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How New Media Helped Auction Direct USA Boost Sales 40%
by Kimberly Smith
Case study published on 10/28/2008
Company: Auction Direct USA
Contact: Eric Miltsch, IT/Web Director for Auction Direct USA
Location: Victor, NY; Jacksonville, FL; Raleigh, NC
Industry: Automotive, B2C
Annual revenue: Confidential
Number of employees: 300
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While auto dealerships across the nation struggle to survive in the new economy, Auction Direct USA's business is expanding.
Annual sales are up 40% for the young company that established its first location in Rochester, New York, in 2005. Three years later, that outlet boasts 14% of the area's used car market.
Stores in Raleigh, North Carolina, and Jacksonville, Florida, were added within the last year, and the Raleigh dealership is already the third largest in the area.
So how, in a time when high gas and commodity prices have induced consumers to cut back, has the company managed to keep growing, registering record sales in both May and August of this year?
Would you believe through a low-pressure approach that entails not only setting low prices but also getting to know its customers on a personal level and supplying the information they need to make smart buying decisions, all without the hounding of follow-up sales calls?
Yes, we are talking about a used-car dealership—but one that has chosen to defy industry practices and built a business around its customers.
Online media—including social networking sites, mobile Web sites, and a blog—have greatly assisted these efforts, and together with keyword search are credited for close to 75% of this year's growth.
This case study shows how Eric Miltsch, the company's IT and Web Director, is leveraging these channels to transform the dealer-buyer relationship and drive up sales.
Auction Direct USA is determined to redefine the used-car retail industry and change consumer perceptions.
It hopes to do so by offering competitive pricing, eliminating high-pressure sales tactics, providing in-depth information to embed confidence in the consumer's decision-making process, and engaging potential customers in comfortable settings.
In early 2007, the company's IT/Web director, Eric Miltsch, determined that new media was the next step for both augmenting that strategy and effectively building an online presence.
With a "go where the people are" approach, he set out to personally connect with potential customers, boost the company's Web traffic, and—ultimately—increase sales.
Auction Direct USA's online campaign began with optimizing its core Web site to be clean, user-friendly and functionally reliable. Then, beginning in April 2007, the company began launching the following campaign components to direct more traffic to the site.
With posts about industry news, auto-related videos, car-buying secrets, dealer confessions, maintenance tips, and more, the company blog at WhyBuyUsedCars.com intends to deliver entertainment and value-added content based on the Web's most popular auto-related search results, as opposed to taking an ego-centric approach or solely promoting the company. To increase reach, the blog's feed is automatically pushed out to the company's social-networking profiles (see below).
Social Networking Sites
To encourage increased interaction and engagement with current and potential customers on their channels of choice, Auction Direct USA developed profiles on Twitter, Facebook, and MySpace, and started its own social-networking initiative, called TweetandGreet.com.
Miltsch uses Twitter to generate exposure, inform customers of company events, build authority, and garner feedback, finding that others on Twitter are fairly responsive to his questions and comments. These include inquiries into the types of information users seek out when they're shopping for a car, which Miltsch then uses to augment the company's blog and Web site content, or to confirm whether the content already offered is considered of value.
He has also posted links to a test market pages and performed A/B testing to monitor responses. To gain additional insight, and further build brand confidence, he has interviewed select followers, the transcripts of which are then posted to the blog and referenced in Tweets.
Although the company's base of followers has grown mostly organically through the network, traffic is also generated through calls to action at the bottom of each page of the company Web site, as well as through links on TweetandGreet.com and Auction Direct USA's other social-networking profiles.
Miltsch created the tumblr page as a destination for users to share information about themselves through the prism of their love of cars, including their first set of wheels, preferred gadgets, and favorite driving tunes.
The submission process increases the company's Twitter base by directing users to become followers before answering the list of questions, and submitted profiles are automatically fed into the company's Twitter stream. Since mid-July, when the page was launched, more than 90 user profiles have been posted.
Facebook & MySpace
These networking sites provide yet another place for Auction Direct USA to be found, both through company profiles and Miltsch's own personal profiles. He helps the company stay top of mind among friends and acquaintances by frequently updating his profile status, thus maintaining a regular presence in users' minifeeds.
The company's Facebook page serves up company news, videos, and the latest blog and TweetandGreet posts. It also invites users to get to know the people of Auction Direct USA, and Miltsch uses a casual tone to prompt user interaction.
For direct contact, a unique email address is supplied (for example: firstname.lastname@example.org) so that the company can run targeted campaigns and continue to differentiate leads.
Auction Direct USA has also run marketplace and banner ads on Facebook. As is common on the networking site, click-through rates for these campaigns average under 1%; however, they have helped to build recognition through the millions of impressions received.
Mobile Web Sites
Given the growing trend in text messaging, Miltsch saw mobile Web sites as another means for changing the way people shop for cars and make contact with the dealership.
A separate site has been established for each of the company's three stores, the addresses of which have been used in offline promotions, such as radio and TV, thereby providing a quick and easy way for users to obtain vehicle information on the go without a computer, and without the fear of having to speak with a sales representative.
Content for the weekly rich-media newsletter caters to user interests, as determined through site activity, and helps drive traffic to both the Web site and the blog. The newsletter has almost 15,000 subscribers and an unsubscribe rate of less than 1%.
The company also advertises online with search engine keyword buys in its three primary regions and listings on sites such as CarsDirect.com, cars.com, and AutoTrader.com.
Auction Direct USA's sales have increased 40% in the past year, and Miltsch contributes almost 75% of that growth to these online efforts.
Keyword search—the performance of which has been augmented by the company's blog content and consumer insight accrued through other online efforts—has provided the best conversion ratio, with the highest conversion rates coming first from MSN, then Yahoo, and then Google. Direct links from the blog and social-networking sites have the next highest performance ratios.
The blog, which is read by a few thousand visitors each month, is consistently among the top 10 referrers of traffic to the company Web site. It currently has a 5-7% conversion ratio for click-throughs to the site, and of those visitors, 13-16% are making requests for contact once on the site. The blog is also on its way to becoming a new, independent revenue channel for the company, given the marketing opportunities that are becoming available.
Facebook is also consistently among the top 10 traffic sources, even though Auction Direct USA's Group only has around 30 members. "It's not a major activity place," said Miltsch. "But the amount of traffic we get from it is incredible, and the conversion rate is above the typical site average."
The company's Twitter profile, on the other hand, has attracted over 570 followers, more than any other automotive-focused profile on the network. And although its primary purpose is not to drive traffic, the conversion rate for the 5-10 followers who do click through to the Web site each day averages 14%-60% higher than the site average.
One of the reasons Auction Direct USA's online campaign has been effective in strengthening its brand and driving up sales is because every piece is designed to appeal to the customer's needs. And those needs are not presumed; rather, Miltsch relies on Web site activity, search results, and customer feedback to identify trends, then shapes his communications and content accordingly.
He also carefully tracks each component and adjusts as needed to optimize results and conserve costs. For example, the company has been able to quickly cut its losses when a new promotion doesn't perform, as was the case with an online newspaper campaign that resulted in zero conversions.
Furthermore, he ensures that the user's final online destination—i.e., the company Web site—is not only fully functional but also well designed and conducive to the conversion process.