CLEARWATER, Fla. — Customer relationship management solution provider AutoLoop LLC today revealed the Top 3 reasons dealerships have difficulty converting leads into buyers. According to recent study results, the reasons are inadequate explanation of the pricing and value proposition, lack of timely follow up and not using leads' preferred follow-up communication methods.

The data was extracted from two studies: AutoLoop's 2016 Digital Engagement (ADE) study, which surveyed 1,000 auto consumers and analyzed the purchase behavior of more than four million customers representing 1,000 dealerships from across the U.S.; and from the 2016 Autoloop XRM Unsold Customer Survey Results, which questioned 60,000 unsold customers after their initial visit at 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."

The importance of converting digital leads is magnified by two trends identified in AutoLoop's Digital Engagement study. On average, car shoppers only test-drive two vehicles during their purchase process. Additionally, generational preferences indicate fewer dealership visits in the future. While 83% of Baby Boomers and 80% of Gen Xers prefer to test-drive vehicles at a dealership, just 60% of Millennials prefer to test-drive vehicles at a dealership, while a whopping 40% prefer virtual or non-dealer location test-drives. Combined, these two trends reveal shrinking buying opportunities for dealers.

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.

1. Explain Pricing and Value Proposition: When car shoppers were asked why they chose to purchase a vehicle from a particular dealership, their top reasons were: (1) good value for the money; (2) selection of vehicles; (3) ease of purchase experience; (4) quality of salespeople; and (5) convenient location.

When car shoppers were asked why they did not repurchase at a particular dealership, their top reasons were: (1) prices are too high; (2) plan on buying another brand; (3) dealer is too far from home; (4) too much pressure to buy; and (5) paperwork took too long.

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

2. Follow Up in a Timely Manner: Just 47% of car shoppers surveyed said they received follow-up communications from the dealership, while 53% said they received no follow-up at all. This breakdown has a significant impact on the purchase rate, as 26% of customers who received follow-up decided to purchase from that dealership, while only 15% of customers who did not receive follow-up from a dealership ended up purchasing there.

"These figures are shocking, as everyone knows that follow-up is a basic tenet of the sales process," said Van Sach. "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: Another important finding is that most car shoppers prefer their follow-up to be in the form of an email or phone call, and that preference varies by generation:

  • Baby Boomers: 60% prefer a call and 40% prefer email.
  • Gen X and Millennials: Their preference is 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," said Van Sach. "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."

To learn more, click here.