Impact of Customer Online Reviews

In today’s social media dominated world, online consumer generated content, such as reviews and ratings, is prevailing as a key influence in shoppers’ decision to ultimately purchase a product or use a service. This trend can be recognized by the increase in popularity of Web sites built on business models providing just this type of information. One great example is Angie’s List, which company collects and aggregates feedback from registered panel members regarding contractors, doctors and a variety of service companies. Members are required to pay monthly fees and the data is only shared with those who subscribe. There are certainly other firms that provide such services, but I think this example illustrates the way the Internet has empowered the Voice of the Customer. A positive consequence of such review sites is that businesses work hard to avoid getting low scores and more effort is put into satisfying customers.

I recently did a Google search for Toyota dealers in Ventura, California, and not only was I provided links to the dealers Web sites but also a map with their locations and most interestingly consumer reviews. A lot of these reviews are pulled from other sites (Edmunds.com, dealerrater.com, etc.), but this sort of information could be an eye-opener for any potential problems with the sales department or management.

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However, most of the time the information provided is sparse and the data can’t be trusted due to unverified sources. Frequently the sample size is insufficient and one cannot make truly informed decisions using partial data. J.D. Power and Associates is currently developing a Customer Service Champions program that can be integrated into the online marketing operations of businesses in various industries including automotive. Through the use of survey data, recognition would be awarded to those who rank in the upper echelon of performers. Customer-driven recognition would demonstrate a high level of accomplishment in the area of customer satisfaction and commitment to customer service excellence. So when a potential customer would search for car dealers, in addition to the typical search information that would be displayed, a customized J.D. Power widget would display the pertinent data for those dealers that are recognized as Customer Service Champions. Those participating in this online marketing program could choose to display customer comments alongside easy to understand metrics. Ultimately, the information provided will allow customers to make the right decision in selecting those dealers that will offer them the best customer service experience.

Please share any feedback you have on this concept or if you have experience with such a program.

New Online Media Behavioral Tool in Collaboration with Compete, Inc.

Today the landscape for automotive online marketing is changing with the emergence of J.D. Power and Associates and Compete, Inc. rsquo;s new Online Media Behavior (OMB) product. This new tool will release in March and serve automotive OEM media planners and publishers alike by allowing them to closely target the new-vehicle buyer audience. For the first time ever in the industry, media planners will be able to target their audiences using actual buyers’ online behavior, instead of just lower-funnel shoppers.

The OMB product focuses on the online media behavior of the new-vehicle buyer as a proxy for what future new-vehicle buyers are doing online. The tool will provide online click-stream analysis at various automotive segmentation levels, enabling media planners to more efficiently target web sites with optimal proportions of new-vehicle buyer traffic as compared with the total traffic on each respective site.

Take the Midsize CUV new-vehicle buyer segment (Toyota Highlander, Ford Edge, etc.), for example. The scatter plot below shows the relationship between the segment buyers’ reach and composition for the top 400 web sites. It’s clear which web sites are exceptionally good candidates for media buys here; especially with the confidence of knowing this is actual buyer behavior data.blog post photo

The following web site metrics are available in the OMB tool:

  • Site Traffic – Total U.S. Internet browsing population visiting the site during the month reported.
  • Segment Traffic (weighted) – Number of new-vehicle segment buyers that visited the site during the month reported.
  • Online Segment Reach – Calculated by the following: Weighted Segment Traffic divided by Online Segment Size where Online Segment Size is equal to the Total sales for each vehicle * proportion of internet usage for each vehicle, for the observed month.
  • Online Segment Index – Calculated by the following: one hundred multiplied by [(Site overlap divided by Online segment size) divided by (Site traffic divided by the total Internet Browser Population (IBP)]
  • Minutes Per User – Average length of time a buyer spent on a given site during the month selected.
  • Minutes Per Visit – Average length of time a buyer spent on the given site for a given visit
  • Bounce Rate – Average percentage of buyers that viewed only one page for a given visit
  • Total Segment Reach – Weighted buyers / Total segment size
  • Total Segment Index – One hundred multiplied by [(Site overlap divided by the Total segment size) divided by (Site traffic / total IBP)]

The OMB sample is derived from a match between Power Information Network (PIN) new-vehicle registrations and Compete, Inc. rsquo;s click-stream panelists, and will occur quarterly for a rolling two years-worth of registrations and panelists. The first official release of the OMB tool will be in early March, and will continue as a monthly product reflecting the actual online behavior of new-vehicle buyers online for each respective month.

Live By Process or Die By Process: A Message To Management

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.

Cost-Cutting Hits the L.A. Auto Show

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?”

Automotive Ad Spending in the Current Environment

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.

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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).
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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.

Acura and Mazda Recognized as Automotive Online Marketers of the Year

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.

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Magazines: Still a Key Ingredient in the Advertising Pie

About a month ago, I picked up one of many magazines at my doctor’s office while waiting for my appointment. As I was reading, an ad for a specific product caught my eye. Later when I got home, I went online and looked up the URL that was provided in the ad to view more information about the product online. As it turned out, I ended up purchasing the product. Looking back, I’m not sure I would have even known about this product if I hadn’t read that magazine.

As the Internet has become a frequently used medium for entertainment and information among new vehicle buyers, shifting ad budgets away from print to online might not be the best idea. Not only does my recent experience attest to the importance of magazines, our findings from the 2008 Power Auto Offline Media Report shows that the growth of the online medium has not exactly come at the expense of other, more traditional media as many might think. The study reports that new vehicle buyers that are excessive users of the Internet for personal-use (10 hours or more a week) tend to read just as many magazines as those spending little time on the Internet.

According to the Power Media Report, a new vehicle buyer will, on average, read or look into 10 different magazines over a six month period, and this level of readership has not changed much over the past five years. In fact, this number may even be underestimated in that the Power Media Reports measure only 134 magazines and 8 national newspapers/Sunday magazines. It’s safe to say that magazine readership remains plentiful among many Internet users because it gives impetus for seeking more in-depth information about a particular subject online.blog post photo

This confirms that in order to effectively communicate and develop a relationship with both current and potential owners, advertising campaigns are greatly reinforced by multiple media, getting in front of consumers at all points of contact, and print should definitely be a part of that.

Online Television Content Becoming Increasingly Effective in Targeting New-Vehicle Buyers

Online television show content is emerging as an increasingly effective way of reaching new-vehicle buyers, according to the J.D. Power and Associates 2008 Power Auto Online Media Study—Summer.

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

The study finds that a substantial majority of new-vehicle buyers—68 percent—report going online to find information on television shows, and that the reach of online television show content among new-vehicle buyers has increased by 22 percent since 2007. In addition, television show content is among the top three types of online information consumed by new-vehicle buyers, along with travel-related information (including maps, driving directions and weather reports) and news (including finance and business-related content).

“As the automotive market struggles in the current economy, it becomes even more important for manufacturers and advertisers to effectively target the diminishing number of consumers who are seeking to purchase a new vehicle,” said Arianne Walker, director of marketing and media research at J.D. Power and Associates.
“J.D. Power and Associates forecasts that fewer than 15 million new vehicles will be sold in 2008, compared with the 16.1 million sold in 2007. As new-vehicle sales shrink, understanding which advertising mediums will provide the best balance of audience reach and composition is absolutely critical. As more new-vehicle buyers seek information regarding television shows on the Web, advertisers can benefit from increasing their focus on this medium.

The study also finds that new-vehicle buyers most frequently visit the following Web sites when searching for television content: CNN.com (with 30% reach among new-vehicle buyers); MSNBC (24%); ESPN (23%); and FOXNews.com (21%). Among television network Web sites, ABC is visited most frequently by online users (with 16% reach among new-vehicle buyers), followed closely by CBS and NBC (each with 13%).

“Television networks are expanding the types of content offerings available on their Web sites to increase their online audience,” said Walker. “In particular, television network sites are issuing online broadcasts of archived television shows, which exposes viewers to pre- and post-roll advertising placements.

Buyers of premium-brand vehicles tend to seek online television show content with the greatest frequency, and are 8 percent more likely to look up information about television shows online, compared with the average new-vehicle buyer. When looking at specific segments, 79 percent of midsize premium utility vehicle buyers, 76 percent of compact premium crossover utility vehicles (CUV) buyers, and 75 percent of midsize premium CUV buyers typically view this type of online content. The biggest increase in consumption of online TV content is among buyers of midsize premium conventional vehicles, a rise of 41 percent since 2007.

“Premium-brand vehicle buyers tend to be frequent users of digital video recorders (DVR), and of the 49 percent of buyers who have DVRs, the vast majority of them—97 percent—tend to skip commercials when they watch recorded TV programming,” said Walker. “Fortunately for advertisers, their propensity to view television content online provides an ideal alternative way to expose advertising messages to this audience.

Historically, online television content was viewed primarily by Generation Y new-vehicle buyers (those born between the years of 1977 and 2002). However, consumption by other generations is now nearly as high.

“While 81 percent of Generation Y buyers visit Web sites regarding television shows, 80 percent of Generation X buyers and 73 percent of Baby Boomer buyers are also seeking this content, demonstrating that this medium is an effective way to reach new -vehicle buyers in various generational demographic groups,” said Walker.

The Power Auto Online Media Study, now in its third year, is based on a random national sample of 12,809 verified new -vehicle buyers who purchased a vehicle between August 2007 and October 2007. The study was fielded between February and April 2008.

Automotive Marketing: Approximation or Calculation?

I listened to a marketing web presentation recently where I heard one of the presenters say that the researchers had “approximated” some numbers to arrive at an appropriate placement for creative. I couldn’t help but ask the question; when do the approximations and gut feelings subside and the calculations preside?

With new tools emerging, I believe the days of designing a media plan or branding campaign on a hunch are gone. Media buys that end up not meeting campaign goals will likely always happen, however now there is a proactive opportunity to use data to predict what the result may be instead of guessing.

The Power Auto Online Media Study (PAOMS), now in its third year, measures and quantifies new vehicle-buyers’ online activities, and new media consumption. The only measurement tool of its kind, PAOMS identifies the gap between excess ad dollars and media buying efficiency specifically in the automotive arena, with sample sizes to slice and dice the data to suit your needs. The study assists automotive marketers in precisely defining the most efficient advertising buys to reach their target audience (i.e., actual new-vehicle buyers) with the least amount of waste before a campaign begins.

As an example, let’s take a look at two different Web sites:

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At first glance, The News web site looks great. It reaches a total audience of 14,506,746, whereas the Travel/Weather web site purchase reaches far fewer total impressions (Source: Compete). PAOMS identifies the new vehicle-buyer audience and the excess impressions. In the second graph, you can see the NVB Audience is 914,697 and the excess impressions amount to over one million. If you chose the Travel/Weather web site for your branding campaign, you would reach a smaller total audience, but you would be gaining an audience of mostly the right people, instead of mostly the wrong people. With the Travel/Weather web site you not only have a higher concentration of the right folks, but depending on the CPM of course, you’ll likely pay less for the same target audience. The Power Auto Online Media Study helps automotive marketers unearth stories like these, among many others.

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PAOMS in combination with our Integrated Media Planning Tool illuminates the duplication across multi-publication media packages. The study calculates unduplicated reach across multiple web sites as well as the duplicate audience. Whether your campaign objective is to reach a larger audience once or achieve fewer unique impressions multiple times, the PAOMS can help you identify the best advertising locations.

Will measurement ever completely take the place of the good old fashioned gut feeling? Unlikely, but with today’s tools and measurements we can identify which of those feelings are best to follow.

Purchasing a Vehicle Online – Possible or Not?

Looking for a new or used car? Good news! Now you can locate that new or used car, negotiate the price and arrange financing all online through a third-party automotive site without having to deal with a dealer. With the exception of trial efforts by AutoNation to conduct the entire transaction online, shoppers still need to visit the dealership to complete the sale. Nonetheless, the idea of a convenient online experience may be pretty appealing to some consumers.

Many consumers probably feel a bit like I do – I want to see, feel and test-drive the vehicle I will be spending the next few years driving. And, last time I checked there wasn’t a 30-day return policy with receipt and tags attached when buying a car, which also makes me a little wary.

However, I know there is a group of consumers out there who know exactly what they want in terms of make, model, and features for their next vehicle. For this group, the concept may work for them. I decided to put myself in the position of one of these consumers and try the “no haggle, hassle free” option of buying a vehicle online. I chose two sites as examples to test.

The Shopping Experience
My first attempt at buying my new vehicle was on Dealix.com. I was looking for a Cadillac CTS. I filled in the required fields and to my disappointment the return message was “MSRP: Coming soon! Invoice: Coming soon! Dealer notified.  My thoughts were, “what does that mean exactly and now what do I do?”

Not wanting to give up so easily, I tried a second vehicle on the same site. I chose the BMW M series and this time received the message, “Sorry, we can’t find BMW M near you.  My third and final attempt was the Jeep Commander and again I was told it could not be found in my area. It would have been nice to be able to expand my search area.

Feeling a little defeated and cheated but still hopeful, I visited CarsDirect. Again, I entered the search fields: make and model. The next screen gave me two options: 1) to either work with the current site or, 2) to work with a local dealer. I elected to work with the current site and entered the required personal information. I was given three options: finance through CarsDirect, arrange my own financing or decide later. I chose the financing with CarsDirect to really experience this concept to its fullest.

As I went through the online application I found that it wasn’t as intimidating as I expected but sadly my journey ended when I reached the social security box. Even if this had not been a trial, I probably would have still exited at the request of sensitive information online.

I moved on and selected the “Arrange your own financing” option. After entering general personal information (name, address, phone number, etc.), I was shown information like MSRP, Invoice and CarsDirect’s price and told that a CarsDirect Vehicle Specialist would contact me. I was also given steps of what would happen next.

The Challenge
Given my less than-successful-attempts at buying a car online, I see some challenges that third-party automotive sites face in order to make the online buying experience convenient. If I’m told I can buy online then I really should be able to. I still believe if I drove to my local dealer I would have accomplished something more than receiving a message that meant absolutely nothing to me. Granted I might have spent six hours at the dealer. Maybe even been talked into buying a different car than I originally set out to buy but at least I would have walked away with one.

Like any other online transaction, the process being easy is paramount. It’s the reason most people buy online. Even though I wasn’t able to successfully complete the transaction this doesn’t mean it can’t work.

Here are some suggestions for these sites:

  • Provide a date as to when I should check back on MSRP. By offering more information I would be more likely to return to the site and try again.
  • Allow further search options (e.g. surrounding or different areas) if the vehicle isn’t available in the area entered.
  • Recommend a similar vehicle I may want to consider to the original one selected (Amazon and Netflix have offered this functionality for many years).

By providing options and more information I may have felt differently about the experience – the process I went through didn’t feel convenient. Maybe the process can’t be simplified and reduced down to a couple of clicks . . . or can it? I welcome you to share any of your experiences, if any, with this process.