The Unbreakable Value of the In-Person Test Drive

by Eric DeMont | Global Practice Director, Urban Science

If there has ever been any doubt regarding the relevance of the in-person test drive, we have confirmed loud and clear that it is here to stay. Over the summer of 2020, we worked with the Harris Poll to survey over 1,500 adults in the U.S. on how the pandemic has influenced the way they shop. As data scientists, we look for both patterns and anomalies hidden in the data that we then infuse into our informed perspectives. What we’ve learned following the permanent effects the year 2020 has had on the world is that once again, not much remains constant aside from change. This study, however, also highlighted one aspect of the vehicle purchase process that has largely remained unchanged in a year in which just about everything else had been forced to adapt.

The in-person test drive at a physical dealership is one enduring element of the car-buying process that has more than weathered the storm of COVID-19. The 2021 auto buyer still wants to experience their next vehicle purchase the same way as the 2010, 2018, 2019, and 2020 auto buyer. According to the study(1), most adults (82%) agree that there are certain elements of the vehicle purchase process that are better fit for in-person visits and cannot be done online. Of that 82%, 80% point directly to test drives as a key component of the purchase process that simply cannot be replicated in a virtual environment.

While we can’t statistically say the pandemic has had no effect whatsoever on people’s interest when it comes to digital retailing or that there aren’t consumers out there embracing the idea of moving many parts of the purchase process online, we can say the majority of adults (79%) still to this day report “they would never buy a vehicle without test driving it first.” Furthermore, 81% agree that a vehicle is too substantial of an investment to risk not seeing it in person before buying.

In November of 2020, Urban Science conducted a follow-up study(2) to evaluate consumer appetite for how they want to buy a vehicle nine months after the virus initially hit. According to the survey, despite the rise in COVID-19 cases across the U.S. during this period, 86% of consumers report being very or somewhat comfortable with buying a vehicle in person and 64% believe it’s completely safe to visit a dealership today.

Even more notable was when we asked consumers if they were ready to purchase a vehicle exclusively online, the response was a resounding “no.” While there are some aspects of the process people do prefer to complete online, most adults said that in person at a dealership is the most helpful to ensure a positive experience, especially when it comes to, you guessed it, TEST DRIVES. 

Once again, both dealers and automakers have proven their resilience to change and adversity as this industry has done throughout historical recessions, pandemics, and natural disasters. Within weeks of the first U.S. case of COVID, we saw dealers quickly act to remediate the situation at hand with advertising containing language around “at-home test drives” and “we’ll bring the car to you!” Dealerships immediately stepped up their game in terms of both vehicle sanitization efforts and operational modifications to adhere to new and everchanging CDC-compliant safety protocols.

At Urban Science, we too had to adapt our test drive incentive solutions to accommodate for things like at-home test drives. We customized offers to help support local restaurants and changed our messaging to inform the public of the great measures our dealers were taking to ensure the safety of their customers. While the fundamental concept of normalcy shattered around us during this time, the collaboration and innovation that arose as a result is something that made our solutions much like the need for the in-person test drive experience, unbreakable.

In many ways, one could argue that the unrelenting impact of this global disaster has only strengthened the relationship people have with their cars. The vehicle itself has consistently been the ultimate symbol of freedom. In times of lockdown, trepidation, and uncertainty, a personal vehicle has become one of—if not the only—places people can go to escape the chaos of our new lives often stuck at home, plagued with screen fatigue. Going for a drive may be the only time and place many of us can find peace or feel free from COVID-related restrictions during times when we can no longer gather for entertainment, go out to dinner, attend a concert or sporting event…the list goes on. Perhaps more of a behavioral observation than a data point, your car is one of the best ways to get out of the house and still be safe, free, and socially distant. It would only make sense that the need to test drive a vehicle in person before making such a large commitment would prove to be pandemic-proof.

To learn more about Test Drive Solutions from Urban Science, contact Eric DeMont at ekdemont@urbanscience.com.

(1) Urban Science and The Harris Poll Joint Study, Around the Bend: How COVID-19 Impacts the Next Normal for Dealers

(2) Urban Science Online Study, The Harris Poll “Continuing Through COVID: Are Consumer Buying Intentions Changing All That Much?”, 2020

© 2021 Urban Science. All rights reserved.

Dealer Survey Points to Three Ways to Combat Inventory Shortage Problems

Exploring recent survey data from the Urban Science® COVID-19 Dealer Survey

This survey was conducted online within the U.S. by Urban Science to understand the impact of the pandemic on dealers and how they are evolving to fulfill the changing needs of consumers while remaining a successful business. Survey responses were evaluated for margin of error at a 90% confidence level.

While it is no secret that inventory shortages have become a common struggle for many U.S. dealerships, our recent survey data indicates opportunities can be found in an otherwise disadvantageous situation. Overall, dealers are recognizing that ongoing vehicle shortages are influencing consumers to increasingly use dealer website inventory to inform their decisions on which retailer(s) they will visit before making a purchase.

Below are three critical implications of the pandemic and actions dealers can take to turn them into opportunities:

1. 80% of dealers report consumers are submitting leads from further distances based on inventory

As consumers become more willing to take a drive for the car they want, they become less likely to be loyal to their nearest dealership. This means dealers in strong inventory positions should expand their media and test drive incentive campaigns to reach further-out geographies. On the contrary, dealers with limited inventory should deliver test drive incentives to all consumers visiting their digital inventory pages to entice them into their showroom, even if they don’t have the specific model that in-market consumers are looking for.

2. 82% of dealers say inventory views have increased during the pandemic

The world may be upside down, but the fact than an increase in VDP views still correlates directly to an increase in vehicles sold is a good sign for dealers. Current industry trends indicate tight marketing budgets would be well spent on things like test drive or purchase incentives to help you convert active, in-market consumers by encouraging them to come in and test drive the exact vehicle they could be taking home. Test drive incentives continue to be a surefire tactic to getting more of your VDP viewers into your showroom, where you have a higher chance of closing the sale.

3. 76% of dealers agree that consumers are more likely to buy the vehicle they submitted a lead for

Increasing lead close rates should give dealers reassurance to work their leads persistently and confidently. If there is a greater likelihood for people to purchase what they say they want, dealers should be mindful to not allow their competitors to steal a sale due to insufficient follow-up. They should follow up with their leads for as long as it takes to get in-market consumers into the showroom and into the vehicle. More specifically, this means salespeople shouldn’t call it quits after seven days and should prevent leads from defecting during that critical 8-14-day period. If you get a customer on the phone, don’t let them hang up without setting up an appointment to come in and take a test drive. If they’re on the fence, lock in the appointment by issuing an instant test drive offer over the phone or in a follow-up email, such as a $25-$75 Visa e-Gift card as a thank you for coming in. For elderly, at risk, or just nervous customers, offer to bring the vehicle to them!

As we settle into the fourth quarter, supply concerns don’t seem to be dissipating. While demand is certainly rebounding from the two months of production lost to the pandemic, pent up demand can contribute to even more of a scarcity of vehicles as automakers struggle to keep up and replenish outputs. More than ever, dealers need to continue to make the most of what they have by keeping the right mix of vehicles in stock to the best of their ability and taking advantage of incentive programs that they can control based on their own unique inventory situation.

As of last month, 2021 models accounted for only 3% of dealership inventory, according to Cox Automotive, compared to a quarter of dealer stocks being new models at this time last year. Therefore, OEM-sponsored clearance deals and incentive programs have been slower to materialize, calling for individual dealerships to take matters into their own hands and work with vendors that can help them convert more of their growing website visitors to actual showroom visits, test drives, and ultimately sales with more targeted and personalized incentives.

© 2020 Urban Science. All Rights Reserved.

AutoHook Releases All-New Advanced Lead Scoring to Deliver More Sales at a Lower Cost to Dealers

As part of ongoing solution innovation initiatives, Urban Science’s Advanced Analytics team was tasked with the challenge of developing a new, technologically superior, enhanced lead scoring model to apply to AutoHook’s third-party incentive solution, also known as Lead2Show. This new, centralized model has proven to pinpoint even more leads with the highest probability of purchasing, faster and more accurately than ever before.

AutoHook’s new lead scoring model leverages the unrivaled sophistication of the Urban Science® DataHub™ - the only source of near-real-time industry-wide sales* data-fueled directly from automakers, not 90-day old registration data. Daily processing of sales and lead data allows us to deliver superior lead scoring automation technology that identifies more in-market buyers faster, without increasing the number of incentives issued.

For our dealers, this means a more efficient, cost-effective solution that eliminates instances of wasted time and money incentivizing leads with a low likelihood of purchasing or leasing a new vehicle. Simply stated, this advanced lead scoring model allows us to send even higher quality leads with the highest propensity to buy into dealer showrooms.

The direct-to-dealer benefits of our new, advanced lead scoring include:

1. More Sales

2. Higher Buy Rates

3. Lower Cost Per Sale

4. Less Waste (more buyers without increasing the number of incentives issued)

But we don’t expect you to take our word for it. In true Urban Science fashion, we have the data to prove it. We conducted extensive testing and validation efforts to confirm not only that the technology effectively does what we built it to do, but we also calculated the exact statistical significance of the implemented enhancements compared to our previous scoring model.

Methodology

To calculate the success of the upgraded technology, we applied both scoring models to the same data set of 173,532 third-party leads across all OEM brands over a two-week period. The actual results shown below reflect only the leads that were validated to have a high likelihood to purchase and thus received an AutoHook incentive offer. The data confirmed the new and improved algorithm provides significant, quantifiable benefits to our dealers including more sales, a higher buy rate and a lower cost-per-sale.

Results

• 73% Higher Buy Rate

• 23% Reduction in Cost Per Sale

• 11% Increase in # of Sales

• 10% Reduction in Incentives Redeemed

Good news for current AutoHook clients, this upgrade in our technology is already working for you and will not affect the cost of our solutions. If you don’t use AutoHook’s third-party incentive solution (Lead2Show), for a $77 cost per sale, why wouldn’t you take advantage of this service?

*Sales refers to vehicle unit sales and does not represent vehicle price or revenue.

2019 YEAR-END REVIEW: How Did AutoHook Impact the Industry in 2019?

WHO'S WORKING YOUR LEADS? On the Dealer Front Lines (Part 4)

It’s day 23 of shelter-in-place, and other than the world needing a haircut, there’s positive news for the auto industry. Sales are certainly down, but they’re not gone. Whether your dealership is open or closed due to COVID-19, you still have leads to work - or your competition will.

Lead volumes are in fact declining, but not consistently across the board. Some brands are even seeing increases right now, and there are still approximately 20,000 vehicle sales happening each and every day. So how are you going to capture them?

At Urban Science, we have a tool called TrafficView™ that shows the highest rate of sales defections happen after 14 days. This means leads that came in during March need to be worked now. So do not shut down, and if you have to, then your internet teams should be working the leads in your CRM from home.

This is a time to be innovative and proactive, whether you are a salesperson, or a manager a GM. Here’s another easy idea. Focus on consumers with lease expirations and positive equity opportunities. Did you know that there are 1.8 Million leases due to expire between now and July of this year? Let’s just start there. You can sustain your business doing only that. In the words of Abraham Lincoln, “The best way to predict the future is to create it.”

In Part 5 of On the Dealer Front Lines, where we’ll cover how dealers can start preparing to capture the pent-up demand once the market recovers. Stay tuned!

ON THE DEALER FRONT LINES: Real-Life Stories, Tips & Data to Help Dealers Thrive in a Volatile Market

Part I: WHY NO INDUSTRY IS MORE RESILIENT

Over the next few weeks, AutoHook will be interrupting your daily COVID-19 newsfeed of doom and gloom to deliver a much-needed dose of positivity to dealers and automotive professionals across the U.S. In our mini blog series, “On the Dealer Front Lines,” we will share real-life stories and lessons learned during some of the toughest times in the auto industry - from the 1989 recession to 9/11, to the Great Recession of 2008, and through ongoing natural disasters.

We’ve been fortunate enough to interview a “task force” so to speak of auto industry veterans, dealership owners, CMOs of large dealer groups, pioneers in the AdTech space, and leaders at the OEM level to collect first-hand anecdotes of how this industry adapted during the catastrophes of the past and the priceless lessons they took with them.

What’s interesting about the way each of these crises in our history unfolded is that each one had a V-shaped curve. Although we were forced to navigate through turbulent times, in most cases, we came back out of these situations better positioned for success than when we went in.

Even more noteworthy is that the real-life stories we’ve collected are not negative ones. They are stories of innovation and of dealers, technology vendors, and OEMs utilizing these times to come together and sharpen their blade while inventing new and better ways of operating.

Today, we face an unprecedented, worldwide pandemic that will undoubtedly bring new challenges no industry will be immune from. However, the silver lining is that there are things dealers can do now in order to weather this storm and come out of it smarter, more prepared, and stronger than ever.

This series will serve as a reminder of the one theme that has consistently united the hardest times in the history of the car business: innovation.

Stick with us during this journey as we share best practices, real-world examples, and lessons learned, infused with near-real-time data to help dealers thrive in a down market.

As Winston Churchill once said, “Those who fail to learn from history are doomed to repeat it.” So, let’s repeat the positivity that came from the lessons we’ve taken with us.

Stay tuned for Part 2 of On the Dealer Front Lines: What NOT to do Right Now.

THE EXECUTIVE EDITION: Lies the Digital Age Told You About Selling Cars

| by David Metter, President of AutoHook powered by Urban Science

In Part I of Lies the Digital Age Told You About Selling Cars, we overturned one of the most blindly accepted industry-wide standards about the current state of consumer car buying behavior. For far too long, the assumption has been vehicle shoppers have everything they need to make a purchase decision online, and they already know what they’re buying before ever stepping foot in a showroom. The common misconception has been that the average consumer in the digital age only visits one dealership before purchasing a vehicle.

What we found after surveying 2,748 U.S. consumers that have purchased a car in the last year is that the above statement couldn’t be further from the truth. In reality, not only does the average customer visit at least 2.4 dealerships before making a buying decision, but almost half – 46% – said they visited three or more dealers before purchasing. Over a quarter of our sample size, 26%, said they visited four or more dealerships before buying. All of this data was collected by AutoHook and Urban Science in May of 2018 from people who purchased or leased a vehicle within the last year – not from a published study conducted five years ago.

As a former general manager of a dealership, CMO of a privately-held dealer group and as a marketer in general, I found the fact that roughly 1 in 4 people (26%) in the year 2018 visit four or more dealerships before buying a car to be personally absurd. Though surprising, this statistic solidified a new truth about the state of our industry. Contrary to what dealers have been told, the in-store experience is arguably more important in the digital age than ever before in the history of the car business – and for several reasons.

The most prominent reason being if a customer has a bad experience with one of your salespeople when they come in for a test drive, they will leave and buy from someone else. If they go to two dealerships and have a bad experience at both, they will go to a third and even a fourth dealer to buy from the one that provides them with the experience they expect and deserve.

Just like everything else that has surfaced from the digital age, car shoppers have a LOT of choices when it comes to what they’re going to buy and who they’re going to buy from. Purchase decisions are still made at physical dealerships, most likely following a test drive – NOT exclusively online. Shoppers in-market for a new vehicle don’t have their minds made up about what they’re going to buy by the time they visit their first dealership. Outsell says 6 out of 10 car shoppers enter the market unsure of what they want to buy. Our own research and survey data consistently shows 78% of people are still considering multiple brands by the time they visit their first dealership.

So we as an industry, we HAVE to get this right. Instead of operating based on pure, often biased assumption, dealers need to seriously reconsider their order of priorities in terms of how they run their business and where they spend their money. The digital age has armed us with so much intellectual power, yet at the same time, it’s made us a little lazy. It’s cast a shadow over what’s really important – defining value and personal worth by likes, clicks and follows rather than interpersonal relationship skills.

Part II of Lies the Digital Age Told You About Selling Cars verified the auto industry has become too quick to rely on technology as a crutch to do the work for us, rather than picking up the phone and having a conversation - or dare I suggest having the inventory knowledge and social skills to not only sell a car, but to foster ongoing relationships that lead to repeat, loyal customers. It is officially time for a new dialogue to emerge. The question we as an industry need to be asking is not how can we leverage new technologies to help us sell cars, but how can we leverage new technologies to help our salespeople sell cars?

Rather than answering the above question based on my expertise and years of experience in this business, I’ll share the real-life success stories of how two actual dealerships in the digital age are using great data processed through great technology to help their people sell more cars and lose fewer opportunities.

DEALERSHIP #1

One of our dealer clients needed an accurate way to measure the true effectiveness of their follow-up process by knowing what was and wasn’t working within their current lead mix as well as how many opportunities their salespeople sold compared to how many they lost to competitors. Using their individual salesperson data, we analyzed each person’s sales and defections and identified who had the most potential to improve. We then pinpointed the time frame during their follow-up process when their people struggled the most, which for this particular store was during days 0-4 after a lead hit their CRM. Lastly, we exposed their highest defecting lead source.

Armed with a roadmap highlighting their greatest areas of opportunity, the owner of this dealership shared this data with his sales staff and reviewed each person’s sales and defection trends with them one-on-one every month. He created an environment of transparency and friendly competition by making this defection analysis technology available to all his salespeople, thus holding them personally accountable for every sale they lost in addition to what they closed.

The dealer then helped his staff implement a more aggressive follow-up strategy for working leads 0-4 days old. He provided additional training on how to better work leads that came from their highest defecting source (especially during this time frame). He took the time to listen to feedback from all his salespeople and found opportunities for peer coaching to help further reduce their collective number of defections. He also implemented a system to reward the people who showed improvement each month.

With a refined follow-up strategy fueled by better prepared, more empowered salespeople, they saw the following results in just 90 days:

• Their overall defections decreased by 89%, with a 44% decrease in defections specifically during days 0-4 post-lead.

• They increased their number of closed sales tied to their highest defecting lead source by an astounding 242%.

• Most importantly, when it came to the salesperson identified as having the highest defection rate, that individual successfully increased their closed sales by 78% and went from being the worst performer on the team to one of their top performers.

DEALERSHIP #2

This store needed a way to identify any potential problems with their lead mix to see which sources were underperforming and why. Using the same defection analysis technology as Dealer #1, they were able to determine the issues they were having with their highest defecting lead source were due to external factors outside of their control – rather than a lack of effective internal follow-up. They then confidently decided to cancel this lead provider and put those marketing dollars back towards their bottom line.

Ninety days later, they saw a 61% average increase in salesperson performance after removing that lead source – not to mention they were able to free up a total of 40 man-hours per week that were previously devoted to working those high-defecting leads. The best result of all? Four of their salespeople went from being average or below average performers to their TOP FOUR salespeople.

And they didn’t stop there. This dealer applied the same technology to define which model(s) in their inventory represented the most defections specific to their salespeople so they could go after leads tied to underperforming models more aggressively. Model A represented the most opportunity for improvement, and again within 90 days, they increased closed sales specific to Model A by 51% and reduced defections by 30%.

What we can conclude from the examples listed above, is that technology can help your people in a multitude of ways. Technology can help your salespeople close more deals and reduce their defection rates. Technology can help your people free up wasted time chasing leads from a faulty source. Technology can identify which models your people struggle with the most in order to boost specific model performance. Technology can even tell you if your customers are leaving your store to buy the same model somewhere else, or if they’re defecting to another brand entirely.

But the most important thing to take away is that technology in the digital age still doesn’t sell cars. It can do a lot to light up the right track for your people to do just that, but at the end of the day your salespeople need to know your inventory like the back of their hand – what makes it better than competing brands or models, and what makes doing business with you a better option than anywhere else.  

The truth in a current landscape littered with lies is that there’s no way for any one dealer to know everything they need to know about their overall market, which models represent the most opportunity for their store, and if their salespeople are doing their jobs and following up with leads appropriately. That’s where the technology and data come into play. With a complete view of who is struggling and exactly what they’re struggling with during the initial contact and follow-up process, dealers can take immediate action to help their salespeople reduce defections and improve their performance across all facets of their sales operations – so they can be one of the 2.4 dealerships (at least) with a shot of winning the sale.

Winning Means Knowing What You’re Losing

3 Steps to Reduce Lost Sales

by David Metter 

1. Use Data That Tells a Complete Story

The only way to know exactly where you stand in your market is to have a clear view of what you’re losing. The problem the automotive industry has faced for years now, is that both CRM and DMS data is one-sided, one-dimensional, and only shows your effectiveness against your own sales. But what about the sales of competing dealers or brands in your market? Wouldn’t it be easier to grow your market share if you knew what percentage of it you actually owned compared to your top competitors?

The other problem exists within the reporting provided by some third party vendors, as these reports only show you one side of the story – their side. In other words, what you’re winning. If you think about it, what is the most vital piece of information to have in terms of improving your dealership’s sales operations? Is it how many clicks your VDPs got or is it how many actual vehicles you sold…or didn’t sell? You be the judge.

2. Accurately Quantify Your Lost Sales Opportunities

What if you could know which dealerships you’re losing sales to? How many units per day or per month are you losing to competitors? How many of your customers purchased from competing dealers or brands in your market?

It is critical for dealers to not only look at their own data and sales and defection trends, but also the sales trends of their biggest competitors. Know where you stand. If you have a clear view of what and how much you’re losing, then you have a clear view of what you need to win back. 

3. Identify the Source of Lost Sales & Adjust Accordingly

There are several factors that play into each and every lost sale. What dealers need is the ability to recognize if sales are lost due to internal or external factors. For example, is there an internal problem with your sales staff or with a specific salesperson? Are your lost opportunities tied to a certain model? Or, is it an external problem such as one of your lead providers consistently delivering leads that are no longer in consideration? Look into your website traffic and the traffic providers you work with. Are these sources driving low-funnel buyers to your showroom, and can they prove it?

If you don’t know the answer to that question, it’s because you’re not seeing the full picture. You can’t fix a problem if you don’t know the problem exists. Similarly, you can’t make smarter decisions with your marketing budget if you don’t know which sources are driving bad traffic or causing high defection rates. 

Now that we’ve identified all these potential problem areas, allow me to leave you with the light at the end of the tunnel. The good news is that the tools and data needed to complete the story of your market’s sales trends already exist. I know this because I’ve been on both sides of the equation. I’ve worked as the CMO of a large dealer group, and I’m currently on the vendor side of the car business. Therefore, I can say with confidence that attempting to grow your market share without a complete view of your market in today’s complex landscape is asinine. I can also say based on factual, proven stats that Urban Science has the fastest, most accurate sales match data in existence. So at the end of the day, you can go with your gut, or you can go with prescriptive science-based conviction. (I suggest the latter).

To learn more about identifying and eliminating lost sales, visit DriveAutoHook.com/TCA.