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Dennis Galbraith

Dennis Galbraith Chief Marketing Officer

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Impacting the Conversion of VDPs to Sales

 

Recently, there was a very helpful exchange on DalePollak.com regarding a situation where Vehicle Detail Pages (VDPs) increased but sales did not. It occurred to me that there is no exhaustive list of reasons why VDPs and Sales could go separate ways. VDPs are absolutely the best way to measure listings services, and total VDPs per vehicle should be a Key Performance Indicator (KPI) for any dealer. However, the correlation between VDPs and sales is imperfect. Understanding all the reasons why the conversion from VDPs to sales can decline will reduce the chance of misinterpreting the data. What follows is my best first effort. I hope others will add to this list or refute mine as needed.

 

  1. A decline in merchandising performance – declines in either the quantity or quality of photos and videos can reduce the number of contacts per VDP, therefore reducing the number of sales. Poorer seller's notes (text descriptions) will have the same impact. Nearly everything on the Vehicle Details Page is under the control or influence of the dealer.
  2. Decline in lead handling performance – A decrease in conversions from VDP to sales can often be attributed to a staffing change or the absence of a key team member.  Occasionally, a team will increase the number of leads coming in faster than the team can expand its ability to properly handle leads. If VDPs increase 40%, contacts to the store through phone, email, chat and walking in will likely rise by 40% as well. If the team is not prepared to handle that increase in store contacts the 40% sales increase will not be realized.
  3. An increase in the Market Days Supply (MDS) – Adding inventory with more supply relative to demand will decrease the number of times your vehicles appear on Search Results Pages (SRPs), resulting in fewer VDPs. It can also lessen the rate at which VDPs convert into contacts and sales. When there is plenty of supply to pick from, your vehicles will not only be looked at less, but with less need-to-have-it enthusiasm.
  4. A decrease in demand – MDS is the amount of inventory in the market divided by the amount demanded each day. If the predicted level of demand is not lived up to, then the actual MDS during the month was higher than the forecasted numbers indicated. A 20% decrease in demand that was not forecasted in the MDS estimates has the same impact on VDPs as adding inventory with a 20% higher MDS when the forecasts are accurate. (The accuracy of MDS forecasting is a legitimate basis for competition among service providers, but that is for another day.)
  5. Decline in branding effectiveness – Over time, a decline in the effectiveness in branding advertising (usually TV, radio, and outdoor) can reduce the preference shoppers have for your store as they examine your vehicles online. Typically, branding campaigns echo over time, so there is not likely to be an immediate decrease in conversion from VDP to sales even if all branding is halted.
  6. Changes in surrounding advertising – The impact of banner ads on the Vehicle Details Page are largely overrated; however, they can impact conversion rates. For example, a dealer buying PowerPosition ads on Cars.com will find an increase in the conversion rate from VDPs to contacts and a resulting increase in sales. If those ads are discontinued and purchased by a competitor, conversion rates are sure to decline. Banner ads are sometimes purchased by OEMs or even non-automotive companies. (AT&T is currently running banner ads on some of AutoTrader.com's Vehicle Details Pages). This does not provide the same boost than can be expected by having your own ads there, but it will not decrease conversion rates as much as having competitor ads there. The decision to purchase banner ads on listings sites is nearly as much about not allowing your competitor to as it is having the ads for yourself. In theory, the impact from competing ads should be minimized for vehicles with excellent merchandising. I don't currently have the data needed to test this hypothesis.

If your used-vehicle sales change more than your VDPs, chances are one or more of the above changes were the cause. I've heard people say "it just doesn't work as well as it did." The more likely answer is you are somehow not working the system as well as you did. Fix the problem and you are sure to increase sales.

Ed Brooks
Dennis, I absolutely agree that VDPs are one of the best measurements of any listing service's performance. I love your in-depth analysis of the factors that can affect conversion from VDP to a sale. I have one to add and/or comment on: In point 3 you speak of increased Market Days Supply (MDS) driving down Search Results Page (SRP) views and the resulting decrease in Vehicle Detail Page (VDP) views. As I demo vAuto around the country on a daily basis for dealers in often dramatically different markets, I always show them some data on their specific market. As part of the demo, we identify the best selling segment and price point for that segment in their specific market at that precise moment in time. Almost always it will be Intermediate Cars. The price point varies from $10K - $15K to $15K - $20K. We first look at cars selling in the highest volume and then change the slider setting to look at cars with the lowest MDS. Here's where is get's good; There is almost always a car selling in high volume that also has a very high MDS. The car is in high demand but is wildly over-supplied in that market. It will show along these lines; 150 sold in the past 6 weeks and 450 available. A dealer stocking this car will see a high number of SRPs and even a high number of VDPs for the simple reason that there are a large number of folks shopping for this car. The poor ratio of Supply / Demand - the high Market Days Supply - causes extreme price sensitivity on these cars. Think of it this way; if you stock this car, you'll be competing with a lot of dealers, many that have aged units. They will do anything to move those units. Pricing becomes extraordinary competitive on those cars. This leads to a high number of VDPs but low sales. So even though people are shopping for and buying these cars, they aren't cars that I would personally want to stock. Give me a car selling in lower volume, but in very limited supply in the market any day. This is a car I can sell quickly and still make a respectable profit on. Dealers using software tracking historical performance will catch this trend much later than dealers using software that tracks the live market. Perhaps even worse is that the historical trend software won't realize when the Supply / Demand ratio has readjusted for months (if ever), causing dealers to avoid vehicles they shouldn't thereby missing opportunities.
Jeff Kershner
"Decline in branding effectiveness – Over time, a decline in the effectiveness in branding advertising (usually TV, radio, and outdoor) can reduce the preference shoppers have for your store as they examine your vehicles online. Typically, branding campaigns echo over time, so there is not likely to be an immediate decrease in conversion from VDP to sales even if all branding is halted." - I agree with this but wish there was a case study to prove it.

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