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May 2008 © 2008 R. L. Polk & Co. All rights reserved. www.polk.com MARKET STUDY Consumer Expectations for Internet Lead Marketing
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Rl Polk Automotive Consumer Expectations

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Rl Polk Automotive Consumer Expectations
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Page 1: Rl Polk Automotive Consumer Expectations

May 2008© 2008 R. L. Polk & Co. All rights reserved. www.polk.com

MARKET STUDY

Consumer Expectations for Internet Lead Marketing

Page 2: Rl Polk Automotive Consumer Expectations

MARKET STUDY

Consumer Expectations for Internet Lead Marketing 1© 2008 R. L. Polk & Co. All rights reserved. www.polk.com

Executive BriefChanging 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 unidentifi ed prospect to hand raiser is tricky at best; these information savvy consumers are initially anonymous, direct and in command.

From an automaker or dealer point of view, engaging with potential buyers should always be tempered with an understanding of what the consumer wants at the time they make themselves known. And in cases where buyers ask to be contacted to speed up the sales cycle, paying close attention to their needs can result in selling one more unit that month or not. Thus, lead marketing, and specifi cally managing online leads, has been an area of growing interest to the automotive industry.

This study, conducted by R. L. Polk & Co., reveals critical insights useful for automotive brand managers and retail managers as they strive to convert a growing base of Inter-net online leads into new vehicle buyers. Findings in this study will help automotive communities better understand the unique preferences among online leads and the follow up tactics which impact subsequent purchase behavior. Specifi cally, the follow-ing questions are explored:

How do leads diff er based on need? Are fi rst time buyers worth identifying and how should they be approached? What types of online interaction infl uences brand loyalty?

Topline fi ndings from this investigation follow.

What You Should Know

Leads can, and should be, treated uniquelySeven distinct segments of leads were identifi ed based on the specifi c input shoppers submitted to OEMs, dealers or third party sites when requesting new vehicle informa-tion online. The information contained in these segments illustrates how leads can be communicated to diff erently to increase shopper satisfaction and potentially increase brand and dealer sales. Two segments in particular were found to purchase from dealers that responded to their online request for information at above average rates compared to the total population. Among other factors, lead attributes tied to these two segments relied heavily on receiving high quality content from a dealer when web inquiries were made.

First time buyers are worth identifyingGiven the importance of developing new relationships with a customer, fi rst 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 fi rst 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 fi rst time buy-ers to their dealer showrooms.

Consumer Expectations for Internet Lead Marketing

About the Authors

LONNIE MILLER is theDirector of Industry Analysis with R. L. Polk & Co. With over 17 years of consulting and research experience, he focuses on examining underlying issues driving automotive market and consumer behavior trends in the U.S. and other global regions.

DAN ZETU is an Analytic Consultant with R. L. Polk & Co., focusing on implementing advanced solutions that solve critical marketing problems. Dan has developed market segmentations, in-market and loyalty scoring models and conducted product development optimization and consumer behavior studies in a variety of industries, including the automotive, pharmaceutical, fi nance and insurance sectors.

MARGARET ZEWATSKY is a Global Market Analyst with R. L. Polk & Co. and focuses on identifying market trends that aid in the development of new services for Polk’s global automotive clientele. Margaret has led multiple cross-functional teams on key global initiatives and is seasoned in new product development and product management.

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Consumer Expectations for Internet Lead Marketing 2© 2008 R. L. Polk & Co. All rights reserved. www.polk.com

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Loyalty can be infl uenced among online leadsWhen predicting whether a lead will be loyal to a brand (e.g., Chevrolet, BMW, Nissan), three factors accounted for 44 percent of the overall infl uence 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 refl ect 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 whenLeads 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 aff ord 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 phone indicate one hour or less as an acceptable time frame to receive a response.

This summary provides only a few of the themes revealed in the study Consumer Expectations for Internet Lead Marketing. The additional fi ndings and recommendations that follow are intended to enable automotive brand, dealer and Internet marketing managers to improve their engagement, measurement and business expectations when nurturing online leads in the new vehicle market.

How the Studywas Conducted

In January 2008, online inter-views were conducted with 571 vehicle buyers in the U.S. that bought or leased a new car or truck from a dealership between November 2007 and January 2008. Qualifi ed respondents visited an auto-motive website and provided their contact information online while researching a vehicle online. Results refl ect weighted proportions based on U.S. distributions of age, income, ethnicity, and gender.

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Consumer Expectations for Internet Lead Marketing 3© 2008 R. L. Polk & Co. All rights reserved. www.polk.com

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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 diff erence 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 fi eld 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 eff orts to profi le and detect diff erences among leads should be made.

Key Findings

In this study, a number of attributes were combined to produce a segmentation model of the interviewed online lead population. Primary emphasis was placed on their pat-tern of communication when submitting leads and their expectations when interacting with dealers and OEMs. In Figure 1, key attributes are listed that were used in the seg-mentation model, including the vehicle purchase information, attitudes about certain shopping and buying behaviors, Internet-based vehicle research behaviors, dealership response and follow-up preferences, and dealership selection drivers.

Figure 1:Attributes Used InLead SegmentationModel

Vehicle Purchase Drivers Brand eff ectsPrice and incentivesStylingVehicle featuresSafetyWarrantyShopping and buying experience

Attitudinal Attitudes about drivingAttitudes that drive vehicle considerationAffi nities with specifi c manufacturersGeneral shopping behaviorsExpectations as shoppers

Internet-Based Vehicle

Research Behavior

Specifi c automotive sites visitedNumber of dealer web sites visitedSpecifi c information submittedSpecifi c information requestedNumber of leads submitted

Dealership Response and

Follow-up Preferences

Method of communicationResponse timeInformation contentSatisfaction with dealership responseExpectations of dealership responseRate of purchase from a responding dealer

Dealership Selection Drivers Previous relationshipQuality of responseVehicle specifi c attributesPrice and incentivesLocation

Synopsis

As online leads reveal their needs and interests when shopping for a new vehicle, fi nding and listening to these market cues is necessary to compete in a challenging U.S. automotive market. Since automakers and retailers con-tinue to shift their advertising expenditures to include a wider range of online media, intercepting these prospec-tive buyers requires disci-plined follow-through with these consumers to ensure that lead marketing strategies are successful. Much of this comes down to the type of information gathered on a lead and from the information used to determine how to treat and communicate with the diff erent lead segments relevantly once an engage-ment with a dealer begins.

Shared fi ndings and recom-mendations in this report from R. L. Polk & Co. were de-rived from online interviews conducted in January 2008 with 571 vehicle buyers in the U.S. Interviewed respon-dents refl ect a population that bought or leased a new vehicle from a dealership between November 2007 and January 2008. It also includes those who visited an automo-tive website and provided their contact information while researching a vehicle online. Results refl ect weight-ed proportions based on U.S. distributions of age, income, ethnicity, and gender.

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Consumer Expectations for Internet Lead Marketing 4© 2008 R. L. Polk & Co. All rights reserved. www.polk.com

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Seven segments of online leads were identifi ed 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, diff erentiating treatment of leads based on their own expectations seems like a sound business strategy.

Elaborating on the above observation, perhaps it is not profi table to treat all leads “well”; not having a specifi c vehicle in inventory, or not being competitive on price are bigger turn-off s 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 defi nitely 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 specifi c 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 specifi c 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.

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Make Loyal Information

Content Buyers

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Content Buyers

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Specifi c VehicleBuyers

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InformationContent Buyers

Apathetic shopping behavior, low incidence of purchase from a responding dealer

High degree of loyalty, value quality of information received from dealers

Large proportion of fi rst time buyers, value both information quality and fast response times

Seek specifi c vehicles, select dealer based mostly on inventory

Buy primarily based on price

Mostly value fast response time, indiff erent about content, low conversion rate

Value information content over response time, high conversion rate when treated properly

Figure 2:Lead Segments

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Content Buyers

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Content Buyers

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InformationContent Buyers

Respond with low priority

Emphasize information content; respond as soon as possible, but do not compromise on content

Respond to them immediately; preferably call them with all the information they requested

Ensure you have the requested vehicle in inventory; if not try to get it from another dealer

Treat with low priority if you cannot fall within their price range

It is important to respond immediately, even if not all requested information is available

Provide them with all the information they requested; they prefer email as the method of communication

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

Figure 3:Recommended Communication Strategies by Segment

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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

In the end, the main purpose of lead segmentation has less to do with classifying leads into one of the seven specifi c segments discussed earlier, and more to do with reinforc-ing the point that not all leads have equal expectations when interacting with dealers and OEMs. Given the wide range of expectations possessed by new vehicle shoppers, it is sensible to make a stronger eff ort up front in order to better understand what dif-ferentiates one lead from another and how this can yield higher sales conversion rates.

There are at least three pieces of signifi cant information that leads share which allow them to be placed into a category that is meaningful to an OEM or a dealer. These include:

1. Knowing if they are a fi rst time buyer. Identifying this disposition among a lead sends direct cues to a dealer that they

have a new prospect in their funnel and that the potential to create positive brand and retail experiences is more critical than ever.

2. Finding out the preferred communication method for follow-up opportunities. This is another controllable and personally-relevant factor to identify. Whether online (e.g., email, text messaging) or telephone contact are desired by the lead, make an eff ort to fi nd out – 70 percent of the leads who purchased from dealers who responded to their requests, were contacted via their preferred communication method.

3. Finding out an acceptable response time to an online request for information.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 systems), responding promptly may not always be relevant to the lead. The fi ne balance of responding relevantly and quickly is a challenge, but self-reported infor-mation from the shopper can diminish the risk if more time is available to provide the most convincing or correct answer to a shopper’s questions. While nearly half (48.5%) of the interviewed leads in this study expected to be replied to within two hours of submitting their request for information online, nearly 30 percent stated 10 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 fi rst.

Applied Learnings

Based on the discussion of segmenting online leads, below is a quick illustration of how their profi les can be used to prioritize follow-up eff orts among these populations:

• If a lead is a fi rst time buyer and prefers email as their communication medium, they are more likely to be an apathetic buyer (Segment 1) and therefore, should be treated with lower priority. This will free up resources that can move on to other leads with higher scores, or other indicators favorable to a conversion.

• On the other hand, if a fi rst time buyer prefers phone as their preferred contact method, this lead is likely to be a First Time Response and Content Buyer (Segment 3) and should be responded to immediately and with as much complete information as is available.

While the specifi c lead attributes noted in this example may not always be available to marketing managers, it underscores the need to collect and analyze robust, online customer information in order to optimize sales follow-up behaviors that are relevant to the buyer.

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Are First Time Buyers Worth Identifying?How Should They Be Approached?Relevancy

Taking note of the earlier discussion, fi rst time buyers certainly represent a fresh start for OEMs and their dealer network. The average age of a new vehicle fi rst 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 fi rst 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 fi gures reveals that fi rst 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 fi ve (83%) fi rst 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 fi rst time buyers value? While price was cited as the single most impor-tant reason for selecting a dealership by all interviewed leads, fi rst 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 fi rst time buyers have when it comes to the interaction process before making a decision to even visit a retailer.

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LoyalistDefectorFirst Time Buyer

* Respondents include those that received a response to their submitted lead.

Figure 4:Percent of Leads Buying from a Responding Dealer

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Experiences among fi rst 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 fi rst time buyers disagreed or strongly disagreed (compared to fi ve percent for experienced buyers). Additionally, the dealership’s response time has room for improvement among fi rst 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 fi rst time buyers prefer a response to their inquiry faster than experi-enced buyers. Of those fi rst 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 diff erent leads visit is always of interest to those controlling media budgets and advertising placement decisions. Results from this study reveal that fi rst 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 identifi ed demographic groups. On average, leads reach out to three diff erent websites during the shopping phase. So applying information gained from previous lead profi les 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 fi rst time buyers, they appear to reciprocate positively by purchasing from a responding dealer when given proper attention.

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Figure 5:Websites Where Leads Requested Information

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Recommendations

Know if a fi rst 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 fi rst time buyer is identifi ed 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 Infl uences 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 effi ciencies. 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.

Aggregate Brand Loyalty Rates

Key Findings

A signifi cant fi nding in this study is that three controllable factors can drive nearly half of the infl uence 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 infl uence on brand loyalty or defection.

Vehicle Features 3%Warranty 4%Incentives 4%

Environmentally Friendly 5%

Manufacturer Responseto Information Request

8%

Road Handling/Maneuverability 11%

Overall Shopping &Sales Experience

18%

Seller Was Honest/ Trustworthy18%

Monthly Payment 29%

Figure 6:Loyalty Rates Among New U.S. Vehicle Owners

Figure 7:Infl uence of Vehicle Selection Criteria on Predicting Brand Loyalty

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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 infl u-ence make loyalty at signifi cant levels5. For example, an improvement of 0.5 points (on a 1 to 5 scale where 1 is least satisfi ed and 5 is most satisfi ed) 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 fi ndings: 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 benefi t of maximizing loyalty behavior.

Recommendations

Pricing, response time and the impressions made while interacting with a shopper are important and recurring themes that certainly infl uence 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 fi nd 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 verifi ed via database inte-gration eff orts, 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 infl uence business behavior that leads to positive loyalty outcomes, these should be explored.

Figure 8:Relationship between Satisfaction with Price Information and Make Loyalty

Figure 9:Relationship between Satisfaction with Response Time and Make Loyalty

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1–5 Scale - Satisfaction with Pricing Information

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Paying Attention to the BasicsSo far the discussion has focused on how leads diff er in their needs, the opportunity to communicate uniquely to each audience, the opportunity to qualify and pay more at-tention to fi rst 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 responses3) 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 specifi c vehicle Available incentives or discounts Available vehicle specifi cations

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 fi rst time buyers, loyalists and defectors (Figure 10). Together with the earlier fi nding of how satisfaction with shared price information may positively infl uence brand loyalty, a more wide-spread adoption of price transparency with vehicle buyers would be of benefi t. 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.”

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1 = Not at all important5 = Extremely important

Figure 10:Importance Ratings for Pricing Informa-tion

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“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.

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 fi rst-in-fi rst-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 fi ve hours or less because respondents were less likely to purchase from a responding dealership with a response time greater than fi ve 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.

Email Phone Mail Fax Other

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60%

50%

40%

30%

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0%

Loyalist Defector First Time Buyer

Figure 11:Preferred Communi-cation Media Among Online Leads

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“Content Really Matters”

Based on the earlier lead segmentation model, most consumers are more likely to purchase from a responding dealer when they are satisfi ed 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 Specifi c 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.

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.

PreferredResponseTime

5

4

3

2

1

0

1 = Not at all important5 = Extremely important

“Slower”

“Faster”

% Purchasing from a Responding Dealer

47.2% 61.3% 83.2% 55.5% 59.8% 58.5% 74.6%

Importanceof Content

1First TimeApathetic

Buyers

2Make Loyal

ContentBuyers

5First Time

Price Buyers

6Response

TimeBuyers

7Content SpecificBuyers

3First Time

Response & Content Buyers

4SpecificVehicle Buyers

Figure 12:Importance with Response Content, Preferred Response Time and Dealer Purchase Rates

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ConclusionsThis 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 profi table 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 fi ndings 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, fi nance and insurance companies, advertising agencies, media companies, consulting organizations, government agencies and market research fi rms make good business decisions. A privately held global fi rm, Polk is based in Southfi eld, 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.

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1 Cobalt, Yahoo!, R. L. Polk & Co. “The 2007 Dealer eBusiness Performance Study:The New Buying Infl uences”, 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 fi rst 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 Infl uences”, 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 defi ne certain segments. Thus the name given to Segments 3 and 7 par-tially refl ects their emphasis on this factor.

Endnotes