August 2011, Auto Dealer Today - WebXclusive
DNA contains the genetic information used in the development and functioning of cells. Likewise, data contains valuable information about online auto shoppers that can be used in the development and functioning of a dealership’s sales department. When analyzed correctly and applied to the decision-making process, dealers can use this data to their advantage both online and offline.
Most car buyers use the Internet to shop for a vehicle, and according to the Automotive Buyer Influence Study conducted by Polk and AutoTrader.com, online auto shoppers spend an average of 18 to 19 hours researching new and used vehicle purchases. Those 18 to 19 hours account for about 60 percent of their overall shopping time, which means today’s auto shopper is spending the majority of his or her time shopping online.
Dealers can see exactly how consumers research and compare vehicles and dealerships online because shoppers leave trails of data showing the websites they visited, the searches they performed, the vehicles they viewed, etc. Compiled en masse, that data can shed light on some revealing trends in auto shopper behavior and provide dealers the opportunity to improve several different aspects of their operations.
A dealership’s website is the face of the dealership online, so dealers should take any opportunity to improve their sites. Jason Ezell, president and co-founder of Dataium, mentioned a couple aspects of dealership websites than can easily be improved.
First is the website URL. While it may seem obvious, some dealers still don’t incorporate their dealership’s name into the URL. Ezell said, “When you have Bob’s Ford, but the URL is BuyaFord.com, it’s not doing you any justice.” When auto shoppers are on search engines, 43 percent of the searches are the dealers’ names only. He added, “That’s free to the dealer. That’s the best SEO you can get, and you’re going to pull up first place every time.”
A second simple tweak dealers can make to their websites is to avoid using a chat pop-up, especially one that floats down the page. Customers will chase that chat window down the screen to close it. Make the chat window stationary. “Almost five to one, people click more on the stationary [chat] box than one floating down in front of them.”
Another element dealers can include on their websites is a section for used vehicles priced under $10,000. According to Dataium, over the past eight months, the thirteenth most popular search term is “used $10,000” and the twenty-ninth most popular search term is “pre-owned $1 to $10,000.” That data alone is probably not enough to convince a dealer to dedicate a section of his website to used vehicles priced under $10,000, but when delving into the data a little deeper, the search “used $10,000” is ranked third on the list of search terms that result in leads. With that search resulting in such a high percentage of leads, it’s clear how beneficial a Web page dedicated to and optimized for used vehicles under $10,000 can be.
Another popular search that results in a high percent of leads is “certified used,” so dealers with sites that don’t include certified pre-owned might want to consider changing that. The fourth-ranked search term on the top search terms that generate a lead is “certified used,” which is eleventh on the list of top search terms.
While it’s important to maintain the dealership website, third-party sites are also key and can provide interesting data on auto shopper behavior. According to the Automotive Buyer Influence Study, online auto shoppers spent more time on third-party sites than on dealer or manufacturer sites. With used vehicle buyers spending seven hours on third-party sites and new vehicle buyers spending three-and-a-half hours, dealers should use the data provided by these vendors to properly market their inventory on these sites.
With both new and used cars, it’s important that listings have multiple photos, as well as “unique and compelling” descriptions with “actual prices” as opposed to the MSRP or instructions to “call for price,” according to Jeff Perkins, senior manager at AutoTrader.com.
“For new car inventory posted using the standard ad format, adding actual photos and prices increased [vehicle detail page] views approximately 140 percent and increased shopper interaction by 110 percent,” stated an AutoTrader.com press release on new car merchandising. The release defined shopper interaction as “clicking through photos, printing pages, clicking on a dealer’s website link, viewing a map to the dealership or other shopper interactions.” The company’s data also revealed that new vehicle listings on AutoTrader.com having only stock photos perform at about the same level as listings with no photos.
For used vehicle listings on Cars.com, “pricing data is critical,” according to Kerri Noeth, communications director for Cars.com. “Our analysis found that a fair market price on used vehicles will significantly lift vehicle and details page views and more than double vehicle demos and contacts,” she said.
Data analysis can also help dealers track pay-per-click ads in more detail. In years past, dealers could determine which ads generated the most clicks; now, dealers can determine which ad resulted in the most leads. Through tracking online shoppers from the time they click on a PPC ad and beyond, dealers “can see how many people click on a banner, if they went to your website, the activities they performed, and if they sent a lead,” said Ezell. So now dealers can decide which type of PPC ads to run based on not only traffic, but actual leads (and even sales, if they want to drill down that far).
Much like PPC campaigns were once only measurable by click-through rate, determining the success of an email campaign was once mainly measured by open rates. However, now dealers can determine which email campaigns generate the most leads. Dataium “can tag all those emails, so that when [a dealer blasts] out an email campaign to invite people back in … we can see how many people opened the email … how many people clicked on it, came to the website, shopped for cars, and sent a lead,” said Ezell.
Similarly, dealers can use data to determine which traditional ads drive more website traffic. While it’s not as exact as tracking online shoppers who originate from an email or PPC ad, if dealership website traffic spikes following a traditional ad campaign, and the dealership didn’t make any other changes that would create a significant spike in traffic, one could deduce that the traditional ad created the spike. Ezell said, “It’s hard to do because there’s not that direct correlation,” but it’s possible. He said dealers can measure the effectiveness of their weekly Sunday ads by comparing the spikes in traffic they see each Sunday.
While most data is looked at in aggregate form, individual auto shopper data can also be collected. Dealers can get a shopper profile that displays information on an individual customer’s shopping habits, including what sites the customer has been on and what vehicles he or she looked at. “When [dealers] get a lead through their website, they cross-reference it with the shopper profile,” said Ezell. This provides the dealership with knowledge about that customer’s interests and how deep into the buying cycle the customer may be. If a customer has been in the market for a couple months, visited several different sites (including the dealer’s), and significantly increased online shopping activity the week before submitting a lead and setting an appointment, that customer is much more ready to buy than someone who’s only been in the market for a week, visited a couple sites, and looked at one or two cars.
This is valuable information for the dealership to know about customers before they walk on the lot and can be used to prepare salespeople for appointments. Managers can educate their salespeople about each customer and tell them which questions to ask that person. For example, if a shopper profile reveals the customer has compared minivans in the dealership’s inventory, the salesperson would ask the customer if he or she is interested in a minivan. He added, “We think it’s going to help the sales process considerably by building rapport with the customer and asking the right questions that you know pertain to [a customer’s] interests.”
Obviously, there’s a fine line between using the data from shopper profiles to build rapport and scaring customers away because they think the dealer’s “Big Brother” watching their every move online. If a salesperson were to tell the customer, “I saw that you looked at this white 2008 Ford F150 three times on our website in the last week, so would you like to take it for a test drive?”, that would probably scare a customer off.
Ezell said, “You don’t want to hand the salesperson the shopper profile … typically the Internet or sales manager takes the profile, builds a questionnaire and … says, ‘Here are the questions I want you to ask this person … I’m going to tell you exactly what to ask these folks and what to show them based on what we already know about them.’”
Auto shopper data also introduces new ways to manage inventory. “[Dealers] typically look at what sold last month [and] what they made a lot of money on, and they go to the auction to get more of those cars. But those people have already bought; they’re out of the market for that car,” said Ezell. Instead of basing purchasing decisions on what moved and was the most profitable last month, dealers can monitor trends online – both on their own websites and on third-party sites – and use current data to determine which vehicles to add to their inventories.
With third-party providers, dealers are at the mercy of the vendors to provide them with data, but the major players make pertinent data available to dealers. Noeth, of Cars.com, said, “We pull our data from millions of monthly site visitors. As a result, our search and leads information are a strong indicator of market behavior and mirror sales for the month.” She added, “This data can be helpful for dealers in determining what to look for at auction and what cars to market in their inventory. Having cars available that a dealer knows consumers are searching for will drive more people through their front door.”
AutoTrader.com provides customers with “scorecards” that look at “inventory demand as well as pricing throughout the market,” said Perkins. “When dealers have access to this kind of information, they can make better decisions about what is in demand in their market.” He also stated that dealers can use this valuable data to see “how they stack up against other dealerships in their area” and decide “whether certain trade-ins command a premium and what additional inventory they should be working to acquire.”
Dealers should also examine trends regarding vehicles on their dealership website, particularly focusing on vehicles that have seen an influx of clicks as well as those declining in popularity. Since today’s Internet customer’s buying cycle lasts up to and even longer than three months, dealers can deduce that vehicles receiving more clicks now will be popular sellers in the coming months. For vehicles declining in popularity, dealers “need to think about getting rid of [these vehicles] now because they will not be selling in the next two to three months when [online shoppers] are coming in to buy,” said Ezell.
In addition to using data to determine how to stock the lot, dealers can also use it to make sure their vehicles are priced right. Perkins said AutoTrader.com’s scorecard provides “a snapshot of all the prices in a DMA to show dealers if they are priced at, above or below market,” which can help dealers “see if their inventory and pricing strategies are aligning with their overall operations.”
Highlighting the importance of price, Noeth said, “If a price is out of line [on Cars.com], dealers may not even get the opportunity to connect with the shopper. Those vehicles priced 10 percent or higher than the market average price received 57 percent fewer contacts.”
For dealers selling accessories online, DealerTrack’s Chrome 2010 Consumer Survey revealed a few interesting tidbits. The survey summary states, “Among respondents who chose to accessorize their vehicles … About half (47 percent) stated the ability to preview accessories online in 2D or 3D is valuable.” The summary also said, “In the current economy, more consumers may opt to refresh a vehicle with accessories instead of buying new, making robust online accessories solutions equipped with visualization a good investment for automotive retailers.”
Another benefit of data analysis is that it can help dealers validate or dispel gut-feel assumptions. For example, natural disasters seem to affect consumer confidence, causing people to hold off on shopping and buying in the wake of a disaster. Ezell said, “When the earthquake and tsunami hit Japan [on March 11, 2011] … not only did shopper intensity on Japanese models drop, but shopper intensity on every model dropped. So the tsunami and earthquake not only had an impact on Japanese models, but it had an impact on consumer confidence as a whole.”
Another trend he noticed after the tsunami was “a huge migration from new shoppers to pre-owned,” citing consumer fear of new cars (both domestic and import) being built with Japanese-made parts that were contaminated as a result of the nuclear power plant explosions. The Japanese models affected by the earthquake have bounced back, but only recently, he said. “Typically the common American gets upset about something for 30 days; then they get over it. This lasted a little longer [due to] the scale [of the disaster] and the uncertainty [it caused].”
Economic factors also cause fluctuations in online auto shopper behavior. Perkins said, “There are certainly some economic factors that get people to click through and look at specific vehicles on our site: when gas prices are higher, fuel-efficient vehicles tend to get more attention; when the economy is troubled, more affordable cars and used cars get more attention; when times are good, people start looking at more luxury and high-end cars and more pricy options.”
Recently, the increase in gas prices has been an economic factor to affect online auto shoppers. “We didn’t see a huge increase in electric and hybrids correlated to gas price; it was more so the price of the vehicle that correlated to gas price,” said Ezell. “As gas prices went up, instead of buying a new car that has good gas mileage, [customers] figured they could save gas money by buying a pre-owned car that had decent gas mileage.” He sees seasonal trends as well. “Come fall, we see an increase in minivan and SUV shoppers [when] school starts.”
As auto shoppers continue to evolve, dealers need to be paying attention to trends and analyzing data in order to make better business decisions because consumers are becoming less dealer-loyal. According to the Chrome 2010 Consumer Survey, “Only 24 percent stated they selected a dealer because they or someone they know had previously purchased or leased from that dealer. This is down 13 percentage points from 2009.” Additionally, consumers are less brand-loyal. “Consumers are less likely to want to purchase the same brand of vehicle they previously owned (35 percent in 2010 versus 39 percent in 2009).”
This highlights the importance of vehicle availability, said the study, which also revealed that “20 percent of respondents chose a dealer based on online inventory listings.
Vol. 8, Issue 6