Finding new ways to attract customers and gain a leg up on the competition is always important for car dealers. Edmunds.com’s Chief Economist Lacey Plache, PhD, has recently completed extensive research on how, for many dealers, a sales boost and significant return on investment can come from creating or enhancing their relationships with third-party websites. Her guest post follows: 

Third-party websites offer at least four key ways for dealers to grow their sales:

1. Customer Acquisition opportunities
2. Retention opportunities
3. Personalization opportunities
4. Communication opportunities

Customer Acquisition Opportunities

Popular third-party websites deliver promising customer acquisition opportunities for dealers looking to grow their businesses. Studies show that third-party sites attract a larger and largely different audience than dealer sites. What’s more, that audience is a desirable one for dealers:

• According to Compete data, third-party sites tend to attract above-average income earners and over-index on Millennials.
• Third-party sites draw engaged, in-market shoppers whose online behavior indicates that they are actively preparing for purchase.
• Third-party sites appeal to shoppers of both new and used vehicles.

Retention Opportunities

Beyond acquisition opportunities, third-party sites also offer the unexpected benefit of helping dealers retain their own customers. Edmunds research has found that visitors who visit a dealer site before coming to Edmunds are significantly more likely to request a price quote. And, a joint study conducted by Edmunds and CDK Global shows that car shoppers who combine dealer website research with Edmunds research are four times more likely to purchase a car.

Why is this true? Edmunds' analysis shows that the explanation lies in how visitors use the two different sites—that is, how they use them differently. Dealer site visitors tend to limit their site activity to viewing inventory and looking for dealer specials, while visitors use Edmunds for a much wider range of pre-buying activities, including researching vehicles, using tools such as vehicle appraisers and payment calculators, and reading articles on car-buying as well as viewing inventory. Supplementing and validating dealer site info with Edmunds info is what pushes dual site visitors to pull the buying trigger.

Personalization Opportunities

Third-party sites serving immense audiences of car shoppers may be collecting and analyzing useful data on these audiences—data that dealers likely do not have, but could make good use of. In working with third-party sites, dealers may want to leverage these objective insights to personalize the shopping and buying experience as much as possible in order to best serve customers.

For example, third-party sites offer a large variety of content for car-shopping visitors and track visitor engagement on their sites. As a result, they may have substantial insight into what matters to shoppers, including features (Bluetooth, third-row seats, vehicle type), pre-buying tasks, concerns, etc. The data can also show which third-party site visitors are shopping new only, used only or both. Third-party site traffic can serve as a gauge for how seriously a visitor is shopping any given model and key competing models. Savvy third-party sites can even predict how likely a visitor is to purchase in a certain time frame, and can tell you if you’re the closest dealer with whom a shopper engaged online.

Knowing this information can make it possible for a dealer to personalize the shopping experience for each site visitor, such as by putting content on the page that corresponds to a visitor’s activities on a third-party site and by exercising sales techniques best suited to that customer’s interests.

CDK Global research shows that consumers who experience personalized content on a dealer’s website engage more than those who do not. On average, shoppers interact with 53 percent more VINs, perform 58 percent more vehicle searches, and return to the dealer website more than twice as often. Overall, dealers who deliver personalized experiences on their websites see 28 percent more ‘likely buyers’—consumers who search inventory, view vehicle detail pages (VDPs) and submit a lead.

“Savvy dealers recognize the value of leveraging the interests that consumers reveal throughout their digital journey and personalize the website for each visitor,” stated Max Steckler, VP of Product at CDK Global. “Knowing how powerful personalization is, we’ve been personalizing the experience for dealer website visitors since 2013 based on both their on-site and off-site activity, including select manufacturer websites and third-party websites.”

Communication Opportunities

Third-party sites not only provide a channel for engaging shoppers with relevant pre-buying content, but also can provide platforms for direct and immediate communication with customers using the format that they prefer. For example, many third party sites offer customers links to “Click to call” and/or “Click to Email” a dealer directly. 

Lacey Plache is the Chief Economist for Edmunds.com. Follow @AutoEconomist [http://twitter.com/autoeconomist] on Twitter.

Have you noticed that the average used car you’re selling is younger and pricier? The recent popularity of leasing is pouring young used cars into the market at unprecedented levels.

Edmunds' analysis found that average used car prices hit a record high of $18,400 in the third quarter of 2015, up 6.3 percent — or $1,100 per vehicle — from the third quarter of 2014. Meanwhile, the average age of used cars sold in Q3 2015 was 4.3 years, down from an average of 4.6 years the same time last year.

This is music to the ears of a franchised dealer who recognizes the opportunity to sell more certified pre-owned cars.

In Q3 2015, dealers sold over 653,000 vehicles through CPO programs, the highest-ever volume for the third quarter. CPO sales accounted for 21.8 percent of used sales by dealers, another record for the third quarter.

These highly profitable cars are here; now the challenge is keeping a steady stream of buyers interested. The timing is great, as growing numbers of Millennials are coming into the market with an appetite for lower priced cars equipped with the technology that can be found in many younger used models.

In support of its new Used+ car shopping service, an innovative used car sales program carefully designed and market-tested for effectiveness in closing used car deals quickly and beneficially, Edmunds has been studying used car buyer behavior and has come upon some interesting learnings:

• In a recent survey conducted on behalf of Edmunds.com by Instant.ly, 88% of respondents said that if they were to consider a used car, they would be willing to pay more for a certified pre-owned vehicle. Of those who were willing, 37.8% said they would spend up to an additional $1,000 while 36.9% of respondents said they would spend up to an additional $500.

• Edmunds found that mobile users are at least 2.5 times more likely to click on ads than wired site visitors. This result holds for both retention and conquest ad campaigns. Mobile ad engagement has tripled compared to last year, and is trending to continue proving effective.

• When determining condition of a used car, 81% focus on the vehicle’s mileage, 77% focus on the vehicle’s age and 67% focus on the wear and tear, according to Edmunds’ research. To draw the most interest from shoppers browsing the Internet for the perfect used car, your online communications should anticipate and address these topics of interest.

• Of the non-CPO used car buyers that Edmunds talked with, 28% were getting rid of their old cars because they needed expensive repairs. Of the CPO buyers that Edmunds talked with, 24% were motivated to shop for something newer because they were nervous about the safety and/or reliability of their old cars. Moving forward, both sets of shoppers are likely to prioritize peace of mind when making a used car purchase. Dealers who address this need will be more likely to close more sales.

Edmunds compiles a wealth of detailed insights into the state of the used car market quarterly in a free report found at http://www.edmunds.com/industry-center/data/used-car-market-quarterly-report.html  Here are some additional points of interest from the latest edition of the report

• The average amount financed for a used car is $20,568, which is up two percent from last year. (The average financed amount is larger than the average price of used cars because many of the more inexpensive transactions are paid in cash and are therefore not reflected in the average financed amount.)

• Loan terms on used cars are growing to offset higher average prices, and for the first time since before the recession, average APRs on used car loans are creeping higher.

• Traditional SUVs  are seeing the most price growth in the used car market. Passenger cars, on the other hand, are generally showing marginal year-over-year adjustments to prices, as a result of lower demand.

Have you noticed that the average used car you’re selling is younger and pricier? The recent popularity of leasing is pouring young used cars into the market at unprecedented levels.

Edmunds' analysis found that average used car prices hit a record high of $18,400 in the third quarter of 2015, up 6.3 percent — or $1,100 per vehicle — from the third quarter of 2014. Meanwhile, the average age of used cars sold in Q3 2015 was 4.3 years, down from an average of 4.6 years the same time last year.

This is music to the ears of a franchised dealer who recognizes the opportunity to sell more certified pre-owned cars.

In Q3 2015, dealers sold over 653,000 vehicles through CPO programs, the highest-ever volume for the third quarter. CPO sales accounted for 21.8 percent of used sales by dealers, another record for the third quarter.

These highly profitable cars are here; now the challenge is keeping a steady stream of buyers interested. The timing is great, as growing numbers of Millennials are coming into the market with an appetite for lower priced cars equipped with the technology that can be found in many younger used models.

In support of its new Used+ car shopping service, an innovative used car sales program carefully designed and market-tested for effectiveness in closing used car deals quickly and beneficially, Edmunds has been studying used car buyer behavior and has come upon some interesting learnings:

• In a recent survey conducted on behalf of Edmunds.com by Instant.ly, 88% of respondents said that if they were to consider a used car, they would be willing to pay more for a certified pre-owned vehicle. Of those who were willing, 37.8% said they would spend up to an additional $1,000 while 36.9% of respondents said they would spend up to an additional $500.

• Edmunds found that mobile users are at least 2.5 times more likely to click on ads than wired site visitors. This result holds for both retention and conquest ad campaigns. Mobile ad engagement has tripled compared to last year, and is trending to continue proving effective.

• When determining condition of a used car, 81% focus on the vehicle’s mileage, 77% focus on the vehicle’s age and 67% focus on the wear and tear, according to Edmunds’ research. To draw the most interest from shoppers browsing the Internet for the perfect used car, your online communications should anticipate and address these topics of interest.

• Of the non-CPO used car buyers that Edmunds talked with, 28% were getting rid of their old cars because they needed expensive repairs. Of the CPO buyers that Edmunds talked with, 24% were motivated to shop for something newer because they were nervous about the safety and/or reliability of their old cars. Moving forward, both sets of shoppers are likely to prioritize peace of mind when making a used car purchase. Dealers who address this need will be more likely to close more sales.

Edmunds compiles a wealth of detailed insights into the state of the used car market quarterly in a free report found at http://www.edmunds.com/industry-center/data/used-car-market-quarterly-report.html  Here are some additional points of interest from the latest edition of the report

• The average amount financed for a used car is $20,568, which is up two percent from last year. (The average financed amount is larger than the average price of used cars because many of the more inexpensive transactions are paid in cash and are therefore not reflected in the average financed amount.)

• Loan terms on used cars are growing to offset higher average prices, and for the first time since before the recession, average APRs on used car loans are creeping higher.

• Traditional SUVs  are seeing the most price growth in the used car market. Passenger cars, on the other hand, are generally showing marginal year-over-year adjustments to prices, as a result of lower demand.