The Cobalt Report Shows that Online Shoppers are the Majority
The most important take-away of the 2007 Cobalt eBusiness Dealer report is that our industry has transformed from a largely offline industry into a primarily online one. More than 80% of auto shoppers start their shopping efforts on the internet, and most of them start their shopping using search engines like Google, Yahoo and MSN.
According to a report released by Jupiter research and NADAguides.com, dealers are spending more money on internet advertising. In this report, about 100 dealers were asked how much they spent, in 2006, on internet related marketing. 43% of dealers said they spent more than 30 thousand and 28% said they spent over 50 (I’m not sure why we’re talking about ‘06 data when it’s almost ‘08). The report makes the point that dealers are focusing more on the internet. However, 30 thousand dollars a year is only $2500 a month.
I’m not sure dealers have responded as well internally. According to the Cobalt study about 30% of internet leads never receive a response from an auto dealer. Of those that are responded to, the average response time is over 5 hours. The report also showed that consumers expect a response in about 4 hours, which is more than reasonable. After 4 hours, online consumers begin to defect to other brands and other dealerships. Also, the majority of online consumers felt that they were not given an effective brand value presentation and did not have their questions answered. So, if dealers are spending more money on the internet they sure aren’t spending enough time on training and employee development.
The presenters of the Cobalt report feel that increased lead volume is outstripping the dealership ability to keep up with leads, which is degrading the quality of response. However, in the ‘05 report, when lead volume was not as high, dealers still took about 6 hours to get back in touch with leads. I’m thinking the issue is cultural. There isn’t enough buy-in. Pay plans don’t motivate salespeople to focus on leads.
On the automotive blog DealerRefresh.com, a salesperson called Earl left the following comments:
I get so sick and tired of these internet customers. You can’t make a dime off of them and they’re waste of my time. Let me tell you WHY!
They come into the dealer armed with information and print outs from Edmunds, KBB.com and other various websites. You end up spending half the day with them; answering their questions, explaining to them that what they read in the forums is misrepresented truth, test driving several vehicles while they compare everything to their print outs. After spending half of the day with them, building rapport, performing a great demo and product presentation while being very professional and courteous, I have to hear “I know your invoice, back end and the dealer incentive for this car, so I want your absolute BEST DEAL!”.
Two to Three hours later I realized that I just spent way too much time with this customer AND I’m about to make a whole WHOPPING $50.00 bucks for a mini deal. Really, it’s not worth the effort unless it’s a volume unit that puts me over the edge for a bonus. Otherwise, I’d rather wait around for a normal customer to visit the showroom floor, someone that I have a chance of making some real money on, and someone that will appreciate the service and time I can offer them.
This guy probably needs an attitude adjustment. It’s an isolated rant from a salesperson, but you can see that he’s not real motivated to work internet leads. Whether it’s tweaking his pay plan, or giving him a salary to work leads, or keeping him from working leads, there’s obviously a disconnect here.
A Recent Google Report Can Help You Understand the Online Buying Process
Understanding how online shoppers use search engines to purchase cars is an important insight that may help internet managers and special finance managers use the internet better to drive more business. Compete.com and Google recently released this presentation on how the automotive buying process works in search. It’s about an hour long. I think it’s worth taking a look.
You can see the report here: The Automotive Buying Experience: From a Search Perspective
I agree that dealer websites leave a lot to be desired. I’m particularly amazed by what appears to be complete and utter ignorance as to what customers want to see–model information (don’t make me go back to the OEM site) contact info that’s not intrusive (get RID of those damn floating “live online chat now” popups). But one of the stupidest things I see is where online inventory is useless or insulting–dealers that say they have 10 2008 models in stock, but don’t tell you what color, trim, engine or trans they are equipped with. Dealers that show you stock photos that aren’t colorized. Dealers that show a huge inventory…of all manual transmissions just because that’s standard and they are too lazy to put in vehicle-specific information, or list all the standard specifications, like rear wheel diameter/material, that no one gives a crap about.
Online shoppers don’t like to have their time wasted or their intelligence insulted, and these crappy sites offend on both counts. Too many other dealers have good comprehensive inventory info, and vehicle info easily accessible, and well designed sites. Dealers need to think like shoppers, not dealers. If you go to a store, you expect to see all the shirts in stock, not just sealed white boxes with misleading informaton printed on them. If you don’t show your stock, customers won’t “contact us”, they’ll shop elsewhere.