Looking At Dealer Review Behavior

Last week we discussed the value in your online reviews – how consumers use reviews and the role of positive and negative reviews.  It’s important to the dealership’s success to have a strategy in place to monitor and respond to all reviews.  Now, let’s dive into consumer behavior by looking at the number of reviews consumers want to see, how recent reviews need to be, and the devices used to read them.

What’s the minimum amount of reviews needed to influence a purchase decision?

Across categories, consumers want to read at least 4 to 5 reviews before making a purchase decision. We also found that one-third of consumers are wanting ten or more reviews to help them make a purchase decision. Think about it — what goes through your mind when you see a product or service with one review? Thoughts may range from, “It must not be good if there’s so few reviews” or “they must be new if there’s only one. I’ll keep looking.” The amount of reviews a dealer has available to consumers online matters — the more the better.

Customers think the same thing. Work hard to grow the amount of reviews for consumers to read, and keep them coming!

Those consumers who are frequent users of reviews expect more reviews than those who aren’t using reviews as often. Car reviews specifically are the second most useful type of review that we found, and car reviews have the largest amount of minimum reviews needed to satisfy consumers—with a mean minimum of 11 reviews being ideal to influence their purchase decision. Car dealership reviews are expected to have the same amount of reviews to be considered useful by consumers when choosing a dealership. If dealers have an effective online review strategy that prioritizes growing reviews, then this number shouldn’t be hard to achieve and it keeps fresh review content alive for an online audience.

How recent to do online reviews need to be to be deemed relevant to consumers?

When discussing recency, car reviews should be within the past six months to be considered useful. Across categories, however, consumers mostly accept reviews within 6 months to one year. Reviews within the past three months are ideal and are seen as having the most value.

Now, not everyone looks at the age of reviews, but for those that do, the more recent the better. Consumers want to make their decisions based on — practically — real-time information. Younger audiences, especially the Millennial generation, live in a world of instant gratification. If they can’t find what they’re looking for or don’t like what they find at a dealership, they’re likely to keep looking until they do. Dealers who don’t have enough recent reviews are going to lose in the marketplace when it comes to digital word of mouth.

Depending upon where a consumer is in their shopping journey, a review could be the catalyst to make a decision sooner. Dealers want to have their best and most representative foot forward to help consumers make that purchase decision — to buy from them.

What devices are consumers using to interact with reviews?

It’s interesting to see what devices consumers use to engage with reviews. You could assume that those who choose to write reviews on mobile devices are ‘in the moment’ and happy with their experience and want to write a review while it’s still fresh in their minds. On the reverse, they could have had an awful experience and want to vent. Either way, mobile is a means to review experiences and do it quickly. We found that 42% of consumers leave online car reviews via their smartphones.

In looking at dealership reviews, 34% of consumers leave them, but 47% of these reviews are done via smartphones — more than individual car reviews.

On the other hand, some consumers may choose a desktop to leave reviews. We found that because of the ease of use for some consumers or a lack of urgency to leave a review, a desktop may be more ideal for some consumers after purchase. For dealership reviews, we found that 78% of reviews are done on a desktop. We also found that 82% of car reviews written are done on a desktop as well.

For the largest purchases in a consumer’s life— vehicles and homes— they tend to use online reviews earlier in their research process compared to other purchases.

In any scenario, dealers need to create and execute a strategy to follow up with consumers after their purchase, asking for reviews of their experience to continue growing that digital word of mouth. Perhaps a consumer didn’t have a mobile device to leave a review when they were on the lot. Maybe the consumer meant to leave a review but forgot. Sending follow up emails, making phone calls, or sending texts can be a great way to continue growing dealers’ brands by asking the customer how happy they were with their experience and then asking for a review.

Cars.com and Clarivoy Partner to Upgrade Google Analytics and Support Dealer Growth

Attribution is one of the biggest challenges facing marketers today and that is no different for our advertisers — particularly dealers. From one store independents to large, multi-store dealer groups, the challenge of understanding which touchpoints are influencing consumers throughout their car shopping journey is universal.

The attribution conversation is one that we continuously have with our customers — and today, that conversation is about to change.

Today at NADA, Cars.com and Clarivoy announced a partnership that will move the conversation beyond first and last click attribution to answer the question dealers have been asking about their marketing investments: are they working?

Through Clarivoy’s native Google Analytics integration, Cars.com customers will now be able to see a multi-touch view of the influence their marketing efforts have in today’s multi-touch world.  Cars.com will be making our data available and transparent via Clarivoy, providing our customers the ability to see the influence Cars.com has on consumers throughout the car buying journey.

To date, Clarivoy’s dealer customers have described their native Google Analytics solution as “game changing” and “stunning.” In fact, Clarivoy took home Driving Sales’ 2016 Innovation Cup for “Most Innovative Solution.”

We are proud to partner with Clarivoy, as well as other attribution providers, to drive the industry forward, through an attribution solution that will help dealers understand how their marketing investments are impacting sales…for every turn.

As Steve White, founder and CEO of Clarivoy said, “When you think about multi-touch attribution, you have to give credit where credit is due.”

We are confident in the role Cars.com has across the car buying journey and are sponsoring a two-month trial for select customers – contact Clarivoy to upgrade your Google Analytics today.

December Consumer Insights

We received some great insights from our monthly consumer survey for December 2016.  We like to speak to our visitors to help us stay better connected with their wants and needs so we can continue to improve results for our dealer customers as well.  We know December can be a slower sales month, so we wanted to know when consumers plan to purchase or lease a vehicle, what the age range is for folks in various stages of the shopping journey, and where they consider themselves in their current shopping journey.

What We Found

Nearly 8 out of 10 Cars.com consumers plan to purchase or lease a vehicle within the next 6 months.  That’s great!  Cars.com consumers are also 3 times more likely to be in-market compared to general consumers.  What stock type do they plan to buy, though?  Well, we found that 65% of visitors to Cars.com in December plan to purchase used inventory, 32% plan to purchase CPO inventory, and 19% plan to purchase new inventory.  If your dealership has a high volume of used inventory, consumers are looking for you [Figure1].

We dove deeper to better understand what else visitors may be considering with 38% saying they will consider more than one of these make options during their research.

Additionally, of those visitors that plan to purchase a vehicle, 53% indicated they plan to sell a vehicle beforehand – 12% indicated they’d already sold a vehicle.  In other words, potentially 1 in 3 consumers plan to buy a car without a trade-in.

Figure 1.  Cars.com In-Market Metrics Total Audience, December 2016

A Demographic Look

All of this is great information to understand where consumers are in their car shopping journey.  But, let’s break it down by a generational look.  Cars.com GenX shoppers are most likely to be in-market to buy or sell a vehicle, especially those between 35 and 44 years old.  We also found 18-24 year olds are slightly more likely to be in market to buy (84%), but 25-34 year olds bring Millenials down slightly with 78% saying they are in-market to purchase [Figure 2].

What’s Shopper Demographic Share?
  • Millennials make up 28% of this survey’s respondents and, of those, 80% are in-market to purchase.
  • GenXers make up 40% of respondents and, of those, 82% are in-market to purchase.
  • Baby Boomers make up 33% of respondents and, of those, 76% are in-market to purchase.

Figure 2.  Cars.com In-Market Metrics by Age, December 2016.

We also asked at what state in the car buying process respondents currently considered themselves to be in.  We found 71% of consumers are at the early stages of the car buying process and undecided on a make and model.  Of those who have decided on a make and model – 22% — but had not decided on a dealer yet and an additional 7% have decided on all three; make, model, and dealer.

The opportunity exists for dealers to speak to these consumers in ways that match what they’re looking for and at the right time in their car buying journey.

When we asked general consumers if they were in the early stages of the car buying process, 88% indicated they were and beginning their research [Figure 3].

Figure 3.  Current Stage of Car Buying Process, December 2016.

Based on the above graph, consumers who are seriously looking to purchase a vehicle make up the majority of visitors using Cars.com – a ready to buy, in-market shopper.  We also see that a good portion of respondents using Cars.com who are ready to buy have decided on a make and model, but are still looking for a dealer to buy from, which gives huge opportunity for dealers to differentiate themselves on Cars.com to influence shoppers.

We will continue to listen to our consumers to make sure we are delivering a car shopping experience that provides everything they’re looking for in a vehicle and dealership.  The more we can improve the consumer experience means the more we can deliver for our dealer customers.

Special thanks to our internal Insights Team for continuing to speak to Cars.com visitors and turning their input into actionable insights.

Source:  Cars.com Consumer Metrics, December 2016. 

5 Questions Dealers Should Ask in 2017

A new year means new opportunity to grow your business.  That means you can’t keep operating under the same mindset when it comes to setting goals, planning advertising, and evaluating metrics if you want to be successful in growing your dealership and continuing to move metal and servicing vehicles. It’s vital to your business to be open to change, to be ready to react to consumers, and to execute advertising to reach customers throughout their car buying and car servicing life cycles.  With that in mind, I’ve come up with 5 questions to ask yourself regarding your advertising strategy to grow your business in 2017.

Am I focusing on the right metrics to judge success?

We’ve already discussed the role that traditional metrics like email and phone call leads play in measuring the success of your advertising strategy on our blog, you can read that here.  But in today’s mobile-first world, traditional metrics don’t carry the same weight as they used to when evaluating your advertising strategy.  Indeed, they are helpful, but when you advertise online versus traditional media like TV and radio, the same metrics to measure success do not translate like they used to.  Sure, you can measure how many eyeballs saw your TV commercial, but when consumers choose to engage with you online, that is more powerful as it shows their interest in you.

Your task, look at your 2016 performance to determine where you were most successful and where you think you can improve.  How were consumers choosing to interacting with your brand online?  With Cars.com for instance, were more customers engaging with you while on the lot versus sending emails and did this result in more sales?  If so, what are you going to do about it?  How does that compare to the success of your TV campaigns or radio buys?  Ask yourself, do your engagement metrics online translate to the success of your other traditional media buys?  Your advertising plans need to cross all platforms to be sure, and when you sit down to measure the success of your plan, it’s not a one-size-fits-all approach when looking at metrics.

Am I placing my ad dollars in the right media so I can quickly react to my customers?

You probably have a process in place already to review your ad spend weekly, monthly, or quarterly.  That’s great.  But, have you thought about that how, now, your dealership and virtual lot are always online and available to customers to find.  When you sit down to review data and metrics, are your customers sending you signals via this data?  For instance, are customers always calling asking for more photos on your listings or are your engagement metrics showing movement on specific makes and models over others when on the lot?  If so, how are you highlighting this inventory?

Your task, when reviewing your ad plan, ad spend, and performance, can you make the necessary changes quickly based on the signals your customers are sending you to optimize your ad spend?  If customers are asking for more photos, can you quickly send them those photos or send them a video of the car in question encouraging them to visit your lot?  There’s no limit to what you can do and how you react to show your customers you’re listening – just do it quickly.

Does my advertising strategy speak to customers throughout their car shopping journey?

Every consumer that comes across your dealership and brand is in a different stage of the car shopping process.  Have you optimized your online presence to speak to customers in every stage of that journey?  We’ve discussed this in similar terms for consumers who walk on the lot, and the same is true for those customers who are online researching.  By creating content on vehicles and making it available via your own website, the likes of Cars.com, or on social media, you’re influencing consumers to engage with you more throughout their journey because you’re helpful throughout their process.  This is true for the consumer who’s just starting their research into makes and models all the way to the consumer showing up on the lot comparing specs on vehicles who’s ready to purchase.

Your task, create a holistic plan that provides information for every stage in the car shopper’s journey.  If you create content or ads that speak to these different stages and make it available at the right moment at the right time, you can influence customers from a short term mindset to a long term customer.  Show consumers the breadth of what you offer them throughout the car ownership lifecycle.

Am I allowing customers the opportunity to engage with me when and how they want?

If you haven’t faced it yet, consumers want to engage with you on their terms.  Given the integration of media across platforms thanks to the Internet, your online presence needs to be seamless to properly speak to your customers.  Your photo and video capability – vehicle photos and information to your commercials – need to be consistently available and up to date regardless of the platform or screen size a consumer chooses to use to engage with you.

Your task, when creating video or photo content, be sure to allow for everything you create to be consumed across platforms and devices.  So, make your TV commercials available on your website in a mobile friendly form.  Create a process to respond to email leads with more engaging photo or video content to influence consumers when you reply.  There’s no end to what you can do or the access consumers have to engage with you, or your competitors if you haven’t thought through all the ways consumers can engage.

Am I optimizing my dealership for the mobile world?

We’ve already said that you need to be mobile to engage with consumers and allow them to choose when and how to engage with you.  But, if your dealership’s content isn’t optimized for mobile screens – phones and tablets – you’re missing out on key opportunities to influence consumers to choose your dealership.  There’s more to this than just optimizing your advertising content.  When you think about how you engage with online advertising content, you don’t always appreciate the popups or lengths of ads you have to sit through when your ultimate destination is to shop or research a product.  Be sure to know your audience and give them customized options – maybe the option of choosing an ad to watch or asking them to follow your social media after completing an ad – giving consumers options can encourage them to explore your dealership and vehicles more fully.

Your task, review your current advertising content and ensure that it is optimized for the mobile world not just in viewability, but in allowing consumers to choose how they consume your content.  Be sure to train your sales teams on mobile and its usefulness for a unified voice in dealing with customers via mobile.

Understanding that a one-size-fits all approach to your advertising spend doesn’t cut it anymore when it comes to allocating dollars to traditional media, social media, and third party partners like Cars.com is vital to being successful in 2017.  Now is the perfect time to align and integrate your internal processes at the dealership to maximize your mobile presence, recognize that consumers expect to engage with your dealership and brand on their terms, and to create content that is informative and engaging that can be viewed across platforms.  You have plenty of partners in the automotive space that help you speak to consumers and help you influence them to purchase regardless of where they are in the car shopping journey.

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

 

cpojourneyimage

Engagement Metrics and Lead Forms

Think of the last time you were asked to fill out a form online when researching or purchasing a product.  Weren’t you hesitant?  Collecting lead information like email addresses and phone numbers are still a great way to know a consumer is interested regardless of the product – albeit more important to the automotive industry.  But, when you consider your own online behavior, you tend to shy away from providing personal information because you don’t want to be contacted or bothered unless you’re ready to engage.

Considering how you would behave in a given situation can be a good indicator of how others would behave in the same situation.  Email and phone leads aren’t obsolete, but they are now only a fraction of how to gauge success with digital marketing.

Indeed, when we surveyed Cars.com visitors and non-Cars.com visitors who were in the market for a new vehicle and asked how likely they would be to engage with a dealer to get pricing or additional information, only 27 percent of Cars.com visitors and 16 percent of non-Cars.com visitors indicated they would submit an email lead.  It was even fewer for submitting a phone lead (16 percent and 8 percent)¹.

leadsubmissiontype

Figure 1. Cars.com Consumer Metrics Study, October 2016

It’s important to note here the other ways in which consumers are choosing to engage with dealers.  Figure 1 also indicates that both Cars.com and non-Cars.com visitors are more likely to visit a dealership lot to learn more about a vehicle than anything else.

So, we have to ask ourselves, is the lead submission form as important as we’ve previously thought when gauging digital marketing success or the success of vendor partners?  We’ve looked at the data month over month and the answer is a growing ‘no, not like it used to be.’

A holistic approach is needed to understand how a modern consumer engages with a dealership to judge ad spend.  Metrics like VDP views, map views, and driving directions along with geo-locating reporting together can build a story of engagement and interest by consumers in more detail than a simple email lead.  Be sure to review all available data and reporting for similar metrics from all digital ad partners.  Reviewing the wrong metrics and placing weight on them over more direct insight-driven metrics can lead to poor investment and review of spend.

This is why it’s important to create an online strategy that best utilizes third party vendors like Cars.com that help drive traffic to your lot – we influence consumers.  In the same study where we asked how likely visitors are to submit lead information, we asked both Cars.com visitors and non-Cars.com visitors what most influenced their decision to select one dealer over another (Figure 2).

influence

Figure 2.  Cars.com Consumer Metrics Study, October 2016

Vehicle search sites have the most influence when it comes to choosing a dealer for visitors.  Furthermore, by interacting with inventory, consumers are exposed to dealer information and can link to the dealer’s website.

This is the same pattern we’ve seen in Borrell Associates’ 2016 Auto Outlook study whereby they laid out future of advertising by medium for the automotive industry.  Digital is taking the largest portion of the advertising pie because that’s where the majority of consumers go².

So, while email and phone leads can provide immediate measurement of success, they are not the most important way to gauge success for a digital ad spend or interest by consumers.  Be sure to review what metrics and reporting are available to you against the inventory you have on the lot and online to create a strategy that will continue to drive sales and growth.

[1] Cars.com Consumer Metrics Study, October 2016
[2] 2016 Auto Outlook: The Thinning of the Media Pack, Borrell Associates, 2016

The Three Types of Walk-Ins: Infographic

A vehicle purchase is an important and exciting decision for car shoppers.  Not every car shopper walks onto the lot with the same mindset.  They walk in with different levels of knowledge and research they’ve gathered online or from friends and family.  Considering what drives car shoppers to the lot will better help you understand how to help them and influence them towards their ultimate goal – purchasing a vehicle from you.  Here are the three types of mindsets car shoppers are in when they walk into a dealership and the needs you can address to better serve them.

The Three Types of Walk-Ins Infographic

mindsets

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