Measuring Customer Retention in the European Automotive Sector

Abstract

Purpose: The main purpose of the work is to present the results of the customer retention level in the automotive sector based on the proposed measurement indicators: “serviced and sold” (SESO) and “sold and serviced” (SOSE).

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Vol. 29, No. 3/2021
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DOI: 10.7206/cemj.2658-0845.53a
„Central European Management Journal”
Vol. 29, No. 3/2021, p. 63–85, ISSN: 2658-0845, e-ISSN: 2658-2430
Measuring Customer Retention
in the European Automotive Sector
Piotr Sliż1, Liwia Delińska2
Submitted: 25.05.2020. Accepted: 4.05.2021
Abstract
Purpose: The main purpose of the work is to present the results of the customer retention level in
the automotive sector based on the proposed measurement indicators: “serviced and sold” (SESO)
and “sold and serviced” (SOSE).
Design/methodology/approach: The study investigates the dealership of passenger cars belonging
to one of the European automotive concerns. The following research methods were used in the
article: systematic literature review, participant observation, and data mining.
Findings: As aresult of the implementation of empirical proceedings, we proposed atheoretical
model in terms of data ow in sales and aftersales service processes, thus enabling the design of
SOSE and SESO retention indicators and their empirical verication in the examined organization.
Research limitations/implications: The presented indicators can be widely used in the analysis of
retention of aftersales service clients. However, the presented research results cannot be applied
to other organizations that provide similar results due to the non-probabilistically selected company.
Practical implications: The proposed indicators can be used by other organizations in different
industries in assessing the level of retention in manufacturer-user and seller-user relations.
Originality/value: The study provides tools that allow for retention analysis from both the customer
and product viewpoint. The concept has auniversal value for enterprises that conduct sales and
aftersales services under one structure.
Keywords: customer retention, customer satisfaction, relationship marketing, aftersales service,
automotive.
JEL: M10, M30, M11, M31.
1 Gdansk University, Faculty of Management, 8 Bazynsk iego St., Gdansk 80-952, Poland, e-mail: piotr.sliz@ug.edu.pl; https://orcid.org/0000-
0001-6776-3369.
2
Corresponding author, Gdansk University, Faculty of Management, 8 Bazynskiego St., Gdansk 80-952, Poland, e-mail: liwia.delinska@
ug.edu.pl; https://orcid.org/0000-0002-1183-6247.

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Introduction
The relationship between the functioning of modern organizations in adynamic
market environment is determined by satisfying the needs of buyers in line with their
expectations. Undeniably, the most important entities for enterprises operating on
the commercial market are customers identied as the main accelerators of changes
in organizations (Saarijärvi et al., 2013). The degree to which organizations retain
custo mers is called “retention” in the literature. It is of widespread interest among
researchers in such areas of the economy as hotel industry (Adzoyi et al., 2018),
banking (Darzi and Bhat, 2018), mobile telephony (Díaz, 2017), aviation services
(Climis, 2016), medical tourism (Han and Hwang, 2018), retail (Julian et al., 2015),
and e-commerce (Yen, 2015).
Customer retention is an imperative of the organization’s competitiveness (Dal Bó et
al., 2018) that has positive consequences for economic and nancial development (Sun
et al., 2007), which is an important goal of enterprises (Anderson et al., 2004). Each
organization needs customers as the primary source of prot generation (Gupta and
Zeithaml, 2006). According to the marketing orientation, what is crucial is afocus on
clients and their needs, but also responding to all signals sent by customers (Kotler
and Keller, 2015). Such actions enable organizations to achieve their goals more effec
-
tively than the competition. Retention rate is used to measure the effectiveness of
actions that lead to repeated purchases made by customers (Kozielski, 2011).
The main axis of this article is the assessment of the level of retention of aftersales
service customers at an authorized service station for premium passenger cars. Unlike
other studies and research, the level of customer retention from services was veried
based on two unique variables. The rst one identied the customer (vehicle user)
and the second one – the serial number (vehicle identication number, or VIN). This
means that the data generated in the sales and aftersales services processes were
explored and consolidated to nd hidden dependencies and patterns enabling the
assessment of customer retention.
The implementation of the main goal was assigned with partial goals that intertwine
in the theoretical (TA) and empirical (TE) perspectives. TA1: The identication of the
existing knowledge regarding the measurement of customer retention levels. TA2: The
denition of customer retention on the example of aftersales services in automotive
dealership. TE1: Presentation of proprietary indicators of the assessment result of the
level of customer retention on the basis of consolidated data generated in sales and
aftersales services processes.

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Measuring Customer Retention in the European Automotive Sector
Customer Retention: Research Gaps Identication
Bibliometric Analysis
As aresult of the theoretical study conducted using qualitative bibliometric analysis
based on ve databases (EBSCOhost, Emerald, Scopus, Springer, and the Web of
Science), we identied acognitive gap consisting of asmall number of publications
on the retention of aftersales services. Table 1 presents the quantitative bibliometric
analysis.
Table 1.
Quantitative bibliometric study
Base Query
Number of all publications Number of publications
in the last ve years
All Articles All Articles
Web of
Science
customer retention 2179 1543 912 686
customer retention
aftersales 11 742
Emerald
customer retention 14 851 13 14 4 5218 4156
customer retention
aftersales 565 489 134 186
Scopus
customer retention 3174 2055 1008 669
customer retention
aftersales 24 15 8 6
EBSCO
customer retention 12 649 3117 3007 821
customer retention
aftersales 4 1 0 0
Springer
customer retention 23 996 7205 8257 2276
customer retention
aftersales 909 181 257 47
Source: own elaboration based on databases information.
The studied area of the aftersales service is dened in the literature as the main source
of revenue, prot, and competitive advantage in most manufacturing industries (Cohen
and Lee, 1990, Seth et al., 2005, Gaiardelli et al., 2007). In addition, the prots generated
by the aftersales services are often higher than those obtained from sales. Therefore,
organizations should focus management activities on monitoring aftersales service
processes in the area of satisfaction measurement and customer retention analysis.

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Aftersales services reveal the needs and expectations of customers, which are the
main indicator of retention and customer loyalty (Gallagher et al., 2005).
To clarify, aftersales services in the automotive sector are dened as “all activities
geared towards maintaining the quality and reliability of the car conducted after the
customer has taken delivery with the goal of ensuring customer satisfaction” (Omotuyi
Ehinlanwo and Zairi, 1996, p. 44).
Literature Review
As part of the literature analysis, we reviewed the denitions of retention, which are
included in Table 2. In anarrower perspective, customer retention is perceived by
researchers as the retaining of buyers, i.e. continuing trade relations. In abroader
sense, retention is also understood as the purchase intentions of buyers and their
willingness to make recommendations to other customers. Therefore, we may distinguish
an economic and behavioral approach to buyer retention.
From the perspective of an enterprise, retaining existing customers is denitely more
protable than investing large sums in acquiring new buyers (Weinstein, 2002; Seo
et al., 2008). Moreover, even small increases in retention can lead to large increases
in prots (Pfeifer and Farris, 2004). Therefore, customer retention has become aserious
issue in the operations of enterprises and should be systematically analyzed so that
internal conclusions and market activities adapted to them will help to retain current
customers. Managers constantly seek ways to stimulate customer retention and increase
their lifetime value (Rust et al., 2004). Customer retention was once described as
adefensive marketing strategy (Fornell and Wernerfelt, 1987). Currently, it seems to
be aconsequence of building customer relationships.
Customer satisfaction is an important element of marketing orientation (Kotler and
Armstrong, 2004) that affects the future purchasing behavior of customers (Yoo and
Park, 2007). Customer satisfaction is perceived as the state in which the customer
nds him/herself after the purchase, directly resulting from the customer’s expecta-
tions of agiven product, service, or shopping situation. Buyer satisfaction plays an
important role in creating effective long-term customer relationships (Homburg and
Rudolph, 2001). Ovenden (1995) proves that to retain consumers, they must be satised.
Satised customers may become more committed to the service (Hennig-Thurau et al.,
2002). As noted by Kumar et al. (2013), customer satisfaction only explains asmall
portion of loyalty variance and does not signicantly increase customer retention

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Measuring Customer Retention in the European Automotive Sector
(Kumar et al., 2013). Nevertheless, customer satisfaction is anecessary condition for
keeping the consumer (Anderson and Mittal, 2000). This means that satisfaction is
not the only and sufcient premise for customer retention, but it is essential.
Table 2.
Denitions of retention in terms of selected authors
Author/Authors, Year,
Page Denitions of the concept of “retention”
Alshurideh
(2016, p. 383)
“all marketing plans and actions that seek to retain both existing and new
customers by establishing, maintaining, and maximizing mutual long-term
benets that streng then and extend the joint relationship between two
parties”
Steiner, Siems, Weber,
and Guhl (2014, p. 885)
“customer retention on the one hand involves actual behavior such
as repeat buying and recommendations to others, while at the same time
it involves behavioral intentions in the form of planning to buy again (repeat
buying intention) or to buy additional products or services (cross-buying
intention), and intending to recommend aproduct or service to others”
Keiningham, Cooil, Aksoy,
Andreassen, and Weiner
(2007, p. 364)
“customers’ stated continuation of abusiness relationship with the rm”
Ranaweera
and Prabhu
(2003, p. 219)
“the future propensity of the customers to stay with their service provider”
Stauss, Chojnacki,
Decker, and Hoffman
(2001, p. 15)
“includes emotional-cognitive retention constructs (liking, identication,
commitment, trust) as well as behavioral intentions (willingness
to recommend and repurchase intention)”
Oliver (1997, p. 392)
“deeply held commitment to rebuy or repatronize apreferred product
or service consistently in the future, despite situational inuences
and marketing ef forts having the potential to cause switching behavior”
Source: own elaboration.
As part of the research conducted so far in the automotive sector, studies observe
apositive relationship between customer satisfaction and willingness to cooperate
(responsiveness), operation speed, services cost, and aftersales services quality (Fard
and Hosseini, 2015). Moreover, in services, the immediate consideration of complaints
positively inuences customer satisfaction and increases brand credibility (Shams
et al., 2020).
We should deliberately distinguish between customer loyalty and retention. In the
absence of both economic and mental attachment, retention does not mean loyalty
(Morgan et al., 2000). Disloyal customers will be less likely to absorb price increases

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or recommend services to others. However, we should emphasize that the main diffe-
rence between loyalty and retention is the fact that loyalty primarily refers to apsycho-
logical predisposition for arepurchase, while retention means the actual repurchase
(Johnson et al., 1997). Brand loyalty also means apositive customer attitude toward
the brand or its offer (Rather, 2017). Behavioral loyalty intent refers to the subjective
likelihood of the customer using the service again and the willingness to recommend it
(Rather and Hollebeek, 2019). Researchers disagree regarding the key loyalty factors, which
vary depending on the context (Rather and Sharma, 2016). Some (Martinez and Rodri-
guez del Bosque, 2014) consider social exchange-related factors to be crucial (e.g. custo-
mer trust, commitment), while others (Huang et al., 2017) position here social identi-
cation-related factors (e.g. customer brand identication). The direct predictors of
customer behavioral intention of loyalty are affective commitment, customer satisfac-
tion, and brand trust (Rather et al., 2019).
An important area of customer retention is relationship marketing, whose main goal
is to develop and maintain mutually protable and long-term customer relationships
(Küster and Vila, 2006). Building and maintaining relationships with customers is
particularly important when providing services by enterprises (Brodie, 2017). One
denition describes relationship marketing as “attracting, developing, and retaining
customer relationships” (Berry and Parasuraman, 1991, p. 133) Gaining asatised
customer base is awidely recognized part of relationship marketing (Rather, 2018).
Relationship strategy is recognized as away to improve performance measures, includ-
ing customer satisfaction, retention, and loyalty (Christopher et al., 2002). Employees’
ability to listen to customer inquiries and positively respond to their needs and com-
plaints is needed to establish acredible relationship with buyers on the aftersales
market in the automotive industry (Izogo, 2015).
Material and Methods
We selected the automotive sector for this study due to the specicity of sales and after-
sales services. From the perspective of car manufacturers, spare parts manufacturers,
and authorized dealerships, the automotive sector is experiencing areduction in prot
resulting from the products’ extended lifespan, which motivates the focus on aftersales
services (Aboltins and Rivza, 2014). Many automotive companies achieve aftersales
prots several times higher than those generated from the sale of new and used cars
(Godlevskaja et al., 2011). The methodological framework of our empirical proceedings
was constructed based on the assumptions of the cross-industry standard process for
data mining (CRISP-DM) methodology.

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Measuring Customer Retention in the European Automotive Sector
Empirical proceedings were conducted with the observation method. The study units
were chosen in nonprobability sampling. The selection was determined by such parame-
ters as the location of the organization, the implementation of sales processes and
aftersales services under one franchise, and the classication of the organization on
the third level of process maturity. We preliminarily selected three units for the pro-
ceedings, in which we conducted pilot studies related to the qualitative assessment
of databases and activities measurement systems in the described processes. Follow-
ing scholarship, we assumed that “it is widely recognized that ahigh-quality data
warehouse is anecessary condition of successful mining” (Clifton and Thuraisingham,
2001). From the three organizations included in the design phase of the study, the one
wit h the highest quality of data was selected. Data quality was evaluated by an interview
with representatives of the organization, considering the ease of access, understanding,
and use (Burns et al., 2000).
Authorized car dealership in Poland was qualied for the study. The entity sells
maintenance services for two brands of premium passenger cars belonging to one
group. During the survey, 30 employees were employed in the organization in three
functional areas: new and used car sales department, service department, and parts
and accessories department. Moreover, an assessment of the level of process maturity
was conducted in 2017 in this organization following the Multicriteria Model of Process
Maturity Assessment (MMPM) methodology (Sliż, 2018).
The empirical proceeding described in this article was implemented in 2018−2019
and is part of abroader research project. The analyzed unit sells and services two car
brands belonging to one European automotive concern. Product sales and aftersales
customer services were included in the main processes conducted in the analyzed
organization.
The results presented in the study were based on acomplete database from 2013−2018,
which gathered 851 sales transactions of brand x
1
and x
2,
and 2922 completed service
interventions (completed repairs). The characteristics of variables are presented in
Table 3.
The variables used in the analysis of the level of customer retention were subjected
to data mining based on the product sales base and the aftersales service base.
For the purposes of this study, arelational database was created marked as retention
(see Figure 1).

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Table 3.
Characteristics of the variables used in the retention database
No. Variable /
attribute Class Variable characteristic
1sales _ VIN [character, 17 signs] Unique vehicle variable − vehicle
identication number (VIN).
2sales _ date [date, format = “%Y-%m-%d] The date the vehicle was sold to the customer.
3sales _ brand* [character] Variable assuming the values x1 for brand 1
and x2 for brand 2.
4order _ type [character] Type of repair order.
5car _ owner [character] Vehicle user data.
6invoide _ date [date, format = “%Y-%m-%d] The sales document after the completed
repair.
* Only brands offered in accordance with the geno typic authorization of the analyzed unit were included in the analysis
and construction of databases.
Source: own elaboration based on the study conducted in 2018–2019.
Retention Rates Characteristics
Based on the literature review and the exploration of the data obtained in the study,
we proposed two indicators: serviced and sold (SESO) and sold and serviced (SOSE).
Depending on the adopted perspective, the rst SESO indicator determines the share
of customers who bought acar (SESO
CUS
) or products sold in the analyzed unit in the
serial number (VIN) aftersales intervention database (SESO
VIN
; Record 1):
in which:
A– set (database) of sales
B – set (database) of after_sales
C – common set of sets Aand B
x
– elements of variables car_ owner (SESO
CUS
) or sales_VIN (SESO
SN
)
The second SOSE indicator was expressed as the percentage share of product sold in
the analyzed organization subjected subsequently to service intervention in the ana-
lyzed unit (SOSE
VIN
; SOSE
CUS
; Record 2):

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Measuring Customer Retention in the European Automotive Sector
in which:
A– set (database) of sales
B – set (database) of after_sales
D – common set of sets B and A
x
– elements of variables car_ owner (SOSE
CUS
) or sales_VIN (SOSE
VIN
)
Documentation analysis and the use of the Delphi method with automotive market
experts showed that the SOSE indicator must be presented in partial form, consi-
dering the types of interventions determined by the type of repair orders imple-
mented (order type variable). The characteristics of the types of repairs are presented
in Table 4.
Table 4.
Characteristics of repairs types (types of repair orders) conducted
in the analyzed unit
Repair type
Repair
order type
Characteristics
Body Body and paint orders conducted for external clients (individual clients,
insurance and internal companies, new and used car sales department).
Internal Internal orders conducted for an internal customer.
Normal Paid orders conducted for external customers.
Salon Orders (e.g. additional tting of anew vehicle, pre-deliver y inspection).
Warranty Warrant y orders conducted for external customers but settled with the
warranty department of the importer or car manufacturer.
Source: own elaboration of the research conducted in 2018−2019.
Afactor in favor of our approach was the fact that the vast majority (>96%) of cars
sold in the analyzed unit must be subjected to pre-delivery inspection. This means
that the total value of the SOSE indicator may be disturbed by the implementation of
the rst service. For this purpose, the SOSE indicator has been considered partially,
depending on the type of repair (type of order).
Figure 1 shows the data ow used in the analysis of SESO and SOSE retention rates.

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Figure 1.
Data ow and characteristics in sales and aftersales service processes used
in the design of SESO and SOSE indicators
Source: own elaboration based on the research conducted in 2018−2019.
First, the number of unique records for the car_owner and sales_VIN variables was
extracted from the sales and aftersales databases. The purpose of this action was to
rst identif y the percentage structure of the share of customers who purchased amin-
imum of one car in the analyzed dealership and used aftersales services, and in the
second approach, cars (products) that were subjected to aftersales service and sold in
the analyzed unit.
Results and Discussion
Results from the Product Perspective (sales_VIN variable)
Based on the data analysis, the following results were obtained for 2018: SESO
VINx1
=
0.261, while SESO
VINx 2
=
0.312. In turn, the values of the SOSE indicators in the ana-
lyzed organization and period for 2018 were as follows: SOSE
VINx1
=0.959 and SOSE-
VINx2
=0.974. Please note that the high value of the SOSE indicator is determined by
the types of salon and internal repairs.
Sales
transacon
Sales process
CRM
Central
technical
system
Repair
orders
Dealership Management System
Dealership Warehouse
Sales
database
Arr-sales
database
Retenon
database
SESO report SOSE report
AS_data
Variables input:
sales _ VIN*
invoice_date
order_ type
sales_ brand
car_ owner
Sales_data
Variables input:
sales _ VIN*
sales_dat a
sales_ brand
car_ owner
After-sales process

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Table 5 shows the breakdown by type of repair order and tested indicator. All types
of repair orders were included in the analysis of retention results from the vehicle
perspective.
Table 5.
Summary of SESO and SOSE indicators in 2018 in the examined organization
Indicator SESO SOSE
Brand VINx1 VINx2 VINx1 VINx2
Body 0.325 0.406 0.221 0.257
Internal 0.684 0.764 0.133 0.050
Normal 0.201 0.239 0.595 0.605
Salon 0.871 0.939 0.938 0.932
Warranty 0.421 0.428 0.692 0.813
Source: own elaboration of the research conducted in 2018−2019.
Next, the SOSE indicator values were summarized considering the year of vehicle use
(see Figure 2).
Figure 2.
Summary of the SOSEVIN retention indicator in 2018 for the x1 and x2 brands
in 2013−2018 in the studied organization
Source: own elaboration of the research conducted in 2018−2019.

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In the course of the study, the Delphi method was used with three experts working
in sales, aftersales, and warranty service in the automotive sector. The method was
implemented in the form of unstructured interviews, during which experts were asked
to present the characteristics of the processes: sales of new cars, service, and warranty
service. In addition, the obtained results were discussed in detail in agroup of experts
who, based on their knowledge and experience, identied the causes related to the
technological aspects of car design and maintenance that may have asignicant impact
on the retention level. They indicated that the increase in the retention level for brand
x
1
in its third year of use is determined by the terms of the manufacturer’s warranty,
which species what types of defects can be repaired at the manufacturer’s cost by
this year of use. Up to the third year of exploitation (the time between repor ting afault
and the date of purchase of the new vehicle), the scope of repairs is the widest and
applies primarily to the replacement of parts dened in later years as operational wear
(elements of the braking system, suspension, steering system, etc.). What is notewor-
thy is the approximate total value of the retention level for both brands. In this case,
the warranty restrictions do not apply as they do for brand x1. It means that the increase
in the retention level for both brands is primarily determined by the value of the SOSE
indicator for brand x
1
.
The formulated conclusions prompted us to partially assess the level of retention by
considering three types of repairs. Figures 3−4 present the analysis of the SOSE
indicator level for 2018, taking into account the two brands examined separately (x
1
and x
2
) and including repair order type (body, normal, and warranty).
In Figure 3, the curve that shows the level of retention rate for x
1
_warranty repairs
conrmed the previous thesis regarding the decrease in the level of customer retention
after three years for warranty repairs. This is due to the removal of defects in the rst
two years of use and the reduced number of service actions. Moreover, avery strong
SOSE increase was also noticed between two and three years of exploitation for repairs
dened as normal. It is related to the warranty policy and the need to conduct acar
service inspection. We should indicate that in most sold and serviced cars, the rst
three inspections are free for an external customer, which visibly increases the level
of retention in the tested car brand. At this point, let us highlight that for lines x
1
_nor-
mal and x
1
_warranty, we notice avisible decrease in the retention level between three
and four years of exploitation. This condition may also result from the fact that users
sell acar that is no longer serviced by the next owner at an authorized station or due
to achange in location, meaning that it receives service at another vehicle station. To
conrm the thesis formulated in this way, we would have to assess the level of reten-

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Measuring Customer Retention in the European Automotive Sector
tion from the perspective of the entire dealer network of the tested brands x
1
and x
2
,
which was impossible in the scope of this study.
Figure 3.
Summary of the SOSEVIN retention indicator in 2018 for the brand x1
in 2013−2018 in the studied organization
Source: own elaboration of the research conducted in 2018−2019.
Figure 4.
Summary of the SOSEVIN retention indicator in 2018 for the brand x2
in 2013−2018 in the studied organization
Source: own elaboration of the research conducted in 2018−2019.

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Figure 4 presents apartial summary of the SOSE indicator, including the types of
repairs tested for brand x
2
. Adetailed assessment of the data provided evidence that
the retention level for all types of repairs decreases over the ve-year product life
period. Compared to brand x
1
, there is anoticeable difference in retention level for
warranty repairs. In the described brand, the retention level does not decrease after
three years of exploitation, but after two years, with aclear indication that the value
of SOSE for both brands in the second year is similar: -0.65 and 0.73, respectively for
brand x
1
and brand x
2
. The level of retention presented in Figure 4 was consulted with
automotive market experts working at the authorized service station of the tested
brands x
1
and x
2
. The high level of retention for brand x
2
was determined by the high
defectiveness of cars produced in 2013–2014. This resulted from the launch of new
models with construction and technological parameters that had not been used before.
Second, the experts assessed that most of the faults were revealed in the rst two years
of vehicle exploitation. Such aconclusion was based on the analysis of the number of
manufacturer’s service actions implemented as warranty repai rs, which directly inu-
enced the level of retention for this type of repair.
Results from the Customer Perspective (car_owner variable)
As aresult of the customer analysis conducted in the studied unit in 2013–2018, we
estimated the SESO and SOSE indicators. The summary results are as follows: SES-
O
CUSx1
=
0.131, while SESO
CUSx2
=
0.189, SOSE
CUSx1
=0.444 and SOSE
CUSx2
=0.582.
Figure 5 presents asummary of the total value of the SOSE
CUS
indicator for brands x
1
and x
2
separately and for both brands simultaneously.
Comparing the results of the SOSE indicator from the customer perspective and the
product perspective, we noticed differences between the data presented in Figures 2
and 5. First, the difference in retention level below one year of exploitation is mainly
caused by the implementation of activities related to the preparation of the vehicle for
sale. According to the manufacturer’s conditions, in the vast majority of cases, apre-de-
livery inspection must be conducted prior to sale. This explains the approxima-
tion of the SOSE indicator for this period to almost the maximum value. Second,
the aggregated level of retention (without division into types of repairs) for brands
x
1
and x
2
indicates very similar results, which may mean that customers of brand x
1
are vehicle owners for amuch longer time than in the case of brand x
2
. Third, con-
trary to the SOSE value from the product perspective (Figure 2), we did not notice
such astrong impact of the SOSE value for brand x2 on the total level of customer
retention.

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Measuring Customer Retention in the European Automotive Sector
Figure 5.
Summary of the SOSECUS retention index in 2018 for the brands x1
and x2 including the years of vehicle use
Source: own elaboration of the research conducted in 2018−2019.
Subsequently, as in the previous section of the article, the analysis of the SOSE indi-
cator began with the aggregate values for brands x
1
and x
2
. Detailed results for types
of body and normal orders are presented in Table 6.
Table 6.
Summary of SESO and SOSE indicators for 2013−2018 in the studied organization
Indicator SESOCUS SOSECUS
Brand VINx1 VINx2 VINx1 VINx2
Body 0.294 0.350 0.200 0.251
Normal 0.119 0.190 0.378 0.565
Source: own elaboration of the research conducted in 2018−2019.
In this part of the study, only paid (normal), body, and paint (body) orders were included
because we believed that their implementation is determined by the choice of an
authorized service station by the customer and the fact that the other types of orders
(warranty, salon, and internal) have one agreed intervention payer.
Figures 6–7 summarize the analysis of the SOSE indicator level for two brands exa mined
separately (x
1
and x
2
), considering the vehicle owner and the vehicle itself and includ-
ing repair order type (body, normal) for both.

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Figure 6.
Summary of the SOSECUS retention indicator in 2018 for the brand x1 taking into
account the years of use of the vehicle and division of the repair order into types
Source: own elaboration of the research conducted in 2018−2019.
Figure 7.
Summary of the SOSECUS retention index in 2018 for the brand x2 taking into
account the years of vehicle use and division into the repair order types
Source: own elaboration of the research conducted in 2018−2019.
Comparing the values of the tested retention level indicator in Figures 3 and 6, we
noticed asimilarity. Focusing on the analysis of Figure 6, pay attention to the x1_nor-

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Measuring Customer Retention in the European Automotive Sector
mal_owner line, which indicates the cyclicality of the increase in the retention level
every two years: one, three, and ve years of exploitation. The line is directly related
to the time of implementation of vehicle inspections. As in Figure 3, there is anotice-
able increase in retention levels in the third year of vehicle use. The reasons for this
state are concurrent with the conclusions formulated above. The assessment of the
retention level from the product owner perspective – in this case the vehicle user –
also provided evidence that the retention level is additionally determined by the
leasing period and the package of free inspections in the rst three years.
As we can see in Figure 7, the level of retention by type of repair for brand x
2
from
the customer perspective is also determined by the leasing period.
Conclusion
Following the implementation of empirical proceedings and based on data and doc-
umentation in the analyzed unit, we attempted to classify types of repairs and proposed
atheoretical model in terms of data ow in sales and aftersales service processes, thus
enabling the design of SOSE and SESO retention indicators and their empirical veri-
cation in the studied organization. Two separate indicators allow for the analysis of
retention levels by considering strategic goals for vehicle sales processes and aftersales
services sales processes. Figure 8 presents the value of the SOSE indicator as afunc-
tion of years of car use, taking into account the customer perspective (SOSE
CUS
) and
product perspective (SOSE
VIN
).
Moreover, let us emphasize that there are differences in the level of retention in rela-
tion to the product owner (owner) – i.e. taking into account the customer perspective
– and in relation to the product itself (VIN), i.e. taking into account the product per-
spective. Based on the obtained results in the completed empirical study, we proved
that there are signicant differences from the perspective of formulating organization
goals and strategy, differentiated in the assessment of the level of retention by the
SESO and SOSE indicators for the same time series.
The above research results refer to anon-probabilistically selected enterprise, without
the possibility of relating the obtained results to other organizations that provide
similar services. This means that despite our access to the complete sales and aftersales
service database, our conclusions apply only to the examined set of vehicles and
aftersales services sold. However, we emphasize that the main purpose of the study
was to present auniversal concept for measuring the level of customer retention for

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companies that implement the process of sales and aftersales services under one
structure. Thus, the SESO and SOSE indicators can be used by authorized car service
stations, regardless of the supported vehicle brand or geographical location. In our
opinion, the presented indicators and replication possibilities of this study can be
used not only in the automotive sector but also in other industries, such as agriculture,
automatics, aviation, or construction machinery.
Figure 8.
Summary of the SOSEVIN and SOSECUS retention rates in 2018 for the brands
x
1 and x2 in 2013−2018 in the studied organization
Source: own elaboration of the research conducted in 2018−2019.
The presented concept of measuring the level of retention with the use of SOSE
and SESO indicator emphasizes the need to test retention by considering customers
who purchase the products and their users. Such adivision constitutes an additional
voice in the discussion on retention studies, with the clear assumption that the analy-
sis of both indicators requires adetailed registration of data on customers and users
of products. Moreover, from the perspective of the studied issue and the use of the
discussed indicators, we must know the specics of analyzed sectors or organiza-
tions so as to correctly describe changes in retention levels, but also to correctly iden-
tify their causes, which in the discussed case, focus on technological reasons. This
means that the interpretation of obtained results should be conducted in an interdis-
ciplinary team.

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Measuring Customer Retention in the European Automotive Sector
Practical Application
The aftersales services marked in the automotive industry undergoes transformations
as an important aspect of business operations becomes retaining customers of after-
sales services, which constitute akey part of prots. The challenge for the aftersales
relationship marketing are changes determined by the increase in the number of
customers who consume aproduct without ownership (Moeller and Wittkowski, 2010),
identied in the literature as the non-ownership mentality (Godlevskaja et al., 2011).
Therefore, enterprises should adapt their customer retention strategy to market trends.
Therefore, when analyzing current trends in the ma rket environment of modern organi-
zations, management and marketing activities should focus on adapting customer
retention programs to the expectations structure of car users, with particular emphasis
on aftersales services, regardless of the form of ownership. Therefore, it seems reaso-
nable to monitor the level of retention by considering the indicators proposed in our
article. This means that when assessing the level of customer retention in the study
area, we should consider both measurement perspectives: that of the customer and
that of the vehicle identication number. The observed change is the approach to
vehicle ownership, which implies businesses in relationship marketing.
The research we conducted has several practical contributions. First, the proposed
indicators allow ahorizontal view of customer retention in aplethora of industries, as
the indicators can be used both from the perspective of the sales process and the after-
sales service. Second, we showed on the example of the automotive sector that it is
worthwhile to analyze customer retention from both customer and product viewpoints,
as they may give different results in atime series. Third, the analysis of the level of
retention using the proposed indicators should be apremise for creating relationship
programs in acompany by adapting to the level of retention in the year of product use.
The presented concept of retention measurement is applicable not only in the auto-
motive sector but also in other sectors that implement sales, aftersales, and warranty
processes.
Limitations and Future Research
The barriers in the application of our concept of measuring retention mainly concern
the limited access to data that organizations treat as condential. On the other hand,
from the perspective of management – both in the automotive and other sectors – in

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which the proposed SOSE and SESO indicators would be used, the main barrier is
related to the integration of databases on sales, aftersales, and warranty service pro-
cesses. At this point, we must underline the need to verify the quality of generated
and explored data. Please note that the conclusions presented based on quantitative
research are of agenera lized nature and should be veried by empirical facts examined
in qualitative research. We suggest that futu re resea rch should measure the customer
retention of randomly selected enterprises from an industry by using the proposed
indicators so as to nd certain market regularities.
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