Mazda horizontal black and white logo.
November, 9th 2004
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."
(source: Written by Mark Rechtin of Automotive News)
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