Why do car makers like conquest customers?

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Lexus_CT_200h_1Car makers like winning sales from people who have previously bought one of their competitors’ cars. These are called conquest customers.

It’s a double win: you claim a sale, your rival loses one. Do things right and retain them for future wins through customer loyalty. More sales your rivals won’t be getting.

Some brands have more potential for conquest customers than others. If you are small, and don’t compete in many sectors, then any new model is likely to generate higher conquest rates than your established rivals, certainly initially.

Lexus has enjoyed strong conquest rates in recent years, thanks to the arrival of the CT 200h premium compact hatch. However, as Jon Williams, president and MD of Lexus UK explained to me on the 2013 Lexus LS launch, conquest does decline as a model ages. There are only so many new people who’ll jump from their Audi or BMW compact hatches.

Leuxs_Jon_Williams

One of the most striking conquest rate declines of the past few years comes from Italy. The Alfa Romeo Giulietta, at last an Alfa that had some semblance of rational car buying logic, boasted industry-leading conquest penetration rates. But now, conquest rates are down 35-40% from their peak, showing how cyclical this breed of customer is.

Conquest only takes you so far. Once conquered, attention turns to customer retention. That’s another post entirely.

Regardless, Lexus has conquest as a KPI for its dealers. They are measured on their conquest performance, with focus on using models such as the CT 200h to attract new customers. That’s why this is such an important car for Lexus – get buyers in early and the brand’s customer-focused service strategy should help encourage them to stay. Lower price point, theoretically earlier entry into the brand. Bingo.

It’s not just conquest from other brands that’s looked at, though. You can also have internal conquest, where someone moves up from, say, a CT to a GS, as well as used-to-new conquest. Both are indicators that dealer and brand are doing something right – if the customer is both willing to stay with you AND spend more with you, you’re onto a winner.

Car makers like keeping the customers they already have. But they love snaring customers from their rivals. This is why they’ll always speak of conquest rates – they know the multiple benefits and opportunities they bring.

It takes work, but it’s worth it.

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