2007 Buying Influences

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2007 Dealer eBusinessPerformance Study:

The New Buying Influences

Presented by The Cobalt Groupin partnership with Yahoo! and R. L. Polk & Co.

October 18, 2007


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New buying influences

Brand and dealership loyalty is

diminishing

Consumers consider more makes,

models and dealerships,

broadening the top of the purchase

funnel

New Internet-based influences act

like filters within the funnel

Consumers use filters to narrow

their selection and determine who

theyll do business with


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Purchase funnelShopping filters

Pre-selection filter Search

Advertising Website appearance

Engagement filter Initial response

Quality of response

Transparency of communication

Purchase filter

Dealership reviews and rankings Sales professionalism, reviews and price


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Research componentsFive sub-studies

Two consumer surveys: 550 vehicle shoppers and purchasers

1000 vehicle purchasers

1 million leads from 1,140 dealerships representing35 brands matched with DMV data to assess sales rates

and time to close

2100 dealerships in eMystery shop campaigns encompassing20 brands

20 onsite visits to top performing dealers


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Pre-selection filterCar buying starts on the Internet

Search is the primary tool

for filtering dealerships

Website is a key extension

of the dealer's showroom

Online advertising grows

dealer sphere of influence

The Cobalt Group, Inc. Proprietary and Confidential. 2007. All Rights Reserved.


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All customers are Internet customers

Base: Total Respondents (550)Q4 When researching auto dealerships, which of these online search enginesdid you use to obtain information? (Please select all that apply.)QS10Which of the following resources did you use to gather information whileshopping for your new vehicle? OR are you using to gather information whileshopping for your new vehicle?Q0You mentioned that you used the resources shown below to research andshop for new vehicles. How did you reach each of these websites?

Car shoppers are

qualifying dealersby researchingonline & using

search for vehicledealershipresearch

Yahoo! Search Marketing Proprietary and Confidential. 2007. All Rights Reserved.


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Internet used more than traditional media

48%

37%

23%

20%

11%

12%

Viewed cars/models available at thedealerships online

See if they had a dealership website

Find reviews about the dealership online

Called to see what cars/models were

available

Checked newspaper classifieds to try to

find more information on the dealership

Used the yellow pages to look for the

dealership

Did you do any of the following before actually

visiting the dealership?

Base: Total Respondents (550)Q14 Thinking about the last dealership you visited, did you do any of thefollowing before actually visiting the dealership?

Online

Offline



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Consumers consider multiple brands

Consumers visit anaverage of 6dealerships, but

they visit only onedealership perbrand

Base: Total Respondents (550); Those RespondingQS6 Please select the statement that best describes your consideration of eachmake listed below.QS7 How many dealerships did you visit for each make?



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Geographic area of consideration grows

68% of consumers are notwilling to travel more than

20 miles

32% of consumers arewilling to travel farther than

20 miles

A third of consumerswill drive more

than 20 miles

from home

Base: Total Respondents (546)*

* Dont know responses removedQS8 Again thinking about the dealerships you visited, think about how far each

dealership was from your home. In miles, please tell us the distancebetween your home and the farthest dealership you visited for each make.



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Internet is the primary resource for information

67%

40% 36%31% 29% 29% 28%

19% 17% 15%

64%

30% 30%26%

20% 20% 18%21%

12% 12%

Made me AWARE ofdealerships

Helped me LOCATEthe dealerships

Driven by

or seen

before

Friends &

Family

Search

engines

Dealer

websites

OEM

websites

TV ads Newspaper

Classifieds

Yellow

Pages

Radio Billboards

Base: Total Respondents (550)Q1a-Q1d Thinking about dealerships youve visited, which of the followingmade you aware of the dealerships?/helped you locate the dealerships?

How do consumers find and choose which dealerships to visit?(Choose from a list of 18 sources)



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Internet is the primary resource for information

36%31% 29%30%

26%20%

Made me AWARE ofdealerships

Helped me LOCATEthe dealerships

Driven by

or seen

before

Friends &

Family

Search

engines

Dealer

websites

OEM

websites

TV ads Newspaper

Classifieds

Yellow

Pages

Radio Billboards

Base: Total Respondents (550)Q1a-Q1d Thinking about dealerships youve visited, which of the followingmade you aware of the dealerships?/helped you locate the dealerships?

How do consumers find and choose which dealerships to visit?(Choose from a list of 18 sources)



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Key online sources are used throughoutthe shopping funnel

SEARCHSEARCH

ENGINESENGINES

DEALERSHIPDEALERSHIP

WEBSITESWEBSITES OEM WEBSITESOEM WEBSITES

33RDRD PARTYPARTY

CONTENT SITESCONTENT SITES

SOCIALSOCIAL

NETWORKINGNETWORKING

Learn about vehicle

makes/models Get a feel for the dealership

Find other buyer reviews on

dealerships Find out how many dealers

were close to where I live Find out if dealerships had

any special offers

Find out dealership inventory

on cars/models I want

Look up dealership address

and contact info

I used the following online sources to

Base: Those Responding: Newspaper inserts/classified ads (173); Radio ads(105) ; Local phone books (147); TV Ads (177); Magazines (68) Indicates percentage is significantly higher than the all-source average at 95%confidenceQ3 Now, thinking specifically about each of the resources you used to researchdealerships, which of the following helped you



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Consumers are submitting quotesat multiple points

Base: Total (550); Submitted a price quote (346)Q11: How many requests for price quotes did you submit on the Internet?Q12: What kind of site(s) did you use to submit your price quote?

Did you submit any requests for price quotes on the Internet?



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Engagement filterLead handling is key to performance

Lost opportunity is high

because lead handling is poor

Poor lead handling can also

cause brand defection

Dealers can turn the tide

through transparency



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Overall conversion is steady

45% of leads did notconvert

55% of leadsconverted

Based on registration information supplied by R. L. Polk & Co.Sales/leases have been adjusted for matching efficiency by a factor of 1.36,which represents a 73% historical match rate


One Million New Car Leads


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Lost opportunity is still high

90% closed at a dealerother than the one thelead was sent to lostopportunity


Sold at intendeddealership



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All missed sales


Sold at intendeddealership



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Too many leads go unanswered

2007

Overall responsiveness 68.6%

Response time average (hrs) 7.1

Quality of responses:

Answered the shoppers questions 28.6%

Use brand or product highlight 25.5%

More than 30% of leads going unanswered.

2007 Cobalt National eMystery Shop, Base: 2,111



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Lead response time is slow

2007






20% of consumers want a response within 4 hours ortheyll go someplace else.*


* Cars Online 06/07: Understanding the Dynamics of Consumer Buying

Behavior and Customer Loyalty CapGamini



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Poor lead handling contributes tobrand defection

QV5 - Those who said they purchased a different make/brand than submitted aninquiry about (301) Which of the following reasons describe why you purchasedanother make/brand than you submitted an online inquiry about?

Of those that switchedbrands, 23% did sobecause of poor

dealer interaction

Why did you purchase a different brand than you submitted an onlineinquiry about?


Poor or noresponse

Bad dealerexperience


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Quality of lead response is poor

2007









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Quality of lead response is poor

2007





Used brand or product highlight 19.5%




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eMystery National Shop2005 vs. 2007

2005 2007

Overall responsiveness 69.7% 68.6%

Response time average (hrs) 6.5 5.4


Answered the shoppers questions 25.9% 25.0%

Used brand or product highlights 30.4% 19.5%


2005 Cobalt National eMystery shop, Base: 3,576



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Purchase filterNewest influence: dealer reputation

The emergence of a

powerful new purchase filter

Consumer ratings and

reviews influence purchase

decisions

Dealership location and

loyalty are less of an

influence today



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Newest influence: dealer reputation


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Experiences influence other buyers


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Dealership reviews/rankingbecoming more pervasive

Base: Total Respondents (550)

Q7a Now wed like you to imagine there was a dealership review site providingcustomer satisfaction ratings generated by other customers who visited ordid business with the dealerships in your area. How likely would you be touse this type of site?

Q7b And how likely would you be to post your own reviews or comments aboutlocal dealerships on this site?

73%

58%

How likely would you be to:



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Impact of reputation is growing

Q13 - Those who visited at least one consumer opinion source/site (214)

Thinking about what you looked at on the customer opinion sites regarding cardealerships, please tell us how much the following statements describe you andyour opinions where 5 means it you describes you very well and 1 means itdoesnt describe you at all.

Car purchasers who visited customer review sites said thisstatement described them well:



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Dealership Preference Selector



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Buying attribute importance




Price

Professional Sales staff

Online reviews

Location

Loyalty

7.75

7.23

5.14

1.85

1.32


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Summary and Implications

New filters influencing customers as they move through thepurchase funnel

Online location and brand is as important as offline

Shoppers make decisions based on quality of early communication

Quality of communication may be more important than ever

Customers seek, value and reward transparency

Reliance on customer reviews and dealer ratings is increasing

Invest in dealership staff to drive strong reviews Grow your review base to create a powerful marketing tool


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For more information on the 2007 Dealer eBusiness Performance Study go to

www.cobaltgroupresearch.com

Thank You.
http://www.cobaltgroupresearch.com/http://www.cobaltgroupresearch.com/

2007 Buying Influences

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