Automotivation: Dealers' Online Sales Zoom
The Internet is becoming an important sales channel for car dealerships, and as a result, dealers continue to increase their online advertising budgets. As dealers up their Internet usage to sell cars, their expectations go beyond generating leads, according to a new report from Jupiter Research. Dealers are seeking partners that provide them with high-quality leads that will turn into sales.
The percentage of dealers generating more than 10 percent of their new car sales from online leads increased from 15 percent in 2004 to 38 percent in 2006, according to the report. Generating higher sales from the Internet requires dealers to purchase a higher number of leads and to have sources in place to convert these leads into sales.
"A couple of years ago, most dealers were waiting on the sidelines, waiting for third-party companies to provide them with leads," says Belis Aksoy, associate analyst for Jupiter Research. Many of those dealerships are still relying on third-party leads, but an increasing number are expecting partners to provide high-quality leads from automobile marketing sites (firms like Autobytel, AutoTrader, and cars.com), and from partners like Kelly Blue Book and MSN.
About 60 percent of online users who have purchased a vehicle within the past year use the Internet to research their next auto purchase, according to Aksoy, and about half of the prospects go to third-party providers to start their searches; the other half go directly to dealer Web sites. Internet leads are only the initial part of the sales process, however, according to Aksoy. Even with better quality leads the dealership's success still comes down to negotiating price (total price or monthly payments) with the prospects.
Autobytel and its peers are also expecting more from their dealer partners, Aksoy says. "They are checking with the dealerships to ensure that they contact prospects within six hours. If they don't, [Autobytel and similar companies] drop the dealerships."
Dealers and their partners are doing a better job of getting more detailed option information (e.g., colors) from prospects so that dealers can customize their offerings, according to Aksoy. Third-party providers are supplying higher quality leads, in part, because they're doing a better job of scrubbing data to ensure that phone numbers, names, addresses, and other information about prospects is correct. Aksoy says, "It's all about sending the dealers good quality leads."
The next step will be adding consumer feedback to dealer sites, according to Aksoy. Consumer feedback, which only a very small number of auto dealership sites collect at present, will enable prospects to view opinions of dealership customers about their experience. This will help the prospect decide between dealerships that have similar vehicles and prices.
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