Entries from December 2007 ↓

The recently released J.D. Power and Associates Power Auto Online Media Study—Winter finds that a substantial percentage of new-vehicle buyers (54%) report going online to view video. Of video-sharing Web sites, YouTube has the largest reach among new-vehicle buyers at 29%, achieving a 4 percentage-point increase since the previous wave of the study. YouTube’s reach is nearly three times that of its closest competitor, Google Video BETA.

Although smaller video-sharing sites may have less absolute reach than large video Web sites such as YouTube, the study finds that the smaller sites may be more effective in targeting specific sub-segments of buyers. For example, Web sites such as Spike/ifilm, MSN Video and Yahoo! Video reach a greater proportion of compact crossover utility vehicle (CUV) buyers than does YouTube. The compact CUV market—which includes models such as the Honda CR-V, Kia Sportage, Saturn VUE and Toyota RAV4—is one of the fastest-growing segments in the automotive industry, up by 11 percent from July 2007.

The study, now in its second year, takes an in-depth look at the Internet usage and behavior of new-vehicle buyers to identify Web sites that most effectively target desirable advertising audiences in terms of reach and scope, and is the only study of its kind that consists exclusively of verified new-vehicle buyers.

“More new-vehicle buyers are viewing video on the Web, and advertisers could benefit from staying on top of this growing trend,” according to Arianne Walker, director of marketing and media research at J.D. Power and Associates. “Finding ways to closely and efficiently target consumers can be extremely beneficial to automakers, particularly when vehicle segments experiencing considerable growth in sales are pinpointed,” said Walker. “In this instance, smaller video-sharing sites attract a higher concentration of compact CUV buyers, which can make such sites more effective in targeting these buyers with relevant automotive advertising.

The study also finds that making media buy decisions based solely on general Web site visitor demographics tends to be less effective than placing advertising on Web sites with high concentrations of the target segment.

“As an example, YouTube’s and MSN Video’s visitor target demographics are nearly identical,” said Walker. “However, when segment reach is examined more closely, it becomes apparent that MSN Video has the propensity to deliver a higher proportion of target compact CUV buyers, compared with YouTube.

The study results also include the following key findings:

• Approximately 58% of compact premium CUV buyers say they are willing to pay more to obtain an environmentally friendly vehicle.
• Compared with the average new-vehicle buyer, buyers of large premium sporty vehicles are more than two times more likely to visit an automotive blog Web site.

The Power Auto Online Media Study is based on a random national sample of 10,883 verified new-vehicle buyers who purchased a vehicle between January and March 2007. The study was fielded from September to October 2007.

Ten years ago, online automotive research meant one thing to shoppers: price. They researched the value of their used vehicles and found invoice price in order to negotiate their new vehicle purchases. Third-party sites like Edmunds and kbb.com lead the charge to provide this information, using the traffic to generate leads and advertising dollars.

Since then, there has been an explosion of vehicle models, with a vast array of possibilities for any consumer in any price category. Over the same time, much more information has become available online to consumers: vehicle data, multimedia, inventory, etc. As a result, more new-vehicle shoppers now say that information found online has more of an impact on their make/model decision than on the price they pay.

In other words, the focus of online shopping is moving more toward product selection. The advantage that consumers get from online price research might save them a few hundred dollars on the transaction. But what if they buy the wrong vehicle? Well, now they’ve lost a lot more. However, the Internet is the greatest matchmaking tool marketers have ever had at their disposal. It was only a matter of time before finding the right vehicle became more important than finding the right price.

On the used vehicle side, the story hasn’t changed as dramatically from the early days and price still reigns supreme.

Part of the reason for this difference between new and used shoppers is that the latter are generally more price sensitive. Also, there is simply less used-vehicle information online—for instance, few manufacturers put any information regarding older models on their sites. Third-party sites do a better job in this regard, aided by consumer-generated reviews that can help shoppers understand what it’s like to own that 10-year car today. But it still pales in comparison to the breadth and depth of new-vehicle information.

The trends for both new- and used-vehicle shoppers have been consistent over the last few years, so unless there’s a major change in how people shop or the online research/shopping experience, we can expect them to hold true for the coming years.

The title of this post could be simply referring to the end of the 2007 and the welcoming of 2008. But for us here at the Online Automotive Review, it means saying goodbye to the traditional PDF download format that we have come to know and love since our inception. The December issue will be the last published in our traditional format. We will now publish the same great information on the blog only. We welcome your suggestions and topic ideas during this transition and always. We will send out occasional newsletters to let you know what we been working on for the blog. Also, don’t forget to sign up for an RSS feed to ensure you know when the new posts, data, interviews and more are posted.

Download the December issue of OAR-Dealer Edition now.

In The December Issue
We recently wrapped up our annual Automotive Internet Roundtable, where the focus was on how to make things online better—better for dealers, OEMs and, most importantly, for consumers. We highlight the event in this issue with a summary of the retail-focused sessions on each day of the event and a very powerful keynote speech from AutoNation’s Gary Marcotte. All of the sessions from the event are available, free of charge, on this site. The audio of every session and video and PowerPoint presentations of selected sessions can be downloaded here.

The other articles included this month directly tie into what was discussed at the Roundtable event.

Rise of the Dealer Sites discusses the changing landscape of the automotive Internet—specifically, how dealership sites have increased in usefulness, visitation and overall importance. Did you know that 30% of all used-vehicle shoppers now cite a dealership site as the location they found the vehicle they eventually purchased? This is a 27% increase from 2006 and is indicative of the growing importance of dealership sites. Read the article to discover how consumers use these sites and what you need to do to ensure they are getting the best experience possible.

As the Internet becomes more intertwined with the automotive shopping process, search engines have quickly become a key consideration for dealer marketing efforts. The 20% of used-vehicle shoppers who said they found their vehicle at a dealership site indicate they found the site via a search engine. We take a look at how dealerships are using search to take advantage of these trends in Search Engine Marketing—Dealer Trends.

As with every other component of retail automotive, collision and body shop centers—whether franchised or independent—are impacted by the Internet. See how the industry is utilizing the Internet to increase efficiency and choice across the process in The Internet is Shaking Up the Collision Industry.

We wish you the happiest of holidays and the most profitable reading possible!

Download the December issue of OAR-Dealer Edition now.

Dealers expect a lot from their online buying services. When it comes to new vehicle leads, quality is of prime importance; with used vehicles, quantity is key. Results from the J.D. Power and Associates’ 2007 Dealer Satisfaction with Online Buying Services Study, (DSOBS) suggest that while online buying services are doing a good job in delivering on dealer expectations, more is expected.

Steve Witten, executive director of marketing/media research at the firm points out that “As products and services offered by online lead service providers continue to evolve, so does dealer satisfaction with those services. rdquo; In noting that dealer satisfaction averages 585 on a 1,000 point scale, for the new-vehicle lead segment, and 613 for the used-vehicle lead segment, Witten went on to say that “…there remains considerable room for improvement in delivering the level of service dealers expect.

As the charts below illustrate, AutoTrader.com ranks highest in satisfying dealers with online buying services for both new and used-vehicle leads. Costco Auto Program again leads the Member Services category this year with a score of 638 (not shown).

The study finds that dealers typically respond to online leads with a personalized e-mail or phone call within 48 minutes; indeed, 46% of dealers report they respond to online leads in 30 minutes or less, while nearly three-fourths of dealers claim to respond in one hour or less.

While the slower responding dealers need to remember how important a nearly-immediate response is to the online shopper, dealers as a whole are doing an amazing job of turning around online responses. Imagine what those response times would have been just a few short years ago.

Lead management is a hot topic in the industry as OEMs, online providers, and dealers all wrestle with how to enhance the online shopping experience while managing the quantity/quality conundrum.

What are your experiences with online buying services?

Most consumers engage in a relatively limited set of activities online. They communicate with friends and colleagues via e-mail, instant messaging, etc.; read news and articles; conduct online research regarding products, services, health, etc.; check weather; get maps and directions; and buy or sell goods. Although these mainstream activities are relatively simple to use, they are enabled by complex technologies and mechanisms that are constantly evolving. New ideas and interfaces are emerging almost daily, making it difficult for the average person to be fully conversant in Net-speak. The following primer explains some Internet concepts using non-technical, benefit-oriented language.

Ajax
A programming method that lets a user update a Web page’s data without requiring the whole page to reload. This allows for more interactive Web applications. For instance, Ajax technology enables online maps to be grabbed and moved interactively rather than clicking on arrows and waiting for the new view to refresh.

The Long Tail
The idea that businesses with sufficient distribution power can sell a greater volume of niche items at small volumes than popular items at large volumes. In the graph below, the red portion represents any hit products, e.g. the Billboard top 100 albums, which sell in high volumes and are carried by traditional retail stores. The yellow portion represents products that are interesting to small audiences, but harder to find in traditional channels.

The Long Tail approach asserts that cumulative sales, represented by the yellow portion, can equal or exceed sales represented by the red portion. So Amazon.com, with its massive inventory of books, can sell both niche (yellow portion) and popular books (red portion), leading to greater sales than any physical bookstore could hope to achieve.

Mashup
A Web page that combines complementary information from two or more sources. For instance, www.housingmaps.com displays geographical information regarding properties for rent or for sale by integrating Google Maps and Craigslist.

RSS (Really Simple Syndication)

An alternative means of accessing online information. Instead of the user visiting many Web sites of interest to read news and blog entries or listen to podcasts, the information is sent directly to them via portal sites (e.g., My Yahoo!), Web browsers, e-mail programs, or feed reader/aggregator software. Content sites that offer their information via RSS—ranging from simple blogs to ESPN.com and nytimes.com—typically include the symbol to make this process easier.

Social Network
Communities of people who share interests and activities, or who are interested in exploring the interests and activities of others. Most social network services provide various ways for users to interact through chat rooms, messaging, e-mail, videos, voice chats, file sharing, blogging, discussion groups, and others. MySpace, Facebook and LinkedIn are the most prominent online social networks in the United States.
Source: Wikipedia

Tag
A word or phrase assigned to a piece of online information such as a picture, article, or video clip. The tag(s) describes the picture/article/video and allows it to be easily classified. In this example from Flickr, someone has uploaded a picture of a Ferrari 360 Spider and tagged it with “ferrari 360 spider,” “Ferrari,” “car,” “fast,” and “super car. rdquo; Any Flickr users searching any of these tags will have this picture included in their results.

User-Generated Content (aka Consumer Generated Media)
Media content created by ordinary people as opposed to traditional media producers such as publishers and broadcasters. YouTube, Wikipedia, Epinions, and TripAdvisor are prominent examples of sites built on user-generated content. User ratings on Amazon and Edmunds are also included in this category. Widespread Internet access and availability of technologies such as digital video, podcasting, and blogs have combined to make user-generated content a powerful online force.

Web Analytics
The study of the behaviors of Web site visitors based on data collected from the site Web analytics covers a variety of disparate techniques. For commercial sites, Web analytics is used to determine what aspects of the site work toward the site’s business objectives.
Source: Wikipedia

Web Widget
A mini-Web application that can be added to a Web page or computer desktop to perform a specific task. For instance, widgets can provide access to eBay listings; retrieve live stock market updates or weather reports; track packages; or display YouTube clips. Users can customize their Web pages or computers with widgets to the Web sites they visit most often. This screenshot displays some widgets available on an Apple computer.

Wiki
A Web site where content can be edited by any Internet user. This allows a group of users to pool their knowledge in a collaborative manner and has become popular for internal corporate use. One of the best-known wikis is Wikipedia, an online encyclopedia written by ordinary people around the world who volunteer their time and information to update the Web site.

Okay you did everything right: the online RFQ came in and you quickly pulled together the information. You not only gave them the price, equipment, and VIN of the vehicle the lead requested, but you book-ended that with a higher and lower-priced alternative. You even added a late-model used vehicle that approximated their interest.

That’s not easy to do with one eye on the clock. But, the information was sent back out in less than 45 minutes. Then…

Silence.

So you moved to “defcon 2”: pursuit. Follow up e-mails, phone calls, and more e-mails, with more exciting news from the dealership. Maybe the BDC then took it over, or maybe the lead stopped being your lead and open season on the prospect was declared. One, two, three or four weeks go by without any response. Meanwhile, in the press of business, this prospect rapidly falls off the radar. A lot of stores give up after 30 days, most after 45. Some keep sending out increasingly general messages and newsletters, most of which have nothing at all to do with the original query, but make the dealership feel good about the efforts they make to stay in contact with prospects. Unfortunately, at the end of the process the e-mails simply become annoying to prospects who might have already bought at a competing dealership.

Many sales people give up too quickly. Some hang on, badly, too long. The reality is an RFQ is not a request to buy; a lead is not always a prospect, and a prospect is not always in a hurry. The shopping funnel – although alive and well – is not always fast, and usually not linear. Consider this data from the 2007 J.D. Power and Associates’ 2007 New Autoshopper.com study below. While 34% of shoppers buy within one month of deciding they need a new vehicle, 27% stretch their shopping over six months

Hypothetically, for every 10 leads you’re working on, about three of them are hot in the next 30 days; the rest will stretch their shopping over a longer period. Nearly three of the 10 leads will shop over six months.

But, in the end they will buy, from somebody.

The shopping funnel is, indeed, alive and well. But, it’s a very individualized process. There are a vast array of reasons driving the purchase from “Have to buy now” (current vehicle inoperable) to “Want to buy now” (just like to have a new vehicle). Some of the RFQs will come from loyal buyers; these are buyers who will buy your brand, maybe just not at your store. Again, J.D. Power and Associates data illustrates model shopping shows that 3 of 10 new vehicle buyers only consider one model when they’re in market, and most of those tend to be brand loyalists. The remaining seven out of 10 leads will look at two to four-plus models. Seriously shopping a lot of models takes time: quotes aren’t always comparable, inventories differ. Third party sites provide a load of comparative information, but more information doesn’t simplify the process.

It’s important to stay with a prospect over the length of their shopping process; help them manage their own funnel. Whether it’s 30, 45, 90, or 120 days, it’s important to stay in the mix. The original RFQ was submitted for a reason: make/model interest or preference; geographic proximity; word of mouth or referral; don’t assume no news is bad news.

At the same time, it’s important to tailor the communication. Unless a prospect tells you they’ve bought and are out of market, you can continue to work the lead. But, the fourth or fifth e-mail shouldn’t be the same as the first or second; the buyer change over time: more experienced, more informed; maybe more frustrated.

Be-backs are not what they used to be; the Internet changed that. Many are buying round trip tickets on the bus. Don’t let them slip away by giving up too soon.

It is easy to be seduced by the promise of Request for Quote (RFQ). In the ideal scenario, the vehicle shopper has clearly signaled an interest in purchasing a certain vehicle, making them a valuable in-market, lower-funnel target. In reality, lead quality varies and it can be difficult to separate good leads from bad, while managing leads can be expensive for both dealers and OEMs. Indeed, fundamental problems with the entire RFQ process limit its effectiveness.

Although more new-vehicle buyers are using the Internet in their shopping process, the online dealer submission rate has not grown, and has in fact remained flat since 2004. Only one-fifth of new-vehicle shoppers submit RFQs, according to the J.D. Power and Associates 2007 New Autoshopper.com Study (Figure 1). Currently, the value proposition for the other 78% translates to Give us your personal data, and we might get back to you.

The online lead submission process for new vehicles is inherently different from that of other industries. The vehicle transaction cannot be completed online, so nearly all shoppers must visit a dealer. Consequently, the momentum of researching online is lost once the potential buyer contacts the dealer, because the dealer must learn from the shopper all the questions they already asked on RFQ via the Internet.

New-vehicle leads don’t generally create the emotional attachment to purchase a specific, unique vehicle. Shoppers who submit a new-vehicle lead often fill out a generic form with little more than requested make and model information. Since shoppers aren’t seeing actual photos online, there is less urgency to determine the availability of a vehicle that hasn’t been fully realized in their minds.

Used-vehicle leads, on the other hand, have a strategic advantage over new-vehicle leads: every used vehicle is unique. A shopper who submits a lead for a used vehicle is interested in a specific vehicle. Sellers usually post actual vehicle pictures that hopefully spark a real interest and possibly some emotional attachment. In 2007, in fact, 48% of used-vehicle AIUs found their vehicles online, up from 33% in 2004.(1) Having this connection also contributes to higher online close rates for used lead services—25% vs. 19% for new lead services.(2)

Improving the Online Lead System

The new-vehicle online lead system needs to improve if it is to grow. First, sales need to be better integrated. Don’t ask shoppers for information they’ve already submitted via RFQ—doing so is a waste of their time. Further, RFQ forms must move beyond the generic toward those that allow for specific information gathering. For instance, the Price Quote Request page from Dave Smith Motors (http://www.davesmithmotors.com/quote/) allows shoppers to specify a range of vehicle options, from colors to cab and bed preferences.

Second, make more easily available the information that shoppers are seeking. When a shopper submits an online lead, they are generally asking about availability and closer-to-transaction asking price on a specific vehicle. Although both are available online, not every shopper finds them. While many automotive sites accept RFQs, most independent and many manufacturer sites don’t show new-vehicle inventory. Dealer sites generally have both RFQ and inventory, but are visited by only one-third of AIUs, reducing their influence.

Finally, dealers themselves can take on more of the responsibility for generating their own leads (e.g. via Search Engine Optimization / Marketing) and reduce their reliance on third parties lead generation sites. By becoming masters of your own ‘lead domain,’ you can exert greater control over the entire process, benefitting both dealer and customer.

Online submissions and forms were first designed more than 10 years ago to address content deficiencies of Web sites. However, we now need to adapt to current-generation users. Shoppers will continue to filter services that go beyond the simple online submission by selecting those that provide more options and alternatives for communication. Meanwhile, the dealers whose RFQs ask for more online shopper data will have a strategic advantage over those who don’t.

(1) J.D. Power and Associates 2007 Used Autoshopper.com Study

(2) J.D. Power and Associates 2007 Dealer Satisfaction with Online Buying Services Study

Watch Gary Marcotte’s presentation in its entirety or read the transcript in the December Online Automotive Review – Dealer Edition released December 21st on this site.

Service and Parts Opportunities
I think service is an area that has been overlooked. We did research and we talked to customers about what they wanted to do with service online. Today we are effectively nowhere with service online and we’ve got customer hunger thanks to our friends at the hotel and airline business. Saying I can do a whole trip without talking to a human being, how come when I come to a dealership I have to wait in line and I’m number 17, I have to stand in the lane with all the exhaust, I have to go sit in that little room and do my thing and then be on my way. The answer is, we don’t think you do.

But here’s what people said about what they want to do with parts and service on the Internet. Almost 70% of the people want to make an appointment. 60 plus percent want to research our products, our prices and our services before they make a decision. If they did that, I bet we’d get more business from the Jiffy Lubes and the Pep Boys, who in some cases have prices that are higher than us. They want to see their status. Something like 40-50% of the calls that come into our service department are status check calls. If people could check the status of their service online, the time we spend with them in the drive would be about them, about their car and we wouldn’t be scurrying back and forth [answering calls] and that experience would be better, too. And, they want to pay their bill and buy parts [online]. All those things can be done today [online]—they are done in industry after industry after industry. And we think it is time for the auto industry to take a look at the service that goes on at our dealership and put those keys in the hands of customers too.

So we asked [consumers], what if we did that, would you be likely to do it? What if we gave you a little menu and say alright here’s the menu, here’s what the manufacturer recommends and here’s what the dealer recommends. Here’s a whole list of other stuff. What if we turned the screen around and said, “Mr. and Mrs. Jones, here’s your car and here’s the mileage, here’s what the manufacturer recommends. rdquo; It’s all right there on the screen, it’s all priced, you can click on it and tell you about it. That’s what Jiffy Lube does. If Jiffy Lube can do that kind of stuff, why can’t we? We’re the ones with the information, we’re the ones they trust. We should do it and if we do 60 plus percent of the people would be likely to use it.

What about express check in? Is it possible to walk into a service department walk up to a machine, say I’m Gary Marcotte, swipe my credit card, pick through my menu that I just saw, pick the services that I want, tell you my drop off time, give you my cell phone number so you can text me when my car is ready, drop my keys in a little box and move on. Would that work? It works at hotels, airlines, Home Depot, grocery stores. These businesses are profitable, customers are happy, their people are more productive and the technology is easy and not that expensive. People say half the time if we gave them an express check in option, they would use it.

Express check out is even easier. How many of us will leave this hotel and our bill will be slid under our door and we won’t talk to another person. Why can’t we do that in a dealership? Why can’t I come in swipe my credit card, answer my five CSI questions, pay my bill, get my keys in the slot, know that my car is parked in slot 3 just like at Hertz or Avis and be on my way. If we did that, would we drive more traffic to our dealership for service, would we have a more loyal customer base, would we improve the way this industry works, would we be more profitable? We think yes because people say they would use it.

So, it’s time for self service in the service [department] too. We are in the process of rolling out xTime in all of our service [departments] so [they] all have real time service appointments. Bill pay is next, followed by status check. We are going all the way with service. We think it’s time, we think service is underleveraged, we can do this. Now we have a real value proposition that says don’t go to Pep Boys, come to my dealership, you already believe I have the highest quality now we have the convenience you’ve been asking for, what’s stopping you?

And parts is another huge opportunity. Parts is one of those things that every business does but it’s time for the auto business to do too. We’re spending our time at AutoNation taking these transactions and putting them out to our consumers, giving [them] the keys to the kingdom and letting them drive. Trusting that they will make the decision that if we have the best dealership in their market, good quality service good competitive pricing they’ll choose us more than [others].