90% of Leads Lost to Another Dealership

Source: http://aiada.org

Brand and dealership loyalty is diminishing – most of us know that. We also know that the Internet provides the consumer with a wealth of information to consider when buying a car. And access to this information leads consumers to consider more makes, models, and dealerships than ever before. But how do consumers use the information available to them on the Internet? What filters do they use to narrow their selection and determine who they’ll do business with?

To better understand current automotive dealership Internet lead handling and the impact of search and consumer-generated media on vehicle shopping and purchase behavior, Cobalt, in partnership with Yahoo! and R.L. Polk & Co., conducted the 2007 Dealer eBusiness Performance Study: The New Buying Influences. This study was the largest research initiative in the automotive industry, and the findings provide dealership management with the information they need to best maximize their lead conversion. For instance, did you know of over a million leads sent to dealers, over 55 percent converted into a sale, but only 10 percent are converted by dealerships that initially received the lead. That means that 90 percent of those sales opportunities were converted by another dealership.
The study was focused on five primary questions:
• How are consumers utilizing the Internet, search and online consumer-generated media to shop and select a dealership?
• How do online dealership reviews and reputation, lead response, and professionalism of sales staff impact consumer purchase decisions?
• What are the current dealership eBusiness performance levels?
• How much Internet lost opportunity occurs at dealerships and what are the causes?
• What are high-performing dealerships doing to meet consumer expectations and successfully convert Internet opportunities?

The result is a comprehensive report on the state of automotive car shopping today. Click here to read the full report.

Summary of Key Findings
Dealers need to invest in their online presence as much as their physical dealership.
Most consumers start their vehicle shopping process online using Internet resources to filter information – 79 percent of consumers used search engines to research auto dealerships and 63 percent sent an online purchase inquiry/lead to a dealership. The Internet was the resource of choice for consumers, far greater than traditional media. This means that to maximize your advertising dollars, dealers should reevaluate advertising budgets to emphasize search and online media and most importantly, implement processes to respond promptly and transparently to online leads.

Online reviews and rankings of dealerships becoming more pervasive.
Consumers are turning to other people for insight into the type of experience they can expect from a dealership. The study found that 55 percent of car shoppers are aware of websites containing reviews of dealerships written by consumers. Seventy-three percent said they would likely use online reviews and rankings in the future and 58 percent said they would likely write an online review or rank a dealership in the future. Surprisingly, consumers typically only select one dealership of each brand to physically visit. Dealership management can use online reviews as a powerful marketing tool by emphasizing good CSI and building a positive online review base to make their dealership the one that is visited.
Customers submitting leads are serious and ready to buy quickly.
Of the one million de-duplicated third-party leads, 55 percent converted to a sale. Of those 55 percent that converted, 90 percent converted at a dealership other than the one to which the lead was initially sent. The financial implications associated with lost opportunity should be a red flag for all dealership management. Considering that 24 percent of leads that closed did so within 10 days of lead submission, a prompt and quality response to Internet leads is a must to capture these lost sales.

High-performing dealers communicate promptly and transparently.
Consumers are relying more and more on the Internet as a resource for vehicle shopping yet many dealers are under-performing when responding to these consumers. Fifty-eight percent of high performing dealers respond to email leads by email and phone and 95 percent provide price, availability and other vehicle information in the initial response. Management that invests in training for their sales staff and institutes guidelines and processes to respond to these consumers will be able to close the gap.

Positive buying experience more important than lowest price.
Not all consumers are happy with just getting the lowest price. Most consumers place a strong value on the actual buying experience, and are willing to pay a more competitive price for a positive experience. Additionally, loyalty and convenient location no longer have the “pull” they once did in attracting business. Foster a welcoming and respectful sales environment where the customer is treated respectfully and transparently, and your per vehicle gross should increase because you’re no longer selling at the lowest price.

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