8-2017 / N I A D A . C O M INDEPENDENTS ARE INCREASING ONLINE INVESTMENTS
It is neither a secret nor a myth that car shoppers largely begin their buying process online. As a result, dealers continue to adopt more modern marketing approaches to grow their portfolios, remain competitive and put buyers in the right car. Dealers realize adopting digital marketing methods does not require sophisticated marketing tools. The most recent NIADA Business Confidence Survey conducted by NIADA in partnership with Equifax, found nearly 50 percent of the independent dealers polled said they planned to increase investments in digital marketing channels – including online and mobile delivery channels. Directing incremental online traffic is key to moving virtual shoppers into the physical dealership. Not knowing who the virtual browsers are or why they are Internet shopping means dealers will struggle to get consumer contact, whether by phone, email or face-to-face – and limited customer contact can be detrimental to dealerships’ profitability. Additionally, it’s imperative for dealers to identify gaps in customer affordability and develop plans to fill those gaps and build trust with consumers to convert leads into satisfied drivers and repeat customers. Those gaps have become increasingly important for used car dealers to understand, because over the past dozen years, finance penetration in used car sales has greatly increased.
Used cars are attractive options to buyers who want to save money by avoiding the decreased value of a vehicle due to depreciation loss from when the vehicle was new. But today used vehicles generally maintain value, reducing the dreaded “upside down” percentage of traders with negative equity and creating more with positive equity. That affords dealers opportunities to leverage that value and employ top-notch marketing approaches, similar to their franchise dealer brethren, which can reap strong back-end profitability. To attract ready-to-buy consumers into that process, dealerships should consider why someone who wants or maybe even needs a car would engage online, and what information he or she is seeking.
Why has the customer disengaged from the traditional process rather than just coming to the local dealership and talking to a salesperson from the start? What makes those consumers automatically head to the Internet? When those behaviors are analyzed, only then do dealerships begin to pinpoint their motivations and align their efforts to them correctly. One reason car buyers click first during their shopping experience is the comfort of it. Purchasing a vehicle is one of the largest purchases of a person’s lifetime, second only to a home for most of us, so it is a decision that takes time and has multiple considerations. Visiting dealerships can sometimes take an entire day or two, or even more for particular buyers. According to an Accenture survey of 10,000 people in the U.S. and other countries, consumers aren’t exactly fans of the traditional car dealership experience. In fact, three-quarters said if given the opportunity, they would consider doing their entire car-buying process online, including financing, price negotiation, back office paperwork and home delivery.
While the auto industry is already seeing some of that end-to-end car-buying online, consumers aren’t necessarily ready to experience that entire process yet, typically preferring to drive their new purchase off the lot. But it is still important for dealers to keep abreast of what is to come and make plans for the future while meeting buyers where they are right now – online.
There’s also another reason: With four times more car shoppers choosing to finance, consumers often opt to remain anonymous as they shop digitally out of fear of harming what might be an already challenged credit score by a dealership pulling credit. That’s an application of credit, which can impact a consumer’s credit scores. That credit-pulling fear can also be derived from previous bad experiences associated with credit, such as being denied a loan. People who have been denied before will just want to browse as many dealers as possible and stay under the radar until they find the right car that works within their budget. Ultimately, they don’t want to experience the feeling of being denied credit again, or maybe even being told they can’t afford the car they want. Fortunately, sophisticated credit based marketing tools are available as plug-ins that can help dealerships remove that fear while providing the consumer transparency, helping convert that anonymous web traffic (online and mobile) into qualified marketing, sales or just plain highly engaged leads. Those credit-based marketing tools can help auto dealers generate more high-quality, identity-verified leads from application forms embedded on their website. Additionally, those tools – through a partnership with a solutions provider capable of integration with a dealer’s website – can offer consumers a risk score to see if they are likely to meet the minimum credit requirements for auto financing from a variety of lenders. Here’s how the process works: To start the pre-qualification process online, the consumer only enters his or her name, address, email and phone number – no social security number, date of birth or driver’s license number is required or requested.
That in and of itself creates a lift in engagement and a drop in abandonment compared to traditional long forms because consumers are hesitant about entering those sensitive identifiers. Pre-qualification results in a soft credit inquiry posting, which does not impact a consumer’s credit score. All captured lead information is then sent to the dealer regardless of whether the consumer completes the input process or whether or not he or she qualifies. Consumers will then receive prequalification decisions, such as a credit limit, interest rate, and term. Once they receive the results, they can decide if they want to share their credit score range and/or prequalification with the dealer to move on to the next step in the auto shopping process. All of that is done by simply checking a consent box online. An overwhelming percentage of automotive advertising from OEM marketing and downstream carries “Buy Now” messages that require finance approval, low leases, zero percent financing, OEM incentive-based financing and payment calls. Pre-qualification can help consumers reduce the set of cars in their consideration set by helping them identify vehicles that are in their payment range and meet their requirements. For dealers, it helps moves qualified, focused leads through the sales funnel and empowers consumers to shop with more confidence. Inserting those marketing tools into existing digital channels helps consumers understand their credit and helps capture engagement, pushing foot traffic to dealership lots and showrooms. It’s extremely instrumental in terms of an overall approach for dealerships, as it works across the board to generate the high-quality, ready-to-buy leads dealers are in search of. Once consumers learn their credit score and can understand the types of cars they can afford, the financing hunt begins and dealers can engage with the customers directly. Lenders can prequalify consumers and provide their credit limits as well as displaying interest rates and loan terms the applicants would qualify for, subject to a full credit application. Now the finance portion of the car buying process has really begun. Some of the credit-based solutions really come to life when dealers use them to “front run” the business and extend offers to consumers who meet predetermined credit criteria – again with no impact to their credit score. We all know traditional credit marketing solutions that fill our mailboxes every day with offers for credit cards, mortgage refinancing, and dealer for a preapproved loan. That is now available to dealers in a real time, digital, consumer-by-consumer environment.
Car shoppers are researching on the Internet and they’re trying to piece together and validate as much of their deal online as possible before they visit a dealership. So it’s imperative for progressive dealers to identify and fill gaps so they can build trust by enabling those shoppers to easily get the information they want. Partnering with a trusted data, analytics and insights partner can provide customer tools that are designed to provide a safe, simple and effective solution that enables an efficient financial process, benefitting both dealers and consumers