Your Most Valuable Customer: The Walk-in Shopper

Walk-in shoppers are a sizable and important audience. According to recent research conducted by Cars.com, 43 percent of car shoppers don’t contact a dealership before walking onto the lot via traditional “lead” methods, meaning that about 4 out of 10 shoppers have narrowed their vehicle search without ever contacting a dealership.  And, these walk-in shoppers are valuable: two-thirds of them make a purchase within 72 hours of their on-the-lot visit, and 40 percent buy within the same day.

The prevalence of walk-in shopping is a challenge and a catalyst for dealers to adopt multi-touch attribution to maximize marketing effectiveness.

Walk-in traffic has always been a challenge to quantify. I suspect that the number of consumers who walk on to the lot to purchase vehicles will create stress an industry whose key systems to gauging sales process and marketing effectiveness (CRM, Google Analytics and dealership management systems) are already antiquated.

 Walk-in Traffic and Multi-Touch Attribution

Walk-in shoppers are influenced by a number of touch points, ranging from organic searches to reviews and third-party sites such as Cars.com. Armed with a wealth of research, they’re visiting dealers’ lots confident that they don’t need to engage with a dealer ahead of time. Consequently, dealers need to use multi-touch attribution strategies, not just last touch attribution or traditional lead metrics, to understand the value of their digital marketing.

However, dealers continue to invest in tactics that support last-click/single-source attribution and are not even necessarily driving sales. For example, in 2016, more than 50 percent of  dealerships’ digital spend went to promoting their website via paid search and display (according to eMarketer). As I wrote recently,when our dealer customers listen to inbound phone calls that originate from branded paid search terms, they realize that close to 90 percent of these “leads” are not leads at all – they are recovery searches for post-influence service. The industry needs to move away from metrics that support last click/single source to advertising that wins with consumer preference and walk in traffic

Winning with the Walk-in Consumer

The walk-in consumer is a great opportunity of sales for the dealer community. To turn walk-in consumers into customers, dealers need to understand their motivations and behaviors. Our data paints the picture of a ready-to-buy shopper  who uses their devices to determine what, where and from whom to buy. They’re using their mobile devices on-the-lot to make smarter decisions:

  • 64-percent use smart phones to compare vehicle prices.
  • 51-percent compare vehicle makes and models.
  • 41-percent read reviews.

Dealers need to train their sales teams to understand how to engage with walk-in shoppers, – and assume that all walk in traffic are consumers who have spent time online researching their future vehicle purchase.  Walk-in shoppers are engaged and ready to talk prices and details about makes and models, and a large number continue their research online while at the dealership’s lot.  Sales associates should understand what key review sites like Cars.com are saying about the vehicles, the dealership, and sales people

On-the-Lot is the New Normal

Dealers need to face a hard reality: their lead data is incomplete and CRMs and Google Analytics currently only support single source attribution. Dealerships that rely solely on last-touch attribution and “internet” lead data to make advertising decisions are missing a sizeable and growing segment of on-the-lot customers — and these are customers who are more than likely ready to make a purchase.  To this end, our industry needs to become literate in the digital experiences, expectations and needs of walk-in consumers to best work with the growing legion of walk in traffic.

CPO Shopper Behavior: Infographic

Interested in speaking to CPO shoppers?  Non-luxury CPO shoppers are typically undecided on a stock type.  Car shoppers flip between New and Used vehicles when considering a new vehicle, but our study shows they are more likely to consider a Used vehicle if they are also considering CPO.  New vehicles shouldn’t be excluded from consideration and car shoppers may be able to be up sold into a new vehicle, but car shoppers are less likely to act on a New vehicle if the car shopper is considering CPO at the beginning of shopping journey.  Click the link to download the PDF infographic for more information.

CPO Shopper Behavior Infographic

Are You Growing Your Service Lane? Voice of the Consumer Update

We are in the throes of winter, and the unexpected can happen when it comes to your vehicle – a flat tire, broken heat, a noise that sounds like… you know, a spring (boing boing!) – and you need to get it fixed.  But where do you go and how do you do it?  Consumers are going online to answer those questions.  And, knowing that vehicle sales slow in the winter months, it’s prime time to highlight the service lane at your dealership.  How do you do that?

Well, we asked visitors to Cars.com how they went about just that.  The key elements we found about consumers in their search for service and repair information involved pricing estimates, maintenance schedules and time estimates of repairs, and service and repair reviews (Figure 1)¹.

Figure 1. Consumer Satisfaction Survey, November 2016

So, we know that consumers are online searching for this information and, specifically, are on Cars.com for it.  What are you doing to help them find this information online? Now’s the time to ask yourself this question and act on it.

Furthermore, we know that service drives sales consideration and retention².  The service department builds and reinforces consideration for the dealership for the next time that customer is ready to purchase another vehicle.  A customer’s current vehicle is the number one indicator of what they will buy next and where they get service is the number one indicator of where they will buy next².

Figure 2.  Dealer Walk-Ins Analysis, Placed Inc. March 2016.

Let’s expound on that a bit.  We know that service department customers typically have a history with the dealership in some fashion.  We also know that customers bringing in newer vehicles are more likely to be in warranty, which explains why there’s a higher percent of newer vehicles that were purchased at the dealership where they are also being serviced².   Take a look at the graph below to understand customers with history at the dealership.

Figure 3.  Dealer Walk-Ins Analysis, Placed Inc. March 2016.

We see that 49 percent of vehicles being serviced are 2009 or older².  That makes sense, the older the vehicle, the more likely service or repairs are needed.  It is also interesting, here, to see vehicle models that are 2010 or newer as the highest percent of service experiences that were purchased at the dealer in the past and that were serviced as well.

The takeaway?  Optimizing your service lane is a great way to influence consumers for a future vehicle purchase from you.  Taking some of the data above into consideration, past experiences consumers had, vehicle model years, and warranties into consideration against what consumers are online looking for in the realm of service and repair can benefit you in the long run – especially in the slower winter sales months.

[1] Consumer Satisfaction Survey, Cars.com, November 2016

[2] Dealer Walk-Ins Analysis, Placed Inc. March 2016.

A Car Shopper’s Buying Process – CPO Journey

We’ve said it before, car shoppers show up on the lot with a myriad of knowledge and expectations and at different stages in the car buying process.  Here, we are laying out the key needs, thoughts, and buying triggers of consumers who are considering purchasing a Certified Pre-owned vehicle.  If you’re able to identify consumers who show up on the lot as CPO shoppers, knowing some of the content in the infographic found here can better help you answer their questions, ease their hesitations, and better influence a purchase from you.  Click the link to download the PDF.

CPO Shopper Journey

 

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Influencing a Car Shopper’s Journey: Leveraging CPO

Automotive shoppers have always set out to find the best deal when looking for a new or used vehicle.  Many of us in the industry have tirelessly researched, studied and surveyed every approach consumers take when purchasing a new vehicle so we can target the right consumer with the right message in the right place.  In fact, in our own research, finding the best deal for their money is what consumers told us they are ultimately looking for when purchasing a vehicle¹.  This isn’t groundbreaking, but how do they get there and, more importantly, how can dealers help them get there?

One thing is clear: Now is the time to start optimizing CPO business.  According to Borrell Associates’ latest report, “2016 Auto Outlook, The Thinning of the Media Pack,” a six-year growth in new-vehicle sales is coming to a head having seen an average of 11 percent growth per year since 2010.  However, 2016 is looking to have only a 0.5 percent increase in new vehicles sold.  It’s forecasted to continue to drop through 2018 and slowly creep back up thereafter².

If new vehicle sales do indeed drop over the next few years, attention needs to be given to CPO programs and service programs at the dealership.  This requires more training for dealership employees on the benefits of CPO and more education for consumers so they realize why a CPO vehicle could be the “best deal” for them. Additionally, it will require branding support to OEMs from third parties like Cars.com.

Some dealers aren’t maximizing their CPO offerings for various reasons.  “Cost” is the overwhelming frustration expressed when deciding whether or not to certify a used vehicle³.  This leads us to believe that education around the ROI of CPO vehicles is an opportunity for growth.  Indeed, our research suggests that the estimated average cost spent getting a vehicle reconditioned and certified as CPO is $820³.  Other examples holding back vehicle certification included a lack of inventory to certify, space and staff availability at the dealership, OEM requirements for certification and market conditions to name a few³.

There is significant value in building up a CPO program, if done right. But how do we know when a consumer is willing to go down the road of purchasing a CPO vehicle?

How Dreaming and Hunting Result in Buying

In working at Cars.com, we’ve done extensive research into the consumer journey to offer our customers the latest insights and trends to better reach and influence shoppers.  Our most recent study, “Differentiating 3 Car Shopper Journeys,” yielded a great deal of insights into the new, used and CPO car shopper journeys.

There are three primary “modes” consumers go through when buying a car, regardless of stock type¹.  That journey includes different tipping points to move to purchase and while consumers make shifts by stock type for sure, it’s important to understand the baseline to see the differences.  Consumers begin their entry into the car shopping journey in either the Dreaming (Plan), Hunting (Discovery + Vetting) or Buying (Decide) stage.  It’s important to note that these various modes are not linear but cyclical.  This means the “Buying” mode can lead back to the “Hunting” mode and even “Dreaming” mode based on obstacles or new information the consumer encounters on his or her journey.  When in the Dreaming mode, the idea of buying a new car starts to circulate in the consumer’s mind.  As a consumer enters the Hunting mode, commitment kicks in and the customer is in preparation, learning, researching, and exploring mode.  The final mode of Buying is when the customer narrows down, sees, touches and feels and finds the car that is right for them¹.

This presents an opportunity for dealers by knowing what mode a consumer is in when they walk onto the lot. We know all consumers have the same goal – to get the best deal¹ – but how they succeed varies by stock type.

The best deal for new car shoppers has to do with “the car I want.”  These shoppers like to have make and model options, know the type of car and features they want, and know they want a good price.

Used car shoppers seek the best deal for them around the idea of “the best I can get for my money.”  This includes considerations around the vehicle being in their price range, the style of car they want, and the most features they can get for the right price.

What about CPO shoppers? Their best deal is “a car I can rely on.” CPO shoppers are looking for reliable ratings when considering make and model, the nicest vehicle they can afford, and the right features.

Growing Your CPO Lane

It’s safe to assume then, that while demand for new vehicles drops, it will rise for CPO and used. Or as Borrell puts it: “a new breed of high-quality, low mileage used cars²” will be front and center.  Those who know this can gear up their CPO, used and service sides of the business.

We know from our own research in conjunction with Placed that new vehicles are considered less as shoppers move closer to purchase⁴.  In Figure 1, we see that as consumers move closer to a purchase decision new vehicles slide below consideration of used vehicles with consideration of CPO being in slight flux.

cpo1

Note that the percent of people considering a used vehicle is much higher than the percent of purchasers.  In part, this is because our research only includes people that visit a dealership; used buyers from private parties are not represented, but in the moment of decision, shoppers also have a tendency to ‘buy up’ based on our research, which explains why we see a spike in new vehicles bought.  How will this change as we move into 2017?  That remains to be seen.  We also know that consumer mindset suggests indecision on new vs. used throughout the shopping process with CPO considered less as a shopper’s intent moves closer toward a purchase³.

If we know consumers aren’t necessarily set on a specific stock type, there’s room to influence their decision when they visit a dealership regardless of which part of the shopping journey they are in because, again, consumers are searching for their own “best deal¹.”

When it comes to CPO, Cars.com falls in the middle of three major stakeholders with an interconnection of relationships; consumers, franchise dealers and OEMs³.  We see our biggest areas of opportunity and influence in educating consumers on CPO and providing support to franchise dealers and OEMs by way of branding support.

Internally, we see value in creating content around the options CPO offers a consumer and the benefits of the franchise experience and a sort of ‘white glove’ treatment it offers a consumer.  Many options exist for dealers to educate consumers on CPO by way of advertising content or on the lot information into what a consumer receives from a CPO vehicle.  One example could be information booklets of a specific make’s CPO program made available in the vehicle itself made with a comparison to a new or used vehicle.  There are many possibilities available to the dealer wishing to grow their CPO sales.

Luxury versus Non-Luxury

But, there is a current worry that CPO sales may be cannibalizing new car sales, a worry that may dissipate in the coming years if forecasts for new car sales do drop².  This is understandable, and when you think about the dichotomy of non-luxury versus luxury vehicles, CPO offers another sales option for consumers who may not have considered it at the onset of their search.

Our research indicates that non-luxury sales have the goal of selling used inventory and to convert to CPO intenders secondly³.  Luxury sees getting aspirational buyers into new vehicles and use CPO as an entry into a luxury brand³.   So, what can be done?  Education on CPO programs and branding support can go a long way as CPO helps shoppers by giving them a car that offers value as well as peace of mind.  By helping support franchise dealer and OEM CPO programs’ brand building and providing more education on CPO within the industry, we can help shoppers make the right purchase decision.

 CPO and the Service Lane

How does this relate to the service lane?  We know from our research that 49 percent of new vehicle buyers had prior service interaction at the dealership where they ultimately made their last purchase⁴.  Furthermore, 6 out of 10 customers that walk into a dealership are headed for the service department⁴.  These service customers will spend money today, and come back in the future as potential sales leads, so loyalty needs to be fostered driving sales retention (Figure 2).

Welcoming back existing customers as a part of the sales process can foster this loyalty.  Do we know how many used and CPO vehicles were purchased by a returning customer that had service before their next purchase?  Yes, we do.  Based on our own surveys and intercepts done March 2015 – February 2016, we know that 4 out of 10 CPO buyers previously had service at the same dealership (Figure 3).   Although a CPO and a new vehicle consumer are relatively the same depending on the specific CPO program, CPO intenders are more price sensitive and slightly more interested in luxury brands³, but they may be more willing to gain entry into a luxury brand from a CPO purchase versus an outright new vehicle purchase.  This is where your influence can come into play.  Selling more CPO and used vehicles could show more returning customers to the service lane as well.

cpo2

cpo3

Continuing to support the service lanes at dealerships can foster that customer loyalty that influences future sales leads from existing customers.  In the end, we all want to help the customer make the right vehicle choice.  It’s a matter of figuring out what influences them, listening to them, and then giving them the best service possible so consumers feel they got their best deal and keep coming back.

Sources
[1] Shopper Differentiation Study, Cars.com Strategic Insights, 2016
[2] 2016 Auto Outlook; The Thinning of the Media Pack, Borrell Associates, 2016
[3] Dealer CPO study, Cars.com Strategic Insights, 2016
[4] Placed Dealer Walk-In Analysis Report, Cars.com Data Insights, 2016

A New Approach to Acquiring Used-Car Inventory

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If you’ve been to your local auto auction lately, you know one thing for certain: Acquiring quality vehicles isn’t as easy as it used to be. Margins are compressed, and demand for clean, sellable cars at a national level has made it difficult for the average dealership to compete for inventory. As a result, most stores are forced pick up less-than-ideal vehicles or pay a premium for the cars they want, putting profitability at risk.

But even in the face of the auction process, there’s an opportunity. Today, a record 258 million vehicles operate on U.S. roads, and each one of them has the potential to end up on your lot through a consumer trade-in or sale for cash. Few managers realize that nearly one in five consumers plans to offload their vehicle in the next six months, meaning there’s a sizeable yet largely untapped pool of inventory for your dealership to capture.

Seller’s Dilemma

Car owners are wary of trading their vehicles to dealerships. In fact, a recent report from C+R Research shows that, of the 42 percent of consumers who initially consider selling or trading in their vehicle to a dealership, only 10 percent actually do. Fearing low-ball offers and a dragged out valuation process, car owners opt to sell independently or turn to major auto warehouses for cash.

Bridging the Gap

The good news is that both franchise and independent dealerships can curb misperceptions and entice consumers to sell by simply delivering on experience. The same C+R study shows that sellers seek a convenient, no-haggle process in which the valuation of their vehicle is not tied to a future purchase. Though it requires a shift in both mindset and process, by offering consumers a quick and transparent method to sell or trade their vehicles, your dealership can increase its total number of used vehicles acquired and improve net profitability. Moreover, the positive interaction sellers have with your dealership has the potential to pay dividends with future vehicle purchases and referrals.

Diversifying Streams

Beyond the local auction, dealership-to-dealership trades and lifecycle marketing programs, it’s imperative to explore new online and mobile channels to diversify your dealership’s inventory. For example, digital offerings like the Cars.com Sell & Trade platform allow you to connect with an incremental audience of vehicle sellers and increase used-car supply.

However, failing to evolve tactics can lead to a decline in used-car inventory and may mean bad news for the long-term profitability of your dealership.

By updating processes, taking advantage of new online solutions and harnessing the power of your dealership’s presence on Cars.com, you can start to give vehicle owners the no-hassle selling experience they desire and continually replenish used-car inventory.

Insight of the Week: Shoppers Ditch the Dealership When Trading In

Vehicle Acquisition TipsNew-car sales are red hot this year; however, many dealerships still feel the pinch when it comes to acquiring used-car inventory. A missed opportunity, one of the biggest pools of quality used-vehicles is largely untapped: customer trade-ins.

According to a recent study by C+R Research, less than half of all consumers who initially consider trading in their car or truck to a dealership actually do. Rather, the bulk of consumers opt to sell their vehicles independently for cash, leaving the average dealership out of the loop. Another issue of perception, dealerships have to go above and beyond to show how their vehicle trade-in programs are as competitive as other trade-in options.

To begin to shift this trend, dealerships should work to merchandise their car buying programs online and in-store, and look for new channels to connect with potential sellers. Doing so can help promote a positive, mutually beneficial vehicle trade-in experience and lift the number of vehicles a dealership acquires each month.

Insight of the Week: Service Retention Plummets After Nine Years

Service 9 years

It’s no small task to keep customers coming back to your dealership for service after the sale. Thanks to stiff competition from big box service chains and local repair shops, retention is perhaps the single greatest challenge for dealership service departments, and the numbers show it.

According to a recent study by market research firm GfK, consumers are significantly less likely to visit a dealership for service after the first four years of ownership – a time that typically coincides with vehicles going out of warranty. Moreover, when a vehicle is on the road for nine years or more, owners are 192% less likely to head to the dealership for work, compared to the first four years of ownership.

The core issue is that consumers lack information when exploring service options. Many of the online shopping tools that have been common on the sales side of the dealership for more than a decade are just now making their way to fixed ops, and that disconnect has left a misperception about the true cost of service at the dealership. In this void, national chains have simply out-marketed dealerships, winning customers and eating into profitability.

To turn the tide, start by looking holistically at your dealership’s marketing strategy. Treat sales and fixed ops not as two separate entities, but as one connected experience that helps continually promote the value of your store. Tactically, this can be as fundamental as publishing service-related content on your dealership’s website or building out your dealership’s service information on Cars.com.

For more fixed ops marketing tips, check out our ebook, Scheduled Maintenance: Leveraging Online Reviews in the Service Lane.

An Introduction to RepairPal Certified

As vehicles age, consumers frequently turn away from dealerships for service and routine maintenance, opting to go to national chains or local repair shops instead. Even with competitive prices, certified technicians and added amenities, most franchise stores still face an uphill battle to retain customers for the lifetime of their vehicle.

The underlying reason for this is a gap in consumer trust and limited transparency related to service pricing information. Auto shoppers perceive dealerships to be more expensive and,  without a strong digital presence to show them otherwise, the misperception negatively influences business.

Cars.com’s new RepairPal Certified product can help change this trend by establishing your service department’s digital footprint and providing tools to differentiate your store from the competition.

To learn more, check out this short overview of RepairPal Certified.

Cars.com Analyzes Dealer Reviews to Uncover Common Shopper Pain Points, National Trends

Online reviews continue to grow in importance within the automotive industry, with seven of 10 car shoppers stating that reviews of dealerships are a ‘very’ or ‘extremely’ important part of the research process. To better understand this trend, Cars.com conducted a text analysis using the nearly one million consumer-submitted reviews on its site and uncovered several unique shopper behaviors, as well as opportunities for retailers and manufacturers.

Cumulative dealer reviews on Cars

“Online reviews are more than social proof; they’re equity for dealerships,” said Simon Tiffen, senior manager, advertiser insights at Cars.com. “Now that reading and writing online reviews is normal behavior for consumers, we’re able to aggregate and analyze real-life experiences to make tangible improvements to the shopping process – not to mention find out some fun stuff along the way.”

Consumers Share Reviews During Office Hours

More than half (52%) of all dealer reviews on Cars.com are left between 10 am and 4 pm ET, with Tuesday, Wednesday and Thursday being the days shoppers most frequently write reviews. Only 7% of all reviews are left on Sunday, and virtually no reviews are left between 3am and 5am ET.

Time of day

“Since consumers are most likely to leave a review during mid-day, it makes sense for manufacturers and dealerships to capitalize on that behavior,” shared Tiffen. “If you’re asking customers to submit a review, time your communication for when they’re most open to sharing, which often means during typical working hours.”

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Bad Experiences Lead to Longer, More Immediate Reviews

The analysis shows that the average length of a dealer review on Cars.com is 62 words; however, reviews that do not recommend a dealership are 142 percent longer than those that do, on average.

Though they account for just a small fraction (4%) of all reviews, negative reviews are 19 percent more likely to be written on a Saturday, Sunday or Monday, presumably after a poor weekend experience at the dealership.

“When a consumer has a bad experience, they want their voice heard,” added Tiffen. “Businesses mess up sometimes – that’s a given. But now retailers have an opportunity to resolve individual issues as well as identify larger problems connected to dealership process through direct customer feedback.”

Review lengthGiven the added strain on dealership staff during peak shopping periods, Tiffen also suggests retailers take notice of the consequences of providing a poor customer experience.

“Retailers need to pay extra attention during high-traffic hours to make sure their customer service doesn’t slip,” added Tiffen. “This includes monitoring online review and social media channels, where consumers are likely to vent after a negative experience.”

Dealerships Ignore Opportunity to Respond

Though simple tools are provided to dealerships to reply to both positive and negative reviews, less than one-third of all dealer reviews on Cars.com are answered. A missed opportunity, the analysis shows that dealer review response rate positively correlates to a higher average star rating.

At a state level, this same trend holds true. Delaware, the highest rated state (4.7/5), has an average response rate of greater than 60 percent. Conversely, the state with the lowest average dealership rating, South Dakota (3.9/5), is home to dealerships with an average response rate of less than 10 percent.

Additional findings from the analysis include

  • On average Cars.com reviewers give dealerships a rating of 4.6 out of 5
  • Franchise dealerships account for 84% of all reviews
  • Of dealerships that have reviews on Cars.com, 80% have more than 20

Breakdown of dealer reviews by type

  • Used-car sales – 38%
  • New-car sales – 37%
  • Service – 24%

Methodology

The analysis was conducted using a random sample of 10,000 Cars.com dealer reviews submitted between 1/1/2014 and 9/30/2014.