Last year J.D. Power and Associates introduced a timeline showing the milestones new- and used-vehicle buyers reach before their vehicle purchase in order to better define the purchase funnel. The data is often reported using means or averages, aggregating the shopping behavior of millions of vehicle shoppers into one succinct number, for each stage in the process: decide it was time to buy, decide on a model, start using the internet for auto information, and start visiting sellers/dealers.

The table below shows the timeline for used vehicle buyers this year versus last year. The important take-away here is the large degree to which used vehicle buyers are postponing their purchase. In 2008, buyers waited 6 months before they bought their used vehicle, compared to 3.75 months just last year. Both new and used vehicle buyers are largely staying out of the market as long as they can, further contributing to the retail sales slump.

While it may be helpful to show that the “average used-vehicle buyer” starts using the Internet for vehicle shopping information approximately 14 weeks prior to their purchase, the reality is that the actions and time lines of used-vehicles buyers are actually quite varied. For example, while 20% of AIUs start using the Internet to research vehicles over 6 months prior to their purchase, nearly half start their Internet research just one month prior to purchase.

Using averages to measure shopping behavior may be an over simplification of a complex and varied process. A simplistic interpretation of the data is the need to get product information in front of shoppers a specified number of weeks before the final purchase decision is made. A more realistic view of the vehicle-shopping process is that there is a constant flow of vehicle shoppers, all at various stages of the process.

The Purchase Timeline table below shows the distribution of the 4 critical stages of vehicle-shopping behavior. Note the overlap of buyers in each of the 4 stages, and the notable amount of shoppers making decisions and visiting sellers even up to 1 year prior to their purchase. This diagram is a snapshot of buyers in one time frame, and a complete picture would entail overlaying the data in this chart with the shopping behavior of the next month’s buyers, and the next month’s, and so on.

An individual shopper will gain awareness of many models, consider a few models, and narrow their choices further by visiting sellers to purchase only one vehicle, hence the shape of the purchase funnel. But from an automotive marketer’s perspective, the shopping process is a continual stream of shoppers and buyers, and the need for marketers to put the right advertisement, the right information, and the right vehicle in front of the right buyer at the right time is a constant requirement.

Editor’s note: OAR will be taking a break for the holidays. Please look for new postings starting January 5, 2009.

In retrospect, it’s clear that 2008 was finally the year that the automotive mobile Internet started to gain traction. There are nearly a dozen fully functional mobile automotive sites, including entries from Acura, Kia, Land Rover, Mazda, VW, Cars.com, Edmunds, kbb, Vehix, and Car & Driver. As discussed in this post, the Cars.com and Mazda mobile sites are heavily used by in-market shoppers.

Given the importance of lower-funnel activities for the mobile platform, it would be logical for dealers to also follow suit. But many dealers still haven’t completely embraced the Internet and moving to a mobile site would be a great leap for most, especially with the industry projected to continue struggling through 2009. Yet some vendors have already launched solutions for dealerships in the form of templated mobile sites that provide the most critical features: contact information, locators, driving directions, and inventory.

Cars.com is one such provider. Its platform is based off the robust Cars.com mobile site, which works across all web-enabled mobile devices. Inventory is also tied directly to all vehicles listed on Cars.com, so there are no additional work for the dealer to keep those listings current. As shown in the screenshots below (taken on an iPhone), the site have all the needed functionality and are easy to use / navigate.

izmocars recently announced its own mobile solution which also focuses on the most relevant lower funnel functionality. This can be seen on one of its early launches with Anderson Honda.

Compared to the Cars.com mobile dealer sites, the izmocars site:

• Home page is more strongly branded with a large vehicle image and more text, in addition to the dealer banner
• Inventory search requires more clicks to get to the vehicles
• Fewer images on inventory listings
• Dealer phone number isn’t as ubiquitous
• Offers SMS as a contact option

I also spoke with John Roark, a Product Specialist for Cars.com, to gain further insight into their platform. He acknowledges that the timing is problematic, but that they already have ten dealers signed on during this pilot phase. The sites are currently linked from Cars.com dealer locator as well as ads, but they are working to make the standard URL automatically go to the mobile site for mobile users.

John also indicated that another major barrier has been lack of consideration – most dealers just haven’t thought about mobile. They already have Blackberries, but these are primarily for email.

Despite these obstacles, change is coming. The iPhone dramatically altered the landscape by immediately creating a group of heavy mobile Internet users. That market has continued to expand as iPhone sales exploded and competitors adopted many of the features that made it so successful. Cars.com and izmocars are the early vendors offering a mobile solution, but others will eventually follow suit. Soon, dealerships won’t be able to simply ignore the mobile possibilities.

Dealers, General Managers and General Sales Managers, this is where the accountability starts: You and Process. I’ve not yet entered a store where the Internet business excelled despite management (ok, for more than one month). Heading into 2009, you must understand all of the fundamentals, be able to speak to the critical points with ease, know your vendors along with holding them accountable and stay up on what’s happening in your store as well as outside.

The opportunity to hide behind anything that keeps you from being engaged with your online identity, understanding what your (Internet) sales staff is doing, knowing how your leads are being handled and taking part in how you message all of your customers has to end. In order to lead, be able to influence your staff and hold meaningful conversations with your sales team you must:

1. Embrace the web and your presence (likely for the same reasons you use the Internet)
2. Immerse yourself in learning, reading and understanding technology and the tools
3. Have complete transparency (logs, reports, analytics, vendor updates/meetings)
4. Validate the use and effectiveness of the web in everything you do

Stores are managed top down, period. People have faith when their leadership does the things that matter, support and recognize them. A few questions to ask yourselves:

Do I:

1. have a clearly understood web plan, marketing platform and the appropriate staff?
2. read magazines, e-newsletters and industry information that informs and validates the efforts?
3. take time to sit down with staff that handles my Internet business?
4. clearly define goals that make sense and hold people accountable?
5. support online efforts by staying in touch with both my staff and customers?
6. know at all times what my online brand, messages and staff are doing to promote completely?

It is not enough to put up a website, buy leads, plug in a CRM and wait for customer to run in. Think like a customer, act like a customer, ask like a customer, shop yourself like a customer and task your staff like a customer. Then you must make sure that you have a viable process and support it. Not half way. Not three quarters of the way. All the way.

Failure is not an option when you understand, plan and execute. Process is a great thing that breeds results. Process also shows areas of failure, possible improvement and validates all of your efforts. Remember, you can have the latest and greatest of everything but it won’t matter if you can’t back it up.

Make it your goal to set all of these things in motion now so your 2009 is something to talk about. More customers will enter your storeonline now than will ever physically walk into your dealership. Make sure you are 100% confident that those people will see and experience exactly what you want them to. Then do it over and over again…oh, and change your website a bit regularly just in case they actually spend some time on it…

Best practices: Professional Insight, Powerful Results

About Gary
Gary May is President of Interactive Marketing and Consulting Services, where his chief responsibility is to benefit dealership, manufacturer, portal, and third-party clients with best practices in the online/eCommerce automotive segment. Mr. May’s prior experience includes roles with izmocars, Edmunds, eVox Productions and CarsDirect. He has 18 years of consultative sales experience in the B-to-B and B-to-C arenas in both the automotive and sporting goods industries.

You can also check out Gary’s blog, IM@CS Web: The Better Way To eComm And Process.

Bob Garfield, contributor and ad critic for the Advertising Age website, recently wrote a great article regarding Web widgets: “Why aren’t more advertisers using them?” There are a lot of interesting and noteworthy examples in his article. For example, he mentions Southwest’s desktop application which uses its iconic “Ding” to notify potential travelers of ticket specials to destinations that are of interest to the users. As he describes it, it’s easier to get your product to the buyers than to get the buyers to your website.

So why should a company invest in the resources needed to develop such a widget? One key reason is the way the Internet, especially social media, can help advertisers and marketers. The viral effect, where Internet users pass on information to their social network of family and friends, creates a multiplier effect. The most common example of this is viral videos on YouTube, where Internet sensations can be made overnight with the launch of a clip. Furthermore, relationships and allegiances are developed with the audience, since social media is all about displaying your preferences and personal interests. A widget installed on your personal page (e.g. MySpace, Facebook) which not only can be seen by those in your network, but in turn can be added by others who share your interests because they may view it as a personal referral or endorsement. This can be considered the ultimate word of mouth marketing.

I recently attended a lunch hosted by the Media and Marketing Research Council in Hollywood. The event featured a presentation by Judit Nagy, VP of Consumer Insights at MySpace, which included research data to validate this multiplier effect through the use of social networks. One of the main points of the presentation focused on a case study spotlighting a marketing campaign for Adidas, which introduced two new brands of soccer shoes. The campaign included an interactive brand community which MySpace users could visit, download an application, use on their personal page, or pass along to others. The impact of this type of “advertising” was measured in order to determine the benefit of consumer to consumer marketing, which MySpace coined the Momentum Effect. The results were impressive: the number of impressions of those who came in contact with the Adidas community directly and, most importantly, indirectly through users’ personal pages which contained the application, was 21 million. The total audience for this marketing campaign was thirty-four times larger than the number of visitors who were driven to the website because of traditional advertising.

If the role of marketing and advertising is to engage the right audience with the right message, then I can’t think of a better example than the use of such applications. Consumers seek out the brand, incorporate it into their lives, and in turn become loyal advocates of products that connect with their personal lifestyles. Widgets are still in a nascent state, and more acceptance is needed from the marketing community. And obviously, there may never be a need for every company to create a widget. But those who do it effectively will be able to reap the benefits of positioning their brands in front of an engaged and active audience.

It took over a decade, but Internet video is finally mainstream. Data from eMarketer shows that 80% of Internet users viewed video in 2008, up from 74% in 2007. Video has long been part of the automotive Internet experience, since it’s a great mechanism to demonstrate vehicles in action: see them, hear them, and understand how they work. Manufacturers have used video for years and more recently, automotive third party sites have also beefed up their own offerings in the video arena.

Vehix has perhaps the most extensive library, having made a huge commitment by producing its own video (test drives and crash tests) in addition to offering content from both Car & Driver and Wheels TV. But almost every major third-party site now incorporates video in some way. For this analysis, I visited eleven sites: AOL Autos, Autotrader, Car & Driver, cars.com, Edmunds, kbb, MSN Autos, NADA Guides, Road & Track, Vehix, and Yahoo! Autos.

The most common videos are vehicle reviews / test drives (usually between one and three minutes) that are integrated into the vehicle research sections. This approach makes them quickly available to shoppers researching specific vehicles. But since not everyone shops in the same way, it’s also helpful to make videos available from one central location. I particularly liked kbb.com’s video search functionality (shown below). Video galleries, offered by cars.com and MSN Autos, are also an effective and familiar method to serve up many videos at once.

A few sites go beyond the baseline video functionality

• Kbb.com offers auto show videos and interviews. Some of its videos also run up to 10 minutes, a great resource for people who want it .
• Vehix offers buying guides, crash tests, and informational videos. Consumers can learn about topics such as “Saving Gas”, “Next Generation Shifting” and “Torque: It Pulls.  While many sites publish this kind of information via print, which can be digested quickly, videos can be more entertaining and easier to understand because of the visuals.

Vehix also encourages others to use its videos with embeddable links. In fact, both CarandDriver.com and NADAGuides.com use Vehix content in lieu of creating their own. Another example of sharing/licensing is found on Autotrader and Vehix, which use videos from Wheels TV.

One sometimes frustrating aspect of video reviews is incomplete availability. For instance, cars.com has video reviews for the 2008 Acura RDX and TSX, but not the MDX, RL, or TL. So it’s not always possible to cross-shop multiple vehicles using comparable information, especially when looking at 2009 models. It’s understandable that creating professional videos takes time and money, but the limitation is noticeable from the consumer perspective.

Another notable nuisance is the use of pre-roll ads. AOL Autos and MSN Autos, in particular, make heavy use of pre-rolls since this is how videos are served throughout the portals. And while consumers seem to generally accept ads as a precondition for video viewing, I wonder whether that tolerance extends to getting a Ford ad before watching a video for the 2009 BMW X6 on Edmunds. (Note: Vehix also uses pre-rolls.)

Despite these issues, automotive video is a great online resource, bringing the user one step closer to a virtual test drive. And user behavior would seem to demonstrate video’s increasing important: a mid-year study from Google showed that searches for vehicle names along with “video” had increased 237% over 2007. So far, only a few third-party sites have made a strong commitment to video (especially beyond reviews & test drives), but with its increasing importance in the online world we’ll probably see that shift in the near future.

Automotive mobile sites have quickly become valuable consumer resources, allowing shoppers to get information efficiently from a variety of devices. Over time, as more consumers own more powerful mobile devices with higher cellular data speeds, we will inevitably see more sites with more robust functionality, including more research, more video, and more tools.

Mazda’s mobile site, one of the earliest entrants, is the only one with a Request for Quote (RFQ) mechanism. The mobile process mirrors the brand site process: select model and location, select dealer, and provide contact information (name, phone, email required). As far as RFQ goes, it’s relatively painless, even with limited screen real estate and a slow connection speed.

But is bringing RFQ to mobile devices a good thing? In past postings (such as this one), I’ve documented some of the problems with the RFQ process. For instance, only 29% of new-vehicle buyers submit RFQs, a figure that has flattened and even decreased over time! Of those that don’t, 50% don’t want to be contacted by a dealer, while another 29% feel that they won’t get valuable/accurate information. (Source: 2008 J.D. Power and Associates New Autoshopper.com Study)

Dealer contact should be less problematic for mobile shoppers, many of whom are actively shopping (in a previous posting Mazda and cars.com noted that mobile site traffic is heaviest on weekends). On the other hand, the other RFQ barriers may be even more problematic. A mobile RFQ submitter would likely need a quick response since they’re out shopping, while the average RFQ response time is 1.55 hours (Source: 2008 J.D. Power and Associates Dealer Satisfaction with Online Buying Services). By that time, the consumer may have finished shopping for the day. In the mobile context, an inadequate response would be equally frustrating.

From a manufacturer perspective, RFQ is a proven (albeit problematic) mechanism with an elaborate supporting infrastructure. If the mobile RFQs go through the same process as an online RFQ (as it seems to with Mazda), the manufacturer can track these leads and determine ROI. Mobile leads could even be given a higher priority or distributed differently to address the timing issue discussed earlier.

Overall, I’m not convinced that mobile RFQ will overcome these obstacles. Fortunately, there are many other ways for shoppers to indicate interest in a vehicle. Most automotive mobile sites offer multiple lower funnel actions, including dealer locator, dealer phone number, and inventory search. Mazda also offers a Shopping Assistant, with which visitors can contact a representative via chat or phone, on both its brand and mobile sites. I’d love to see this functionality more prominent throughout the mobile site.

I was surprised that no one offers text messaging as an option since a new frontier such as mobile automotive would seem to support it. While such a system would not be easy to implement, especially to tie into ROI analysis, it would certainly be appealing to many shoppers.

But the issue isn’t just mobile RFQ vs. other options – as always, it comes back to the underlying system. Dealers must consistently respond quickly with adequate information, regardless of the response mechanism in place.

New-vehicle buyers are increasingly likely to avoid specific models due to price or gas mileage, according to the J.D. Power and Associates 2008 Avoider Study released today.

The study, now in its sixth year, examines the reasons consumers fail to consider particular models when shopping for new vehicles. The 2008 study finds that 23 percent of new-vehicle buyers cite price as a reason they avoided a certain model during the shopping process. Gas mileage is also becoming a more important factor, both in vehicle buyers’ avoidance of some models and selection of other models. Poor gas mileage as a reason for avoidance has increased dramatically in the past four years, climbing to 13 percent in 2008 from 7 percent in 2004.

“In these tough economic times, a significant number of would-be new-vehicle buyers are postponing their purchases, but for those who are purchasing new vehicles, the market has shifted toward smaller, less expensive and more fuel-efficient models,” said Jon Osborn, research director at J.D. Power and Associates. “Although we’ve recently seen a considerable decrease in the price of gasoline, consumers will not soon forget having had to pay in the range of $80 to $90 for a tank of gas earlier this year.

The study also finds that even as gas mileage has become increasingly important to new-vehicle buyers, only 4 percent of buyers cite environmental concerns as a reason for avoidance, compared with 5 percent in 2007.

“With the recent trend in automotive marketing centered on ‘green’ vehicles for environmentally conscious buyers, it seems that now would be the time that environmental concerns would resonate strongly with new-vehicle buyers,” said Osborn. “However, the reality is that environmental concerns are seldom mentioned as a reason to either avoid or purchase specific models. Gas mileage is now the primary factor in the new vehicle purchase decision, so it appears that buyers are looking for better gas mileage as a way to save money, rather than out of concern for the environment.

While styling remains the reason for avoidance cited most often by new-vehicle buyers (43%), the study finds that other product-related concerns—such as long-term reliability, quality and resale value—are also very important to consumers. Reliability concerns are cited by 22 percent of buyers as a reason for avoidance, while resale value is cited by 16 percent and concerns about poor quality by 14 percent.

“The halo effect of a brand’s product quality and dependability on its models, and vice versa, is critical to brand image and consideration,” said Osborn. “A vehicle brand that has a perception in the marketplace for poor quality faces an uphill battle when it comes to winning customers, and these negative brand perceptions—whether true or not—are among the most difficult to overcome in the short term. Quite often, vehicles are avoided due to quality concerns to a greater extent than they may deserve. For instance, many buyers cite ‘quality’ as a reason for avoiding Ford and Chevrolet models, yet both of these brands earned above-average quality scores from owners in the J.D Power and Associates 2008 Initial Quality Study.

The 2008 Avoider Study is based on responses from more than 33,000 owners who registered a new vehicle in May 2008. The study was fielded August through September 2008.

For most of the past half-century, dealerships – like most businesses – required only a telephone to keep in touch with prospective and existing customers. While many dealerships still rely primarily on the telephone, email also has a major role.

Consumers, on the other hand, go well beyond these two communication mediums with texting, chat/IM, social networks, etc. Different people naturally gravitate to different channels. This is particularly true for texting, which is far more common among the Gen Y set.

Given that some of your prospective buyers and current customers are already heavy text users, why not give them the option to text you? Most will be just fine with phone and email, but the heavy texters will certainly appreciate the option. Moreover, incorporating texting into your communication arsenal can require little or no financial investment. For instance:

• Provide shoppers with the option of texting (in addition to phone and email) your sales people
• Phone, email, and/or text prospective buyers when the vehicle they want is available
• Phone, email, and/or text service customers when their vehicle is ready to be picked up
• Post your specials via Twitter in addition to your dealer Web site

While phone and email are the foundation, texting enables you to communicate with some of your prospective buyers and current customers in the manner they choose. It may only amount to a small number at first, but as those young consumers will grow up and become a more significant portion of the overall market, they are likely to retain that propensity to text. You can offer them the texting option or wait for them to start demanding it.

Consumers who use the Internet to shop for their new vehicles report lower satisfaction levels with their new-vehicle sales process than consumers who do not use the Web, according to the J.D. Power and Associates 2008 Sales Satisfaction Index (SSI) Study. Sales satisfaction scores average 851 points (on a 1,000-point scale) for consumers who use the Web vs. 873 points for consumers who do not use the Web before they purchase a new vehicle — a difference of 22 points.

“Consumers are using the Internet to find information about price to help decide the make or model to buy and to determine which dealership to visit. This sets a higher level of expectation before the consumer even steps on the dealer lot,” said Tom Gauer, senior director of automotive retail research at J.D. Power and Associates. He said dealers must make sure the information they provide on the Web is as up-to-date and as valid as possible, and they must make sure their staff members are conversant with the information provided. This will help make the Internet a valuable tool to enhance satisfaction and drive customers to shop at the dealership.

The L.A. Auto Show is now the next victim of the collective cost cutting chainsaw by the Detroit 3. GM has scrapped its news conference, its vehicle debuts and kept its product Czar Bob Lutz at home. Chrysler has canceled all vehicle debuts and left the onus on their already struggling dealers to foot the bill for their product stands and floorspace.

I understand that the executives from these once great companies need to plea for a bail out but in my opinion, the psychological operations (read: creating product excitement and building customer loyalty) needed to stay in business cannot be simply left to rust on the side of the road. Doing so would undermine the very “propping up” they are seeking from the Feds at this very moment. Think about it: GM finally gets exciting product line ups throughout its divisions, Ford finally gets back to the basics of what once made Ford-Lincoln-Mercury great, and Chrysler’s Jeep brand seems reinvigorated in a time when consumers have been shying away from SUVs.

To paraphrase President-elect Obama, they are using a hatchet on their marketing budget when they need a scalpel. Why not look at this as an opportunity to change the game? Take this archaic, financially taxing road show and revolutionize it by going virtual and building rock star followings.

In an age where the vast majority of new vehicle buyers can be found online, the entire life of vehicles could and perhaps should be broadcast in a virtual manner. After all, there are numerous highly trafficked sites built upon the “spy photo” concept – why not package and deliver the propaganda personally? Microsites are a nice start, but it can be taken much further. The shift of advertising dollars to the Internet will hopefully help fund this kind of investment.

What if the domestics traveled their concepts and next-gen first looks to the dealerships? Isn’t the idea to increase dealership foot traffic in the first place? By starting at the dealerships you have more attention, more time to repair and even enhance the consumer-dealer relationship – a something that in many cases is in need for repair. The dealerships that are currently a place of anxiety for consumers and dealers alike could be transformed into communities of retention. And your reach would expand to reach consumers living outside Detroit, Los Angeles, and New York.

The game is changing, so why not the rules, practices and habits? It’s time to innovate and step out of our habitual routines. The manufacturers that were once the pride of every American can still be just that, but it needs to happen from the inside out. If you do that, those other manufacturers at the auto show might soon be wondering “where did we go wrong?”