3 reasons dealerships have difficulty turning leads into buyers


Three fundamental reasons why auto dealerships find converting leads into buyers an obstacle are: inadequate explanation of the pricing and value proposition, lack of timely follow-up and not using leads' preferred follow-up communication methods, according to recent study results released by AutoLoop.

"To increase lead conversion rates, the studies' results shine a spotlight on three specific areas that auto dealers can target for sales process and technology improvements," the auto industry marketing and customer relationship management solutions provider said in a news release.

AutoLoop's findings come from two of the company’s latest studies, the 2016 Digital Engagement (ADE) study, which analyzes the purchase behavior of more than 4 million customers who represent 1,000 dealerships within the U.S.; and the 2016 Autoloop XRM Unsold Customer Survey Results, which questioned 60,000 unsold customers following initial visit to a national sample of dealerships.

"Many dealers are quick to blame low conversion rates on the quality of leads, or they accept low conversion rates and opt to spend more money to get more leads, but our study points to different reasons for low conversion rates," said Doug Van Sach, AutoLoop’s vice president of analytics and data services. "The data tells us that key areas where dealers are failing to convert have to do with the internal sales process and the failure of sales teams to use technology and tools available to them."

1. Explain pricing and value proposition

"The reasons given to purchase and not to repurchase were similar, which tells us that it really is up to the individual salesperson to be transparent about pricing and to reinforce price points with additional benefits offered by the dealer, such as large vehicle inventory or free loaners during subsequent service visits," Van Sach said.

"Additionally, salespeople may want to ease up on the pressure and focus on making the purchasing process as pleasant and fast as possible."

AutoLoop said the car shoppers surveyed were asked why they decided to buy a vehicle from a particular dealership, their top reasons were: good value for the money, selection of vehicles, ease of purchase experience, quality of salespeople and convenient location.

When asked why they chose to not repurchase at a particular dealership, their top reasons were: prices are too high, plan on buying another brand, the dealer is too far from home, too much pressure to buy and paperwork took too long.

2. Follow-up in a timely manner

Only 47 percent of car shoppers surveyed said they received follow-up communications from the dealership, and 53 percent responded that they never received a follow-up whatsoever.

AutoLoop suggests that this significantly influences purchase rate. The study found that 26 percent of customers who received follow-up communications chose to buy a vehicle from that dealership.

Just 15 percent of shoppers who did not receive follow-up communications returned to the dealership to make a purchase.

 "These figures are shocking as everyone knows that follow-up is a basic tenet of the sales process," Van Sach said. "This tells us that many salespeople do not understand the real value of follow-up, are not being held accountable to the established processes within the dealership, or don’t have sufficient time available to contact every unsold customer."

3. Communicate via prospects' preferred methods

 Whether it’s by email or phone call, AutoLoop said another compelling finding is that the way in which follow-up communications are preferred is closely tied to the generation a car shopper belongs to.

  • Among baby boomers, 60 percent prefer a phone call and 40 percent prefer email.
  • Gen Xers and millennials have a preference that’s split 50/50 between email and phone calls

"I believe just about every CRM has a place to track a preferred method of contact, or it's very easy to store the information in a customer’s profile. One strategy dealers can employ is to ask customers for their preferred method of contact during their initial interaction with a dealer either online or in the store," Van Sach said. "Dealers that focus on enhancing their sales process and usage of technology in these three areas will see significant improvements in their lead conversion rates."

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