yahoo rl polk car buying study at j.d. power and associates automotive internet roundtable

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2007 Dealer eBusiness Performance Study: The New Buying Influences Presented by: Yahoo! and R. L. Polk & Co.

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Yahoo Rl Polk Car Buying Study at J.D. Power and Associates Automotive Internet Roundtable

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Page 1: Yahoo Rl Polk Car Buying Study at J.D. Power and Associates Automotive Internet Roundtable

2007 Dealer eBusiness Performance Study:

The New Buying Influences

Presented by: Yahoo! and R. L. Polk & Co.

Page 2: Yahoo Rl Polk Car Buying Study at J.D. Power and Associates Automotive Internet Roundtable

New buying influences

• Brand and dealership loyalty is diminishing

• Consumers consider more makes, models and dealerships, broadening the top of the purchase funnel

• New Internet-based influences act like filters within the funnel

• Consumers use filters to narrow their selection and determine who they’ll do business with

Page 3: Yahoo Rl Polk Car Buying Study at J.D. Power and Associates Automotive Internet Roundtable

Purchase funnel Shopping filters

Pre-selection filter• Search• Advertising• Website appearance

Engagement filter• Initial response • Quality of response• Transparency of communication

Purchase filter• Dealership reviews and rankings• Sales professionalism, reviews and price

Page 4: Yahoo Rl Polk Car Buying Study at J.D. Power and Associates Automotive Internet Roundtable

Research components Five sub-studies

Two consumer surveys:• 550 vehicle shoppers and purchasers• 1000 vehicle purchasers

1 million leads from 1,140 dealerships representing 35 brands matched with DMV data to assess sales rates and time to close

2100 dealerships in eMystery shop campaigns encompassing 20 brands

20 onsite visits to top performing dealers

Page 5: Yahoo Rl Polk Car Buying Study at J.D. Power and Associates Automotive Internet Roundtable

Pre-selection filter Car buying starts on the Internet

• Search is the primary tool for filtering dealerships

• Website is a key extension of the dealer's showroom

• Online advertising grows dealer sphere of influence

R. L. Polk, Inc. Proprietary and Confidential. © 2007. All Rights Reserved.

Page 6: Yahoo Rl Polk Car Buying Study at J.D. Power and Associates Automotive Internet Roundtable

All customers are Internet customers

Base: Total Respondents (550)Q4 When researching auto dealerships, which of these online search engines did you use to obtain information? (Please select all that apply.)QS10Which of the following resources ‘did you use to gather information while shopping for your new vehicle?’ OR ‘are you using to gather information while shopping for your new vehicle?’Q0You mentioned that you used the resources shown below to research and shop for new vehicles. How did you reach each of these websites?

Car shoppers are qualifying dealers by researching online & using search for vehicle dealership research

Yahoo! Search Marketing Proprietary and Confidential. © 2007. All Rights Reserved.

Page 7: Yahoo Rl Polk Car Buying Study at J.D. Power and Associates Automotive Internet Roundtable

Internet used more than traditional media

48%

37%

23%

20%

11%

12%

Viewed cars/models available at the dealerships online

See if they had a dealership website

Find reviews about the dealership online

Called to see what cars/models were available

Checked newspaper classifieds to try to find more information on the dealership

Used the yellow pages to look for the dealership

Did you do any of the following before actually visiting the dealership?

Base: Total Respondents (550)Q14 Thinking about the last dealership you visited, did you do any of the following before actually visiting the dealership?

Online

Offline

Yahoo! Search Marketing Proprietary and Confidential. © 2007. All Rights Reserved.

Page 8: Yahoo Rl Polk Car Buying Study at J.D. Power and Associates Automotive Internet Roundtable

Consumers consider multiple brands

Consumers visit an average of 6

dealerships, but they visit only one dealership per

brand

Base: Total Respondents (550); Those RespondingQS6 Please select the statement that best describes your consideration of each make listed below. QS7 How many dealerships did you visit for each make?

Yahoo! Search Marketing Proprietary and Confidential. © 2007. All Rights Reserved.

Page 9: Yahoo Rl Polk Car Buying Study at J.D. Power and Associates Automotive Internet Roundtable

Geographic area of consideration grows

68% of consumers are not willing to travel more than

20 miles32% of consumers are

willing to travel farther than 20 miles

A third of consumers will drive more

than 20 miles from home

Base: Total Respondents (546)** Don’t know responses removedQS8 Again thinking about the dealerships you visited, think about how far each

dealership was from your home. In miles, please tell us the distance between your home and the farthest dealership you visited for each make.

Yahoo! Search Marketing Proprietary and Confidential. © 2007. All Rights Reserved.

Page 10: Yahoo Rl Polk Car Buying Study at J.D. Power and Associates Automotive Internet Roundtable

Internet is the primary resource for information

67%

40%36%

31% 29% 29% 28%

19% 17% 15%

64%

30% 30%26%

20% 20% 18% 21%

12% 12%

Made me AWARE ofdealerships

Helped me LOCATEthe dealerships

Driven by or seen before

Friends & Family

Search engines

Dealer websites

OEM websites

TV ads Newspaper Classifieds

Yellow Pages

Radio Billboards

Base: Total Respondents (550)Q1a-Q1d Thinking about dealerships you’ve visited, which of the following… made you aware of the dealerships?/helped you locate the dealerships?

How do consumers find and choose which dealerships to visit? (Choose from a list of 18 sources)

Yahoo! Search Marketing Proprietary and Confidential. © 2007. All Rights Reserved.

Page 11: Yahoo Rl Polk Car Buying Study at J.D. Power and Associates Automotive Internet Roundtable

Internet is the primary resource for information

36%31% 29%30%

26%20%

Made me AWARE ofdealerships

Helped me LOCATEthe dealerships

Driven by or seen before

Friends & Family

Search engines

Dealer websites

OEM websites

TV ads Newspaper Classifieds

Yellow Pages

Radio Billboards

Base: Total Respondents (550)Q1a-Q1d Thinking about dealerships you’ve visited, which of the following… made you aware of the dealerships?/helped you locate the dealerships?

How do consumers find and choose which dealerships to visit? (Choose from a list of 18 sources)

Yahoo! Search Marketing Proprietary and Confidential. © 2007. All Rights Reserved.

Page 12: Yahoo Rl Polk Car Buying Study at J.D. Power and Associates Automotive Internet Roundtable

Key online sources are used throughout the shopping funnel

SEARCH SEARCH ENGINESENGINES

DEALERSHIP DEALERSHIP WEBSITESWEBSITES OEM WEBSITESOEM WEBSITES

33RDRD PARTY PARTY CONTENT SITESCONTENT SITES

SOCIAL SOCIAL NETWORKINGNETWORKING

Learn about vehicle makes/models

Get a feel for the dealership

Find other buyer reviews on dealerships

Find out how many dealers were close to where I live

Find out if dealerships had any special offers

Find out dealership inventory on cars/models I want

Look up dealership address and contact info

I used the following online sources to…

Base: Those Responding: Newspaper inserts/classified ads (173); Radio ads (105) ; Local phone books (147); TV Ads (177); Magazines (68)

Indicates percentage is significantly higher than the all-source average at 95% confidenceQ3 Now, thinking specifically about each of the resources you used to research dealerships, which of the following helped you…

Yahoo! Search Marketing Proprietary and Confidential. © 2007. All Rights Reserved.

Page 13: Yahoo Rl Polk Car Buying Study at J.D. Power and Associates Automotive Internet Roundtable

Consumers are submitting quotes at multiple points

Base: Total (550); Submitted a price quote (346)Q11: How many requests for price quotes did you submit on the Internet? Q12: What kind of site(s) did you use to submit your price quote?

Did you submit any requests for price quotes on the Internet?

Yahoo! Search Marketing Proprietary and Confidential. © 2007. All Rights Reserved.

Page 14: Yahoo Rl Polk Car Buying Study at J.D. Power and Associates Automotive Internet Roundtable

Engagement filter Lead handling is key to performance

• Lost opportunity is high because lead handling is poor

• Poor lead handling can also cause brand defection

• Dealers can turn the tide through transparency

R. L. Polk, Inc. Proprietary and Confidential. © 2007. All Rights Reserved.

Page 15: Yahoo Rl Polk Car Buying Study at J.D. Power and Associates Automotive Internet Roundtable

Overall conversion is steady

45% of leads did not convert

55% of leads converted

Based on registration information supplied by R. L. Polk & Co.Sales/leases have been adjusted for matching efficiency by a factor of 1.36, which represents a 73% historical match rate

R. L. Polk, Inc. Proprietary and Confidential. © 2007. All Rights Reserved.

One Million New Car Leads

Page 16: Yahoo Rl Polk Car Buying Study at J.D. Power and Associates Automotive Internet Roundtable

Lost opportunity is still high

90% closed at a dealer other than the one the lead was sent to – “lost opportunity”

Based on registration information supplied by R. L. Polk & Co.Sales/leases have been adjusted for matching efficiency by a factor of 1.36, which represents a 73% historical match rate

Sold at “intended” dealership

R. L. Polk, Inc. Proprietary and Confidential. © 2007. All Rights Reserved.

Page 17: Yahoo Rl Polk Car Buying Study at J.D. Power and Associates Automotive Internet Roundtable

All “missed” sales

Based on registration information supplied by R. L. Polk & Co.Sales/leases have been adjusted for matching efficiency by a factor of 1.36, which represents a 73% historical match rate

Sold at “intended” dealership

R. L. Polk, Inc. Proprietary and Confidential. © 2007. All Rights Reserved.

Page 18: Yahoo Rl Polk Car Buying Study at J.D. Power and Associates Automotive Internet Roundtable

Too many leads go unanswered

2007Overall responsiveness 68.6%

Response time average (hrs) 7.1

Quality of responses:

Answered the shoppers questions 28.6%

Use brand or product highlight 25.5%

More than 30% of leads going unanswered.

2007 R. L. Polk National eMystery Shop, Base: 2,111

R. L. Polk, Inc. Proprietary and Confidential. © 2007. All Rights Reserved.

Page 19: Yahoo Rl Polk Car Buying Study at J.D. Power and Associates Automotive Internet Roundtable

Lead response time is slow

2007Overall responsiveness 68.6%

Response time average (hrs) 5.4

Quality of responses:

Answered the shoppers questions 28.6%

Use brand or product highlight 25.5%

20% of consumers want a response within 4 hours or they’ll go someplace else.*

2007 R. L. Polk National eMystery Shop, Base: 2,111* “Cars Online 06/07: Understanding the Dynamics of Consumer Buying Behavior and Customer Loyalty” CapGamini

R. L. Polk, Inc. Proprietary and Confidential. © 2007. All Rights Reserved.

Page 20: Yahoo Rl Polk Car Buying Study at J.D. Power and Associates Automotive Internet Roundtable

Poor lead handling contributes to brand defection

QV5 - Those who said they purchased a different make/brand than submitted an inquiry about (301) Which of the following reasons describe why you purchased another make/brand than you submitted an online inquiry about?

Of those that switched brands, 23% did so because of poor dealer interaction

Why did you purchase a different brand than you submitted an onlineinquiry about?

R. L. Polk, Inc. Proprietary and Confidential. © 2007. All Rights Reserved.

Poor or no response

Bad dealer experience

Page 21: Yahoo Rl Polk Car Buying Study at J.D. Power and Associates Automotive Internet Roundtable

Quality of lead response is poor

2007Overall responsiveness 68.6%

Response time average (hrs) 5.4

Quality of responses:

Answered the shoppers questions 25.0%

Use brand or product highlight 25.5%

2007 R. L. Polk National eMystery Shop, Base: 2,111

R. L. Polk, Inc. Proprietary and Confidential. © 2007. All Rights Reserved.

Page 22: Yahoo Rl Polk Car Buying Study at J.D. Power and Associates Automotive Internet Roundtable

Quality of lead response is poor

2007Overall responsiveness 68.6%

Response time average (hrs) 5.4

Quality of responses:

Answered the shoppers questions 25.0%

Used brand or product highlight 19.5%

2007 R. L. Polk National eMystery Shop, Base: 2,111

R. L. Polk, Inc. Proprietary and Confidential. © 2007. All Rights Reserved.

Page 23: Yahoo Rl Polk Car Buying Study at J.D. Power and Associates Automotive Internet Roundtable

eMystery National Shop 2005 vs. 2007

2005 2007Overall responsiveness 69.7% 68.6%

Response time average (hrs) 6.5 5.4

Quality of responses:

Answered the shoppers questions 25.9% 25.0%

Used brand or product highlights 30.4% 19.5%

2007 R. L. Polk National eMystery Shop, Base: 2,1112005 R. L. Polk National eMystery shop, Base: 3,576

R. L. Polk, Inc. Proprietary and Confidential. © 2007. All Rights Reserved.

Page 24: Yahoo Rl Polk Car Buying Study at J.D. Power and Associates Automotive Internet Roundtable

Purchase filter Newest influence: dealer reputation

• The emergence of a powerful new purchase filter

• Consumer ratings and reviews influence purchase decisions

• Dealership location and loyalty are less of an influence today

R. L. Polk, Inc. Proprietary and Confidential. © 2007. All Rights Reserved.

Page 25: Yahoo Rl Polk Car Buying Study at J.D. Power and Associates Automotive Internet Roundtable

Newest influence: dealer reputation

Page 26: Yahoo Rl Polk Car Buying Study at J.D. Power and Associates Automotive Internet Roundtable

Experiences influence other buyers

Page 27: Yahoo Rl Polk Car Buying Study at J.D. Power and Associates Automotive Internet Roundtable

Dealership reviews/ranking becoming more pervasive

Base: Total Respondents (550)Q7a Now we’d like you to imagine there was a dealership review site providing

customer satisfaction ratings generated by other customers who visited or did business with the dealerships in your area. How likely would you be to use this type of site?

Q7b And how likely would you be to post your own reviews or comments about local dealerships on this site?

73%

58%

How likely would you be to:

Yahoo! Search Marketing Proprietary and Confidential. © 2007. All Rights Reserved.

Page 28: Yahoo Rl Polk Car Buying Study at J.D. Power and Associates Automotive Internet Roundtable

Impact of reputation is growing

Q13 - Those who visited at least one consumer opinion source/site (214)Thinking about what you looked at on the customer opinion sites regarding car dealerships, please tell us how much the following statements describe you and your opinions where 5 means it you “describes you very well” and 1 means it “doesn’t describe you at all.”

Car purchasers who visited customer review sites said this statement described them well:

R. L. Polk, Inc. Proprietary and Confidential. © 2007. All Rights Reserved.

Page 29: Yahoo Rl Polk Car Buying Study at J.D. Power and Associates Automotive Internet Roundtable

Impact of reputation is growing

Car purchasers who visited customer review sites said this statement described them well:

Q13 - Those who visited at least one consumer opinion source/site (214)Thinking about what you looked at on the customer opinion sites regarding car dealerships, please tell us how much the following statements describe you and your opinions where 5 means it you “describes you very well” and 1 means it “doesn’t describe you at all.”

R. L. Polk, Inc. Proprietary and Confidential. © 2007. All Rights Reserved.

Page 30: Yahoo Rl Polk Car Buying Study at J.D. Power and Associates Automotive Internet Roundtable

Impact of reputation is growing

Car purchasers who visited customer review sites said this statement described them well:

Q13 - Those who visited at least one consumer opinion source/site (214)Thinking about what you looked at on the customer opinion sites regarding car dealerships, please tell us how much the following statements describe you and your opinions where 5 means it you “describes you very well” and 1 means it “doesn’t describe you at all.”

R. L. Polk, Inc. Proprietary and Confidential. © 2007. All Rights Reserved.

Page 31: Yahoo Rl Polk Car Buying Study at J.D. Power and Associates Automotive Internet Roundtable

Impact of reputation is growing

Car purchasers who visited customer review sites said this statement described them well:

Q13 - Those who visited at least one consumer opinion source/site (214)Thinking about what you looked at on the customer opinion sites regarding car dealerships, please tell us how much the following statements describe you and your opinions where 5 means it you “describes you very well” and 1 means it “doesn’t describe you at all.”

R. L. Polk, Inc. Proprietary and Confidential. © 2007. All Rights Reserved.

Page 32: Yahoo Rl Polk Car Buying Study at J.D. Power and Associates Automotive Internet Roundtable

Dealership Preference Selector

R. L. Polk, Inc. Proprietary and Confidential. © 2007. All Rights Reserved.

Page 33: Yahoo Rl Polk Car Buying Study at J.D. Power and Associates Automotive Internet Roundtable

Buying attribute importance

Q13 - Those who visited at least one consumer opinion source/site (214)Thinking about what you looked at on the customer opinion sites regarding car dealerships, please tell us how much the following statements describe you and your opinions where 5 means it you “describes you very well” and 1 means it “doesn’t describe you at all.”

R. L. Polk, Inc. Proprietary and Confidential. © 2007. All Rights Reserved.

Price

Professional Sales staff

Online reviews

Location

Loyalty

7.75

7.23

5.14

1.85

1.32

Page 34: Yahoo Rl Polk Car Buying Study at J.D. Power and Associates Automotive Internet Roundtable

Summary and Implications

New filters influencing customers as they move through the purchase funnel

• Online location and brand is as important as offline

Shoppers make decisions based on quality of early communication• Quality of communication may be more important than ever • Customers seek, value and reward transparency

Reliance on customer reviews and dealer ratings is increasing• Invest in dealership staff to drive strong reviews• Grow your review base to create a powerful marketing tool

Page 35: Yahoo Rl Polk Car Buying Study at J.D. Power and Associates Automotive Internet Roundtable

For more information on the 2007 Dealer eBusiness Performance Study go to

www.yahoopolkresearch.com

Thank You.