Jaycee

I'm certainly a loyal Mazda customer - my previous car was an MX6 and before that a 626. My reason for sticking with them - love the cars and I've been impressed with the service.

timbo

I'd have to say I am loyal, too, mainly because I have always found the cars good quality/value and very reliable (several 626s, 323s, MX-6 and Astina V6. There was a hollow patch in the 90's when they lost sight of, in sequence, value and then design, but that appears to be over. We have to remember that Australia is a tiny market, in global terms, and difficult to serve in terms of distances etc. My big prayer is that the design and marketing people continue to take bravery pills, and not fall into the 'me too' trap of Toyota and Nissan.

AMG

AMG has had 2 MX5's, one unfortuantaely has returned as a dishwasher.

I was about to buy an MX5 SE which unfortunately came to a premature end after Paradise Mazda in Adelaide pissed me off. As Adelaide is poorly serviced by reputable Mazda dealerships I willn ot be buying another Mazda again (but I do have a soft spot for rotary cars though)

The next car will be either a 911 or an M3 for my self or a Lexus 4WD as a family car.

My loyalty has been lost.

takahashi

I am with you there! My next car most likely will be a used current 911 Carreara S. When I am ready to buy it, it will be around $150k (nice price for me). I am just so impressed with the car (after seeing one real life at Porsche Centre today).

hmmm.... I am tempted for the Lexus 4WD for my wife too, although it is getting so much bad press lately. Alternative is a 5 series or a X5. I am more into estates rather than 4WDs though - is that a wrong thought?