Dealers' Response Times and Response Quality to Leads Matter More than Ever; The Cobalt Group Releases Findings from Auto Industry's Largest, Most Comprehensive Automotive e-Business Performance StudySEATTLE--April 5, 2006--The Cobalt Group, Inc., the leading provider of marketing services to the retail automotive industry, and its Dealix division, the leader in automotive online sales leads, today announced findings from the Industry and Dealership e-Business Performance Study. The e-Business Performance Study is believed to be one of the most comprehensive assessments of dealership e-business performance conducted to date.
The study(1), conducted in conjunction with R. L. Polk & Co., an independent automotive information and marketing solutions provider, examined 1.1 million Internet 3rd-party leads over 15 months of sales performance, covering more than 1,300 dealerships that spanned U.S. geography and 36 major manufacturer brands. It also included detailed onsite evaluations of 20 of the top-performing dealerships, as well as corroborating 'eMystery' Internet shopper inquiries and telephone surveys with more than 4,000 vehicle-buying consumers.
"The findings from this unprecedented study have broad implications for the entire automotive industry," said John Holt, CEO of The Cobalt Group. "Cobalt is pleased to sponsor this research. As the leading provider of Internet advertising and marketing services, we have an obligation to identify and disseminate valuable insights into industry trends and best practices for the benefit of our OEM and dealer customers."
"The research provides valuable insights into automotive retailers' Internet sales process effectiveness, into car buyers' perceptions of dealer responsiveness and quality, and into levels and causes of OEM brand defection," said Andrew Price, vice president of Dealer Solutions, R. L. Polk & Co.
The study revealed many important findings:
-- 3rd party leads are valuable, because they represent ready-to-buy consumers. 56% of all leads analyzed resulted in a vehicle sale, which underscores the value of 3rd party leads as an effective customer acquisition method.
-- Consumers who submit 3rd-party Internet leads have a short purchase timeframe. 42% of sales associated with leads occurred within 30 days of the leads' submission. 68% of sales occurred within a 90-day period.
-- More dealerships are responding to Internet leads. Analysis indicates that dealers responded to 69.7% of leads, up from 60% a year ago.
-- Dealers have improved their responsiveness to Internet leads. Analysis revealed that average dealer response times(2) to leads are now 6.5 hours, versus 9.5 hours from a year earlier.
-- Quality of dealer responses is diminishing. The study showed that dealers responded satisfactorily to consumers' questions only 26% of the time, down from more than 38% a year ago.
"Internet leads are quality opportunities. Six out of ten buy, and they buy quickly: 42% purchase within 30 days," said Dean Evans, VP of Marketing for the Dealix division of The Cobalt Group. "These findings may surprise many dealers, especially when they compare Internet leads to traditional show room walk-ins. However, to capture the sale, dealers need to be prepared to move quickly and to respond to all questions, including price and inventory availability."
When asked about choosing a dealership, consumers cited the following as the primary reason for doing business with a dealer:
-- Competitive price (39% of respondents)
-- Good, quick dealership response (21% of respondents)
-- Proximity to dealership (14% of respondents)
-- Inventory availability (9.6% of respondents)
While many dealers presume that dealership proximity and inventory availability are top priorities for consumers, these finding illustrate the greater importance of timeliness and quality of dealer responses to consumer inquiries.
The study revealed high consistency with regard to the sales practices of top-performing dealerships. For example, sales professionals at top-performing dealerships are more likely to answer any / all questions from consumers, including pricing questions, in an initial contact. "If I don't provide price, then I am the highest price," said Michael Waldrop, of Coggin Honda in Florida.
The study also revealed that of the 3rd-party leads which resulted in a vehicle sale, only 8% of those sales occurred at the dealership that purchased the lead. The remaining 92% of 'lost opportunity' sales took place at another dealership, with three different outcomes:
-- 24% of sales involved the same make and model, but from a competing dealership
-- 34% of sales involved a different make, from another dealership
-- 42% of sales involved the purchase of a used car from another dealership
Further analysis of these "lost opportunities" yielded additional insights:
-- Brand defection from intended make is high. As indicated above, 34% of 'lost opportunity' sales involved a different make from the intended dealership, which shows that consumers are open to comparison-shopping among brands.
-- The longer it takes to close a lead, the more likely the consumer will buy a used car after originally submitting the new car lead, as illustrated by the following table:
Percentage Purchasing Lead Close Time-Frame Used Vehicle -------------------------------------------------------- 30 days or less 20% 31 - 60 days 49% 91 days or more 55%
"For the past few years, the mantra was 'response time drives closing'", said Kevin Root, VP of Applications and Services, The Cobalt Group. "Today, it's the quality response that drives closing. That means answering questions about inventory availability and price. It doesn't mean providing the lowest price. In fact, rather than discount heavily, most high-performing dealers build value in their responses (why me / why make) to earn the appointment."
The co-authors of the Industry and Dealership eBusiness Performance Study have published a comprehensive and detailed analysis of the study's objectives, research methodologies, findings and implications. This document is available as a white paper at www.cobaltgroup.com/press/in_the_news.jsp
About The Cobalt Group
The Cobalt Group is North America's leading provider of automotive marketing services. For more than a decade, Cobalt's exclusive mission has been to help automobile dealers and manufacturers increase their retailing effectiveness and profits. Cobalt provides marketing services to more than half the automotive dealerships in the United States, Canada and Mexico and is endorsed by more than two-thirds of the world's major automotive manufacturers. Cobalt is also endorsed by the American International Automobile Dealers Association (AIADA).
The Dealix division of The Cobalt Group is a leading provider of third-party leads to automotive dealers. Dealix owns and operates InvoiceDealers.com, one of the industry's leading auto buying portals and the Dealix Lead Trading Platform(SM) (LTP), a suite of proprietary technology products and business services. The Dealix LTP processes over 2.2 million vehicle shoppers monthly from InvoiceDealers.com and from the Dealix Lead Acquisition Network(SM), a collection of preeminent partner websites. Dealix also provides market intelligence via its data analysis division, Dealix Business Intelligence(SM) (DBI).
For more information about The Cobalt Group or about Dealix, please call 800-909-8244.
For media inquiries, please contact the corporate communications team at 206-219-8022, or email firstname.lastname@example.org.
About R. L. Polk & Co.
R. L. Polk & Co. is the premier provider of automotive information and marketing solutions. Polk collects and interprets global data, and provides extensive automotive business expertise to help customers understand their market position, identify trends, build brand loyalty, conquest new business and gain a competitive advantage. Polk helps automotive manufacturers and dealers, automotive aftermarket companies, media companies, finance and insurance companies, advertising agencies, consulting organizations, government agencies and market research firms make good business decisions. A privately held global firm, Polk is based in Southfield, Mich. with operations in Australia, Canada, China, France, Germany, Japan, the Netherlands, Spain, the United Kingdom and the United States. For more information, please visit www.polk.com.
Cobalt, The Cobalt Group and Dealix are trademarks of The Cobalt Group, Inc. All other trademarks and trade names are the property of their respective owners.
(1) The Industry and Dealership e-Business Performance Study was sponsored by The Cobalt Group and its Dealix division, and conducted in conjunction with R. L. Polk & Co. an independent, privately held provider of automotive research and information solutions. The study examined 1.1 million third-party leads over 15 months of sales performance, covering more than 1,300 dealerships that spanned U.S. geography and 36 major manufacturer brands. Research and analysis included lead matching, telephone surveys with dealers and consumers, onsite evaluations and eMystery shopping tests.
(2) Actual responses, rather than email 'auto-responses', were used to compute this measure.