Training effect on internet close rates

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Ford DivisionFord Divisione-Marketing e-Marketing

Web Lead Analysis ProjectWeb Lead Analysis Project

February 2003

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Employed a Comprehensive ApproachUsed Both Data Analysis and Experts

• Data Analysis - Engaged GCI's Analytic Competency Center and the SAS Institute to determine the analytical drivers of close rates

• Dealer & Field Feedback - Quizzed Regions & Key Dealers - emailed and called all Regions - Interviewed both poor performing and top performing dealers

• Competitive Perspective - Conducted interviews with:- GM BuyPower - Brian L. Wines, Manager, GM BuyPower & Internet Alliances- DCX - Rich Everett, Manager of Interactive Communications

• Industry Expertise – Conducted interviews with:- KBB - Stephen Henson, Vice President, Marketing and Business Devpmnt- Yahoo! - John Costello, Chief Global Marketing Officer- Forrester – Harley Manning, Partner- Reynolds – Randy Harvey, VP Marketing- J.D. Power - Scott M. Weitzman, Senior Director Automotive lnternet

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1.Data Analysis

• Business Issue: While Internet Sales have shown monthly year-over-year increases, Internet Close Rates exhibit substantial variance month-to-month

• Project Objective: Identify the potential drivers of variance in Internet Close Rates by evaluating the relationships between several data sources

Copyright © 2002 , SAS Institute Inc. All rights reserved.

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Data Sources Considered

• Close Rate Calculation (different methodologies)

• Web Leads • Dealer Training (In-Dealership & Rally)• Retail Sales & Availability (Days Supply)• Incentives• Dealer Classification (Contact vs. Select)


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• The methodology does not influence Close Rate variance• Close Rates exhibit similar annual cyclic behavior regardless of the

approach employed


Findings

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• Total Retail Sales and Close Rate follow similar cyclic patterns• Internet Close Rates mirror off-line retail activity


Findings

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• Dealers are getting better at closing leads over time• Close Rates are increasing: 2002 is significantly higher than 2001


Findings

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• In dealership training works -- much better than expected• Participating dealers close rates have improved dramatically• Trained dealers get better over time… it doesn’t wear off


Findings

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2. Dealer and Field Feedback

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Who did we talk to?

• Poor Performing Dealers:a) 1/3 Small 10 to 49 leads per monthb) 1/3 Medium 50 to 99 leads per monthc) 1/3 Large over 100 leads per month

– 50% reduction in close rate from August 2002 to September – November 2002

– Geographically dispersed

• Influential, Good Performing Dealers

• Talked to Dealers, GM’s and a few ISM’s where dealers or GM’s were not available*

*see attached list

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What did we ask?

• Was dealer aware of decline?

• Did “retail” and “used retail” volume follow similar trends?

• Gauge importance dealer places on Internet leads

• Gauge stability of Internet personnel and internet sales process

• Obtain dealers opinion on why their close rate declined

• Solicit ideas on how Ford can help

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Overall FindingsAwareness: Most poor performing dealers (76%) were aware of their close rate decline

“Zone Manager has brought to our attention”Rob DeRoy, Premier Ford

Retail: Most dealers (67%) identified a relationship between close rate declines and a decrease in “retail” and “used retail” franchise volume

“240 units this month, normal is 300 “Noel Daniels, Gary Daniels Ford

Internet Importance: Virtually all dealers rated Internet business as very important to their dealership

“Took my best salespeople and placed them in the internet department”Gary Romeo, Lou Fusz Ford

Turnover: Almost half (42%) indicated they had experienced some turnover in the Internet Sales Department

“Decline is a direct result of losing our Internet Sales Person”Jerry Chase, Framingham Ford

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Findings• Smoking Gun? - There was no single causal factor

that drives changes in close rates

• Big 3 - The top factors mentioned were:1. Market Conditions – Same as other retail business

“Close rates track the retail market. When we do well in the showroom, we do well with Internet leads” Rueben Muinos, Galpin Ford

”Unrest in the economy, customers are having a hard time making a commitment both online & offline” Dan Wiebold Jr., Dan Wiebold Ford

2. Inventory/Mix/Availability – Can’t sell what you don’t have“Multiple leads being submitted for 6.0L Diesel, no inventory”

Colin Wickstrom, Wickstrom Ford

3. Turnover and Training – The loss of key managers hurts“Having trouble finding the right person, has worked with over a dozen different salespeople and can’t find the right fit”

Brian Augustine, Ken Grody Ford

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3. Competitive Perspective

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Competitive Findings• GM

– Believes that their close rate is generally higher (20% - 23% nationally), but this may be driven by their methodology

– Experiences same monthly cyclical variances as Ford

• DCX– Does not measure close rate electronically– Feedback from 5-Star dealers indicates that there is a

similar relationship to retail

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4. Industry Experts POV

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Industry SME - Findings• Staff Turnover - Consultants from a variety of sources

see continuous turnover of staff during re-visits to dealers for continued training

• Maintenance - Dealers that have an eBusiness Coaching and Maintenance program experience lesser degree of fluctuation in sales results due to staff turnover

• Process vs. People - Dealers that have a documented eBusiness Process that is supervised and monitored by the management team have more consistent sales results than dealers whose eBusiness program is primarily defined by an individual operating without accountability to defined processes

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How can Ford help?

Top items mentioned by dealers included:– Reports: Provide lead details report online

• Gene Evans, Gene Evans Ford (Note: Plan in place via FMCdealer for March 2003)

– eCoupons: Consumers required to complete name, address,

phone number • Dave Ashby, John Kennedy Ford (Note: In process of development after increased

FordDirect enrollment rates)

– Training: We should concentrate training on poorer performing Internet Dealers

• Colin Wickstrom, Wickstrom Ford (Note: Internet sales training in development for

March/April 2003 rollout in Atlanta Region)

21Copyright © 2002 , SAS Institute Inc. All rights reserved.

FindingsFindings

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Key FindingsKey Findings (Historical Web Lead Volumes)(Historical Web Lead Volumes)

• Web Leads exhibit a similar annual cycle with a three to four month lag superimposed on an increase of 40,000 leads per year



FindingsFindings

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Key FindingsKey Findings (Lead Sales as a Percentage of (Lead Sales as a Percentage of

Total Retail Sales)Total Retail Sales)

• Web Lead Sales have risen from 2% of Total Retail Sales at the beginning of 2001 to 8% at the end of 2002 with a straight line increase of approximately 3% per year



FindingsFindings

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Key FindingsKey Findings (Ratio of 2002 to 2001 Close Rate)(Ratio of 2002 to 2001 Close Rate)

• The percent improvement of 2002 Close Rate over 2001 has maintained a positive trend



FindingsFindings

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Key FindingsKey Findings In-Dealership TrainingIn-Dealership Training

• Trained dealers have experienced larger increases in their 2002 Internet sales close rates compared to their 2001 results, when compared to all dealers on average



Key FindingsKey Findings