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Analysis: Fast response, quick sale

Dealers are converting more internet leads into used car sales despite failing to accurately track the online process, according to the new AM/Auto Trader survey.

Dealers are converting more internet leads into used car sales despite failing to accurately track the online process, according to the new AM/Auto Trader survey.

However, less than half (41.5%) respond to a website or email enquiries within two hours (up marginally on 2003’s 38%), although 91.5% in total reply within a day (2003: 99%). Almost 4.5% admit to taking more than a week to answer online enquiries, suggesting they have no website strategy.

They are missing out on a substantial opportunity to raise sales as consumers expect a quick reaction: research from Cap Gemini Ernst & Young suggests at least 30% anticipate a response within four hours – and as they have often made several enquiries to different retailers at the same time, the quickest responses stand the best chance of making the sale (see panel below).

Most dealers are enjoying a positive impact to their bottom line: 32% say that internet leads accounted for more than half the used cars sold over the past 12 months, a dramatic increase from 22% in 2003. Likewise, almost 98% of dealers (up from 48% last year) say the internet is breaking down barriers and enabling them to market their business nationwide, generating sales from outside their traditional territory.

Twelve per cent are selling more than eight cars outside their sphere of influence every month; 48% are selling between three and seven cars, while a further 36.65% are selling one or two cars a month.

With more customers willing to travel to buy a used car following an online search, greater demand for stock has seen residuals strengthen, according to 34% of dealers. That’s no surprise, as 74% believe customers searching for cars online are generally closer to a purchase decision than walk-in trade.

But many are still missing out on sales opportunities. Just a third (34.16%) have a designated or specially trained sales person to handle internet sales leads, up 4% from 2003, while a paltry 42.65% have a system in place to track internet sales. That calls into question their knowledge about the true number of sales leads coming from the internet – the figure might be higher than they believe.

Training is essential. Consumers making online enquiries have generally undertaken far more research prior to considering the purchase and are more knowledgeable about model specifications, strengths and weaknesses. That’s the view of 92.5% of dealers who will need their hottest sales staff handling enquiries. A further 89.6% say these customers are more aware of the price they should pay, which means haggling should be expected, while 29.5% of dealers believe they are more affluent than walk-in trade (70.5% say there’s no difference).

So what helps retailers attract enquiries to their online stock? According to the AM/ Auto Trader survey, it’s the ability to write information about the car (88% of respondents), following closely by use of images (71%) and dealer branding on ads (69%).

The next technological advance is likely to come from digital TV, say dealers, rather than WAP-enabled mobile phones whose influence seems to be on the wane. Fifty-four per cent of dealers believe digital TV will play an ‘important’ or ‘very important’ role in the car buying process over the next five year, in contrast – and contrary to the predictions a few years ago – to Wap phones at 38.5%. A third of respondents say Wap phones are not important.

Online auctions – a service already offered by BCA and Manheim to the trade – are seen as an important resource for selling vehicles to consumers as well as buying stock. With almost 43% of dealers believing they offer a new route to market, it is a clear call to auctions houses and internet companies to set up functions for business-to-consumer auctions, following the approach taken by bidding website eBay Motors. Auto Trader has already indicated it is considering (AM, May 7) an online auctions business.

But while the impact on used car sales is indisputable, the influence on new car business is lagging behind. Of those respondents with a new car franchise, just 2% claim that internet sales leads end with a transaction. That’s probably more a reflection on poor tracking procedures than a general lack of interest by consumers, however.

Speed of response - how quickly car dealers reply to email sales enquiries

Ten biggest sellers on AutoTrader.com

1. BMW 3-SERIES
2. VW GOLF
3. Ford FIESTA
4. Renault CLIO
5. Vauxhall CORSA
6. Vauxhall ASTRA
7. Honda CIVIC
8. Peugeot 306
9. Ford FOCUS
10. Ford ESCORT

The consumer’s view

Retailers should consider the internet as a valuable opportunity to stay in touch with consumers as the lengthening car buying cycle and service intervals threaten to fracture the relationship.

That’s the view of Cap Gemini Ernst & Young, which says integration of the internet into a dealer’s overall marketing programme is vital to drive more consumer traffic to the business, improving communications and increasing data capture. The company says consumers have three key questions when visiting a website: What can I afford? Where is the vehicle I want to look at? How does the vehicle compare with other vehicles in my price range? Dealer and manufacturer websites often contain too much information that prevents consumers from quickly fulfilling these requirements.

Secondary information that they find useful includes trade-in information, cost calculators and configuration capabilities, while the option of booking test drives and service/repair is also valued. Speed of response is essential. Most consumers expect a response within 24 hours, with 30% demanding an answer within four hours. And they won’t wait for the dealer – 81% say they would look for a new retailer if they take too long to respond, while 48% would consider a different manufacturer.

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