Entries from November 2008 ↓
November 24th, 2008 — Uncategorized
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.
November 21st, 2008 — Uncategorized
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.
November 21st, 2008 — Uncategorized
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.
November 20th, 2008 — Uncategorized
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?”
November 18th, 2008 — Uncategorized
Q. What prompted your decision to add research tools (such as compare vehicles, configure vehicles, payment calculator, and trade-in estimator) to your sites?
We have always considered our main “hub site”, LAcarGUY.com, as a site that can answer all of your automotive needs. Visitors can browse the inventories and specials for all of our dealerships on one website. Having research tools was a natural outgrowth of that concept, so we’ve always had some research content and tools.
However, as our online marketing efforts have increased (both in terms of budget and scope) our traffic is evolving. The type of visitors on our site has expanded and many people are further up the purchase funnel. Many more people are coming to our site to do some research to figure out which make and model they are interested in. Our hope is that the valuable tools they use early in their buying cycle will encourage them to come back again when they are ready to buy a car.
In addition, the additional research tools increase length of visit which improves conversion. Last, but certainly not least, having research content, such as reviews, is an excellent boost to our SEO (search engine optimization).
Q. How did you go about selecting vendors?
Most of our site’s research tools are add ons from our website vendor (Dealer.com and Cobalt). The others I learn about from a variety of sources. Word of mouth, articles and stories I’ve read, conferences, etc.
Q. Were there any problems/issues implementing (or maintaining) the research tools?
My biggest problem using third party research tools is that it creates gaps in my analytics. We track every visitor on our site: where they came from, their path on our site, and if they convert. If they go to a third-party vendor’s page (even if it’s framed in) and it doesn’t have our tracking code, we lose them. As far as the analytics are concerned, the visitor has exited when they click on that content.
Q. Do you believe the additional content has contributed to the effectiveness of your sites, lead generation, or conversion? Is it possible to determine the payoff?
I definitely believe that additional content helps in both conversion and organic traffic which is crucial to the success of the site. Determining the exact payoff can be difficult, but I do know that some of our car reviews generate almost 20% of our organic traffic which is huge. It would be worth having reviews for that reason alone.
Brad Burlingham is Senior Director of Online Marketing for the Sullivan Automotive Group (publicly branded as LAcarGUY.com) which includes 9 Los Angeles-based dealerships. Brad’s unique background in entertainment marketing and website production brought a fresh, objective viewpoint to the Sullivan Group when he joined in 2002. Since joining the Sullivan Automotive Group, Brad has orchestrated all online marketing campaigns has integrated a consistent and effective Internet sales process across all dealerships. Brad’s emphasis on ROI and management involvement has resulted in robust increases in sales and revenue at every dealership. Before joining the Sullivan Automotive Group, Brad was a website producer at Universal Music and a Publicist at Disney Studios.
November 17th, 2008 — Uncategorized
It’s no secret that the automotive industry has been reducing its advertising spending – from its peak in 2004, spending is down in almost all categories except for online.
Source: Marketing Pilgrim
That decrease has accelerated dramatically in 2008 with the implosion of automotive sales. According to TNS Media Intelligence, overall media spending was down 11.2% in the first half of 2008 as compared to the first half of 2007. A more detailed breakdown can be seen below (note that Internet spending is up 4% for Q1 2008 vs. Q1 2007).
A large portion of the new online money seems to be funneled to search. Compared with 2007, automotive search spending was up 10% in Q1 2008, much higher than the 4% increase for total online ad spend. For Q2, search spending was up 24% in 2008 vs. 2007. (Source:Efficient Frontier)
This trend will only accelerate, especially given the continued industry problems. Chrysler’s ad agency recently cut 145 jobs, while GM has cut back on television upfront advertising purchases and expects to dramatically reduce marketing spending in 2009 even while maintaining online spend (Source: Automotive News, subscription required).
Of course, given the uncertainty about the fate of the Big Three, this could all rapidly change in the coming weeks and months.
November 12th, 2008 — Uncategorized
How should dealers respond to online leads? “Faster” is one common answer – the 2008 Dealer Satisfaction with Online Buying Services Study (DSOBS) reports that the median time to respond to a lead is 45 minutes. While faster is generally better, it’s almost worthless if shoppers don’t get the information they want.
One recurring issue is pricing policy. Consumers want the price up front, but according to the 2008 New Autoshopper.com Study (NAS), 29% of new-vehicles buyers who didn’t submit an RFQ avoided doing so because they felt they wouldn’t get valuable/accurate information. A further 50% indicated that they did not want to be contacted by the dealer. If customers don’t want dealer contact, how will they feel about being dragged into the dealership just to get a price?
Unfortunately, dealers are often resistant to pricing transparency. The 2008 DSOBS found that only 40% of dealers provide pricing on the first email to the customer. Worse, 16% still insist on getting the customer to the dealership in order to discuss pricing.
There’s a clear disconnect going on here: customers want up front pricing while many dealers don’t want to give it. But customers have the upper hand in this battle and will vote with their feet. And with automotive sales down dramatically, the dealers that meet this need for greater pricing transparency will be better positioned to make it through the down turn.
November 9th, 2008 — Uncategorized
J.D. Power and Associates has named Acura and Mazda as the 2008 Automotive Online Marketers of the Year. The awards were presented to the respective organizations last week after being announced on October 8 at the J.D. Power Automotive Internet Marketing Roundtable in Las Vegas.
The Online Marketer of the Year award is based on competitive performance metrics drawn from J.D. Power and Associates studies on automotive Internet marketing, including the New Autoshopper.com and Manufacturer Web Site Evaluation studies.
The New Autoshopper.com Study is based on the self-reported shopping habits of 27,901 new-vehicle buyers, and offers insightful and extensive analysis of automotive buyer trends and online consumer behavior. The Manufacturer Web Site Evaluation Study measures shopper satisfaction with the usability of automotive manufacturer Web sites. It is based on a comprehensive survey of more than 11,000 new-vehicle shoppers who indicated they would be in the market for a new vehicle within the next 24 months.
Recipients of the Online Marketer of the Year award were selected based on their demonstrated effectiveness at bringing visitors to the brand’s Web site; converting those site visitors into dealership visitors; achieving superior market share (relative to total) among automotive shoppers who use the Internet in their shopping process; and consumer evaluations on the usefulness of the brand’s Web site while shopping.
“Although Acura and Mazda have each achieved this recognition for the first time, they have long had strong online presences,” said Gene Cameron, vice president of marketing and media solutions at J.D. Power and Associates. “These awards affirm their accomplishments in online marketing and meeting the needs of new-vehicle shoppers. In particular, Mazda has demonstrated strength in designing its Web site to effectively reach a technologically savvy target market demographic, while Acura has demonstrated skill at bringing appropriate traffic to its site—ultimately resulting in a large proportion of those site visitors actually purchasing Acura vehicles.