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Study links car sales success to digital due diligence

Major car dealership groups tout their digital retailing processes and prowess, but many of them only rank moderately in a Pied Piper mystery shopping survey.

The consultancy’s Internet Leads Effectiveness Study primarily measures how quickly mega-retailer stores respond to a specific question sent through their websites. The auto-response didn’t count.

Among the major groups, Penske Automotive, Berkshire Hathaway Automotive and Asbury Automotive Group are above the industry average.

Conversely, Sonic Automotive, Hendrick Automotive, AutoNation (largest dealership chain in the US), Group 1 and Lithia rank below average. (See the table below for the full ranking.)

“We knew some of them would do well,” Pied Piper president Fran O’Hagan told Wards. “But there is a huge variation in behavior.” Some dealers were good at using one communication channel, but not others. Exceptional dealers are adept at using all channels, be it email, text, phone call, or chat.

“It’s not enough to be good at one and not the other that the customer might prefer”, O’Hagan (photo below left) said.

It pays for a dealership to stay on top of internet inquiries and avoid putting digital operations on “cruise control,” he says. “Our metrics show that dealers who respond quickly, personally and completely to website customer inquiries sell an average of 50% more vehicles to the same number of website customers, compared to dealers who don’t respond.”

Pied Piper submitted mystery shopper requests through the individual websites of 1,631 dealerships, asked a question about an in-stock vehicle, provided a customer name, email address and local phone number, then assessed dealers response within 24 hours.

“If you crafted a nice answer but it took 36 hours, you’re not doing well,” O’Hagan says. “Reacting quickly is the highest correlation with high close rates.”

Customers from high-performing dealer groups were three times more likely to get a quick response than customers from a low-performing dealer group, O’Hagan says.

Digital auto retail pioneer David Kain told Wards that the dealership group’s rollercoaster performance was not surprising. “There is a little digital fatigue in large groups,” he says.

He notes that while dealer groups are essentially centralized operations, general managers with a stake in the business manage many individual stores.

“If the GM is digitally tuned, he’ll do well,” says Kain (photo below left)who runs the consulting firm Kain Automotive, co-founded FordDirect 25 years ago and partly owns a family dealership, Jack Kain Ford in Versailles, KY.

Kain talks about the need for dealerships to engage with buyers, learn why they’re buying “and not treat them like you’re trying to cash them in at checkout.”

David Kain.png Dealer groups’ larger marketing budgets give them an edge over independent stores, Kain says. “But the Pied Piper study shows there’s no benefit to interacting with customers.”

Here are examples of performance variation studies by company:

  • How often did the company’s dealerships respond via email or text to a website customer’s question within 30 minutes? More than 50% of the time on average: Naples, Penske, Morgan, Serra. Less than 35% of the time on average: Ken Garff, AutoNation, Lithia, Victory.
  • How often has a dealership used a text message to respond to a customer request on a website? More than 35% of the time on average: Asbury, Automotive Management Services, Naples, Morgan. Less than 20% of the time on average: Ken Garff, Penske, Greenway, Berkshire Hathaway, Victory.
  • How often did a dealer phone the web customer within 60 minutes? More than 75% of the time on average: Naples. Less than 30% of the time on average: Victory, Greenway.

Pied Piper has done similar studies of dealer mystery shopping by brand. This is his first collective effort.

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