Case Study on Crm Which Deals with Customer Lifetime Value

CONROY’S ACURA: CUSTOMER LIFETIME VALUE AND RETURN ON MARKETING

In the fall of 2006, Terrence Conroy, president of Conroy’s Acura, was poring over the company’s quarterly sales. Despite a healthy economy, sales at his dealership were stagnant. If the dealership were to remain profitable, Conroy needed to find a cost-effective way to increase sales. His vice-president of sales, Rachel De Lima, was continually coming up with new marketing schemes to boost sales. But Conroy had difficulty determining how successful past marketing efforts had been in increasing profitability. He needed a way to put the numbers into context.

HISTORY OF THE DEALERSHIP

Conroy’s Acura was founded in November 1986 by Ross Conroy, a veteran of the car industry who also

owned a General Motors dealership and an American Motors (AMC) dealership. Conroy’s Acura was the

first Acura dealership to open in Toronto and one of the first in North America. Located in downtown

Toronto, Conroy’s Acura sold both new and pre-owned vehicles, and its service department was dedicated

to Acura products.

In 1999, Ross’s son, Terrence Conroy, became president of Conroy’s Acura. Along with Terrence Conroy and De Lima, the dealership had a staff of nine salespeople, two administrative assistants/receptionists and six technicians who worked in the service department.

Conroy’s Acura was an independently owned dealership that held a franchise agreement with Honda, Acura’s parent company. Conroy’s Acura purchased its inventory directly from Honda’s Canadian distributor and sold the cars at a markup. Conroy’s Acura also sold pre-owned automobiles, the majority of which were obtained through trade-ins from consumers.

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THE MARKETPLACE

Conroy’s Acura had a number of competitors in the marketplace, the most obvious were the dozen or so

other Acura dealerships within a 30-kilometre radius. Conroy’s Acura competed directly with...