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Rl Polk 2008 Consumer Expectations
 

Rl Polk 2008 Consumer Expectations

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    Rl Polk 2008 Consumer Expectations Rl Polk 2008 Consumer Expectations Document Transcript

    • MARKET STUDY Consumer Expectations for Internet Lead Marketing May 2008 © 2008 R. L. Polk & Co. All rights reserved. www.polk.com
    • MARKET STUDY Consumer Expectations for Internet Lead Marketing Executive Brief Changing Times With over 85 percent of all eventual car and truck purchasers using the Internet as a means to conduct their research, it has never been more crucial for automotive marketers and dealers to view their online hand raisers as one of their most impor- tant competitive assests. However, moving an online shopper from an unidentified About the Authors prospect to hand raiser is tricky at best; these information savvy consumers are initially LONNIE MILLER is the anonymous, direct and in command. Director of Industry Analysis with R. L. Polk & Co. With over From an automaker or dealer point of view, engaging with potential buyers should 17 years of consulting and always be tempered with an understanding of what the consumer wants at the time research experience, he focuses they make themselves known. And in cases where buyers ask to be contacted to speed on examining underlying issues up the sales cycle, paying close attention to their needs can result in selling one more driving automotive market and consumer behavior trends unit that month or not. Thus, lead marketing, and specifically managing online leads, in the U.S. and other global has been an area of growing interest to the automotive industry. regions. This study, conducted by R. L. Polk & Co., reveals critical insights useful for automotive DAN ZETU is an Analytic brand managers and retail managers as they strive to convert a growing base of Inter- Consultant with R. L. Polk & net online leads into new vehicle buyers. Findings in this study will help automotive Co., focusing on implementing advanced solutions that solve communities better understand the unique preferences among online leads and the critical marketing problems. follow up tactics which impact subsequent purchase behavior. Specifically, the follow- Dan has developed market ing questions are explored: segmentations, in-market and loyalty scoring models How do leads differ based on need? and conducted product Are first time buyers worth identifying and how should they be approached? development optimization and consumer behavior studies What types of online interaction influences brand loyalty? in a variety of industries, Topline findings from this investigation follow. including the automotive, pharmaceutical, finance and insurance sectors. What You Should Know MARGARET ZEWATSKY is a Leads can, and should be, treated uniquely Global Market Analyst with Seven distinct segments of leads were identified based on the specific input shoppers R. L. Polk & Co. and focuses submitted to OEMs, dealers or third party sites when requesting new vehicle informa- on identifying market trends that aid in the development tion online. The information contained in these segments illustrates how leads can be of new services for Polk’s communicated to differently to increase shopper satisfaction and potentially increase global automotive clientele. brand and dealer sales. Two segments in particular were found to purchase from Margaret has led multiple cross- functional teams on key global dealers that responded to their online request for information at above average rates initiatives and is seasoned in compared to the total population. Among other factors, lead attributes tied to these new product development and two segments relied heavily on receiving high quality content from a dealer when web product management. inquiries were made. First time buyers are worth identifying Given the importance of developing new relationships with a customer, first time buyers present long-term business opportunities to any automaker and their dealer network. Among the responding lead population, over 80 percent of those buying a vehicle for the first time acquired their vehicle from a dealership who responded to their online request for information. First time buyers were noted as using third party automotive sites more often than experienced buyers. This implies that dealers and OEMs may need to place higher emphasis on third party leads to attract first time buy- ers to their dealer showrooms. Consumer Expectations for Internet Lead Marketing 1 © 2008 R. L. Polk & Co. All rights reserved. www.polk.com
    • Internet Lead Marketing MARKET STUDY Consumer Expectations for Loyalty can be influenced among online leads When predicting whether a lead will be loyal to a brand (e.g., Chevrolet, BMW, Nissan), three factors accounted for 44 percent of the overall influence on this outcome. The three factors include the overall shopping and sales experience, whether the seller was viewed as honest and trustworthy, and the manufacturer’s response time to infor- mation requests. All three reflect controllable factors experienced during the online shopping phase among leads. Furthermore, a lead’s satisfaction was found to increase loyalty rates by as much as 3.4 percentage points when pricing information was pro- vided and/or a prompt response time was achieved. Ask how and when Leads want what they want. This includes communicating with them on their own terms and in the time frame they expect. Determining the method of preferred com- munication and an acceptable time for a response appears to be achievable and shows interest in understanding the shoppers’ basic communication needs. Most leads prefer email communication, which tends to afford a longer tolerance for replies to requests for information. Yet when the telephone is the preferred communication channel, expectations are higher given that 68 percent of those preferring to dialogue via the How the Study phone indicate one hour or less as an acceptable time frame to receive a response. was Conducted In January 2008, online inter- views were conducted with This summary provides only a few of the themes revealed in the study Consumer 571 vehicle buyers in the U.S. Expectations for Internet Lead Marketing. The additional findings and recommendations that bought or leased a new car or truck from a dealership that follow are intended to enable automotive brand, dealer and Internet marketing between November 2007 managers to improve their engagement, measurement and business expectations and January 2008. Qualified when nurturing online leads in the new vehicle market. respondents visited an auto- motive website and provided their contact information online while researching a vehicle online. Results reflect weighted proportions based on U.S. distributions of age, income, ethnicity, and gender. Consumer Expectations for Internet Lead Marketing 2 © 2008 R. L. Polk & Co. All rights reserved. www.polk.com
    • Internet Lead Marketing MARKET STUDY Consumer Expectations for How Do Leads Differ Based On Their Needs? Relevancy The conventional wisdom in lead management is that all leads have to be treated equally well. If this were actually the case, it is reasonable to assume that the current lead conversion rate of approximately 55 percent would be higher1. On the other hand, does every lead warrant “royal” treatment? An area of interest is to reveal the degree of difference in expectations when leads engage with automotive websites and in particular, with dealers. Practically speaking, interactions dealers have with leads often come down to a simple email response, or a phone call to field questions posed by the shopper. The more relevant these basic interactions are to the needs of the shopper, the better chance of a showroom visit and eventual purchase. It stands to reason that efforts to profile and detect differences among leads should be made. Synopsis As online leads reveal their Key Findings needs and interests when shopping for a new vehicle, In this study, a number of attributes were combined to produce a segmentation model finding and listening to these of the interviewed online lead population. Primary emphasis was placed on their pat- market cues is necessary to tern of communication when submitting leads and their expectations when interacting compete in a challenging U.S. with dealers and OEMs. In Figure 1, key attributes are listed that were used in the seg- automotive market. Since automakers and retailers con- mentation model, including the vehicle purchase information, attitudes about certain tinue to shift their advertising shopping and buying behaviors, Internet-based vehicle research behaviors, dealership expenditures to include a response and follow-up preferences, and dealership selection drivers. wider range of online media, intercepting these prospec- tive buyers requires disci- plined follow-through with Figure 1: these consumers to ensure Vehicle Purchase Drivers Brand effects Attributes Used In that lead marketing strategies Price and incentives Lead Segmentation are successful. Much of this Styling Model comes down to the type of Vehicle features information gathered on a lead and from the information Safety used to determine how to Warranty treat and communicate with Shopping and buying experience the different lead segments relevantly once an engage- Attitudinal Attitudes about driving ment with a dealer begins. Attitudes that drive vehicle consideration Shared findings and recom- Affinities with specific manufacturers mendations in this report General shopping behaviors from R. L. Polk & Co. were de- Expectations as shoppers rived from online interviews conducted in January 2008 Internet-Based Vehicle Specific automotive sites visited with 571 vehicle buyers in the Research Behavior Number of dealer web sites visited U.S. Interviewed respon- dents reflect a population Specific information submitted that bought or leased a new Specific information requested vehicle from a dealership Number of leads submitted between November 2007 and January 2008. It also includes Dealership Response and Method of communication those who visited an automo- Follow-up Preferences Response time tive website and provided their contact information Information content while researching a vehicle Satisfaction with dealership response online. Results reflect weight- Expectations of dealership response ed proportions based on U.S. Rate of purchase from a responding dealer distributions of age, income, ethnicity, and gender. Dealership Selection Drivers Previous relationship Quality of response Vehicle specific attributes Price and incentives Location Consumer Expectations for Internet Lead Marketing 3 © 2008 R. L. Polk & Co. All rights reserved. www.polk.com
    • Internet Lead Marketing MARKET STUDY Consumer Expectations for Seven segments of online leads were identified as noted in Figure 2. Looking across all of these segments, a few observations are worth noting: Drivers of vehicle choice have a high bearing on leads’ expectations when interact- ing with dealers; therefore, differentiating treatment of leads based on their own expectations seems like a sound business strategy. Elaborating on the above observation, perhaps it is not profitable to treat all leads “well”; not having a specific vehicle in inventory, or not being competitive on price are bigger turn-offs for certain leads than “poor” treatment. By the same token, apathetic shoppers (i.e., Segment 1) are not likely to convert into sales and dealers could derive more value by focusing on higher potential leads. First time buyers are a category worth identifying due to their high likelihood to purchase from a dealer who responds to their online lead. While responding to leads fast is definitely a good business practice, a large proportion of leads value the quality of the dealer response at least as highly as the speed of a response, if not higher. Leads that value response time more than information content tend to have a lower conversion rate than the ones that value information content the most. Results of this analysis imply communication strategies for each segment as noted in Figure 3. There are three segments that would not necessarily respond to a particular treatment. For example, shoppers in Segment 4 seeking a specific vehicle type are more sensitive to vehicle inventory than the way they are treated. Similarly, price shoppers in Segment 5 respond favorably to price quotes that are within their range. At the same time, apathetic shoppers in Segment 1, with no specific expectations, have a low likelihood to convert into a sale, and therefore should not be treated with high priority. Dealers should still respond to these apathetic shoppers with the requested informa- tion, but time is not of the essence with these buyers. Figure 2: Lead Segments 1 2 3 4 5 6 7 First Time Make Loyal First Time Specific Price Response Information Apathetic Information Response and Vehicle Buyers Time Buyers Content Buyers Buyers Content Buyers Content Buyers Buyers Apathetic High degree Large proportion Seek specific Buy Mostly Value shopping of loyalty, of first time vehicles, primarily value fast information behavior, low value quality buyers, value select dealer based on response time, content over incidence of of information both information based mostly price indifferent response time, purchase from received from quality and fast on inventory about content, high conversion a responding dealers response times low conversion rate when dealer rate treated properly Figure 3: Recommended 1 2 3 4 5 6 7 Communication First Time Make Loyal First Time Specific Price Response Information Strategies by Apathetic Information Response and Vehicle Buyers Time Buyers Content Buyers Segment Buyers Content Buyers Content Buyers Buyers Respond with Emphasize Respond to them Ensure you Treat It is important Provide them low priority information immediately; have the with low to respond with all the content; respond preferably call requested priority immediately, information as soon as them with all the vehicle in if you even if not they requested; possible, but do information they inventory; cannot all requested they prefer not compromise requested if not try to fall within information is email as the on content get it from their price available method of another range communication dealer Percentage of Segment Purchasing from a Responding Dealer (Average Purchase Rate = 62.6%) 47.2 61.3 83.2 55.5 59.8 58.5 74.6 Consumer Expectations for Internet Lead Marketing 4 © 2008 R. L. Polk & Co. All rights reserved. www.polk.com
    • Internet Lead Marketing MARKET STUDY Consumer Expectations for For the segments that value information content, including Segments 2, 3 and 7, it is crucial to avoid compromising the quality of information in order to simply get a response to them faster. Shoppers in these segments tend to be more forgiving with longer response times within reason if the delay ensures that the right information is being collected and conveyed. These three segments also had the highest rate of actu- ally buying their new vehicle from a dealer who responded to their online request for information and it is expected the quality of the response contributed to this positive behavior. On the other hand, for Response Time Buyers in Segment 6, it is important to respond to them immediately, even if not all the information is available at that point. Recommendations Applied Learnings In the end, the main purpose of lead segmentation has less to do with classifying leads into one of the seven specific segments discussed earlier, and more to do with reinforc- Based on the discussion of ing the point that not all leads have equal expectations when interacting with dealers segmenting online leads, below is a quick illustration of how their and OEMs. Given the wide range of expectations possessed by new vehicle shoppers, profiles can be used to prioritize it is sensible to make a stronger effort up front in order to better understand what dif- follow-up efforts among these ferentiates one lead from another and how this can yield higher sales conversion rates. populations: • If a lead is a first time buyer There are at least three pieces of significant information that leads share which allow and prefers email as their them to be placed into a category that is meaningful to an OEM or a dealer. These communication medium, include: they are more likely to be an apathetic buyer (Segment 1) and 1. Knowing if they are a first time buyer. therefore, should be treated with Identifying this disposition among a lead sends direct cues to a dealer that they lower priority. This will free up resources that can move on to have a new prospect in their funnel and that the potential to create positive brand other leads with higher scores, and retail experiences is more critical than ever. or other indicators favorable to a conversion. 2. Finding out the preferred communication method for follow-up opportunities. • On the other hand, if a first This is another controllable and personally-relevant factor to identify. Whether time buyer prefers phone as online (e.g., email, text messaging) or telephone contact are desired by the lead, their preferred contact method, make an effort to find out – 70 percent of the leads who purchased from dealers this lead is likely to be a First Time Response and Content who responded to their requests, were contacted via their preferred communication Buyer (Segment 3) and should method. be responded to immediately and with as much complete 3. Finding out an acceptable response time to an online request for information. information as is available. While certain OEMs and dealers implement operating standards on the response time they adhere to (including the use of “auto replies” in many lead management While the specific lead attributes noted in this example may not systems), responding promptly may not always be relevant to the lead. The fine always be available to marketing balance of responding relevantly and quickly is a challenge, but self-reported infor- managers, it underscores the need mation from the shopper can diminish the risk if more time is available to provide to collect and analyze robust, the most convincing or correct answer to a shopper’s questions. While nearly half online customer information in order to optimize sales follow-up (48.5%) of the interviewed leads in this study expected to be replied to within two behaviors that are relevant to the hours of submitting their request for information online, nearly 30 percent stated 10 buyer. to 48 hours was acceptable to them. Thus, identifying the response time expecta- tions when the lead is submitted may help to prioritize which leads to follow up on first. Consumer Expectations for Internet Lead Marketing 5 © 2008 R. L. Polk & Co. All rights reserved. www.polk.com
    • Internet Lead Marketing MARKET STUDY Consumer Expectations for Are First Time Buyers Worth Identifying? How Should They Be Approached? Relevancy Taking note of the earlier discussion, first time buyers certainly represent a fresh start for OEMs and their dealer network. The average age of a new vehicle first time buyer is 28 years old and by 2010, the U.S. expects to have approximately 21.4 million residents who will be between the ages of 25 and 29 years old. This represents over a 10 percent increase in this population between 2000 and 20102. These new entrants to the new vehicle market are potential future loyal customers. Furthermore, just under 10 percent of all new car and truck sales in the U.S. are sold to first time buyers with most of this segment buying compact SUVs, compact cars or full-size pickup trucks3. Applying this rate to 2007 U.S. sales figures reveals that first time buyers acquired nearly 1.6 million new vehicles. That volume is more than the total number of new passenger vehicles sold in India last year4. The OEM and dealer network response to online leads of this growing category are critical in making a positive, initial brand impression. Key Findings Better than four out of five (83%) first time buyers purchased from a dealership that responded to their online inquiry. Compare that with 73 percent of loyalists and 51 percent of defectors (Figure 4) and it can be seen why it is critical for retailers to identify them early in the lead submission process. It also raises the issue of not getting back with a lead who seeks information. First time buyers were almost 40 percent more likely to have their online request for information go unanswered than other buyers. This is unfortunate given the high purchase disposition represented by this consumer group. So what do first time buyers value? While price was cited as the single most impor- tant reason for selecting a dealership by all interviewed leads, first time buyers chose “response to their request for information” as the second most important factor in selecting a dealership. In contrast, experienced buyers only ranked this same attribute as their seventh (out of 13) most important dealership selection factor. This indicates the expectations first time buyers have when it comes to the interaction process before making a decision to even visit a retailer. 100% Figure 4: Percent of Leads Buying from a Responding Dealer 83% % Purchased from a Responding Dealer 80% 73% Loyalist Defector First Time Buyer * Respondents include those that received a response to 60% their submitted lead. 51% 40% 20% Consumer Expectations for Internet Lead Marketing 6 © 2008 R. L. Polk & Co. All rights reserved. www.polk.com
    • Internet Lead Marketing MARKET STUDY Consumer Expectations for Experiences among first time buyers reveal critical reviews on dealer feedback once an engagement began. When asked if a dealership they engaged with gave them the vehicle price information they requested, 12 percent of first time buyers disagreed or strongly disagreed (compared to five percent for experienced buyers). Additionally, the dealership’s response time has room for improvement among first time buyers as nine percent disagreed or strongly disagreed that the dealer replied in a desired time frame (versus two percent of experienced buyers that indicated similar negative ratings). It also appears that first time buyers prefer a response to their inquiry faster than experi- enced buyers. Of those first time buyers interviewed , 68 percent thought two hours or less was an acceptable amount of time to wait for a response compared to 39 percent for experienced buyers. Knowing which websites different leads visit is always of interest to those controlling media budgets and advertising placement decisions. Results from this study reveal that first time buyers are not as active on OEM and dealer sites compared to their activity with third party sites such as Yahoo! Autos.com and Cars.com (Figure 5). Studying these site visitation patterns among lead segments is healthy as it enables targeted messages to stand out to identified demographic groups. On average, leads reach out to three different websites during the shopping phase. So applying information gained from previous lead profiles gives automotive marketers an advantage. With any single lead seeking responses and content from multiple entities, the chances for lost opportuni- ties grow quickly. In the case of first time buyers, they appear to reciprocate positively by purchasing from a responding dealer when given proper attention. Figure 5: 60% Websites Where Leads Requested Information Loyalist 50% Defector First Time Buyer 40% % of Total Respondents 30% 20% 10% 0% om e m m ok s e o! rt sit sit .co .co ho Bo po s.c eb eb er ds Ya r Re ue W W Ca ad un Bl er er r. Tr m fg al m y to Ed lle M De su Au Ke n Co Consumer Expectations for Internet Lead Marketing 7 © 2008 R. L. Polk & Co. All rights reserved. www.polk.com
    • Internet Lead Marketing MARKET STUDY Consumer Expectations for Recommendations Know if a first time buyer is talking to you by identifying them up front in the lead col- lection process. Their expectations with the new vehicle buying process should not be taken lightly even though they share some basic response tactic needs with seasoned buyers. Using insights from the lead segmentation model presented earlier, one can envision that if a first time buyer is identified early and indicates phone as their pre- ferred communication medium, it may be a good practice to respond within two hours of receiving their inquiry to prevent them from moving on to another dealer. While this may not be a universal “rule” to adopt, it emphasizes the need to devise an optimal response model with this audience in order to build loyalty among a growing popula- tion entering the new vehicle market. What Type of Online Interaction Influences Brand Loyalty? Relevancy Overall loyalty rates for automotive brands have been steady over the last 12 model years with 44 percent of new vehicle owners staying with the same make (Figure 6). With the latest estimates for new vehicle sales expected to be 15.2 million for 2008, retaining existing owners is of the utmost importance to realize marketing efficiencies. Whether engagements with these owners are in the showroom, in a live chat session or over the telephone, impressing an audience that switches more than half of the time to a competing brand is always important. 50 Aggregate Brand Loyalty Rates Figure 6: Loyalty Rates Among 45 New U.S. Vehicle Owners 40 35 30 96 97 98 99 00 01 02 03 04 05 06 07 19 19 19 19 20 20 20 20 20 20 20 20 Model Year (Oct.–Sept.) Key Findings A significant finding in this study is that three controllable factors can drive nearly half of the influence on whether an online lead stays loyal to a brand or not (Figure 7). Based on their impressions of the overall shopping and sales experience, a manufacturer’s response to information requests and whether the seller was viewed as honest and trustworthy, these criteria are factors that emerge during the online vehicle shopping phase. Between these three issues, they represent 44 percent of the overall influence on brand loyalty or defection. Incentives 4% Warranty 4% Environmentally Friendly 5% Vehicle Features 3% Figure 7: Influence of Vehicle Manufacturer Response Selection Criteria to Information Request Monthly Payment 29% 8% on Predicting Brand Loyalty Road Handling/Maneuverability 11% Overall Shopping & Sales Experience 18% Seller Was Honest/ Trustworthy 18% Consumer Expectations for Internet Lead Marketing 8 © 2008 R. L. Polk & Co. All rights reserved. www.polk.com
    • Internet Lead Marketing MARKET STUDY Consumer Expectations for While positive experiences with certain shopping criteria are keen predictors of repeat sales, satisfaction plays an integral role in the loyalty of online leads as well. In this study, satisfaction with pricing information and response time were found to positively influ- ence make loyalty at significant levels5. For example, an improvement of 0.5 points (on a 1 to 5 scale where 1 is least satisfied and 5 is most satisfied) in satisfaction with pricing information translates into an improvement of 3.4 percentage points in make loyalty (Figure 8). Coincidentally, the same improvement in make loyalty can be attained by an increase of 0.5 points in satisfaction with dealership response time (Figure 9). One implication from these findings: current customer satisfaction measures used by automakers and dealers can be applied to online shopping engagements as a way of understanding how the dialogue went earlier. If improved satisfaction scores indicate a higher likelihood of the lead being loyal, it may be wise to employ existing measure- ment tools in this environment for the benefit of maximizing loyalty behavior. 45% 45% 40% 40% 35% 35% 30% 30% % Make Loyalty % Make Loyalty 25% 25% 20% 20% 15% 15% 10% 10% 5% 5% 0% 0% 1 1.5 2 2.5 3 3.5 4 4.5 5 1 1.5 2 2.5 3 3.5 4 4.5 5 1–5 Scale - Satisfaction with Pricing Information 1–5 Scale - Satisfaction with Response Time Figure 8: Figure 9: Relationship between Relationship between Satisfaction with Price Satisfaction with Response Information and Make Time and Make Loyalty Loyalty Recommendations Pricing, response time and the impressions made while interacting with a shopper are important and recurring themes that certainly influence the chances for making a sale. In the case of maximizing repeat sales among gathered leads, these business planning questions should be considered: Can you find out if leads were past customers? Is it feasible to qualify this fact at the moment the lead hits a CRM system? And if it cannot be verified via database inte- gration efforts, it is feasible that this may be a worthwhile question to ask the lead directly once a dialogue begins? Is there value in measuring customer satisfaction among online shoppers? Programs focusing on tracking (and rewarding) satisfaction exist today for new and used vehicle customers and for service customers. If certain attributes from existing sat- isfaction metrics can help influence business behavior that leads to positive loyalty outcomes, these should be explored. Consumer Expectations for Internet Lead Marketing 9 © 2008 R. L. Polk & Co. All rights reserved. www.polk.com
    • Internet Lead Marketing MARKET STUDY Consumer Expectations for Paying Attention to the Basics So far the discussion has focused on how leads differ in their needs, the opportunity to communicate uniquely to each audience, the opportunity to qualify and pay more at- tention to first time buyers, and on strategies to strengthen owner loyalty. Yet all of this is purely speculative if certain basics are not fully adopted by retailers and automotive marketing managers. There are some basic truths for marketing to online automotive leads. From this body of research, much of what has been discussed converges to three fundamental issues which relate to: 1) Vehicle pricing information 2) The communication medium and timing practices used for responses 3) The expected quality of shared communication from a dealer or responding party “Price is King” New vehicle buyers submit an average of three leads during the online vehicle shop- ping process. In doing so, they consistently request four pieces of information: Price Availability of a specific vehicle Available incentives or discounts Available vehicle specifications While price was requested by three out of four leads (74%), access to the vehicle’s price information was rated the most important item when determining which dealership to purchase a vehicle from. Despite the importance of price information, recent studies re- veal that only one out of four dealers answered questions about vehicle availability and price6. Including price in the initial response helps increase satisfaction with the lead follow-up process, yet this item of interest can mean many things. Among price factors explored in this study, the model’s actual purchase price range rated higher than the dealer invoice price or MSRP (manufacturer suggested retail price) for all buyer groups including first time buyers, loyalists and defectors (Figure 10). Together with the earlier finding of how satisfaction with shared price information may positively influence brand loyalty, a more wide-spread adoption of price transparency with vehicle buyers would be of benefit. As one audience member from an April 2008 Polk Automotive Intelligence Summit stated, “If I don’t give price information to the customer, I’m automati- cally viewed as the highest priced guy in town.” 4.1 Figure 10: Importance Ratings for Pricing Informa- 4.0 tion 1 – 5 Scale - Level of Importance 3.9 3.8 Loyalist Defector 3.7 First Time Buyer 3.6 3.5 1 = Not at all important 5 = Extremely important 3.4 3.3 Model Dealer MSRP Purchase Invoice Price Price Range Consumer Expectations for Internet Lead Marketing 10 © 2008 R. L. Polk & Co. All rights reserved. www.polk.com
    • Internet Lead Marketing MARKET STUDY Consumer Expectations for “Talk To Me My Way” Accommodating the lead’s preferred communication medium can have an impact on sales. Respondents who were contacted via their preferred communication medium purchased from a responding dealership 70 percent of the time. Email was overwhelm- ingly the most requested medium for responding to online leads with 63 percent of respondents requesting this form of response (Figure 11). However, only 52 percent of respondents received an email reply from the dealership that they purchased their ve- hicle from. Not surprising, a phone call was the next preferred method of communica- tion at 26 percent, yet 40 percent received an answer to online inquiries in this manner. With 83 percent of respondents telling dealers how they want to be contacted, there should be no excuses for ever missing the opportunity to communicate in the manner desired. Figure 11: 70% Preferred Communi- cation Media Among Online Leads 60% % of Total Respondents 50% 40% 30% 20% 10% 0% Email Phone Mail Fax Other Loyalist Defector First Time Buyer The preferred communication medium can also help provide insights into response time tolerances. Of respondents who preferred an email response, 47 percent viewed 10-24 hours as an acceptable response time, while 68 percent of respondents who preferred a phone response viewed one hour or less as an acceptable response time. Collecting information from leads on what represents an acceptable response time can be useful in gauging the segment a lead is very likely to belong to and consequently can help prioritize lead follow up instead of a first-in-first-out methodology. In general, the speed of response is important in closing a sale with an online lead. How fast is fast enough? While many standards exist, dealers should target five hours or less because respondents were less likely to purchase from a responding dealership with a response time greater than five hours. Related to this point, dealers appear to be target- ing a faster response time and have improved their response behavior in recent years. In the 2007 Dealer eBusiness Performance Study, the dealer response time average had dropped from 6.5 hours in 2005 to 5.4 hours in 2007. What happens if a lead feels they are not replied to quickly enough? In Capgemini’s Cars Online 07/08 global study, it was revealed that half of the consumer respondents would look for another dealer if responses to their questions took too long. An additional 25 percent of the respondents in that study indicated they would look for a new manufacturer or both a new manu- facturer and dealer with delayed responses to web inquiries7. Consumer Expectations for Internet Lead Marketing 11 © 2008 R. L. Polk & Co. All rights reserved. www.polk.com
    • Internet Lead Marketing MARKET STUDY Consumer Expectations for “Content Really Matters” Based on the earlier lead segmentation model, most consumers are more likely to purchase from a responding dealer when they are satisfied with the content of the response to their online inquiries. In Figure 12, importance levels8 that rate the content of a dealer’s response are compared to how fast leads received the response from a dealer. This information is broken down by the seven lead segments. As can be seen below, the segments placing a higher degree of importance on content are the First Time Response and Content Buyers (Segment 3) and Content Specific Buyers (Segment 7)9. Of these two segments, those in Segment 3 preferred a relatively quicker response time. Yet both of these segments purchase at relatively higher rates from a responding dealer compared to all other segments. On the other hand, segments that had lower importance ratings on dealer response content exhibited lower purchase rates from a dealer who eventually replied to them. Response Time Buyers (Segment 6) provide the best example of this behavior. Even though they prefer a relatively quicker dealer response, they display the lowest impor- tance rating on content and they exhibited a below average purchase rate. Figure 12: Importance with % Purchasing from a Responding Dealer Response Content, 47.2% 61.3% 83.2% 55.5% 59.8% 58.5% 74.6% Preferred Response 5 “Slower” Time and Dealer Purchase Rates 4 Importance 3 of Content Preferred 1 = Not at all important Response 5 = Extremely important Time 2 1 “Faster” 0 1 2 3 4 5 6 7 First Time Make Loyal First Time Specific First Time Response Content Apathetic Content Response & Vehicle Price Time Specific Buyers Buyers Content Buyers Buyers Buyers Buyers Buyers Overall, much of what leads expect tie back to “what, how, and when.” Knowing which leads want what information is half of the battle in optimizing a brand’s or dealer’s relevancy to the shopper. Knowing how they want to be addressed adds another layer of practical and tailored behavior that can increase the chances of closing a sale with online leads. Unfortunately, knowing something and acting on expressed desires are not always in tandem. It is expected that those capitalizing on cues shared by automo- tive leads will punish those who ignore expectations that are available and willingly voiced in the marketplace. Consumer Expectations for Internet Lead Marketing 12 © 2008 R. L. Polk & Co. All rights reserved. www.polk.com
    • Internet Lead Marketing MARKET STUDY Consumer Expectations for Conclusions This study uncovers the heterogeneity in the automotive lead population in terms of expectations from the interaction with OEMs and dealers once they submit themselves into the lead process. It suggests that there is no universal recipe in dealing with sales leads. While it is always helpful to reach leads as soon as possible with the right infor- mation, it is highly important to avoid holding back information from leads which they have requested. Particularly sensitive to leads is the vehicle price information that is requested by the vast majority of this population. It is also important to emphasize that it is not always profitable to treat all leads with high priority. Also, by collecting minimal additional information from leads, one can formulate a better hypothesis about the expectations of the leads in their shopping process. The study has found that, when leads’ expectations are met by dealers, purchase rates can be higher than average and buyers tend to be more loyal. These findings uncover opportunities for both OEMs and dealers to improve their lead management processes in order to meet a demanding and growing body of customer expectations. About R. L. Polk & Co. R. L. Polk & Co. is the premier provider of automotive information and marketing solutions. Polk collects and interprets global data, and provides extensive automo- tive business expertise to help customers understand their market position, identify trends, build brand loyalty, conquest new busi- ness and gain a competi- tive advantage. Polk helps automotive manufacturers and dealers, automotive aftermarket companies, finance and insurance companies, advertising agencies, media companies, consulting organizations, government agencies and market research firms make good business decisions. A privately held global firm, Polk is based in Southfield, Michigan with operations in Australia, Canada, China, France, Germany, Japan, Spain, the United Kingdom and the United States. For more information, please visit www.polk.com. Consumer Expectations for Internet Lead Marketing 13 © 2008 R. L. Polk & Co. All rights reserved. www.polk.com
    • Internet Lead Marketing MARKET STUDY Consumer Expectations for Endnotes 1 Cobalt, Yahoo!, R. L. Polk & Co. “The 2007 Dealer eBusiness Performance Study: The New Buying Influences”, 14. 2 Retrieved May 12, 2008 from www.census.gov/population/projections/52PyrmdUS1.xl. 3 CNW Marketing Research, Inc. Based on those buying a vehicle for themselves for the first time. 4 R. L. Polk & Co. Approximately 1.5 million passenger vehicles were sold in India during 2007. 5 While controlling for other shopping criteria and dealership selection drivers (such as the previous purchase from the dealership, dealership location etc.). 6 Cobalt, Yahoo!, R. L. Polk & Co. “The 2007 Dealer eBusiness Performance Study: The New Buying Influences”, 18. 7 Capgemini (2007) “Cars Online 07/08: Responding to Changing Consumer Trends and Buying Behaviour”, 19. 8 Ratings measured the importance of various content-focused attributes that a dealer- ship could provide to a lead once a dealer received a web inquiry. 9 During the development of the lead segmentation model, this importance factor was used to help define certain segments. Thus the name given to Segments 3 and 7 par- tially reflects their emphasis on this factor. Consumer Expectations for Internet Lead Marketing 14 © 2008 R. L. Polk & Co. All rights reserved. www.polk.com