One Dealer's Flub Is Another's Catch

Of the Internet leads that dealers receive — whether they come from their own websites, manufacturers or third-party lead providers — 56% result in a sale.

But of that percentage of online buyers, 92% buy from a different dealership than the one the original lead went to. Some dealerships are losing a lot of potential sales online.

That's according to a recent study by the Cobalt Group, an online marketing and website provider for the auto industry.

Over a 15-month period, Cobalt evaluated more than 1 million leads sent to 1,329 dealerships. R.L. Polk used its data to match those leads to actual sales.

The study also shows 76% of the opportunities lost by dealerships initially contacted bought either a new vehicle of another brand or a used vehicle. The remaining 24% purchased the intended make.

So not only are some dealers losing sales, they are losing them to another brand.

There are things dealers can do to keep Internet buyers from going elsewhere.

Much of it has to do with the quality of a dealer's response to a lead.

Dealers are doing a better job responding to leads faster, according to mystery-shopping metrics developed by Cobalt.

Nearly 70% of leads sent in 2005 received a response from a dealership, up from 60% in 2004. This is the biggest one-year jump since Cobalt began its mystery shopping. The metrics also show response times have declined from 9.5 hours in 2004 to 6.5 hours in 2005.

Less encouraging is this: A Friedman-Swift Associates survey says 92% of all e-mail leads to dealerships ask two questions: “Do you have this vehicle?” and “What price can you sell it to me for?” But Cobalt says only 26% of the responses actually answered those questions. That is down from 38.2% in 2004.

Kevin Root, vice president and general manager of Cobalt's Dealer Advisory Services division, says many dealers are afraid to give a price because they think doing so takes the negotiating leverage out of their hands.

“But if you don't provide the price, you are going to lose that customer,” he says.

According to the survey, 39% of the customers that bought from the original dealership they contacted did so because the price was competitive.

“It doesn't have to be a cheap price,” Root says. “It only has to be competitive.”

Michael Waldrop, Internet manager for the Asbury Automotive Group's Coggin Honda, ranked 34th on this year's Ward's e-Dealer 100, believes if he does not give a price, his price automatically becomes the highest in the customer's mind.

Root says another mistake dealers make is thinking shoppers who have sent a purchase request to a dealership, either through a third-party vendor or by e-mail, have made up their minds about a vehicle.

That runs counter to the Cobalt study indicating that 76% of the customers bought a different vehicle than the one originally intended.

The solution? Provide more information on more vehicles and give the customer a choice.

“The more lines you put into the water, the more chance you have of reeling customers in,” Root says. He suggests providing links to any articles that tout the vehicle the customer is asking about.

“The more information, the better,” he says. Even if the customer sends a lead inquiring about a new vehicle, dealers should provide information on used vehicles.

Also, e-mails should include multiple ways for the customer to contact the dealership.

According to the study, the longer customers take to close, the more likely they are to purchase a used vehicle.

Root also thinks dealerships should telephone within a few minutes of sending the first e-mail response, which is different than what he was saying a few years. Before, Cobalt's thinking was to engage customers using e-mail because that is what they wanted.

Root now realizes getting customers on the phone is critical to getting them into the dealership. One way dealers can call without being obtrusive is to ask if they received the e-mail, using spam-blocking filters as a reason to inquire.

Other dealers suggest calling the customer to provide additional information about the vehicle or financing options.

Dealers also should employ aggressive follow-up strategies. Within the first 30 days, 42% of the leads become sales, while 68% turn into sales within 90 days.

Says Waldrop: “The quicker you respond, the longer you follow-up, and the more cars you'll sell.”

Cobalt Study's Top Performers