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J.D. Power: Prepaid Maintenance Fueling Brand Loyalty, Repurchase Rates

April 10, 2014

WESTLAKE VILLAGE, Calif. — The percentage of vehicle owners with complimentary or prepaid vehicle maintenance packages has more than doubled during the past five years, according to the J.D. Power’s 2014 U.S. Customer Service Index (CSI) Study. The growth in such offerings is helping to drive up loyalty and repurchase rates.

The study, which measures customer satisfaction with service at a franchised dealer facility among owners and lessees of one- to five-year-old vehicles, revealed that 68% of luxury vehicle owners and 46% of mass-market brand owners had their vehicle covered under either a complimentary or prepaid maintenance package during the first year of ownership, compared with 35% of luxury and 15% of mass-market brand owners in 2009.

Such offerings, the study noted, are driving up repurchase rates among owners, with 72% of those who have a complimentary or prepaid maintenance package repurchasing the same vehicle make on their next purchase, compared with 62 percent who did not have a maintenance package.

“Maintenance packages — whether they’re complimentary or paid for by owners — create a long-term relationship between the customer and dealership, which, when coupled with satisfying service experiences during that period, can have a very positive impact on loyalty rates,” said Chris Sutton, senior director of the U.S. Automotive Retail Practice at J.D. Power. “Maintenance packages help capture a higher percentage of service visits, and since customers with these plans are predisposed to purchase such items as batteries, brakes and tires from the dealer even after their plan expires, dealers retain key revenue opportunities for service and repairs.”

Two GM brands performed highest in the segment rankings in 2014. Cadillac ranked highest in satisfaction with dealer service among luxury brands, achieving an overall CSI score of 872 on a 1,000-point scale — an increase of 14 points from 2013. Rounding out the five highest performing nameplates in the luxury segment were Audi (868), Lexus (867), and Infiniti (865) and Lincoln (865) in a tie.

Buick ranked highest among mass-market brands with an overall CSI score of 835 — a 26-point improvement from 2013. Following Buick in the mass-market rankings were Volkswagen (830), GMC (828) and MINI (828) in a tie, and Chevrolet (812).

The study found that customer satisfaction with dealer service continues to increase. Among luxury brands, overall customer satisfaction with service at a dealer facility averaged 855, up from 846 in 2013. The CSI average among mass-market brands was 797, up from 789 in 2013.

Six of the Top 10 key performance indicators for CSI involved service advisor-related best practices, including being focused on customer needs; providing helpful advice; and keeping the owner updated about the status of their vehicle. And industrywide, vehicle owners use ratings and review websites to select a dealer for service 17% of the time and social networking sites 15% of the time. Owners of traditional domestic U.S.-brand vehicles use social networking sites at a much higher rate to help select a dealer, while owners of non-U.S.-based brands use ratings and review sites at much higher rates.

Additionally, the use of digital tablets during service interactions can have a positive impact on customer satisfaction. The industry-wide CSI score when a tablet is used is 838, compared with 802 when a tablet is not used. Tablets are used more frequently by service advisors in the luxury vehicle segment (19% of the time) than in the mass-market segment (15%), according to the study.

The 2014 U.S. CSI Study is based on responses from more than 90,000 owners and lessees of 2009 to 2013 model-year vehicles. The study was fielded between October and December 2013.

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