Let’s talk about friction.

Friction doesn’t just play a critical role in physics. Removing friction from the automotive shopper’s journey is the key to automotive dealerships prospering in an industry fraught with challenge of running a modern dealership. 

Twenty years ago, an automotive retailer needed to be proficient with one-to-three traditional media outlets to promote its value while investing the majority of its time on hiring, training, developing people and honing and executing on processes to win with the consumer. Digital introduced some interesting wrinkles – on the one hand delivering more informed and purchase-ready consumers but also complicating the dealership’s life. The challenge of managing myriad digital advertising platforms and software alone actually began to compete with a dealership’s ability to develop its people. As a result, while the consumer is more empowered than ever, the dealership team members have struggled to master the very tools designed to empower dealerships. 

It’s time for third-party marketplaces -- dealerships’ vital digital advertising partners -- to step up and simplify the dealership’s job in the most important way we know how: removing friction from the shopping journey. Making the journey faster and less complicated will help dealerships balance supply and demand more effectively, whether the dealership is creating a sense of urgency around used-car pricing or guiding the shopper more intelligently through new vehicles.

But not all marketplaces remove friction the same way, and some are better than others. So, I propose a friction test to help dealerships better understand who really removes friction and thus connects more high-value shoppers to the lot faster.

The Amazon Example

First, some context: removing friction from shopping is the foundation of success for marketplaces such as Amazon that are shaping entire industries. Amazon enables consumers unfettered access to products, price details, consumer-generated reviews, information on similar products, and ease of transaction. For example, the Amazon Dash button provides an easy way for consumers to replenish staple goods such as detergent with a simple button. Amazon GO, the emerging brick-and-mortar grocery store, makes it possible for shoppers to literally take what they want from the store shelves and walk out the door without seeing a cashier or even a self-service kiosk. As Fortune magazine put it, Jeff Bezos is waging a war with friction, and he’s winning. No wonder Amazon is on track to become the first $1 trillion company by 2022.

Third-party automotive marketplaces may not have the scale and reach of Amazon, but they’re connecting in-market shoppers to dealerships similar to how Amazon connects shoppers with merchants. Marketplaces all remove friction differently, though. Dealerships can better distinguish these differences by applying a basic “friction test” in three different categories as follows.

Price Contextualization

Friction test: review how your car inventory is contextualized on the marketplace you use.  

The key question dealerships should ask is this: does your digital marketplace contextualize car prices to reduce friction between the auto retailer and the consumer?

It’s not enough for a marketplace to provide a standard price rating. A marketplace needs to provide the “why” behind a price, calling out a vehicle’s attributes that may be affecting the price and weighing additional factors such as the vagaries of supply and demand. Doing so enables dealers to be more transparent with their customers, show value beyond price and, ultimately, close the deal quickly and efficiently.

It is important to challenge your automotive marketplace on factors that contribute to the “price badge.”  If the marketplace is only using price without incorporating considerations such as supply and demand and the availability of sub-trim levels like options and packages then they are greatly adding friction by not neglecting to tell the complete “why” story behind the price.    

Additionally, does your marketplace treat its price ratings dynamically – or does your marketplace apply a one-size-fits-all formula to distribute vehicles into different pricing categories (e.g. “Good Price” or “Great Price”)? For example, when a shopper compares prices on a group of Ram 1500s -- some limited edition and some not – the marketplace should not apply the same rules for assigning different price badges as when a consumer compares a group of base trim Toyota Camrys. The number of vehicles that fall into Great or Good ratings should be influenced by dynamic metrics that respond to each unique consumer browsing scenario. If your marketplace is simply bucketing a set percentage of inventory into the “Good” price rating and set percentage into the “Great” price rating for every browsing scenario, then the marketplace is adding friction. 

At Cars.com, we provide price badges to remove friction in the car buying process. Our badging uses machine learning to assess the closest comparable vehicle and considers features that are either in high demand for a region or those that affect the price beyond year, make, model, and trim. If there are 25 2013 BMW M3s in a certain area and all are either “Great” or “Good” deals based on the data, then we take pride in conveying to the consumer this data and do not force a subset of these vehicles differently. 

Creating Connections 

Friction test: How well does your marketplace connect dealerships with customers 24/7?

In a business that depends on one person selling a car to another, marketplaces should connect a dealership with customers on the consumers’ terms. Doing so delivers more qualified, ready-to-buy shoppers on the dealership’s lot. 

For example, at Cars.com, we offer a tool known as Salesperson Connect, which helps shoppers identify a dealership’s salespeople ahead of time and build a relationship with them before the shopper walks on the lot. Salesperson Connect integrates into a VDP the top-rated salespeople based on their reviews (published on a review platform operated by DealerRater, a Cars.com brand) and thus gives shoppers one easy place to review details about the vehicle and the person selling it. Doing so removes friction by streamlining the process for consumers and connecting them to the right dealership and right salesperson to meet their needs. The dealership benefits by having its salespeople connected with a stronger lead. 

Salesperson Connect meets a fundamental shopper need: according to our own research, 97 percent of auto shoppers would like to select their salesperson ahead of time.[i]In addition, In according to a recent survey of DealerRater Certified salespeople, more than 80 percent of DealerRater Certified salespeople said their employee profile helps them sell more cars, drive more showroom visits per month, and speed up the sales process resulting in a higher close rate.[ii]

Making salesperson profiles available to shoppers also humanizes a dealership’s brand. And humanizing a brand builds trust, which leads to a buyer becoming more confident and ready on the lot.

Predictive Selling Indicators

Friction test: review how you and your marketplace uses predictive selling indicators to create a sense of urgency. 

Predictive selling indicators are common in digital marketplaces. Consumers demand real-time and predictive insights on how quickly an item may move, whether they’re shopping on a real-estate marketplace, an airline site, or Amazon. The retail housing marketplaces do a solid job of predicting when a house will sell, which removes friction between the buyer and seller because now both buyer and seller use the same data in deciding price. 

Automotive marketplaces should provide predictive selling, too, and Cars.com does exactly that. By analyzing vehicle supply, demand, and pricing data in a specific market, Cars.com now offers consumers the insight needed and dealers the third-party validation to ensure both parties win in an era of information parity.  For example, our “Hot Car” technology helps car buyers determine when and how to act on a purchase -- and assists in accelerating sales for both new and used cars.

The new technology leverages a proprietary machine learning algorithm from Cars.com to identify which vehicles are most likely to sell quickly, based on car make and model, geographic demand, time on lot, pricing and consumer shopping behaviors. Importantly, Hot Cars discerns between differences in purchasing windows for both new and used cars. For instance, a Hot Car badge is featured on used vehicle listings that have a 70 percent chance of being sold within seven days from the day it was added or modified on Cars.com. New vehicles earn a Hot Car badge when they have a 70 percent chance of being sold within 20 days from the day it was added or modified on the site.

This innovation creates a sense of urgency for consumers, which also benefits local retailers by increasing turn rate and speeding the time to complete the transaction.

Removing friction improves trust and speed to sale while engendering the most powerful sentiment in sales where both the buyers and sellers feel that they have won.   

Improving the On-the-Lot Experience 

Friction test: how well does your marketplace facilitate the purchase process on the lot?

Lot traffic still defines a retailers’ success.  The typical car shopper visits fewer than two auto dealerships before making a purchase versus five visits in the early 2000s.[iii]  And while they are on the lot, consumers are showrooming, or using their mobile phones to compare dealerships and their inventory. 

Dealerships should demand from their providers information on what consumers are shopping for and how they are cross-shopping while on the lot. For example, Cars.com provides a monthly report that provides dealerships insight into cross-shopping behaviors of mobile shoppers while they are on the lot. In addition, to remove friction, marketplaces should help shoppers make better decisions while they are on the dealership’s lot. 

We are on a journey as we strive to remove friction and connect in-market shoppers with sellers. Removing friction saves retailers’ and consumers’ time and money and importantly, improves the quality of the transaction.  How we remove friction will change (and often) as we use technologies such as artificial intelligence and machine learning to make our site adapt to shoppers based on their evolving preferences. Expect Cars.com to provide a more personalized experience that will result in more confident buyers coming to the lot. Stay tuned. Our friction free journey is just beginning.

When the history of retail in the digital era is written, the calculus in defining winners and losers will center around how retailers leverage marketplaces. Currently, Amazon’s use of its digital marketplace is the force powering Amazon’s success.  According to a 2017 comScore/UPS study, 97 percent of U.S. online shoppers made purchases on marketplaces, up 12 points from 2016.[i]

Amazon’s utility and dominance as a marketplace is growing.  More than half of people start their online shopping searches on Amazon versus only 26 percent on search engines such as Google, according to investment firm Raymond James.[ii]

Until recently, grocery stores and auto dealerships were the two largest retail segments “immune” from the Amazon effect. With Amazon’s $13.7 billion purchase of Whole Foods in Q3, 2017, only auto remains. Since Amazon needs to sell 6,600 heads of lettuce to match the average sales price of a used vehicle[iii], Amazon is poised to disrupt the automotive industry.[iv] To thrive, automotive dealerships need to understand marketplaces’ strengths and wield the most critical advantage that dealers have over Amazon: people.

The Rise of Marketplaces

Marketplaces have been around for as long as people have been buying and selling goods and services. The basic concept of a marketplace centers around bringing buyers and sellers together. From ancient farmers’ markets to travelling art fairs, consumers and merchants appreciate the efficiency that marketplaces provide.

In the 20th century, local automotive dealers fueled the rise of marketplaces with the creation of “auto malls,” “the auto row,” and “regional tent sales.” With their scale and size of inventory selection, these creations were a way to attract consumers who would park their cars and test drive different vehicles and dealerships. 

Similarly, the automotive wholesale auction companies have been leveraging (and profiting) from their physical scale and size for years in wholesaling used vehicles in a similar marketplace style: offering a wide selection of inventory all in one location.

Amazon Is Coming to Auto

In the digital age, marketplaces range from pure marketplaces such as eBay to hybrids such as Amazon and Walmart, which act as department stores for their own curated merchandise as well as marketplaces for third parties that wish to sell their products on their platforms. In 2016, online marketplaces accounted for $1 trillion in sales.[v] Amazon alone accounts for more than 43 percent of U.S. online sales and 4 percent of all retail sales.[vi]

Before Amazon purchased Whole Foods, the grocery business was viewed as the one of the last frontiers of retail for Amazon as groceries are highly personable, intimate purchases. Once Amazon improves its Whole Foods integration, it will only be a matter of time before it starts competing with local dealers and selling used vehicles.

It’s important that dealerships understand why Amazon is succeeding and then how to best compete with Amazon. First, let’s look at the reasons why Amazon has disrupted retail:

     Relevance and Context and a Great User Experience

Amazon makes it easy for shoppers to find highly relevant content through a combination of a vast product inventory, effective search, and algorithms that track your personal preferences to provide specific recommendations. Effective marketplaces such as Amazon deliver relevant audiences to sellers, too. Additionally, Amazon’s site is super fast, clean, and focused. It is a “walled garden” (i.e., once you’re in, it is hard to leave).  When the consumer is on Amazon, they are in a purchasing mindset, and Amazon gives them the contextual content and relevant tools to help them get what they want. 

     Transparency and Efficiency

Think about the last time you shopped on Amazon or found a place to stay on Airbnb. I’ll bet you didn’t even think twice about how easy it was to compare prices and read customer reviews. And Amazon makes customer reviews even more efficient with features such as Themes, which make it possible for shoppers to identify the words that buyers use most frequently in their product reviews.

Marketplaces make it easy for buyers and sellers to do business. Ride-sharing services connect riders and drivers with the click of an app. Walmart makes it possible for shoppers to stop by brick-and-mortar locations and have customers’ orders loaded into their vehicles by Walmart employees. Amazon continues to perfect the art and science of product delivery as we’ve seen with the introduction of Amazon Key, through which Amazon drops off products at your home even when you are away.  Additionally, digital marketplaces are fast and adaptive on different formats, ranging from apps to desktops.

How to Win Against Amazon

When Amazon starts selling used cars, how will a local dealer compete? First, determine which marketplaces, such as Cars.com, match Amazon’s current experience in site speed, breadth of content, transparency, and efficiency. And then, with the help of automotive marketplaces, dealers need to leverage their advantage: the power of their people.

     People Create Relationships

Only dealerships can move beyond transactional efficiency and develop relationships. As an online marketplace, Cars.com makes the connections between buyers and sellers, delivering high-value shoppers to the lot. From there, dealerships need to go full throttle by playing to their competitive advantages that marketplaces cannot touch: building relationships.

Relationships constitute auto retailers’ advantage. The value proposition for digital marketplaces like Amazon is not about creating relationships between the buyer and sellers. But auto retailers can create those relationships. When auto retailers’ salespeople act as concierges and consultants for their customers, the salespeople create relationships that endure beyond a transaction on the lot. Salespeople are more important than ever – so important that Cars.com recently redefined the 4Ps of Automotive Marketing™ to be product, price, place, and person.

Our research indicates that 97 percent of automotive buyers prefer to select salespeople ahead of time[vii] – and we’re helping consumers do just that. Through our DealerRater Connections suite of products, we give dealerships a platform to publish salesperson reviews on one platform and syndicate those reviews to create preference for their salespeople. (You can read more about DealerRater Connections here.)

     Look Outside Retail to Appreciate the Power of People

Brick-and-mortar retailers outside automotive are already holding their own against Amazon by embracing their people. Best Buy, for instance, has gone beyond selling products and offers in-home installation services through its vaunted Geek Squad (as well as in-car stereo installation at Best Buy). IKEA adopts a similar approach to helping customers assemble store-bought products, as evidenced by IKEA’s recent purchase of Task Rabbit. Yes, in the digital age, retailers are winning with people. 

Bring Back the Tent Sales Online

Dealerships need to embrace parallel business models that allow them to compete at scale -- think of the tent sales or auto malls but in a digital setting.  Auto retailers need to compete on marketplace sites like Cars.com and appreciate the need for consumers to review their product and people and dealership as well as allow Cars.com to contextualize the price of their vehicle against other local and regional similar vehicles. 

Before Amazon arrives, online automotive marketplaces (such as Cars.com) need to tout how they will allow the local dealers to compete and win against the greatest marketplace disrupter in modern times: Amazon. To compete and win against Amazon, auto retailers need to embrace the power of their people – on the lot and through online marketplaces like Cars.com.  

Why are you paying Google to drive traffic to your site?

The automotive industry wastes billions on paid search, social, and re-targeting to drive consumers to their own websites – and consumer behavior data suggests that people are increasingly avoiding these sites. The auto industry needs to resist the seductive lure of spending billions to drive consumers to their websites. Instead, they need to focus on where consumers spend their time and invest there while appreciating the conumers’ growing desire to invest their times in comprehensive online market places.

A Disparity Between Spend and Results

In 2017, digital automotive ad spend alone will hit nearly $10.7 billion -- with 45 percent, or about $4.8 billion, being sunk in paid search, and 48.7 percent, or about $5.2 billion, going to display.[1] It’s fair to assume that automotive OEMs, local dealers, and their agencies will spend more than $10 billion to drive consumers to their first-party websites. 

The auto industry is wasting a ton of money on advertising – actually, 10,000 tons. Here’s one big reason why: while agencies spend billions to drive consumers to their websites, traffic to these sites is decreasing as first-party sites do not meet the customer’s expectations.  For instance, according to comScore data, from May 2016 to May 2017, traffic to automotive manufacturer sites alone decreased by a whopping 28 percent. [2] In addition, comScore data indicates that:

• Traffic to multiple national dealers’ sites over a similar period decreased by an average of 15 percent.[3]
• Third-party automotive resource sites (marketplaces) such as Cars.com averaged 2.4 times the unique monthly visitors as automotive manufacturer sites.[4]

The $10 billion wasted to promote first-party website traffic looks even more grim when you realize that shoppers don’t spend much time on dealership and automotive sites, either. In fact, they spend 60 percent of their time on third-party sites and only 25 percent of their time on dealership/OEM sites combined.[5]  

To make matters even worse, advertisers risk spending their money on bogus sites or sites that will hurt their brand. As recently reported, Google is refunding businesses whose advertising dollars were spent on websites with fake traffic. In all, advertisers lose $6.5 billion to fraud, and tracking the value of their legitimate spend is complicated by a system that fails to be transparent.[6] The 10,000-ton Google elephant in the room is the $10 billion that automotive industry is wasting to drive traffic to first-party websites. And the industry needs to talk about the elephant or else continue wasting money. With a flat-to-down seasonally adjusted annual rate in 2017[7], OEMs and local dealers need to be hyper-vigilant about the effectiveness of their marketing or risk losing share to more advanced/aligned OEMs and local retailers. 

Why do automotive shoppers prefer third-party reference sites over first-party automotive sites? Well, two reasons stand out: 

Rising Consumer Digital Expectations

Consumers’ expectations of automotive sites are being influenced by their experiences on comprehensive marketplaces sites such as Amazon, Zillow, and Expedia. On these and many other market place sites, consumers have become accustomed to and demand:

• Speed.
• Trustworthiness.
• A wide selection of easily searchable inventory.
• Expert reviews as well as user-generated content.
• A mobile-first experience.
• An experience free from ad disruption – either free of ads completely or free of ads (such as pop-up ads) that get in the way of finding what consumers want to find.

Consumers continue to interact with non-automotive sites even as they research for an automotive purchase. All the sites they visit shape their expectations of their digital experience with automotive sites.    

Automotive Sites Come Up Short

Most dealerships and OEM sites still struggle to provide a complete, easy-to-navigate vehicle selection and an independent as well as crowdsourced reviews of the price, vehicle, dealership and sales staff. According to a DrivingSales white paper, Competing on Consumer Experience, “. . . consumers use online sources they consider to be the most trustworthy and objective. Three out of four shoppers reported using third-party car buying websites while shopping for their new car while substantially fewer used dealership websites.” The white paper cited these reasons for why consumers avoid dealership sites:

• “They find them confusing and cluttered 

• They don’t want to be ‘bugged’ if they submit a question or inquiry 

• They feel information on 3rd party sites are more ‘trustworthy’ and complete” 


Being mobile-friendly is another trait that consumers have come to expect. According to Google, the average load time for mobile landing pages in general is 22 seconds – yet 53 percent of visitors abandon mobile sites that take more than 3 seconds to load[8]. Chances are your site is not fast enough for the mobile consumers. (At Cars.com, 59 percent of our traffic comes from mobile and we can help you reach those consumers no matter what device they’re using.) You should consider the mobile experience of your site before spending advertising dollars to drive consumers to your first-party site.

The real beneficiaries for the promotion of first-party traffic have been Google, Facebook, and their reseller agencies that promote such traffic.  For instance, Google recorded $25.7  billion in revenue for Q2 2017, and Facebook beat expectations for its most recent earnings report. Advertising fuels earnings for both companies. In Google’s case, advertising accounts for 87 percent of the company’s revenue, thanks partly to automotive dealers and OEMs pumping money to drive people to first-party websites that do not meet the consumer’s digital expectations.

How to Address the 10,000-Ton Elephant

To address the 10,000-ton elephant in the room, OEMs, dealers, and their agencies need to meet consumers where they are in their journey (rather than try to pull them to automotive websites) and understand what influences consumer’s decisions. I recently discussed in a blog post how the automotive industry needs to operate by a redefined four Ps of automotive marketing: product, price, place, and person. As I discussed, consumers have redefined place to mean not only the lot, but also all the digital destinations where they interact with your brand as they research their purchase.

We know from our own experience and data that the consumer’s purchase journey is varied and layered. Those research touchpoints include social media, reviews, OEM sites, industry trades, and third-party publishers such as Cars.com. Leading automotive OEMs and local auto retailers understand the perils of spending too much money and energy on driving traffic to first-party websites. Instead, they are trying to best promote their people, dealership, product, and vehicle price, on third- party marketplaces to get them to walk into the dealership. 

Finally, it is critical to understand and appreciate the differences in goals that your OEM or local auto retailer have against the car shoppers’ goals. As the DrivingSales white paper discusses, car shoppers want independent validation; a large, unbiased selection of inventory; and trust and transparency.

Understanding the 4 Ps and differences in your goals versus the consumer’s goals is key to addressing the 10,000-ton pound elephant in the room.

Automotive dealers and OEMs are obsessed with widely inaccurate CRM metrics that focus on traditional email and phone leads. There is a growing movement from leading OEMs and dealers to focus on what drives outcomes – the sales of new, used, and CPO vehicles and services. As consumers use a few key sources to decide what, where, and from whom to buy, it is critical for dealers to advance beyond single source CRM email and phone leads – or be left behind by OEMs and advertisers who are rapidly evolving with consumers. 

Cars.com recently surveyed hundreds of recent and prospective car buyers to understand how they interact with dealers throughout the purchase journey.[1] We carefully screened these shoppers from a large national research panel to ensure that we were getting responses from in-market shoppers. We found that quality leads – people who are serious about making a purchase – fall into three buckets:

• Phone. About 22 percent of shoppers call the dealership to set up an appointment.
• Internet. About 28 percent use their mobile phones or desktops to contact dealers online – through email, text, a lead form, or some other digital contact.
• Walk-in. A whopping 50 percent do not contact the dealer or submit a lead before visiting a dealership. Instead, they research on their own and then go directly to the lot.

To convert quality leads to sales (outcomes), dealers need to tailor their approach to identifying, nurturing, and closing leads for each channel. It is critically important they optimize their approach for the largest of these buckets – walk-in traffic. 

According to research we completed in June, 52 percent of walk-in shoppers purchase a car within one day of their visit, and 67 percent buy a car within 72 hours.[2] To succeed with walk-in shoppers, dealers should train sales staff to understand how a consumer’s motivations and behaviors may vary depending on where they are in the shopping journey.

While our research indicates that consumers visit less than 2 dealerships before purchasing a new, used, or CPO vehicle, we’ve also uncovered three different categories of walk-in traffic:

Early shopper: Early in their car search, walk-in shoppers are more likely to visit a dealership to experience vehicles firsthand. They will often show up without a specific model in mind – just to learn about car features and attributes that will be important in their search. An exploratory visit may help them to begin the process of narrowing possible options.

Mid Funnel: Later in the car search, walk-in shoppers will visit a dealership with the goal of finding a specific make and model, test driving it, and vetting it as a possible option. The goal is to ensure that a car is the right one for their specific needs.

Low Funnel: Near the end of the car shopping process, walk-in shoppers go to the dealership with a purchase in mind. They begin to feel out the dealership on their real price and start the negotiation and purchase processes. Their goal is to get the right car at the best possible price.

It is critical that local automotive sales people appreciate that walk-in shoppers are heavy online researchers. Best practices include having the local retailer acknowledge how digital research drives walk-in traffic and asking the consumer which sites they visited. Just as your best automotive sales people know the features of their product and how it stacks against the competition, successful sales people also appreciate and know the differences between core third-party sites and OEM sites. They know that connecting and speaking to the consumer wherever they are looking is critical to driving greater retail outcomes (sales). 

As mentioned previously, 50 percent of car buyers are walk-in visitors that have not submitted traditional leads before they visit a dealership. Walk-in shoppers are arriving on dealers’ lots confident that they don’t need to engage with a dealer ahead of time. They don’t hesitate to use their mobile phones to research your competitors before and during a visit to your lot. In fact, 64 percent of walk-in shoppers use smart phones to compare vehicle prices, 41 percent use their devices to read reviews, and about half to compare vehicle makes and models.[3]

In assessing the ROI of your advertising mediums, challenge your advertiser to review how much walk-in traffic they influence.  For more insight into quality leads, check out the newly published The Cars.com Guide to Converting Leads to Sales in the Digital Era.

The automotive industry must write our own rules to continue growing.

We need to let go of the assumptions that served us well for years but will hold us back in the face of changing consumer behavior, emerging technologies, and new business models. No rule for successful marketing is sacred, including the time-honored principle that auto brands should master the four Ps of marketing to win customers: product, price, place, and promotion.

The four Ps still matter, but not the same way they did when they caught on decades ago to form the four pillars of the popular marketing mix. I believe we need a new four Ps: product, price, place, and person.

Times Have Changed

According to the traditional four Ps, for marketers to succeed they need to promote a desirable product at the right price and convenient place. For decades, auto dealers have applied them to propel an industry that has been the bedrock of the American economy.

But times have changed. The consumer’s car shopping journey touches multiple places before and after the point of purchase on your lot. Consumers are also affected by the best experiences they have in other industries, such as Zillow.com for finding a home, and Lyft and Uber for getting personal transportation with complete transparency regarding price as well as the driver. These new platforms have changed retailing – brands are now utitlies and must provide transparent, useful content in context of each consumer’s needs.

As a result, useful features such as price contextualization and consumer reviews more effectively meet shoppers’ needs than “look at me” promotion. And the payoff is one person selling a vehicle and then building a relationship with another person.

In the digital era, automotive retailers must now prioritize a new fourth P – person -- as they go beyond promotion to create meaningful connections that fuel growth.

Power to the People

People drive automotive sales. The path to purchase ends with a person working with a person. The two most crucial people in the automotive purchase decision are shoppers and salespeople – people buy from people.

Even as consumers have access to more digital tools to research what they want, the final decision about buying and servicing a car still comes down to a shopper’s interaction with a person. That interaction is more essential than ever as the purchase decision becomes more complicated. Each year, more than 30 manufacturers launch more than a thousand make, model, and trim combinations. Automobiles have evolved into sophisticated mobile computers, providing more features and options than ever before. So it’s no surprise that more than 97 percent of consumers would like to select a salesperson before they visit a dealer[1].

The direct shopper/salesperson interaction creates sales. Dealers tell us that their most valuable leads consist of people talking with salespeople directly, either face to face on the lot or on the phone[2]. As discussed in the recently published DealerRater Guide to Online Reviews, auto dealers have an opportunity to highlight their own people through tools such as reviews of their salespeople on their own sites, on the lot, and on third-party sites such as Cars.com. We know that consumers will read reviews and ask for salespeople by name given the chance. (And we’ll soon announce one way we’re going to make it easy for dealers to create increased visibility and connections via those reviews.)

Product and Price

One of the reasons that third-party research sites have exploded in popularity is that consumers want more detail about their purchase. Product and price are still two essential bedrocks of the four Ps. What’s changed is that consumers want more in-depth information about what they are buying and for how much, including price comparison tools and visually stunning product features using rich media. And, oh yes: they want reviews from other consumers.

Your digital vehicle detail page (VDP) on a site such as Cars.com is where price and product become increasingly essential to help consumers make the right decision on what to buy. Consider these data points:

• Product: 70 percent of Cars.com shoppers are undecided on what and where to buy. Cars.com connects your inventory to consumers in the moments that matter.[3]
• Price: 61 percent of new car shoppers turn to third parties for pricing.  Cars.com creates pricing transparency that fosters trust between your brand and the consumer.[4]

Price is about what the consumer can comfortably afford based on resources and financing options. Price also includes variables such as increasingly complicated optional features. In other words, price is increasingly contextual, and by providing transparency into that context you can grow trust with consumers and win customers.

Redefining Place

As dealers respond to the consumer who navigates across multiple touch points throughout their decision-making journey, our notion of place has changed. “Place” no longer means the lot exclusively. Place includes everywhere in the online/offline world where consumers research their purchase decision. Dealers must be present with the right content and experiences at the right time to attract shoppers to the lot.

In addition, the on-the-lot experience has changed: with their mobile phones, consumers are bringing the digital world with them to your lot. They’re showrooming competitors’ lots and researching reviews while they interact with your salespeople.

It’s time for auto dealers to stop over-investing their digital advertising resources into blindly promoting their own websites and brick-and-mortar dealerships now that consumers have the power to block digital ads and find what they need elsewhere. Smart dealers are thinking of place in context of the experience that people have wherever a shopper finds a dealer – in a search result, on a review site, in an article, and on the lot. And they’re training their salespeople to know how to interact with the mobile, multi-tasking consumer on the lot, too.

Cars.com Helps Dealers Reach Consumers with the 4Ps of Automotive Marketing

Cars.com delivers connections that fuel growth for our partners by providing the best possible experiences for consumers. We are creating market-leading innovations to enhance the consumer experience and empower consumer with all the information they need -- what to buy (product), what to pay (price), where to buy (place), and who to buy from (person). In coming days, Cars.com will show you how we have responded to the advent of the new four Ps by creating a new experience on our site. Stay tuned. And let me know how you are responding to the emergence of the new four Ps.

Last-click attribution is dead. And major data publishers know it, as evidenced by Google’s attempts to improve its attribution capabilities. For many auto dealers, Google’s tools, which default to last-click attribution, fail to measure the effectiveness of auto dealers’ marketing spend in an omnichannel world. As a result, dealers are over investing in tactics such as paid search with limited payback.

To master digital, auto dealers need to recognize all the media that determine what, where, and from whom consumers purchase vehicles – or what is known as multi-touch attribution. In digital, multi-touch attribution gives credit where credit is due – similar to an ice hockey game where players are credited with assists for passing puck to the team mate who scores a goal. Multi-touch attribution provides insight into how all the players contributed.

For some time, dealers have been telling me that tools such as Google Analytics provide, at best, a glimpse of last-click attribution, meaning that dealers lack a true understanding of all the touchpoints that influence the shopper’s journey.

I have some new hard numbers to complement dealers’ experiences, courtesy of Clarivoy.

For context: Clarivoy provides proprietary software products that help businesses measure the return on their marketing spend. The Clarivoy Multi-Touch Attribution solution is designed to help dealers understand how all their digital marketing investment efforts -- not just the last click or interaction -- influence the car buying journey.

Recently more than 100 Cars.com dealer customers integrated the Clarivoy Multi-Touch Attribution solution into their Google Analytics software. We suspected that Google Analytics was failing to recognize the true influence of third-party sites such as Cars.com, and we believed Clarivoy’s product would expose those limitations.

Our hunch was correct. As Clarivoy announced July 11, dealers using last-click attribution with Google Analytics are not able to accurately attribute the value of third-party sites such as Cars.com. For instance, on average, dealers who implemented the multi-touch attribution solution saw conversions on their sites attributed to Cars.com increase by 37 percent -- with a 20 percent decrease in cost per conversion after two months on the trial.

The results were even more interesting when dealers considered the conversions that occur directly on Cars.com. Adding Cars.com data (e.g., Cars.com leads) to the multi-touch attribution model allowed one dealer to identify more than 11,000 conversion events that happened on the Cars.com site – on top of the original 103 reported by Google Analytics!

This trial use of the Clarivoy solution provides some important take-aways:

• There is a disconnect between consumer behavior and dealers’ marketing investments. On the one hand, shoppers are navigating several omnichannel touchpoints ranging from Cars.com to OEM sites as they research and shop for vehicles. About half these shoppers don’t even contact the dealer before walking onto the lot. But on the other hand, dealers are overspending on tactics such as paid search that fail to measure how myriad touchpoints in the journey shape a shopper’s perceptions.
• Dealers need to graduate beyond the use of basic tools such as Google Analytics to truly understand consumer behavior. As I mention in the Clarivoy announcement, dealers need stronger tools to really understand the full customer journey leading up to the last click. Doing so will help dealers understand the influence that third-party sites such as Cars.com have on the path to purchase and make more informed decisions about how to allocate their marketing spend.

The disconnect between consumer behavior and dealers’ marketing investments has some important consequences. Dealers:

• Lack an accurate understanding of how their customers behave.
• Overinvest in the wrong tactics.
• Miss opportunities to connect with customers in the areas where consumers are researching and shopping, including Cars.com.                                                                                            

The solution to this disconnect is for dealers to use multi-attribution tools that look before the last click. Once dealers are set up for success, they can adjust their marketing spend accordingly – and start reaping the benefits of true insight into consumer behavior. What are you waiting for?

The recent Google boycott has made international news and set off an avalanche of activity.  Over 250 companies have joined the cause related to concerns around Google’s inability to prevent ads from being served next to questionable content on YouTube and throughout their ad network. 

Google just celebrated their 11th year as a publicly traded company and, in that time, advertising revenue growth has ballooned from $6.1 Billion in 2005 to $79.38 Billion in 2016.  Until this boycott, advertisers have been mesmerized by Google’s scale and ubiquitous brand.  Google -- and the media agencies that sell and promote Google’s media services -- have sold Google’s paid search and display products on scale-driven KPIs such as low cost per click (CPC), low cost per thousand (CPM) and the need for high impression share. 

While Google offers tremendous scale, some advertisers are recognizing the tradeoffs between quality and quantity in digital media.  Advertising are questioning the effectiveness of a “scale” model and the KPIs that fail to reflect the clients outcomes (e.g. what truly does a CPC or CPM measure in a digital ecosystem where audience quality is not equal).

Accroding to eMarketer, OEMs and dealerships spent $4 billion on Google and Paid search marketing in 2016.  Yet few US Automotive advertisers have analyzed this spend to determine if the spend helped attain their goals: from market share and rate growth to turn and reduced SG&A expenses…  How could so much money be spent in the US auto industry without basic oversight of such considerable investment?   

Marc Pritchard, Proctor & Gamble’s Chief Brand Officer, issued a Clarion Call during his IAB presentation in January 2017 to the entire digital ecosystem.  During his presentation, Pritchard commented on the lack of digital accountability, “We are wasting too much time and money on a media supply chain with poor standards adoption, too many players grading their own homework…and too many holes to allow criminals to rip us off."

While Mr. Pritchard didn’t name any agency, media company or call out Google directly;  however, in less than 8 weeks after Mr. Pritchard’s presentation, over 250 leading companies began “voting with their dollars” and started boycotting Google boycott based on the same lack of standards and lack of accountability that Mr. Pritchard addressed at the IAB conference. 

Brand quality and brand standards need to be central to advertising moving forward.  As Mr. Pritchard stated, Digital media cannot have a “hall pass” on quality standards.  Since the dawn of advertising, companies selling goods or services have aspired to build their brands by associating their products with high quality,  strong brands and marketplaces. While there will always be a place for scale plays and the potential lower quality and cheaper rates that scale plays provide, advertisers needs to assess the quality of their audience not in terms of cheap CPCs and CPMs, but in terms of outcomes, quality and potential risks (in either advertising or not advertising). 

Over the past 11 years there has been an unnatural disconnect between large scale plays like Google (and increasingly Facebook) based on their internal metrics that emphasize efficiency and scale vs. true advertiser outcomes and quality. Over 250 companies have connected this formula and have begun assessing how negative brand associations affect their audience- even at cheap CPC or CPMs.  This recent realization could prove costly to Google- with  Fortune estimating that the Google boycott could cost Google $750M.  The advertisers boycotting Google have made it clear: the price of quality is high and the cost to fail to deliver quality can be even higher…

Walk-in shoppers are a sizable and important audience. According to recent research conducted by Cars.com, 43 percent of car shoppers don’t contact a dealership before walking onto the lot via traditional “lead” methods, meaning that about 4 out of 10 shoppers have narrowed their vehicle search without ever contacting a dealership.  And, these walk-in shoppers are valuable: two-thirds of them make a purchase within 72 hours of their on-the-lot visit, and 40 percent buy within the same day.

The prevalence of walk-in shopping is a challenge and a catalyst for dealers to adopt multi-touch attribution to maximize marketing effectiveness.

Walk-in traffic has always been a challenge to quantify. I suspect that the number of consumers who walk on to the lot to purchase vehicles will create stress an industry whose key systems to gauging sales process and marketing effectiveness (CRM, Google Analytics and dealership management systems) are already antiquated.

 Walk-in Traffic and Multi-Touch Attribution

Walk-in shoppers are influenced by a number of touch points, ranging from organic searches to reviews and third-party sites such as Cars.com. Armed with a wealth of research, they’re visiting dealers’ lots confident that they don’t need to engage with a dealer ahead of time. Consequently, dealers need to use multi-touch attribution strategies, not just last touch attribution or traditional lead metrics, to understand the value of their digital marketing.

However, dealers continue to invest in tactics that support last-click/single-source attribution and are not even necessarily driving sales. For example, in 2016, more than 50 percent of  dealerships’ digital spend went to promoting their website via paid search and display (according to eMarketer). As I wrote recently, when our dealer customers listen to inbound phone calls that originate from branded paid search terms, they realize that close to 90 percent of these “leads” are not leads at all – they are recovery searches for post-influence service. The industry needs to move away from metrics that support last click/single source to advertising that wins with consumer preference and walk in traffic

Winning with the Walk-in Consumer

The walk-in consumer is a great opportunity of sales for the dealer community. To turn walk-in consumers into customers, dealers need to understand their motivations and behaviors. Our data paints the picture of a ready-to-buy shopper  who uses their devices to determine what, where and from whom to buy. They’re using their mobile devices on-the-lot to make smarter decisions:

• 64-percent use smart phones to compare vehicle prices.

• 51-percent compare vehicle makes and models.

• 41-percent read reviews.

Dealers need to train their sales teams to understand how to engage with walk-in shoppers – and assume that all walk in traffic are consumers who have spent time online researching their future vehicle purchase.  Walk-in shoppers are engaged and ready to talk prices and details about makes and models, and a large number continue their research online while at the dealership’s lot.  Sales associates should understand what key review sites like Cars.com are saying about the vehicles, the dealership, and sales people

On-the-Lot is the New Normal

Dealers need to face a hard reality: their lead data is incomplete and CRMs and Google Analytics currently only support single source attribution. Dealerships that rely solely on last-touch attribution and “internet” lead data to make advertising decisions are missing a sizeable and growing segment of on-the-lot customers — and these are customers who are more than likely ready to make a purchase.  To this end, our industry needs to become literate in the digital experiences, expectations and needs of walk-in consumers to best work with the growing legion of walk in traffic.

It's time for automotive dealers to see Google clearly for what it is: a multibillion-dollar digital phone book.

By the time a consumer is conducting a search for your dealership by name, they have likely already decided what car they are buying and where they are going to buy it. They are no longer in discovery search mode -- they have likely moved into recovery search mode.

Search authority John Battelle is credited with popularizing discovery and recovery search in his book about Google, The Search, and the terms remain useful for understanding how people use Google to find your dealership:

• Discovery search occurs when someone is doing initial research into a product or category. They may search for “family-friendly sedans” or “best three row SUVs.” With discovery search, a consumer has just embarked upon their car-shopping journey and are looking for information on what car to buy, where to buy it, and who to buy it from.

• Recovery search occurs when a consumer already knows about your business, might even have visited you, and does a search to recall where to find you. Recovery searches can also include searches for your dealership by name, or a “branded search.” Examples of recovery search might be, "Carter Subaru address” or "What are the hours for Smith Ford in Grand Rapids?"

Last year, eMarketer reported that 49% of local U.S. dealers’ digital spend is with paid search. Yet when our dealer customers listen to inbound phone calls that originated from branded paid search terms, they realize that close to 90 percent of these “leads” are not leads at all – they are recovery searches for post-influence service.

Phone Book Traffic Doesn’t Drive Purchase Influence (or Leads)

The traffic that paid search is driving for the majority dealers is essentially serving the same purpose as the phone book did for local businesses years ago – it’s providing basic name, address, phone number, and hours of operation information. These searches are not influencing consumers’ purchase decisions on what car to buy and whether or not to buy from your dealership. Yet, paid search resellers have flooded the industry selling branded terms on Google as the ultimate direct response medium, which has over-inflated the value of paid search and, in turn, the percentage of spend against paid search across a typical dealer’s digital marketing mix. (And it doesn’t help that Google Analytics is set up by default to provide last-click attribution, which in the case of recovery search is most often – you guessed it -- Google.)

Look (and Listen) Beyond the Last Click

By the time consumers are looking for your dealership by name, they have already decided to buy from your dealership -- they are using Google as a phone book. Listen to the phone calls that you are receiving from branded paid search and you will find what many of our customers have found: that 90 percent of these calls are service customers asking if their car is ready for pickup.

Establish The Right Search Media Mix

Google paid search resellers and agencies love to sell branded terms as they perform the best in terms of last-click conversion. What dealers must understand is that they don’t need to buy their way into branded phone book recovery searches on Google – they can earn their way into them, through local SEO (and managing your Google My Business profile). If your paid search campaign is currently heavy on branded search terms consider day-parting during high service pick up and drop off hours to optimize spend.

Don’t over-invest in a branding dream and get phone book results with Google recovery search. Save your digital dollars for discovery opportunities in the places consumers are actually seeking information to determine what car to buy and where to buy it. By looking beyond the last click and actively managing your local SEO efforts to drive your “phone book” listing on Google, you will earn your way to being found in the moments of recovery search when Google comes calling.