An analysis of how auto dealers respond to online leads

1. Positioning for Success?
A Study of Canadian Dealer Responses to Online Leads
Barry Baker –Director of Professional Services, Sun Media
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2. Contents
Overview ....................................................................................................................................................... 2
Background ............................................................................................................................................... 2
Terminology .............................................................................................................................................. 2
Methodology............................................................................................................................................. 3
Sample....................................................................................................................................................... 3
Executive Summary....................................................................................................................................... 4
Response Times ............................................................................................................................................ 5
Prompt Responses ................................................................................................................................ 5
Brand ............................................................................................................................................................. 6
Responses within 1 Hour .......................................................................................................................... 6
Overall Response Times ............................................................................................................................ 7
Pricing Information ................................................................................................................................... 8
Invitations to the Store ............................................................................................................................. 8
Province ........................................................................................................................................................ 9
Dealers in BC, Manitoba Positioning for Success ...................................................................................... 9
Response Times ........................................................................................................................................ 9
Errors....................................................................................................................................................... 10
Web Site “Leaks”..................................................................................................................................... 11
Month ......................................................................................................................................................... 12
Response Times ...................................................................................................................................... 12
Other Critical Success Factors ................................................................................................................. 13
Summary ..................................................................................................................................................... 14
Works Cited................................................................................................................................................. 14
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3. Overview
In an effort to help Canadian auto dealers identify opportunities to improve online sales processes,
Autonet Dealer Solutions regularly secret shops dealers with Internet leads.
Between January and December of 2011, 245 automotive dealerships were shopped. This study
presents a portion of the data collected during those shopping processes.
Background
In 2007, Dr. Oldroyd of the Massachusetts Institute of Technology (M.I.T.) published a ground-breaking
study which revealed that when following up on sales inquiries, the ”… immediacy of response far
overshadows (other factors) in its effect on contact and qualification ratios” (Oldroyd & Elkington, 2007).
Leads age rapidly, such that that the window of opportunity to successfully contact and qualify
prospects diminishes within minutes. In fact, “… the odds of contacting a lead if called in 5 minutes
versus 30 minutes drop 100 times.” Further, “The odds of qualifying a lead increase by 21x if attempted
within 5 minutes versus 30 minutes.”
Prompt responses often face little competition. The reality is that many retailers don’t respond at all! In
2010 Cobalt reported that 39% of service leads never received a response (McCann & Kahn, 2010), while
more recently it was revealed that, “55% of top companies” in a variety of other industries “don’t
respond to web leads” (InsideSales.com Research and Analytics Division, 2011).
But response time is just one critical element contributing to online sales success; the content of the
response is also a contributing factor. Oftentimes sales people overlook even seemingly obvious
verbiage, such as inviting the customer to the store, or answering a Price Quote lead with a price. And
with the advent of services such as CarCostCanada.com, online automotive customers have become
increasingly empowered and well-informed, pressuring dealers to provide information and engagement
that was not necessary when the customer just came to the store.
Terminology
It is important to understand the terminology used in this document. Some of the key terms include:
- Meaningful response: indicates a response which in some way advances the sales opportunity with
the customer, via means such as a personal reference by the responder to the situation or lead
(such as an answer, or a promise to answer a question). Obvious auto-responders indicating little
more than that the lead has been received do not qualify as a meaningful response.
- Sales tool: indicates any one of a broad range of online mechanisms which allow the customer to
advance themselves through the sales process. Sales tools relevant to a post-lead circumstance
include (among others) Credit Applications and Trade-in Evaluations.
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4. Methodology
The Secret Shopping process included the submission of electronic leads via either the dealership’s
independent web site, the dealer’s OEM web site, or the dealer’s listing on an automotive portal.
Telephone numbers for the secret shopper were either not provided, or were provided with a specific
request for no phone calls. In some cases, leads could not be submitted either due the design of the site,
or as a result of errors encountered at the site.
Following the submission of each secret shopping lead, dealer responses were collected for a minimum
of 3 days. Lead responses were evaluated in terms of a variety of criteria, such as:
1. The time it took the dealer to meaningfully respond to the lead, with an emphasis on prompt
responses. Dealers that provided a first meaningful response more than 3 days after the lead was
submitted were grouped with dealers that didn’t respond at all; the contents of those late
responses were, however, still evaluated as below.
2. Whether any response to the lead contained an invitation to either the store or a test drive.
3. Whether any response to the lead included pricing information.
4. Whether any response to the lead included interactive sales tools that would facilitate the
customer’s advance through the post-lead sales process.
Sample
The large majority of Secret Shops collected for this study were clustered within 4 provinces: Alberta,
British Columbia, Manitoba, and Ontario, with a small number from New Brunswick (in some cases, New
Brunswick results have been excluded from graphical representations of the collected data). 245
independent and franchise stores were shopped, including 64 domestic OEM franchises, 91 import
franchises, and 28 independent operations.
Sample Size
120 113
100 91
80
60
41
40
20
0
Domestic Import Independent
Figure 1 - Sample Size
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5. Executive Summary
The study identified a number of key findings, including:
- The majority of dealers shopped did not respond to leads within a timeframe that would position
them for success; less than half of the dealers responded within the first day, let alone within the
first hour.
- A significant minority of dealers did not respond to leads within 3 days, or at all.
- The highest proportion of meaningful lead responses within 1 hour were produced by stores
carrying the following five brands: Acura (33%), Toyota (21%), Ford (17%), Nissan (17%) and Honda
(15%).
- Just 22% of dealers invited the customer either to the store or to a Test Drive. This is a curious
oversight, given that many managers describe the goal of post-lead follow-up as “get the customer
to the store”.
- More than two thirds of the brands evaluated did not produce a majority of responses within a day
following submission of the lead
- As a group, domestic dealerships provided the highest ratio (13%) of meaningful responses within
the first hour, followed by import dealerships at 8% and independent stores with 7%.
- Independent stores significantly lag their franchise counterparts with respect to providing or
confirming price information in lead responses.
- BC and Manitoba dealers position themselves for success with the greatest consistency. Dealers in
these provinces presented the highest proportion of either prompt or high-quality lead responses
(respectively).
- BC and New Brunswick are the only provinces in which no responding stores provided interactive
sales tools as an element of lead responses.
- A decreasing number of Canadian dealers continue to provide web site “leaks”; that is, links to
other web sites via which the customer may locate another dealer. However this behaviour is still
most frequently observed in Ontario where 7% of dealer sites either “frame-in” or “link out” to
content on other web sites, most typically OEM sites, where “Locate a Dealer” search buttons are
often prominently featured.
- In terms of both responses times and other critical success factors, the quality of lead responses
degrades dramatically during the summer months (Q3), but improves during the final quarter.
- In light of the high number of dealers responding to Internet customers either slowly or not at all,
dealers that do improve online response processes face a favourable competitive environment.
These findings are discussed in greater detail below.
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6. Response Times
Considering that the greatest opportunity to contact and qualify prospects occurs within the minutes
following submission of a lead (Oldroyd & Elkington, 2007), the majority of dealers shopped did not
respond to leads within a timeframe that would position them for the success; only 46% of the dealers
responded within the first
day, let alone within the 2011 - Response Times
first hour. The majority of
dealers (54%) either
provided no response, or 10%
responded a day or more
after the lead was Up to 1 hour
41%
submitted. 1 hour to 1 day
36% 1 to 3 days
A significant minority of
dealers – 41% – either took 3+ days/No Response
more than 3 days to
respond, or did not respond 13%
at all (Figure 2).
Figure 2 - Response Times
Prompt Responses
Only 10% of the dealers responded within the critical first 60 minutes; of these, the large majority (62%)
provided some type of meaningful response within half an hour (Figure 3). But while a 30 minute
response time compares
2011 - Responses Within an Hour quite favorably to the
average identified in this
4% study, one must also
consider whether waiting
8% up to 30 minutes before
5 minutes or less greeting customers on
38%
6 to 10 minutes the lot would hamper or
improve sales.
11 to 30 minutes
50% 31 to 60 minutes
Figure 3 - Responses within an Hour
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7. Brand
Stores representing the following 29 OEM brands were evaluated:
• Acura • GMC • Mitsubishi
• Audi • Honda • Nissan
• Buick • Hyundai • Porsche
• BMW • Independent • RAM
• Cadillac • International • Scion
• Chevrolet • Jeep • Subaru
• Chrysler • KIA • Suzuki
• Dodge • Lexus • Toyota
• Fiat • Mazda • VW
• Ford • Mercedes
Responses within 1 Hour
Overall, domestic dealerships provided the highest ratio (13%) of meaningful responses within the first
hour, followed by import dealerships at 8% and independent stores with 7%.
Responses Within 1 Hour
14%
12%
10%
8%
6%
4%
2%
0%
Domestic Import Independent
Figure 4 - Responses within 1 Hour
The highest proportion of meaningful lead responses within 1 hour were produced by stores carrying
the following five brands: Acura (33%), Toyota (21%), Ford (17%), Nissan (17%) and Honda (15%).
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8. Overall Response Times
Across many brands, it is apparent that a significant portion of dealerships are slow to respond to
Internet leads, if they respond at all. In fact, more than two thirds of the brands evaluated did not
produce a majority of responses within a day following submission of the lead.
Responses Times by Brand
0% 20% 40% 60% 80% 100%
Acura
Audi
BMW
Chrysler
Ford
GM
Honda
5 minutes or less
Hyundai
Independent 6 to 10 minutes
International 11 to 30 minutes
KIA 31 to 60 minutes
Lexus 1 hour to 1 day
Mazda 1+ days
Mercedes
3+ days/No Response
Mitsubishi
Nissan
Porsche
Scion
Subaru
Suzuki
Toyota
VW
Figure 5 - Response Times by Brand
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9. Pricing Information
Whenever possible, the price of the vehicle in question was requested as an element of the lead.
Nevertheless, less than a quarter (23%) of the import stores evaluated provided price as an element of
the lead response process, while 21% of domestic and just 12% of independent stores included this
information.
Price Quote
25%
20%
15%
10%
5%
0%
Domestic Import Independent
Figure 6 - Price Quote
Invitations to the Store
A similarly small portion of import and domestic stores invited the customer either to the store or for a
test drive, while overall just 22% of dealers initiated that next logical step. This is a curious oversight,
given that many managers describe the goal of post-lead follow-up as “get the customer to the store”.
Invitations to the Store/Test Drive
30%
26%
25%
20%
20% 17%
15%
10%
5%
0%
Domestic Import Independent
Figure 7 - Invitations to the Store/Test Drive
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10. Province
Dealers in BC, Manitoba Positioning for Success
Evaluating the geographical differences between stores provides some interesting insights. BC Dealers
tend to respond promptly, however they are somewhat less likely to incorporate interactive sales tools
in those responses, the lack of which may compromise their ability to advance individual opportunities
through the sales funnel, and build commitment to visiting the store.
Response Times
As 2011 progressed it became evident that BC dealers deliver the most consistently prompt responses
(see Figure 8Figure 8 - Lead Response Times (by Province), with more than a third being delivered within
an hour and a promising 6% arriving within 5 minutes. Meanwhile Ontario (8%) and Alberta (6%) dealers
provide the smallest proportion of prompt responses, likely compromising opportunities to make
contact with and then advance those customers through the sales funnel.
Manitoba dealers continue to present the largest portion of sites at which leads could not be submitted.
Lead Response Times (by Province)
1%
ON 4% 3% 37% 14% 42% 1%
5 minutes or less
6 to 10 minutes
MB 12% 6% 47% 6% 24% 6% 11 to 30 minutes
31 to 60 minutes
1 hour to 1 day
BC 6% 18% 12% 6% 12% 47%
1+ days
3+ days/No Response
AB 3% 3% 33% 13% 47% 3% Could Not Send Lead
0% 20% 40% 60% 80% 100%
Figure 8 - Lead Response Times (by Province) - total percentage may not add up to 100% due to rounding
When other critical success factors other than response times are evaluated, Manitoba fairs better; 35%
of the stores in that province provide an invitation to the store, while 18% present pricing information,
and another 18% provide interactive sales tools to facilitate the customer through the sales funnel
(Figure 9). BC and New Brunswick are the only provinces in which no responding stores provided
interactive sales tools as an element of lead responses.
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11. Critical Success Factors (by Province)
60%
50%
40%
Invitation to Store/Apt.
30%
Price/Quote
20%
Sales Tools
10%
0%
AB BC MB ON NB
Figure 9 - Critical Success Factors (by Province)
Errors
Manitoba stores also lead the way in other, albeit less desirable categories - errors and spam - as
indicated in Figure 10 - Errors during Customer Experience (by Province) and Figure 11 - Lead Responses
Caught in Spam Filters (by Province). In some cases errors were the result of forms on the dealer web
site that produced unexpected or catastrophic results (i.e. 404 "Page not found”), in other cases
interactive sales tools embedded in the lead responses led to unexpected results.
Errors During Customer Experience
(by Prov)
40% 35%
30%
20% 14%
10% 12%
10%
0%
0%
AB BC MB ON NB
Figure 10 - Errors during Customer Experience (by Province)
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12. Lead Responses Caught in Spam
(by Province)
20% 18%
15%
10%
5% 3% 4%
0% 0%
0%
AB BC MB ON NB
Figure 11 - Lead Responses Caught in Spam Filters (by Province)
Web Site “Leaks”
A decreasing number of Canadian dealers continue to provide web site “leaks”; that is, links to other
web sites via which the customer may locate another dealer. However this behaviour is still most
frequently observed in Ontario (see Figure 12 - Site "Leaks" to Locate another Dealer (by Province))
when pages from the OEM web site are either “framed-in” to the dealer web site, or the dealer’s
independent web site lacks its own new vehicle specifications (i.e. New Vehicle Showroom), and so
visitors are directed to external sites for that information.
Once referred to external content, customers often encounter prominently displayed “Locate a Dealer”
search buttons. Within the context of a customer who has already landed at a specific dealer’s web site,
the ability to search for competing, albeit same-brand dealers, is counter-productive to that dealer’s
interest).
Site "Leaks" to Locate Another Dealer
(by Province)
8% 7%
6%
6%
4%
2%
0% 0% 0%
0%
AB BC MB ON NB
Figure 12 - Site "Leaks" to Locate another Dealer (by Province)
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13. Month
Response Times
Significant variability is evident when evaluating the lead response data by month, likely because many
stores were only shopped once; each month different stores, and therefore different Internet sales
processes, were observed.
Response Times (by month)
70%
60%
50%
40% Less than 1 hour
30%
1 hour to 1 day
20%
10% 1+ days
0% 3+ days/No Response
Figure 13 - Response Times (by Month)
However when the same data is evaluated by quarterly period, a pattern does emerge (Figure 14 -
Responses within a Day (by Quarterly Period)). In each of the first three quarters of 2011, an increasing
majority of dealerships took more than a day to respond to a lead. Shopping online for vehicles during
the summer months would appear to be a most unfortunate time for consumers, given that 81% of
dealers shopped during the 3rd quarter took more than a day to respond. Only during the last 3 months
of the year did dealers respond most often within a day.
Responses within a Day (by quarter)
100%
81%
80%
56% 57%
60% 48% 52% 44% 43% Up to 1 day
40%
19% More than 1 day/No Response
20%
0%
Q1 Q2 Q3 Q4
Figure 14 - Responses within a Day (by Quarterly Period)
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14. Other Critical Success Factors
There is also significant variability when examining the presence of other critical success factors, as
illustrated in Figure 15 - Critical Success Factors (by Month) below.
Critical Success Factors (by month)
60%
50%
40%
30% Price/Quote
20% Invitation
10%
Sales Tools
0%
Figure 15 - Critical Success Factors (by Month)
However, when these other critical success factors are examined on a quarterly basis (Figure 16), we
find that with the exception of the 3rd quarter, dealers tend to respond with more of these factors as the
year progresses. In fact, during the 4th quarter, more than a third of dealer responses included Price
Quote information and/or an Invitation to the Store/Test Drive.
Critical Success Factors (by Quarter)
40% 37%
34%
35% 32%
30%
30% 28%28%
25%
Price/Quote
20%
Invitations
15% Sales Tools
11%
10%
6% 6% 5%
5%
0% 0%
0%
Q1 Q2 Q3 Q4
Figure 16 - Critical Success Factors (by Quarter)
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15. Summary
While it is encouraging to see that fewer dealers exhibit “leaks” on their web sites, the fact remains that
even when a dealership manages to capture a lead, the process for managing that lead remains largely
ineffective. Prompt response times have been proven to produce positive results; however it seems that
relatively few stores have invested in the skills or manpower necessary to convert more leads into more
sales.
There are some signs of positive change however, particularly in BC where dealers produce the greatest
proportion of prompt responses, and Manitoba where an increasing number of dealers today employ
multiple critical success factors during the course of their Internet sales processes, in effect positioning
themselves for success in an age of well-informed consumers. This progressive Internet posture can
produce its own challenges however, as evidenced by the high ratio of erroneous customer experiences
in Manitoba. Effective and ongoing management oversight can help these potentially strong Internet
sales processes become trouble-free.
This study confirms that there is plenty of room for Canadian dealers to improve Internet sales
processes. In light of the high number of dealers responding to Internet customers either slowly or not
at all, dealers that do improve online response processes will position themselves favourably within a
competitive sales environment.
Works Cited
Baker, B. (2011). Positioning for Success - 2011 Mid-Year Report on Canadian Dealer Responses to Online
Leads. Sun Media Inc.
InsideSales.com Research and Analytics Division. (2011, June). 55.3% of Top Companies Don't Respond
to Web Leads. Retrieved September 9, 2011, from InsideSales.com:
http://www.insidesales.com/images/aa-isp-2011-response-audit.pdf
McCann, M., & Kahn, P. (2010, April 26). The Marketing Excellence Scorecard. Retrieved September 9,
2011, from The Cobalt Group, Inc. web site:
http://www.cobalt.com/pdf/DD10_Presentation_Customer_Release.pdf
Oldroyd, D. J., & Elkington, D. (2007, October). Lead Response Management Study - Oct. 2007. Retrieved
September 9, 2011, from InsideSales.com: http://www.insidesales.com/images/LRM_07.pdf
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16. Contact
Barry Baker – Director of Professional Services
Sun Media Corporation
Phone: 1.866.955.2255
Email: barry.baker@sunmedia.ca
More about Autonet Dealer Solutions
Autonet Dealer Solutions is an automotive Internet marketing and solutions provider
specializing in website development, online inventory management, Internet merchandising,
Internet sales training, web analytics, and electronic data interchange (EDI).
Autonet Dealer Solutions is a division of Sun Media which is comprised of some of the most
recognized interactive media assets in Canada in the areas of news, automotive, housing,
classifieds, personals and entertainment. Sun Media is itself a division of Quebecor Media Inc.
one of the largest media, publishing and broadcasting companies in Canada.
Quebecor Media's divisions include:
1. Videotron Ltd, the largest cable services provider in Quebec, the third largest in Canada, and the
only provider in its service area to deliver all telecom services - cable TV, Internet access,
residential and business telephone service - over its broadband network;
2. Sun Media Corporation, Canada's largest publisher of newspapers;
3. MediaPages, Quebecor's one-stop shop for all print and online directories;
4. TVA, the largest private French-language broadcaster in North America;
5. Canoe Inc., one of the largest networks of English- and French-language general-interest and
special-interest Internet portals in Canada;
6. TVA Publishing Inc., the largest magazine publisher in Québec;
7. Quebecor Media Book Group, the largest group of French-language publishing houses in
Canada;
8. Archambault stores, the largest music store chain in eastern Canada;
9. Select, Canada's largest independent distributor of CDs and videos;
10. Le SuperClub Vidéotron ltée, the largest chain of video stores in Québec;
11. Nurun Inc., a leading international interactive consulting agency.
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