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By Richard Greene, AR NewsMagazine Editor May 29, 2007 MINNEAPOLIS — The speed with which a dealership responds to a potential buyer's request for vehicle information plays a critical role in a customer's initial perception of a dealership and whether a shopper may purchase the vehicle from that dealership or from a competitor, according to a new study by Outsell LLC. Outsell recently released its third installment in a series of iBase research studies into consumer car-purchasing habits. "In today's ‘data on-demand' climate, it's all about who can provide consumers with the fastest response to their information requests," noted Outsell Chief Executive Officer Mike Wethington. "Dealers who stall in responding to these requests are missing out on a lot of business. "Offering a fast and efficient purchasing process affects the likelihood of a consumer returning to the dealership," Wethington added. "Knowledgeable floor sales staff, transparent pricing and good overall customer service is the key to not only ensuring a single purchase, but also encouraging future purchases and advocacy from the customer." According to Sahil Merchant, Outsell's research analyst, the study's findings were based on two different e-mail surveys conducted in March among nearly 1,000 consumers drawn from dealership lists among those served by the company. This produced a confidence level of 95 percent and a 3.8 percent margin of error, Merchant reported. Merchant said the significance of the findings was underscored by Outsell's market position as a leading Internet automotive sales and marketing company. He pointed out that Outsell drives 16,000 consumer interactions per day for more than 300 dealers, who represent every major auto manufacturer. Outsell has also experienced 300 percent revenue growth for each of the last two years, Merchant added. Insights gleaned from the study, Merchant said, included: —91.4 percent of consumers say they will search online and 82.5 percent will submit a request via phone or e-mail prior to coming into an actual dealership to purchase a vehicle. And, 80.3 percent of consumers contact multiple dealers in their search for a vehicle, so the initial perception of a dealership is extremely important. —92 percent of consumers stated that the speed of a dealer's response to an information request affects the perception of a dealership and the likelihood of purchase. And, 74.3 percent also said it affects the likelihood of purchasing a particular brand. —Consumer interest in purchasing a vehicle from a dealership rapidly decreases if the dealer does not respond to an information request. And, in three hours, 60 percent of consumers have lost a degree of interest in purchasing from the dealership; in 12 hours that number rises to 76 percent. —90 percent of consumers would prefer to complete their shopping experience at the dealership in two hours or less. And, having a fast purchase process affects the likelihood of a consumer returning to the dealership, as well as the perception and future purchase decision for the brand. "Getting back to customers is very, very important. It's the image of the dealership," Merchant pointed out. "The fact that 80 percent of people are going to contact multiple dealerships means that as soon as consumers submit their request to a dealership, they are already in competition with other dealerships for that customer's business," Merchant said. "As a result, a dealership must get back to the consumer as quickly as possible. That sounds simple, but in the auto industry, we have found that many dealerships don't get back to customers very fast at all." Merchant acknowledged that dealerships are being bombarded for information from numerous directions, over the phone, via the Internet, from e-mails and even during live chats. "Dealerships can have a large in-bound flow of leads, and many tend to cherry-pick those leads to an extent," he explained. "But they are leaving money on the table because many consumers will go somewhere else. "So, in some respects, speed is money because if you move too slow and don't contact the consumer quickly, you are going to lose that consumer and lose that sale to a different dealership in your area," Merchant noted. "If your dealership provides a fast experience as well as great customer service, consumers are going to want to come to you and come back for future sales, as well as refer you to family and friends," he elaborated. "And we've found that this builds consumer confidence and consumers will want to pay a little bit more to be confident of the place they're purchasing from because buying a car is such a big purchase." Key recommendations from the study, Merchant said, included the following: —Dealers should provide consumers with information-rich Web sites with multiple photos of vehicles, as well as a robust Internet sales channel that allows customers to quickly get answers to their queries. —A fast response to consumer queries is essential, as the initial contact with a consumer will shape the consumer's perception of the dealership and the brand. An organizational culture of speed and responsiveness to customer needs should be created at all potential consumer touch-points from the manufacturer level on down to the floor-sales staff at a dealership. —Offer a fast and efficient experience at the dealership. Knowledgeable floor sales staff, transparent pricing and good overall customer service is the key to not only ensuring a single purchase, but also encouraging future purchases and advocacy from the customer. —Many customers will pay extra for a great experience. Aside from regular customer service, special incentives such as home delivery for free vehicle test drives will set a dealership apart in its market and encourage customers to shop there. "By moving toward these best practices, we believe consumers will be better served and dealers will make higher profits," Merchant noted. Merchant also said that many larger dealerships are establishing business development centers to field information queries and to get back quickly with answers to their questions and to set up appointments at the dealership. "This concept is increasingly gaining greater traction," he commented. But for those smaller stores that cannot afford to set up their own in-house BDC operation, Merchant said hiring out that service to a company such as Outsell affords the dealership the chance to keep up with the rapid pace in which information requests come. "When we present dealerships with hard evidence that the BDC system works and also case studies about dealers who are already using one, we find that more and more dealerships are willing to go this important route," Merchant said. "As a result, consumers are contacted quickly, critical speed is maintained and sales staff out on the dealership lot are freed up to deal with floor-sale customers and actually close deals," he concluded. |
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