MARKET STUDY Consumer Expectations for Internet Lead Marketing May 2008 2008 R. L. Polk & Co. All rights reserved. www.polk.com
MARKET STUDY Consumer Expectations for Internet Lead Marketing Executive Brief Changing 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 unidentified About the Authors prospect to hand raiser is tricky at best; these information savvy consumers are initially LONNIE MILLER is the anonymous, direct and in command. Director of Industry Analysis with R. L. Polk & Co. With over From an automaker or dealer point of view, engaging with potential buyers should 17 years of consulting and always be tempered with an understanding of what the consumer wants at the time research experience, he focuses they make themselves known. And in cases where buyers ask to be contacted to speed on examining underlying issues up the sales cycle, paying close attention to their needs can result in selling one more driving automotive market and consumer behavior trends unit that month or not. Thus, lead marketing, and specifically managing online leads, in the U.S. and other global has been an area of growing interest to the automotive industry. regions. This study, conducted by R. L. Polk & Co., reveals critical insights useful for automotive DAN ZETU is an Analytic brand managers and retail managers as they strive to convert a growing base of Inter- Consultant with R. L. Polk & net online leads into new vehicle buyers. Findings in this study will help automotive Co., focusing on implementing advanced solutions that solve communities better understand the unique preferences among online leads and the critical marketing problems. follow up tactics which impact subsequent purchase behavior. Specifically, the follow- Dan has developed market ing questions are explored: segmentations, in-market and loyalty scoring models How do leads differ based on need? and conducted product Are first time buyers worth identifying and how should they be approached? development optimization and consumer behavior studies What types of online interaction influences brand loyalty? in a variety of industries, Topline findings from this investigation follow. including the automotive, pharmaceutical, finance and insurance sectors. What You Should Know MARGARET ZEWATSKY is a Leads can, and should be, treated uniquely Global Market Analyst with Seven distinct segments of leads were identified based on the specific input shoppers R. L. Polk & Co. and focuses submitted to OEMs, dealers or third party sites when requesting new vehicle informa- on identifying market trends that aid in the development tion online. The information contained in these segments illustrates how leads can be of new services for Polks communicated to differently to increase shopper satisfaction and potentially increase global automotive clientele. brand and dealer sales. Two segments in particular were found to purchase from Margaret has led multiple cross- functional teams on key global dealers that responded to their online request for information at above average rates initiatives and is seasoned in compared to the total population. Among other factors, lead attributes tied to these new product development and two segments relied heavily on receiving high quality content from a dealer when web product management. inquiries were made. First time buyers are worth identifying Given the importance of developing new relationships with a customer, first 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 first 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 first time buy- ers to their dealer showrooms. Consumer Expectations for Internet Lead Marketing 1 2008 R. L. Polk & Co. All rights reserved. www.polk.com
Internet Lead Marketing MARKET STUDY Consumer Expectations for Loyalty can be influenced among online leads When predicting whether a lead will be loyal to a brand (e.g., Chevrolet, BMW, Nissan), three factors accounted for 44 percent of the overall influence on this outcome. The three factors include the overall shopping and sales experience, whether the seller was viewed as honest and trustworthy, and the manufacturers response time to infor- mation requests. All three reflect controllable factors experienced during the online shopping phase among leads. Furthermore, a leads 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 when Leads 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 afford 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 How the Study phone indicate one hour or less as an acceptable time frame to receive a response. was Conducted In January 2008, online inter- views were conducted with This summary provides only a few of the themes revealed in the study Consumer 571 vehicle buyers in the U.S. Expectations for Internet Lead Marketing. The additional findings and recommendations that bought or leased a new car or truck from a dealership that follow are intended to enable automotive brand, dealer and Internet marketing between November 2007 managers to improve their engagement, measurement and business expectations and January 2008. Qualified when nurturing online leads in the new vehicle market. respondents visited an auto- motive website and provided their contact information online while researching a vehicle online. Results reflect weighted proportions based on U.S. distributions of age, income, ethnicity, and gender. Consumer Expectations for Internet Lead Marketing 2 2008 R. L. Polk & Co. All rights reserved. www.polk.com
Internet Lead Marketing MARKET STUDY Consumer Expectations for 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 difference 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 field 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 efforts to profile and detect differences among leads should be made. Synopsis As online leads reveal their Key Findings needs and interests when shopping for a new vehicle, In this study, a number of attributes were combined to produce a segmentation model finding and listening to these of the interviewed online lead population. Primary emphasis was placed on their pat- market cues is necessary to tern of communication when submitting leads and their expectations when interacting compete in a challenging U.S. with dealers and OEMs. In Figure 1, key attributes are listed that were used in the seg- automotive market. Since automakers and retailers con- mentation model, including the vehicle purchase information, attitudes about certain tinue to shift their advertising shopping and buying behaviors, Internet-based vehicle research behaviors, dealership expenditures to include a response and follow-up preferences, and dealership selection drivers. wider range of online media, intercepting these prospec- tive buyers requires disci- plined follow-through with Figure 1: these consumers to ensure Vehicle Purchase Drivers Brand effects Attributes Used In that lead marketing strategies Price and incentives Lead Segmentation are successful. Much of this Styling Model comes down to the type of Vehicle features information gathered on a lead and from the information Safety used to determine how to Warranty treat and communicate with Shopping and buying experience the different lead segments relevantly once an engage- Attitudinal Attitudes about driving ment with a dealer begins. Attitudes that drive vehicle consideration Shared findings and recom- Affinities with specific manufacturers mendatio...