Category Archives: internet sales

The Game-Changing Google Program Auto Dealers Can’t Afford to Ignore

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Google’s online ventures are usually anything but under the radar. Yet recently, in what may be a game-changing play, the search engine giant quietly entered the third-party lead provider business for car dealerships.

The beta version of Google Comparison Ads for Autos (which is unofficially being referred to as “Google Cars” within the industry) was launched to very little fanfare a few weeks ago in the San Francisco Bay area. The service invites participating dealers to send their inventory to Google, allowing consumers direct access to inventory, price comparison, and the ability to request quotes from within Google search results. As shown below, the program—and associated inventory—is prominently displayed on page one of a relevant search.

While the program is currently limited to dealers within the San Francisco Bay area, program-specific search results are available throughout the state of California, not just for people located within the Bay area—contrary to what others are reporting. As evidenced by the above screen-grab, I did not have to change my location to get Comparison Ad results, and I live almost 500 miles away, in Southern California.

Google is currently testing a number of similar Comparison Ads programs for other products, including credit cards, CDs, and checking and savings accounts. Results have been controversial, with many advertisers in these industries reporting dissatisfaction, especially since Google is not obligated to play by its own rules and is, in effect, competing with its own advertisers. In November 2011, Google temporarily suspended its Comparison Ads service to the mortgage industry with plans to reboot the program after revamping it.

While specifics of the program for auto dealers have yet to be announced, Google is promoting the new service with the following program highlights:

“Higher-quality leads: Our leads come directly from motivated, purchase-ready consumers who have specifically chosen to contact your dealership. Leads are unique, never resold, and delivered immediately to you.

Free inventory listings: You can have your inventory shown to consumers on Google for free, even if you decide not to receive leads.

More than just inventory: Consumers can choose to connect with you even when you don’t have a specific car in inventory. We know that you can order the car, dealer trade, or find other solutions to help consumers get the cars they want.

Greater control over leads: You choose how much you’re willing to pay for a lead and target consumers based on distance and specific type of car, so you get the leads that are most valuable to you.”

This is all the information that Google currently has publicly available about the program. However, the operational processes used in the suspended Comparison Ads program for mortgages may offer additional insights. Here’s a run-down of how the program functioned:

1. Google looked at maximum bids placed by each competing bidder and then set a reserve price based on those bids. Once set, the reserve price was the minimum fee bidders would have to pay to appear on a desired search results page.

2. Anyone bidding below the reserve price was dropped from the auction. Google also dropped the bottom 10% of bidders who bid at or above the reserve price.

3. Results were then displayed (in this industry’s case) from lowest to highest APR. This leads me to believe automotive results would be displayed with the lowest prices first.

Furthermore, this is how, in an unlisted video, Google described the highlights of the program to the mortgage industry:

• The ads were included in the “Sponsored Listing” section but are not counted in the AdWords auction.

• Pricing was pulled directly from the companies’ “pricing engine product feed,” which would presumably be the equivalent of a dealer’s DMS or pricing tool, and updated multiple times per day.

• Bids could be highly targeted to reach the consumers most likely to convert, and an advertiser could place different bids for each targeted criteria.

Google mentions that they are working on a different ranking system for the mortgage program (one of the reasons provided for its suspension) in which Google will reward high-quality advertisers using factors such as:

• Accuracy of offers as determined by mystery shopping

• Turnaround time on lead follow-up

• Customer satisfaction as measured by surveys

It is probably safe to assume that Google will eventually apply these ranking criteria across all industries serviced by their Google Comparison Ad program.

Google is promoting the Comparison Ads for Autos program as a way for dealers to source fresh leads from consumers’ Google searches, but given the above information I have several concerns regarding how beneficial the program will really prove to be.

First and foremost, Google claims that the leads generated by the program are “unique,” yet in the final step of a lead submission, the program offers the consumer the choice to contact other dealers who may have similar cars available. A single person inputting a lead and requesting contact by multiple dealers would hypothetically generate multiple leads, a complication Google does not currently address.

On a related note, Google is telling consumers that even if they are interested in a particular vehicle that has already been identified by VIN, they may be able to get the same vehicle from another dealer. As Google puts it, “if you see a particular car (specified by a unique VIN) showing in a dealer’s inventory, you may be able to get that car from other dealers as well. Dealers often times trade inventory with each other, so you can buy from the dealer that you prefer.” Thus, Google is negating the edge a dealer may have in winning the consumer’s business simply by having the exact vehicle they are looking for in stock.

In addition, while Google says that dealers can list their inventory on the program free of charge, it is unclear what would happen to any leads generated if the dealer chose not to “pay to play.”

For those who are willing to pay, Google allows dealers to “[choose] what [they’re] willing to pay for a lead.” According to Automotive News, the price-per-lead is determined via a bidding model, with dealers competing for prominent positioning within search results for their inventory.

The final component of the program is that Google emphasizes the protection of consumer privacy. There are three ways in which a consumer can contact you as a participating advertiser:

1. Inbound Phone Lead: This comes via a Google-generated phone number; the consumer’s phone is blocked from the advertiser’s phone system.

2. E-mail Inquiry: The advertiser is given the consumer’s name and the details of the product they are interested in, but the consumer’s e-mail address is masked.

3. Request a Call-Back: The advertiser is given a masked phone number with which to call the consumer.

Google states that lead delivery is compatible with CRMs, but how those leads would actually populate is unclear.

The fact that Google commands such a large percentage of internet searches means that this program is a potential game-changer. Google’s ability to position this program wherever it likes, regardless of its other ad programs, may mean that dealers are forced to participate to remain competitive. Because Comparison Ads currently appear just above the first organic search results, these results will likely divert a portion of traffic that would otherwise have gone directly to dealers’ websites.

Not only will Google’s Comparison Ads for Autos impact many components of your online marketing efforts, including search engine optimization strategy and pay-per-click campaigns, but it may also even affect the lead quantity that your current third-party lead providers are able to offer you. Obviously, dealers would be well-advised to pay close attention to the program as it develops.

via the July 2012 edition of the 3 Birds Marketing newsletter

Tip: Selling Cars using eBay Motors Local Market

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In my experience, I’ve heard many dealers complain about eBay Motor’s Local Market service for dealers. For those who don’t know what it is, it’s NOT a typical auction-style listing service. It will post your entire inventory on eBay and offer shoppers two choices on your vehicle page on eBay – “Make an Offer” or “Contact Seller”.

One of the coolest things is that, different from a normal eBay message from an interested buyer, you actually get full contact info for the consumer as they have to be logged into eBay to complete the action and eBay passes along this information to you straight into your CRM. So if someone contacts you and asks you a question, you have the ability to follow up with them just like any other lead.

One of the biggest complaints I hear from dealers are that they continuously get ridiculous offers for vehicles – like an offer of $1,000 for a $10,000 vehicle – and they don’t want to waste their time. They believe there is little value in having their inventory on eBay because their perception is that all they get are stupid offers and little else.

What I ask dealers when they make this complaint is “If you had someone in your showroom making you an offer of $1,000 on a $10,000 car, what would you do? Would you tell them to hit the pavement?” The typical answer is “I’d sit down with them and work the deal starting off with explaining why that offer is not realistic.”

Keep in mind that, despite their unrealistic offer, these are people, first and foremost, shopping for cars. On top of that, out of the millions of cars listed on eBay, they happened to land on yours. Not only did they land on your vehicle, they took the time to contact you and/or make an offer on that vehicle – realistic or not.

Anyone offering you any amount of money for a vehicle is, in reality, starting negotiations. I’m sure you get unrealistic offers all the time from showroom customers in the box with your salesperson. You ask your salespeople to get a commitment when filling out the initial foursquare and, sometimes, those offers are unrealistic. These leads aren’t any different except for the fact that they aren’t in your showroom.

If you get an unrealistic offer on eBay, instead of looking at it like a waste of your time, realize that, chances are, this person is farther down the funnel than most of your internet leads. They may be higher maintenance and require more work than your typical internet lead but by making the effort instead of just declining their offer and dismissing them as a “jack”, you’ll find that you’ll be able to convert some of those ridiculous offers into sales.

In Defense of TrueCar

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There’s been a lot of talk about TrueCar lately in automotive industry forums blasting them for their business practices and how “evil” they are. There’s a thread on DealerElite with over 33 PAGES of comments [edit: 50+ pages] in response to Jim Ziegler’s question:

“TRUE CAR and ZAG Cyber Bandits: Parasites or Good for the Car Business?”

..and even a video from Jerry Thibeau of Phone Ninjas who has a very strong opinion:

(Edit: I guess TrueCar didn’t like the video. It appears that they had it removed.)

My experience with HomeNet Automotive (the leading automotive data distribution company now owned by AutoTrader) gave me unique insight from all perspectives: vendors, 3rd party inventory sites and dealers.

Whether you think TrueCar is good or bad for the automotive industry, you have to step back and consider a few things:

(In regards to TrueCar having, and using, a dealer’s sales data) In the early days of inventory marketing, it was the general thought that having your inventory on every 3rd party site possible was a great idea. Most dealers signed up for every 3rd party site they could, especially if it was free. When I was an Internet Director, I signed up for them all also. When I was with HomeNet, I talked to many Dealer Principals that wanted their inventory everywhere. Most never read any “terms and conditions”, they just signed up. Any of these third party sites could have been polling their DMS for not only inventory but sales data and they never would have known. Nothing’s free. It wasn’t until recently that people started questioning the wisdom of shotgunning their data and, even then, it had nothing to do with whether the sites should have it but how it was effecting their SEO efforts and how the sites were using their data to collect leads then selling those leads to the dealer. It had nothing to do with the fact that they HAD the data in the first place.

When HomeNet Automotive integrated TrueCar into their inventory management tool, (IOL Pro), as a rep, I visited many dealers who loved the TrueCar feature and ability to use reports to close deals and research competitor pricing. Only a few even questioned where the data was coming from and in only one case was a dealer actually upset that we (ie. HomeNet) had the sales data at all. The fact remains that this data was given voluntarily by the dealer to hundreds of 3rd party sites, each with their own terms and conditions, and any of which could have been polling their DMS for sales data and, in turn, providing it to TrueCar, Edmonds, AutoTrader, etc. or any of the hundreds of other sites.

(In a now amusing tangent, industry people demonize Reynolds and Reynolds all the time for protecting their data (ie. not allowing unauthorized 3rd party access) and throttling their control over distributing it to just anybody and now these same people are complaining about 3rd parties having the data.)

Now, onto the lead program.. People are complaining that TrueCar leverages the dealer’s data (which the dealers are giving to countless websites already) to provide consumers information on the lowest prices for vehicles, converting the lead and offering it to the dealers on a per sale cost of $300 versus a per lead basis. Why is this so evil?

There are plenty of 3rd party sites that do the same thing with the only difference being that they charge per lead. Hell, even MANUFACTURERS do it. When I was in retail, I used a company with a similar pricing strategy named Autotropolis (since bought by Autobytel for $15 million). I LOVED those leads. I could easily identify a lead from them and factor in the $250 per sale fee into any deal structured or quote given to a consumer. I only paid when I sold a car. It was great. At least on a per sale basis, my cost per sale was fixed. With 3rd party leads, it wasn’t. I hear dealers complain about $900+ costs per sale with their AutoTrader programs yet they still participate. The point is that I was always in control of the sale. If I didn’t want to sell the vehicle at the pricing given to them, I didn’t. It was my choice. The fact is that I would rather have the opportunity to earn the sale than not have it. Why wouldn’t you want a fixed cost per sale on internet leads? 

Dealers have been sending their transactional and inventory data to 3rd parties for YEARS. This isn’t some new phenomenon that’s all of a sudden appearing. Everyone wants to single out TrueCar when, in fact, TrueCar is only ONE OF MANY companies that have their data. Dealers have willingly and happily provided this data to 3rd party sites for YEARS (at least as far back as 2003 to some sites that I personally know of).

To top it all off, dealers and industry professionals have been evangelizing transparency in their sales processes, pricing and interactions with consumers yet it appears that dealers don’t really want transparency, what is wanted is the illusion of transparency.

Bottom line: If you don’t want your data used by a 3rd party, stop giving it to them. I’m not just talking about TrueCar, I’m talking about EVERY 3rd party.

TrueCar is a business that pays for information received from the dealers themselves. Rather than demonizing TrueCar for monetizing the data by providing a service to both consumers (via transparency) and dealers (via sales), don’t participate.

As the saying goes: Don’t hate the player, hate the game.

(Edit: TrueCar is just a scapegoat and convenient target. I don’t necessarily disagree with all of the arguments, just the placing of the blame on TrueCar. Dealers created this, not TrueCar.)

UPDATE 12/1/11: Seems as if my friend Jerry created a new video.

When Dealer Promotions Go Wrong

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In browsing a popular deal website, Slickdeals, I noticed a thread titled “20% off all new Chevrolets (Arizona)”. Out of curiosity, I thought I’d check it out. I was more curious to see if the dealer (or an employee) posted this or if it was something that a forum member posted.

Wow. Talk about negative publicity. Here are some choice comments from the thread from people who TRIED to take advantage of this deal posted on the dealership’s website (which does actually say “20% off All New Chevrolets”) and one local customer who decided to chime in about his buying experience at this dealership.

“Interesting. Called the dealer and he stated that the deals are good for Arizona residents, although this isn’t stated anywhere on the website. Doubt very much that the OP was successful in securing a car from these guys. I was trying to buy a Chevrolet Volt from them. The salesman was very accommodating, suggesting that I falsify my residency to obtain the price. Imagine that, a dealership suggesting that we do something illegal so that we can take advantage of their poor advertising and sales tactic. Unfortunately this is another example of one poorly run dealership proving the stereotype that all dealers are thieves. Sad really.”

“Get ready. My deal went all the way to the owner. Just another car dealer living down to their reputation.”

“I’ll be interested to see if any of you get the deal. I live close to this dealership and recently tried to buy a new truck that was listed in an ad. Went to the dealership that morning and was told that the truck listed in the ad “wasn’t available.” The salesman offered me a truck with the same exact options, color and sticker price as the one listed in the ad, for $2,000 more than the price listed in the newspaper.”

They even included a response e-mail from the Internet Manager at this dealership that they got when inquiring:

“Hi Chris … Thanks for your email 11-27-11 on the New Chevrolet Volt #120126 and choosing Sands Chevrolet in Surprise for your next Chevrolet purchase.

This Volt is available from Inventory here in Arizona. Is that a CRAZY PRICE or what? $7,500 of this Huge Discount will be in the form of a Tax Credit at Year End Tax Time, and you will also need to be a Resident of Arizona to purchase at this Special Price.

There are no Rebates or Special Interest Rates at this time. Please call or email me.

Thanks
XXX XXXXX
Internet Manager”

 

To date, over 5,000 people have viewed this thread.

That’s 5,000 people who were interested enough in buying a new Chevrolet that they clicked on the thread to get the details and found the above types of comments.

Done right, that could’ve been 5,000 leads. This probably led to 5,000 people who aren’t going to buy a car at this dealership.

Dirty Rotten Scoundrels

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Most consumers hate shopping for cars. They love to BUY cars. They WANT new cars. It’s just like shopping at the mall, just way more expensive, which is why they should enjoy it much more. If you were to go into any retail store and tell them you wanted to spend $20,000+, they would treat you like royalty, yet, when people go into car dealerships, all they get are headaches and wasted time. Many dealers are recognizing this and consciously making changes to their processes that streamline the buying experience and make it easier, and more enjoyable, for people to buy cars but, sadly, many dealers are still playing games.

Has something like this happened to you at a dealership or have you seen this happen at your dealership?

Until dealers can break through the stereotype they earned, consumers will distrust them. That’s why it’s such a refreshing experience to consumers when they find a dealership that doesn’t play games. Until they experience it personally, however, they won’t believe you no matter how hard you try and convince them that your dealership is different. Treat every customer like royalty and you’ll be well on your way to referrals and word-of-mouth marketing that you could never buy.

(P.S. This video was from a series of videos shot by DealerKnows Consulting. It was an honor (and a lot of fun) to be included in these. There are more to come and, in case you missed the first one released, I’ve included it below.)