Automotive Leads Are Not Always a Leading Sales Indicator

The automotive industry is unique in many ways; most notably it trails almost every other consumer market in influencing people to actually buy online.  From our vantage point, here are the five biggest differences and their implications (hint: dealers have something to do with it):

  • Trade-ins Require a Trip to the Dealer: Most people who buy a new vehicle trade in an old one, or return a leased vehicle.  Despite better trade-in value websites, they typically do not know what they can afford until they know what their trade-in is worth (or whether they’ll owe fees on a lease return).  This means a trip to the dealer.
  • Fitting Requires a Trip to the Dealer: In addition, a vehicle is much like clothes: size and fit are not uniform across models.  Often consumers need to actually interact with the vehicle to evaluate fit, comfort, visibility, etc.  That requires a trip to the dealer.
  • Stock Gaps Require a Trip to the Dealer: Online vehicle configurators have come a long way, but trying to find the exact vehicle you configured in dealer stock reveals the gap between digital and dealer.  Likewise, many vehicles have dealer-added options that are not included in configurators.  And of course there is the negotiation process, which means the price online is most likely not what you end up paying.  Solving these requires a trip to the dealer.
  • Romance Requires a Trip to the Dealer: The auto industry is a romance industry, meaning there is often as much heart in the decision as there is mind.  The look, smell, and gleam of a new vehicle all influence the purchase decision, and experiencing that requires a trip to the dealer.
  • Avoiding Unwanted Emails Requires a Trip to the Dealer: A recent Money magazine feature titled "Don’t Try to Do This Online" suggested getting a price quote through results in being "pelted with dozens of email from car dealers for months" after revealing your email address.  This is common on lead generation sites, not just Edmunds.  Avoiding inbox overload requires a trip to the dealer.

Other than healthcare, it’s tough to find another market where the distribution channel is so central to the purchase experience. And our data reinforces this.

Compete analyzed how many consumers visiting automaker sites begin the configuration/Build Your Own process and begin the lead/Request A Quote process, looking  at the average monthly rates over the past three years across all OEM sites.

The units are unique consumers, not unique events or sessions: A consumer that submits five different leads on the same site in a month, or submits five leads on five different sites, is counted here only once.  We used this approach given that consumers generally buy one vehicle at a time, so we avoid false positives in terms of sales potential.

The results show how few potential buyers actually start the Request-A-Quote process: about 3% of unique consumers on average over the past 3 years.  Because completing the process typically requires submitting an email address or phone number, the share actually completing the RAQ process is even less.

So what does this all mean?  It means that while the vast majority of automotive buyers use the internet, a slim minority actually submits leads, and those that do may submit multiple leads at the same time.   While driving leads is an important e-commerce objective, using leads as a robust measure of demand in and of itself has significant limitations.   We are left with two choices:

  1. Ignore the limitations and focus on the minority of consumers
  2. Embrace the limitations and move further upstream online where reasons like the above do not contaminate the data

Compete recommends that marketers use both, correctly applied to business needs.  For measuring in-market demand, marketers should rely on consumers’ pre-purchase-request behaviors. Compete blends these behaviors as tracked across the largest set of sites used in the industry, which has produced the industry’s longest running digital in-market demand measure and one proven to represent future buyers.  Connecting these trends to ad spend, incentives, etc. unlocks the ability to measure and optimize efficiencies.  In addition, Compete offers the ability to reveal the clickstream of actual vehicle buyers, which leverages full web insights (not just RAQs) on another important set of consumers: those that bought.

For optimizing automotive websites, marketers should use lead submission but only as one important part of the equation.  The other parts come from Compete’s ability to see the full online process from home page to engagement to lead.  We recommend comparing the results across both OEM and third-party automotive sites to reveal set-leaders and best practices.

In addition, each solution can be combined with the other to reveal a broad and deep view of the consumer process, and augmented with pre-site search engine activity and behavioral segmentation analyses.  Together these provide the most complete look under the hood at driving consumers and driving sales.

About Lincoln Merrihew:
Lincoln Merrihew is the Senior Vice President of Transportation at Millward Brown Digital. At Millward Brown Digital, Lincoln is responsible for steering the Transportation Team, which encompasses the automotive and travel practices. Before Lincoln joined the Millward Brown Digital team, he worked at TNS Custom leading the Automotive team, and then continued on there to lead business development for 10 different industry verticals. Lincoln's career aspiration is to create game-changing solutions and insights. Connect with Lincoln on LinkedIn.

Categories: Automotive

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