2016 INDEPENDENT DEALERSHIP ACTION REPORTinfo.dealersocket.com/rs/827-YDT-828/images/iDAR 2016 Pages...
Transcript of 2016 INDEPENDENT DEALERSHIP ACTION REPORTinfo.dealersocket.com/rs/827-YDT-828/images/iDAR 2016 Pages...
2016INDEPENDENT DEALERSHIP ACTION REPORT
Table of Contents
Introduction 4
The Why 8
Initial Research 12
Vehicle Equity 16
Purchase Process 20
Financing 26
Conclusion 30
AT A GLANCE
Data Sources DealerSocket Data
DealerSocket Independent Dealer Survey
Google Consumer Survey
Google Insights
NIADA Used Car Dealer Industry Report
BHPH NABD Benchmarks
J.D. Power: Power Information Network (PIN)
Experian Data
The car buying process has changed dramatically the past few years.
It is crucial that dealers constantly reevaluate their processes to ensure
they are evolving with the times. For this year’s Independent Dealership
Action Report, we set out to take a closer look at the fact and fiction of
the car buying process. By juxtaposing consumer perceptions against
those of independent dealers, we can understand the customer better
and identify areas of opportunity to meet their needs.
We will reveal our findings and make key connections using survey results, DealerSocket data (compiled from more than 4,000 independent dealerships that utilize our software), and data from several industry partners. The purpose of this report is to aid dealers in identifying and prioritizing processes and technologies that will be most impactful to their customers and their businesses. These recommendations will help dealers save time and money, and make a significant impact on their bottom line.
IN SUMMARYDealerSocket conducted consumer research using Google Consumer Surveys to reach more than 2,000 consumers who purchased a vehicle in the last 12 months.
We asked them about their attitudes toward the following stages
of the car buying process:
• Research
• Dealership communication
• Vehicle purchase
• Vehicle equity
• Financing
We surveyed independent dealerships across the United States
and Canada, asking how they believed their customers felt
about the same questions we posed to our consumer pool and
compared the results.
We collaborated with our data partners, NIADA, NABD, and J.D.
Power to examine industry trends.
We poured over a wealth of product information pulled directly
from the DealerSocket platform, including operational and trend
data from our CRM, DMS, DealerFire websites, and Inventory+
inventory management solutions.
Do you enjoy the car buying process?
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INTRODUCTION
Knowledge Is Power
Why does this matter? The more a dealer understands consumer
perceptions, the more he or she can tailor the dealership’s sales and
marketing strategy to its customers’ unique needs.
For example, a female in her 50s visits a dealership. Data shows that she
more than likely does not enjoy the car buying process. Her presence
indicates a high probability that she is in a position to buy. Knowing this,
the dealer should take extra care to provide the best experience possible,
perhaps employing mobile technology to make the process as seamless
as possible.
GOOGLE CONSUMER SURVEY
DEALERSOCKET DEALER SURVEY
Q: Do you enjoy the car buying process?
LEADING “NO” CONSUMER RESPONSES:
85% 45–54 years old
85% Female
82% Income between$25K and $50K
LEADING “YES” CONSUMER RESPONSES:
29% 18–24 years old
24% Male
32% Income greaterthan $150K
Inside the numbers:
2
1
Yes
19%
No
81%
CONSUMERS
INDEPENDENT DEALER PERCEPTION
1
Yes
32%2
No
68%
Age, gender, and income affected results
INDEPENDENT DEALERSHIP ACTION REPORT FALL 2016
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Dealer Confidence
Overall, used car dealer confidence has tapered slightly with a
recent 4% drop. This includes:
“Dealers must continue to manage cash flow, improve efficiencies,
embrace new digital technology, and take a measured approach to
expanding their market opportunities as resources allow in an ever
changing, dynamic auto retail industry.”
NIADA USED CAR INDUSTRY REPORT J.D. POWER: POWER INFORMATION NETWORK (PIN)
DEALERSOCKET DATA
USED TRANSACTIONS FOR FRANCHISE DEALERS IN 2015–2016
8% Total used car sales down
27% Lease maturities up
4% Increase in average days to turn (from 48 to 50)
7% Decrease in days to turn using DealerSocket CRM
11% Gap from independent dealers
CRM InsightsIndependent dealers using DealerSocket CRM saw an average decrease
of 7% in days to turn from 21 days in 2015 to 20 days in 2016. Franchise
dealers saw a 4% increase — an 11% gap from independent dealers.
Independent dealers that leverage technology are turning vehicles faster
than their franchise counterparts.
Increase in number of independent dealerships with 1–4 employees
Decrease in number of independent dealerships with 20+ employees
A historical trend of downsizing:
Internet-sourced vehicles saw the greatest decrease in days to turn — four days or 17% — which highlights the importance of investing in online strategy to quickly turn inventory.
DECREASE IN DAYS TO SOLD FROM 2015–2016
A 4-point increase over the previous quarter in dealers who do not anticipate hiring new staff over the next year
76%
4%
Drop in dealerships that plan to expand their business over the next quarter
6%
5%
Floor1 Internet2 Phone3
5% 10% 15% 20%
6%17%
3%
01 THE WHY
What don’ t you like about the car buying process?
01
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CH.1THE WHY
GOOGLE CONSUMER SURVEY
Q: What don’t you like about the car buying process?
TOP CONSUMER RESPONSE
29% Don’t trust sales people
INDEPENDENT DEALER PERCEPTION
32% It’s too time consuming
Transparency Builds Consumer TrustConsumers need to feel engaged throughout the entire car buying process. Every time a salesperson excuses him- or herself to privately negotiate with a manager, consumer confidence takes a hit as they feel growingly disconnected from the process.
Mobile technology reverses this effect by allowing salespeople to manage the entire transaction without stepping away from the consumer, thus increasing efficiency, transparency, and trust.
Notice the disconnect between consumer opinion and independent dealer opinion. Whereas dealers believe the problem is a time-management issue, the reality is it’s a trust issue.
Inside the numbers:
Don’t trust sales people
Too time consuming
Worry about getting a fair price
Negotiation process
Too much pressure to buy
Lack of knowledge about the process
15% 35%
Consumers1 Independent dealer perception2
29%16%
32%19%
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Interestingly, although it seems obvious that the use of mobile technology should be common practice in the business-to-consumer world, our data suggests that the majority of dealership users still complete tasks via desktop.
J.D. POWER: POWER INFORMATION NETWORK (PIN)
DEALERSOCKET DATA
Rating Technology During the Sales ProcessAccording to J.D. Power, the use of technology, specifically the use of tablets during the payment presentation process, improves customer satisfaction ratings significantly. On the other hand, negative satisfaction ratings result in negotiations using handwritten figures and verbal quotes.
CRM Desktop Versus Mobile UsageDealers have not fully embraced mobile technology, deferring instead to desktop. This presents a great opportunity for tech-savvy dealers to differentiate themselves from their competition.
Mobile app1 Desktop2
POSITIVE SATISFACTION RATINGNegotiation figures where displayed using...
500K 1M 2.5M 5M
5.1M
466,000
43%Users logged into mobile some time during the last year
30%Use the mobile application (CRM) 20 days or more per month
5
10 SCALE 10 Truly exceptional 7 Outstanding 4 Average 1 Unacceptable
8.127.08
6.92
Tablet device1
Verbal quotes2
3 Handwritten figures
SALES OPPORTUNITIES CREATED ON DESKTOP VS. MOBILE APP Based on a three-month data sample
02 INITIALRESEARCHPath to Purchase
02How many dealership websites did you visit
before physically visiting a dealership?
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CH.2INITIAL RESEARCH
GOOGLE CONSUMER SURVEY
GOOGLE CONSUMER SURVEY
Q: How many dealership websites did you visit before physically visiting a dealership?
Q: Do you consider dealership websites to be resources for information or simply places to shop?
Once again, dealers do not demonstrate an accurate understanding of the consumer car buying experience. At zero to two websites visited, a dealership’s margin for error is slim to make a business-generating impression.
The higher positive response from dealers indicates a false confidence that they provide all of the information and resources consumers are searching for online.
Increase Visits to the Dealer WebsiteMost consumers visit only one or two dealer websites (if any) prior to
visiting just one or two dealerships during the car buying process. This data
suggests that a buyer who visits the website is likely to visit that dealership.
It becomes vital, then, to invest in an effective website with targeted digital
marketing to reach each consumer at as many touch-points as possible
throughout the car buying process.
0–2
3–5
6–10
11+
25% 50%
TOP CONSUMER RESPONSE
44% 0–2
INDEPENDENT DEALER PERCEPTION
63% 3–5
Independent dealers think consumers see them as both
Consumers see them as both
53% 74%
Provide Better Information Create valuable digital content that consumers can digest from any
device. Better content helps increase digital touch-points, which drives
researchers to your website and ultimately to the sales floor.
Inside the numbers:
44%33%
15%
8%
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GOOGLE CONSUMER SURVEY
Q: Do you like to receive personalized emails based on your online research on a dealership’s website for specific vehicles?
75% Of auto purchaser research time is spent on digital
19/24 Of consumer touch- points are digital
Over 33%
Of auto research occurs on a mobile device
1–2 The number of dealers consumers visit (vs. five in 2005)
GOOGLE INSIGHTS
Automotive Path to Purchase, 2015
18–24 year-olds picked YES more than those 65+
Of consumers age 65+ answered YES
30% 16%
DEALERSOCKET DATA
DealerFire Digital Insights
New leads come from organic search (ranked No. 1)
Paid ads results in a new lead
1 in 3 consumers who submitted a lead interacted with auto dealers via two or more channels
48% 1/52+
NIADA USED CAR INDUSTRY REPORT
Membership DataNIADA dealer members overwhelmingly
rely on online as their main advertising
avenue, although there was a nearly 10
percent drop from 2014 to 2015.
Newspaper
Radio
Specialty pubs
Online
Magazine
Mobile
Other
50% 100%
20141 20152
Television
Accounting for only 2% of page sessions, email will result in very few
leads if not properly leveraged. To get more leads through email,
messaging must be as personalized as possible for each recipient
with landing pages that are specific to email content. An integrated
website and CRM can allow dealers to target online visitors with
customized messaging specific to their online behavior.
03 VEHICLEEQUITY
03How do you feel about knowing whether or not you’re in an equity position before
shopping for a car?
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CH.3 VEHICLE EQUITY
GOOGLE CONSUMER SURVEY
GOOGLE CONSUMER SURVEY
Q: How do you feel about knowing whether or not you’re in an equity position before shopping for a car?
Q: If you want to sell your car, do you consider a car dealership as a potential buyer?
Providing equity awareness is more important to consumers than dealers realize.
Independent dealers need to position themselves as a buying power.
Equity-mining technology enables dealers to identify customers in their
database that are in a position to buy. Most likely, these customers
have not quite started shopping yet. And once they are in the store, the
likelihood they purchase a new vehicle and trade in their old one in is
very high.
Identify Customers in an Equity PositionAlthough dealers have realized that the majority of shoppers start online,
it is worth noting that it’s not always the case. There are other ways to
initiate the car purchase process.
With more than a third of consumers claiming they would like to be
notified when they are in an equity position, dealers should invest in
equity-mining software that identifies customers in their database that
are in a position to buy.
Very important
Moderately important
Not important
CONSUMERSINDEPENDENT DEALER PERCEPTION
Inside the numbers:
TOP CONSUMER RESPONSE
36% Consumers feel it is very important
INDEPENDENT DEALER PERCEPTION
35% Dealers think consumers find it moderately important
1
2
Yes
48%
No
52%
Men aged 25–34 years picked YES
Women aged 25–34 years picked YES
64%
45%
57% Visits sold Sourced through Revenue Radar,
DealerSocket’s robust equity-mining
tool, this lead type is as likely to close
and include a trade-in.
INDEPENDENT DEALERSHIP ACTION REPORT FALL 2016
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GOOGLE CONSUMER SURVEY
Q: Do you believe you get fair value for your trade-ins at dealerships?
Inside the numbers:
With inventory management technology, dealers can create transparency for trade-in customers by illustrating the specific costs of vehicle sales, including reconditioning.
According to NABD BHPH benchmarks, inventory reconditioning costs rose from 7.63% in 2014 to 8.31% in 2015.
“Operators who embrace technology can increase efficiency and market share without increasing operating costs. Technology has never been more beneficial for those who implement it properly.”
DEALERSOCKET DATA NABD DATA
CRM and Inventory+ Insights
2
1
Yes
25%
No
75%
Of sold deals include a trade-in (CRM data)
Increase in gross per vehicle (Inventory+ data)
Faster vehicle turn (Inventory+ data)
National average of reconditioning costs per vehicle (Inventory+ data)
21%
$500
35%
$908
SOLD WITH TRADE
15%
30%Floor – 20%1
Phone – 22%3
Internet – 21%2
04 PURCHASEPROCESS
04When consumers are in the market to purchase a used car, where are they
more inclined to go to purchase it?
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CH.4 PURCHASE PROCESS
GOOGLE CONSUMER SURVEY
Q: When consumers are in the market to purchase a used car, where are they more inclined to go to purchase it?
Q: What do you value more during the car buying process?
Inside the numbers:
The used car landscape is highly competitive. Independent dealers must compete to be top-of-mind. The demographic sweet spot for independent dealers occurs in lower income members of Generation X (ages 35–55).
Consumers make it clear that they want to love the car buying experience
just as much as the vehicle they’re purchasing. There is no sacrificing one
for the other. Dealers can’t afford to focus solely on inventory; customer
experience must also be a priority.
1
1
2
2
Brand-specific dealership
48%
Other
44%
Independent dealerships
52%
High-quality customer experience
Getting the vehicle they set out to buy
56%
Consumers aged 35–44 prefer independent dealerships
Consumers who prefer independent dealerships earn $24,999 or less annually
24%
22%
Elevate Customer Experience
Establish a franchise feel through stellar
customer experience. According to
J.D. Power data, handwritten figures
and verbal quotes produce some of
the lowest customer rating scores.
Customers prefer to transact using
technology that is familiar to them,
such as tablets.
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GOOGLE CONSUMER SURVEY
Q: Do you usually end up purchasing exactly the type of vehicle you set out to buy?
Q: Why don’t you purchase exactly the type of car you initially set out to buy?
Inside the numbers:
The discrepancy between consumer and independent dealer opinion shows that while used vehicle selection may be more limited, customers don’t actually settle as much as dealers think. When consumers do settle, however, it’s usually due to price or inventory.
1 1
2 2
2
3
4
1
Yes
65%Yes
74%
No
35%No
26%
Inventory
25%Price
49% Features
15%
Financing
11%
An Inventory Management System Is Key
Employing an intelligent inventory management system is vital to
balancing customer satisfaction and dealer confidence. Inventory
intelligence tools take into account both specific dealership sales history
as well as general market trends. When these factors align, a dealer can
acquire vehicles that perform the best on his or her specific lot, and price
them at the most optimal price.
Dealers should monitor aging inventory weekly on the search results
pages (SRP) and vehicle details pages (VDP) of their websites as well as
third-party sites.
CONSUMERSINDEPENDENT
DEALER PERCEPTION
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GOOGLE CONSUMER SURVEY
GOOGLE CONSUMER SURVEY
GOOGLE INSIGHTS
Q: Do you like to negotiate or be given the “best price” up front?
Q: When you’re given the best price up front, do you trust it?
Consumers checked the price of a vehicle on a mobile device while on the dealership lot to make sure they’re getting a good deal
The average profit per used vehicle sold in DealerSocket CRM in 2016
2015 Automotive Path to Purchase
1
2
Yes
12%
No
88%
36%
$2,905
CH.4 PURCHASE PROCESS
1
Best price
57%2
Negotiate
43%
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GOOGLE CONSUMER SURVEY
DEALERSOCKET DATA
DEALERSOCKET CRM VS. NIADA DATA
Q: Where do you prefer to have negotiation take place?
The average cars per month sold by independent dealers using DealerSocket CRM in 2016
NIADA members surveyed reported an average of 31–50 vehicles in inventory
Inside the numbers:
A significant portion of consumers still prefer to negotiate face to face in the store. Conscientious consumers come armed with mobile technology, empowering them with information to readily verify what they are being told. Dealers must be cognizant of this and embrace technology that promotes transparency and trust.
71 30%
CRM Insights
As sales processes become optimized with a CRM, dealer inventory
needs to rise in lockstep.
VS.
1
In store
71%2
Elsewhere
29%
05 FINANCING
05How confident do you feel about
your level of knowledge about the financing process?
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CH.5 FINANCING
GOOGLE CONSUMER SURVEY
GOOGLE CONSUMER SURVEY
GOOGLE CONSUMER SURVEY
Q: How confident do you feel about your level of knowledge about the financing process?
Q: Why through an outside lender?
Q: Where do you prefer to secure your financing? (Through the dealership or an outside lender)
Inside the numbers:
Mistrust continues to rear its head as both an obstacle and opportunity for dealers. On the other hand, with only 15% of consumers citing “credit score” as their reason for choosing an outside lender, there still remains opportunity for a portion of customers to opt to finance with an in-house BHPH.
Age affects a consumer’s answer to this question. Younger consumers may feel less confident in their knowledge of the car buying process, so they rely on the dealership to make it easier. Income also most likely plays a significant role.
18–24 year olds are not confident in their level of knowledge about the financing process24%
2
2
1
Dealership
48%
Outside lender
52%
18–24 year olds prefer to secure financing through the dealership
Consumers who earn $25K–$49K per year in the South prefer to secure financing through the dealership
62% 53%
3
1Mistrust
36%Loyalty to bank
49%Credit score
15%
Transparency and education helps consumers feel more confident to finance through the dealership.
INDEPENDENT DEALERSHIP ACTION REPORT FALL 2016
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DEALERSOCKET DATA
DMS Insights
The financial benchmarks for 2015 reflect significantly increased competition within the deep subprime marketplace
Experian market data indicates that BHPH deep subprime used vehicle financing declined in 2015 in favor primarily to franchise dealers
BHPH dealers are advised to implement technology that will improve operational efficiencies
BHPH Benchmarks
State of the Automotive Finance Market
Loan amounts continue to grow while the
gap between new and used payments rise
despite an increase in terms.
NABD DATA
EXPERIAN DATA
1
2 3
4 5
Local lender
35%
BHPH
27%Wholesale
20%
Cash
17%Lender portal
1%
$4,702
$1,869
UNITS SOLD BY TRANSACTION TYPE
GROSS PROFIT AVERAGE
3K 6K
BHPH1
Q4 20141 Q4 20152
Local lender2
35% of units sold in 2015 were financed through a local lender. Yet,
DealerSocket data shows that independent dealer gross profit margins
are 250% higher with BHPH deals.
Independent dealers should leverage technology that positions them to
better capitalize on the profit opportunities of the BHPH market.
20K
NEW USED
40K
AVERAGE AMOUNT FINANCED
PAGE 30
IN CONCLUSIONToday’s automotive consumer is an elusive creature. While dealers
may think they know their consumer, the data shows that there are
some real disconnects between perception and reality. Despite
dealers’ best efforts, these disconnects can erode the very
foundation of the customer experience. If independent dealers
mean to compete with their franchise counterparts, the onus is on
them to adapt one consumer at a time.
Bolster customer confidence with mobile technology by conducting the whole sales/negotiation process without stepping away
Increase customer satisfaction ratings and establish a franchise feel with tablets
Reach consumers at as many touch-points as possible by investing in an effective website with valuable digital content that drives researchers to the sales floor
Prioritize customer experience as readily as stocking the right inventory
Invest in equity-mining software to engage and cash in on customers who demonstrate a high likelihood of purchase and trade-in
Keep customers loyal; address their biggest pain points and lead customers to take advantage of in-house BHPH financing
100 Avenida La PataSan Clemente, CA 92673
855.296.5249DealerSocket.com
Facebook: Facebook.com/DealerSocket
Twitter: Twitter.com/DealerSocket
LinkedIn: LinkedIn.com/company/DealerSocket
YouTube: YouTube.com/DealerSocket