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Jared Hamilton
From: Jared Hamilton
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Dennis Galbraith

Dennis Galbraith Chief Marketing Officer

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The Research Around Social Media

The purpose of most marketing research is better decision making. The problem is that it is cheaper than ever before to generate data, and as easy as ever to claim that the data supports the conclusion the author wants it to. Over the past few months, I've plowed through over 1,000 pages of books and articles on social media. Much of the data I've encountered is simply not credible. However, separating the facts from the non-sense has long been my calling card in the auto industry. There is some good, solid research supporting the call for more attention to social media by auto dealers.

The recent study conducted by GfK Automotive and supported by Dealer.com and DriverSide has merit. A research friend of mine rightly brought up the fact that survey respondents don't always remember what influenced them in their shopping process. So when the research says 28% of Facebook users who bought new or late-model used vehicles said they saw a posting that caused them to add a dealership to their consideration set, that may not be the actual number. However, the penetration of Facebook among auto shoppers is so high that an influence rate of half this much would demand action. The statistical margin of error is not the relevant range for decision making. What is important is for dealers to recognize that the actions being recommended would be justified at influence rates far lower than those being uncovered, even at the outer edge of the margin of error.

It seems that every week brings a new round of vendor research designed to impact how dealers allocate their marketing resources. Most of this research deserves to be viewed with a suspicious eye. These studies are not funded by vendors as some kind of altruistic gesture. With that said, some vendor backed research is very useful and reliable. There are occasions where vendors believe their products would be the beneficiaries of truth. They distance themselves from the study design and data collection process and let the chips fall where they may. Kevin Root, recognized as an internet pioneer for his work at Parr Auto Group in the mid '90s, has been a very prolific source of this kind of research from the vendor side. His deep association with this study further adds to its credibility.

The study claims that 38% of new vehicle shoppers will use social media to research their next vehicle purchase. No matter how carefully the study was designed, that number may be off. But how big does the number need to be before your store realizes it needs to take social media seriously? Would 20% of your customer base be enough, because there is very little chance that the difference between intentions and actions can be that great.

We went through this same thing with the Automotive Internet Use (AIU) rate more than a decade ago. It didn't really matter whether the AIU rate was 40% or 50%, an AIU rate anywhere close to those levels meant dealers needed to have a website. The same sort of decision making is occurring with respect to social media. It is still difficult to know how many sales would not have taken place if the dealership did not have a website. After all, there is no shopping cart on most dealer websites; they buy their cars from the store. Today we hear the same arguments about social media. Those who don't use it say it doesn't sell cars because there is no "buy" button on Facebook or Twitter. Those who use it well are whistling all the way to the bank.

I'm looking forward to the complete study report coming out in November from the partnership of Dealer.com, DriverSide, and GfK Automotive. Will I then be able to confidently say precisely what influence social media has on auto shopping? No. Will I have enough evidence to confidently say any dealer with a good, honest operation should seriously consider a strong social media effort? I'm already there. And for the record, I don't sell social media services.

Vince King
Hi Dennis, I think it would help if more of these studies and surveys defined "social media" better. I would guess that most consumers don't respond to surveys by saying: "Yes, I'm going to use 'social media' to research my next automotive purchase." They might say "Yes, I might ask my friends on Facebook for their advice on my next new car purchase." But does that really imply that dealers will be part of that "social media research process"? If the recommendation to dealers is that they HAVE to jump on the "social media" bandwagon, what exactly does that mean? Should they have a Facebook company page? Will a car buyer be more likely to buy from a dealership that has a lot of "likes" on its Facebook page? Should the dealer’s Facebook page look like the dealer's website? How should it differ? What incentive would a potential car buyer have to "like" a dealership on Facebook if they haven't purchased a car from them yet? Speaking from personal experience -- yes, I may not be typical -- all of the brands and business pages that I've "liked" on Facebook are for brands and businesses that I already do business with. A new dealer would have no way to find or reach me, if I didn't "like" its Facebook page first. Similarly, what incentive would a car buyer (not yet owner) have to "follow" a car dealer on Twitter? I can see that, as a car owner, I might be interested in tweeted "service specials" from my favorite local dealer's service department. But I don't think I'd sign up for tweets from a bunch of new car dealers if I'm just considering buying a car from them. As consumers, we are already inundated with too many updates and emails and items in our Facebook newsfeeds. Do we really want messages from car dealers, too? I think that dealers are wrestling with these questions, because it's all they hear at conferences these days -- "You have to be on Facebook and Twitter or you'll get left behind." But where are the concrete examples (and success stories) of HOW to effectively use Facebook and Twitter to market your car dealership? You allude to some success stories -- "Those who use it well are whistling all the way to the bank." -- but who are those dealers and what exactly are they doing? You also said that the GfK Automotive study showed that "...28% of Facebook users who bought new or late-model used vehicles said that they saw a posting that caused them to add a dealership to their consideration set..." What does that mean? Where did they "see the posting"? I've never seen a posting for a new or used car on Facebook. I've also never seen a "posting" for a car dealership on Facebook. Does GfK provide any examples of such "postings"? I know that there are sometimes contextual ads in the right column of my Facebook page, but I've never seen one for a dealer (and Facebook has never "suggested" that I "like" a dealer's page). Are these users saying that one of their friends posted an automotive-related status update and they were influenced by it? (For example, when one of my close friends bought his Audi A4, he posted about it several times, so that might have influenced his friends to consider an Audi A4 as their next car). But even if that happened to these “28% of Facebook users,” how can a dealer participate in or influence that (unless they ask all of their existing customers to "like" them on Facebook)? Thanks for listening!

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