GM strike cost more than 36,000 loyal customers-study
By Michael Ellis
DETROIT, Dec 9 (Reuters) - Summer strikes at General Motors
Corp. cost the world's largest automaker more than
36,000 customers and nearly $1.1 billion in revenues in the
three months from July through September, according to a study
released on Wednesday.
GM customers, who rank as the most loyal in the industry,
opted for vehicles from Ford Motor Co. and other
automakers when GM dealers were unable to supply their favored
car or truck because of the strikes.
"Customers wanted to buy, but couldn't," said Karen
Piurkowski, director of loyalty for The Polk Company, which
named GM the winner in manufacturer loyalty for its annual
loyalty awards on Wednesday.
"Not only did GM experience the immediate loss of revenue
for one-time sales, but they will also experience a larger
long-term loss -- the loss of customers for life, estimated to
be 10 times greater than the loss of a single sale."
GM scored the highest customer loyalty in the industry,
with 67.54 percent of GM owners opting for another GM product
when they purchased a new vehicle in the 1998 model year, which
finished at the end of September.
Ford placed a close second with 65.30 percent of its
customers returning and Toyota Motor Co. <7203.T> was a distant
third at 51.88 percent, trailed by Chrysler Corp. at 49.40
percent. Chrysler completed its merger with Daimler-Benz to
create DaimlerChrysler AG in November.
GM's customer loyalty, fueled partly by its Loyalty First
coupons offering rebates of $500 to $1,000 to tens of millions
of GM owners, propelled its customer loyalty to more than 70
percent in the from October 1997 to June 1998.
But the strikes, which crippled production in June and
July, and the end of the Loyalty First program caused customer
loyalty to plummet to 58.7 percent in the July to September
period, Polk said.
Separately, GM dealerships ran full-page advertisements in
the Detroit Free-Press and Detroit News newspapers critical of
GM's plans to switch control of hundreds of millions of dollars
of advertising funds allotted to dealer groups.
"Such news is extremely disturbing," said the ads, which
asked for a sit-down meeting with GM Chairman Jack Smith to
discuss the issue.
"The proper mix of national and local advertising has been
a potent combination for General Motors and its dealer network
for several decades - to suddenly curtail one component of that
powerful program is to deprive the local customer of
information that applies specifically to his or her market or
buying need," said the ads, which identified the dealer group
as the "General Motors Dealers Coalition."
A GM spokeswoman said the automaker has never heard of the
coalition, and it has been receiving positive feedback on its
advertising program, which it will announce at a later date.
"Dealers have had significant input in the new marketing
plan," said GM spokeswoman Donna Fontana.
"We obviously have the same view with our dealers than
local marketing is crucial."
The industry trade publication Automotive News reported on
Monday that GM's 750 dealer marketing groups would lose control
of nearly $500 million in funds under the plan to transfer it
to five newly-named regional GM directors. GM earlier this year
restructured its North American marketing organization and its
dealer support structure.
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