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Internet Behavior of Auto Buyers: Analyzing influential studies

The relationship between internet usage and car purchases have consistently increased over the last decade and have now become part of the car buying experience as consumers look for local car dealerships.

Auto manufacturers, dealerships and the auto industry in general have accepted this reality and incorporated the internet and related technology as part of their marketing and advertising efforts. Some of these business entities have embraced the power of the world wide web, while others are struggling to keep up with the constant upgrades, developments and latest trends. Becoming aware of internet behavior of auto buyers is important in developing and maintaining cost effective and money making marketing strategies.

Billions of dollars are spent on website development and maintenance, software, tools, gadgets, widgets, search engine optimization, social networking, on and on. This does not take into account time spent trying to figure out what works and more importantly, what does not work. Spend only a couple of hours online reading blogs and forums about online marketing and one quickly figures out that even the so called “experts” disagree and sometimes just can’t keep up themselves with the warp speed of technological developments, whims and algorithms of online corporate giants.

There is one way to tame the wild west of the online world and that is to become familiar with research findings regarding internet behavior of auto buyers. Being armed with this valuable knowledge will enable car related businesses such as auto dealers, insurance agents, lenders, and after market retailers to tailor not only their advertising budgets but time spent on understanding the multitude of marketing services. Here are some key findings and discussion about the data.

Research Findings

JD Power and Associates conducts annual surveys to measure online usage of auto buyers. In 2008, JD Power and Associates found that 75% of the public spend on the average close to seven hours on the internet when making a new vehicle purchase. They also found that consumers focused on three types of websites for information.

1. Third party auto websites were used for referrals and recommendations.

2. Auto manufacturing websites were used for product information.

3. Auto dealer websites were used to search for inventory. (source: theautochannelnews)

This same trend is also seen when it comes to used car purchases and other auto related servies such as insurance and loans.

Web Rides TV in 2008 conducted a survey of their users titled  “User Attitudes Toward Cars and Automotive Content” which found that consumers were most likely to turn to third party reviews over other information sources when it came to auto products. The findings showed that there was a decrease in using auto manufacturer websites as a primary source in one’s decision making (source: emdiawire).

Another interesting statistic is the amount of time the average consumer takes to make a vehicle purchase. According to a study by Kelly Blue Book, these figures range anywhere from six months or longer to less than a month. Embedded within this time frame are the different stages of decision making. In the same study, Kelly Blue Book found three groups of car buyers:

1. “Just looking” group consisted of consumers planning to make a purchase within a two to six month range

2. “Ready but undecided” group consisted of consumers planning to make a purchase within one month and

3. “Ready and decided” group consisted of consumers planning to make a purchase within one week

Kelly Blue Book concluded that “vehicle shoppers look to the third-party sites as a relevant and necessary source of objective information that spans across all makes and models. While consumers seek information and opinions, what they really come to the third-party sites for is confidence– that they are making a good choice, that they won’t have ‘buyers’ remorse’ after their purchase, that they won’t pay too much, that they are buying a safe vehicle, that they have weighed all their options” (source:imediaconnection).

Keynote Systems, a company that studies attitudes and behaviors on the internet, found that auto buyers prefered to conduct research about vehicle capabilities over price comparisons. In fact they found that price comparison ranked the lowest in online satisfaction. In addition, only 20% of participants in this particular study reported a willingness to request an online quote. Frustration over uncertainty about the end user of submitted information was a main concern of the 80% of respondents who declined an auto quote request (source: Keynote Systems).

Comscore, another company that measures consumer behavior and attitudes conducted the first study of blog readers back in 2005. While this study is now dated, we can assume that blog usage is even more influential today due to their growing popularity. One of their key findings were demographics of the average blog reader. Blog readers tended to have above average incomes, shopped online, and spend almost twice as much time online over regular internet users. “The fact that we found 30 percent of the online population to have visited blogs clearly underscores the commercial importance of consumer generated and driven media” (source: comscore.com).

Looking toward the future in trying to predict trends on the horizon, KRC Research and Microsoft conducted a study that focused on the “millennial generation.” The eldest of the millennials are now becoming established in their professions making them a sought after consumer. Who are these millennials? Consider these statistics:

“Millennials are born from 1982 to 2003. They are the largest generation in U.S. history; they are also the most ethnically diverse generation. Forty percent are African-American, Asian, Latino or mixed race. One in five has an immigrant parent. There’s a million more Millennials than boomers. Though no more Millennials are being born, some are immigrating, so the generation keeps getting bigger. Boomers are leaving us and Millennials are still gaining in size” (source: Mercury News).

This generation has already transformed our society. If you doubt their awesome power just ponder the immense popularity of social networking websites such as Facebook and Twitter. The millennials do not know life without the cell phone, internet or MP3s. We can predict that their social behaviors will carry over to consumer behaviors. Microsoft found that this group of consumers want an interactive online shopping experience. This includes interaction through blogs, instant messaging, and social networks. While over 90% still want to visit a showroom in person, once there they expect an automated rather then in-person experience. Additionally, “large percentages of millennials were open to seek advice from third-party consumer website (65 percent), third-party consumer blogs (45 percent), friends or colleagues via social networking sites (61 percent), and friends and family (87 percent).” (source: CXO Today).

Discussion

In examining the above findings, we can see a few patterns emerge.  Whether due to the overwhelming presence of the internet in our daily lives or current economic conditions, the traditional print media is fading and may even become extinct in the not so distant future. An overwhelming percentage of consumers rely on a combination of online resources for information. This means that auto dealers who network with a variety of websites can expect positive returns since the data shows a trend toward third party websites such as All About Cars Online.

The data also suggests that instead of spending resources on third party sales leads, dealerships might focus on developing technology that captures sales leads from their own websites since consumers find third party quotes less then trustworthy and actually visit dealer websites to find inventory.

Another significant trend is the emergence of social networking through a variety of online tools. As more millennials come of age, this trend will quickly become a norm in the world of business and sales. One of the greatest advantages of social networking websites and blogs is that they are free and easy to start. However, this is also the downside for companies. Trying to keep up with maintaining blogs, Facebook, Twitter, Squidoo, Digg, Youtube, wikis, and one’s own website is overwhelming to say the least.

Marketing Strategies

With all of this in mind, it is clear that auto dealers must have an online strategy that takes into account internet behaviors of auto buyers. Through the analysis of the above influential studies, one can use the data to develop effective marketing strategies. Using Kelly Blue Book’s stages of decision making can also be helpful in targeting specific groups of consumers:

1. Just Looking – since this consumer has no immediate plans to make a purchase, this group will most likely not be interested in viewing the dealer’s website. They are however most likely seeking information and conducting research on makes, models, and options. Older consumers are more likely to want to read (blogs) and younger consumers are more like want to view (videos).

2. Ready But Not Decided – This consumer is actively seeking referrals and recommendations. They have their antenna up for reviews on makes and models and are asking questions. Older consumers are more likely to interact in forums (blogs) and younger consumers are more likely to twit (twitter, facebook). Both age groups are also seeking information from third party websites.

3. Ready and Decided – This consumer is ready to make a purchase. They are actively searching for dealerships that offer their chosen make and model. This group will go back to third party websites, online directories and search engines. Once they find a number of dealerships, consumers in this stage will then visit these dealers’ websites to view inventories. Car dealers should have a reliable system in capturing visitors and use live chat software to satisfy the need for instant messaging behaviors of the millennial generation.

Car dealers and other auto related businesses measure the effectiveness of advertising strategies through sales and leads. However one thing to keep in mind is that leads and sales only come once the consumer is in the third stage of decision making. By not investing in websites that capture the “Just Looking” and “Undecided” groups, one ends up with a shortsighted strategy. According to a study conducted by cars.com and Synovate in 2008, “”tracking email and phone leads alone gives dealers an incomplete picture of how their internet initiatives perform” and “one-third of car buyers cited independent websites as a significant influencer affecting their decision to visit a dealership.” The study also found that a third of these consumers do not contact dealers prior to visiting showrooms (source: cars.com).

Furthermore, investing and networking with third party websites also has a hidden advantage. Investing in a multitude of third party websites that publish links to dealer’s website will increase that dealer’s search engine rank. This becomes immensely valuable when the consumer is ready to make the purchase in stage three. The rule is to get as many different websites to link to dealer’s website. Even if the third party website may not necessarily be the perfect fit for targeted audience, links play an important role in search engine ranking.

Blogs definitely are also valuable because they serve as an important source for education and information. Posts are usually set up with forums allowing visitors to comment and ask questions. An ideal situation would be to create multi-blogs with different URL’s (different website locations and names) all linked to the dealer’s main website. This increases one’s presence on the internet, improving one’s ranking with search engines such as Google, Yahoo and Bing as well as increasing the odds that a consumer will find the dealership. Creating multiple blogs is a much more cost effective method compared to microsites. Microsites are generally used for the same purpose, come with contracts and have significantly higher fees that when compared to blogs seem unrealistic. Automotive consultants advise that “every dealership should have one or more blog focusing on current dealership happenings, service specials, seasonal car care tips, car buying tips, customer testimonals and highlighted inventory” (Paul Rushing).

Blogs and multi-blogs are a cost effective marketing strategy although very time consuming. Many entities start blogs but quickly abandon efforts because one has to make regular updates. Anywhere between 60% to 80% of blogs are abonded within one month of creation (source: Caslon Analytics). Software exists that automatically generates multiple blogs, but search engines recognize this as “splogs” which are frowned upon like spamming is in the world of e-mail. Multi-blogs have to be maintained by humans.

Analyzing internet behavior of auto buyers is imperative in today’s economy because this knowledge goes a long way in saving valuable advertising and marketing monies and increasing sales.

 

About the Author

All About Cars Online includes detailed information, links and articles for consumers who are in the research stages of purchase. http://www.allaboutcarsonline.com includes links to all auto manufacturers, nonbiased reviews, consumer rating reports, government data, purchasing tips and much more. Dealer contacts and recommended referrals to dealerships are useful to consumers who are in the final stage of vehicle purchase. The website does does not generate sales leads to protect the privacy of its users but rather directs consumers to selected reputable dealer websites.

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