| Through a case study of a car dealership, the first part of the research is dedicated to developing a framework to identify existing customers in terms of profitability, to tier the customer-base in terms of profitability, to identify the demographic variables that are the most effective in characterizing profitability tiers and to calculate the retention rate.; This study examined the longitudinal relationships of a stratified sample of 123 new car buyers over a period of five years, from 1998 to 2002. The procedure to determine the customer relationship profitability has been based on some elements of the framework developed by Storbacka (1994) for the banking sector and has been replicated and adapted to the automotive industry. From this the degree of subsidizing between profitable and unprofitable customers has been calculated.; The segmentation of the customer base has been completed through cluster analysis where the customer relationship profitability and the profitability index were the variables used to segment the customer base into four tiers: Platinum, Gold, Iron, and Lead.; A one-way ANOVA was used to compare the means of the four clusters and to test whether the differences between the means of the variables were statistically significant at an alpha of .05. A chi-square test has been executed with all of the other categorical variables. The variables that are the most significant in characterizing the four tiers are: number of cars bought; tenure; service frequency over a five-year period; type of car bought; salesperson; and language. The age, gender, address, and type of transaction variables are not statistically significant.; In the second part of the research, the Spearman rank-order correlation was used to test the relationship between customer satisfaction, loyalty, and profitability. The results showed that there is no relationship between customer satisfaction and loyalty, that there is no relationship between customer satisfaction and profitability, but that there is a relationship between customer loyalty and profitability. |
