An Exploratory Study of Factors That Lead to Customer Retention Practices in the Automotive Industry: A Study of Platinum Motors, Harare Branch, Zimbabwe

This research focused on a once-profitable automobile dealership called Platinum Motors, a franchised Mazda and Nissan dealership operating a 3S business model (sales, service, and spare parts), based in Harare, the capital city of Zimbabwe. As a franchised dealership, Platinum Motors is authorized to sell new Mazda and Nissan vehicles, provide genuine manufacturer parts, and offer factory-trained service and maintenance, which distinguishes it from independent garages and informal service providers in Zimbabwe’s automotive sector. Results are not looking good as customer complaints are on the increase. As if that’s not enough service delivery is no longer that good. A case study using a mixed-methods approach was conducted to investigate the underlying reasons for this situation and the lessons to be learned. At the end of the investigation a new model is suggested as a solution to the myriad of challenges this business is facing. A case study entails a systematic investigation of a phenomena affecting an organisation or community in which the researcher examines in-depth data relating to the behaviour of several variables. A mixed methods approach forms the basis of the investigation due to its rigour. In addition, this approach leads to a comprehensive understanding of the research problem. This is so because the use of both qualitative and quantitative approaches in research leads to increased validity, flexibility and better contextualisation of matters under investigation. The study population was comprised of seven hundred customers (N) from an existing client database provided by the business comprising government departments, quasi-government organisations commonly referred to as parastatals, from which a random sample of three hundred and two respondents (n=302) (42%) was selected. This sample size was produced using a sample size calculator at 90% confidence interval and a 10 percent margin of error. The study population, where a randomly selected sample was drawn, comprised of high-net-worth individuals, government, non-governmental organisations and corporates. Each participant had an equal opportunity of being selected to participate in the study. Probabilistic sampling was applied in the form of simple random sampling technique. The questionnaire was deployed as the data collection tool. It had eighteen open ended and close ended questions which looked at various aspects of the business. Some of these include customer satisfaction levels, customer perception matters, customer engagement strategies implemented by the business and customer journey mapping with the latter being used to track customer satisfaction levels at each touch point. Definition of key terms such as customer relationship management, Customer Retention (CR), Customer Loyalty (CL), Customer Journey Mapping (CJM) and Customer Experience Management (CX) were looked at during the course of this study. After analysing the primary data used in this research, it was discovered that 50% of customers were satisfied with the level of customer relationship management at Platinum Motors Harare Branch while the balance had issues with the service delivery processes. Using ranking technique, the average score for CRM was 5.0 on a scale of 1 to 10 suggesting that there is some degree of customer loyalty to this dealership. Various techniques are being used by the dealership for customer retention such as discounting prices and other value adding services such as cleaning vehicles after services and customer gifting. By looking at the findings of analysis, it can be concluded that there is still room for improvement especially when one considers that only eight percent of the customers give repeat business. Using the binary logistic regression model of analysis, it was concluded that customers generally have a positive perception about Platinum Motors Harare Branch service delivery processes. The results show that customer satisfaction level significantly affects customer perception on service provision (p = 0.001). A 10 percent increase in the customer satisfaction has 61% probability of influencing positive perception in customers about the quality of service. This assertation is supported by the findings of the binary logistic regression model. From the findings of this research it can be concluded that 50% of customers were satisfied by the current level of service provision. The researcher used a moderated mediation model to determine that the quality of motor services provided by an organization directly affects the brand image perceived by customers. In order to maintain a positive brand image, it is important to provide good quality services and practice effective customer relationship management. These are key factors in customer retention and customer satisfaction. Application of a qualitative thematic analysis technique (sematic analysis) showed that the main emerging themes were the provision of genuine motor spares, time management and turnaround times within the organization, fair pricing of products and services, improvements of communication and the adoption of new technology. In conclusion, it can be pointed out that Platinum Motors is not entirely performing very well. Given the nature of the findings, one can conclude that there is room for improvement at this dealership so as to upscale its client retention efforts. The findings show that there is need for a holistic approach in dealing with customer pain points so as to increase the numbers of repeat business for the dealership. To conclude the investigation, a CRM model is suggested as a possible solution to the challenges this business is facing.