What is your dealership’s lead conversion rate? Specifically, how many of your leads turn into buyers? Industry benchmarks for auto retailers’ conversion rates are close to 10 percent, with large variations attributed to lead source, dealer brand, location, process and other factors. While some of these factors lie outside of dealerships’ control, dealers have many options available to positively impact lead conversion rates.
According to two recent studies 1 conducted by AutoLoop, failure to convert car shoppers into buyers occurs because of a breakdown in several key areas. As customers test drive fewer vehicles, many dealerships are not enhancing the customer experience to overcome the drop in traffic. When customers do visit a dealership, our data indicates a salesperson’s lack of transparency and pressure tactics drive many away. Additionally, many salespeople fail to follow up with customers via their preferred method of communication.
Fortunately, dealerships can implement a few simple strategies to address these breakdowns and turn more leads into buyers.
1) Increase Ease of Test Drives
Once a lead is identified, the largest hurdle that salespeople must overcome is to convince that customer to make an appointment and show up at the dealership. According to our Digital Engagement study, this hurdle is only getting higher.
One reason why car shoppers are reluctant to come into a dealership is because they are taking fewer test drives. On average, consumers take just two test drives before purchasing a vehicle. Baby Boomers and Gen Xers average 1.5 and 1.7 test drives respectively, while Millennials average 2.4 test drives.
We asked these same car shoppers where they prefer to take their test drives and their answers revealed a trend that doesn’t bode well for dealers. While 83 percent of Boomers and 80 percent of Gen Xers prefer to take a test drive at the dealership, only 60 percent of Millennials prefer to take a test drive at the dealership. A whopping 40 percent of Millennials prefer to take test drives at a non-dealer location or virtually.
To address this trend, dealerships need to identify ways to reduce the inconvenience of taking a test drive, which can be extremely time-consuming for customers who have less time than ever to spend shopping for a vehicle. Some strategies to consider are having a customer’s vehicle of interest ready to go when a customer arrives at a dealership or even taking the vehicle directly to the customer’s home.
As many Millennials consider a virtual test drive to be an adequate replacement for a real test drive, dealerships also need to consider offering virtual test drives on their websites as a potential intermediate step before a customer opts for the real experience.
2) Understand Buyers’ Motivation
Every car shopper is different; each with their own unique reason for buying a car. Data from AutoLoop’s Digital Engagement survey reveals the top reasons why car shoppers purchase from a dealership, as well as the top reasons why car shoppers fail to return for a repeat purchase.
Top Reasons Buyers Purchase at a Dealer
- Good value for the money
- Selection of vehicles
- Ease of purchase experience
- Quality of salespeople
- Convenient location
Top Reasons Buyers Don’t Return
- Prices are too high
- Plan on buying another brand
- Dealer is too far from home
- Too much pressure to buy
- Paperwork took too long
Understanding these motivators can help salespeople deliver a better first impression. Skilled salespeople explain the value proposition of a vehicle rather than just quote the price. Ideally salespeople will also share the value proposition of the dealership and take steps to alleviate the length and pressure of the sales process.
3) Follow Up!
Sadly, this key statistic from AutoLoop’s Unsold Prospect survey with 60,000 customers may not be surprising to many dealers. Just 53 percent of car shoppers said they received follow-up communication from a dealership they visited, which means nearly half of customers who visited a dealer never received any follow-up communication.
Follow-up has a significant impact on a consumer’s decision to purchase. 26 percent of customers who had follow-up from a dealership after their initial visit ultimately purchased from that dealership, compared to a 15 percent purchase rate for customers who did not receive any follow up.
To improve follow-up, dealers need to emphasize training, process consistency and accountability. Dealers also need reliable back-up systems to contact customers when sales associates are too busy to follow up.
4) Use Customers’ Preferred Communication Channels
While follow-up is a basic tenet of salesmanship, the best way to communicate with a customer is a gray area for many dealers. Salespeople often use their own preferred method for contacting a customer, such as calling on the phone, instead of the customers’ preferred communication channel.
According to AutoLoop’s Digital Engagement study, the majority of customers who visit a dealership prefer their follow-up to be in the form of an email or phone call. Preferences differ somewhat between generations, with Boomers preferring phone calls and younger generations split between phone calls and email.
Most CRMs allow salespeople and BDC staff to enter a preferred method of communication. Whether email, text, phone or even ‘no preference,’ it doesn’t take much effort to pull up a customer record and note the preference before reaching out. Not only does this demonstrate a show of respect for the customer relationship, it greatly increases the likelihood of a response.
Turning leads into buyers isn’t rocket science. But it is a science of sorts, because a consistent application of methodologies is required to produce consistent results.
To attract leads to your dealership, find ways to reduce the inconvenience of a test drive and enhance the customer experience at your dealership. A comprehensive strategy will encompass virtual test drives on your website combined with extra conveniences for customers who are ready for a physical test drive.
Once on the lot, your sales team is largely responsible for the final conversion into sales. Their ability to focus on customer needs, build trust and explain the value proposition of your dealership is critical. Finally, if a customer leaves your lot without purchasing, follow up using their preferred communications channels.
Doug Van Sach is Vice President of Analytics & Data Services at AutoLoop LLC, the leading provider of auto industry marketing and customer relationship management solutions that successfully drive the Sell, Service, Repeat cycle.
Doug uses crucial customer analytics and insights to improve and drive digital and multi-channel acquisition, retention and loyalty programs across leading OEMs and dealer groups. Previously, as VP of strategy at DME Automotive and VP of Analytics at 3Birds Marketing, he developed innovative marketing programs for automotive dealers and aftermarket providers. EMAIL: firstname.lastname@example.org
*Data cited in this article was sourced from two studies:
(1) AutoLoop’s 2016 Digital Engagement (ADE) study surveyed 1,000 auto consumers and analyzed the purchase behavior of over 4 million customers from across the U.S.
(2) AutoLoop’s Unsold Prospect study surveyed over 60,000 customers from a national sample of dealerships.
Author: Doug Van Sach
Doug Van Sach – Vice President of Analytics & Data Services
At AutoLoop, Doug uses crucial customer analytics and insights to improve and drive digital and multi-channel acquisition, retention and loyalty programs across leading OEMs and dealer groups. Previously, as VP of strategy at DME Automotive and VP of Analytics at 3Birds Marketing, he developed innovative marketing programs for automotive dealers and aftermarket providers. Prior to that, he established the customer insights and online marketing functions at Dick’s Sporting Goods and provided performance improvement consulting to Fortune 500 companies at Ernst & Young Management Consulting. Doug earned his BS from Miami University in Ohio and his MBA from Indiana University.