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Tuesday, November 20, 2007 

Vol. 3 No. 25

The JD Power Automotive Internet Roundtable 2007

Again One of the Best Events of its Kind, it Happened in Las Vegas October 17-19

A few other things came up between then and now, so I’m a little late in writing about the annual JD Power Automotive Internet Roundtable which happened about this time last month, but that in no way lessons the importance or impact of this “best of in class” event. This is the third annual JD Power Roundtable of its kind, which concentrates on new developments in online marketing and commerce as they relate to manufacturers, retailers and vendors, and once again my old friend Charlie Vogelheim, the resident automotive master of ceremonies extraordinaire (and officially the Vice President, Automotive Development, of J.D. Power and Associates), did an incredible job, somehow topping even last year’s event, in terms of content, relevance and an outstanding line up of speakers.

Those of you who read this blog know of Charlie’s talent for entertaining an audience, so I’ll stick to relaying a few highlights of the program, and my interpretation of the reactions to it and, from what I can tell, the new developments that lie ahead for Internet innovations in the automotive world.

The program was organized around a half a dozen or so general sessions for the entire audience, with keynote speakers including Curt Viebranz, President, AOL Platform A and Gary Marcotte, the Senior VP eCommerce for AutoNation, and then some breakout sessions, mostly industry panel discussions divided into two tracks occurring simultaneously – one for automotive retailers and the other for automotive marketers in general. I obviously couldn’t attend every session even if I had been there the whole time, and due to some schedule conflicts I arrived there late the morning of the second day (getting to Vegas late, that is unusual for me, I usually like to come early and stay late…), but I attended enough to sense a couple of reoccurring themes from many of the varied speakers and panelist, which included senior people from Yahoo! Autos, Autobytel, General Motors, Volvo, Cars.com, AutoTrader, Ford, Chrysler, Nisson, BMW, etc.

The Bottom Line

So, distilled in some bullet points (for those who suggest I may be too verbose at times), are my conclusions drawn from the excellent program and presentations at the JD Power Automotive Internet Roundtable:

  • If the first generation automotive retailing Internet revolution was ushered in through third party, lead generation sites, the current one clearly revolves around organic and keyword search. If your average dealer, let alone manufacturer and dealer ad groups, isn’t an expert or doesn’t have a cadre of advisors working this system he or she will be at a severe disadvantage to those dealers down the street that do master this discipline.

  • In relation to the above, local search for dealers is the place to be, and results in refining traffic will far outstrip broad based initiatives.

  • New advancements in mobile text based messages, targeted demographic profiles, email initiatives (for current customer retention), all will play a significant role in prospecting and keeping customers in the future.

  • On the Web video is king, it’s the new method of communication, get involved tell your message, list your cars, pattern your website to accommodate video media or risk getting passed over for those that do.

  • Social networks will migrate into specific affinity groups, note the transformation of Autobytel from primarily a lead generation site into a full blown social network, this evolution is consistent with the prognostications in David Silver’s book (see blog entry Vol. 3 No. 16, Sept. 16, 2007).

  • Word of mouth has always been the most effective form of prospect lead generation for car dealers (got that from JD Power’s own Chris Denove and Jamie Power’s great book, “Satisfaction: How Every Great Company Listens to the Voice of the Customer”), this will soon translate on the Web, and dealers will as easily and visibly be ranked and reviewed by consumers as books are on Amazon.

A Special Observation on the Last Bullet Point

In my opinion, this last development will usher in monumental changes in how cars are sold. To be quite honest and lay it bare, there are two types of successful car dealers in this world, one actually satisfies their customers and has good service, and the other, far more prevalent still, are the ones, despite what they say in broad based advertising, base their whole operation on “raping and pillaging” every walk-in prospect or “up” as we call it (in sales or service) and try to wring every last dollar out of them, albeit with a smile, ultimate satisfaction be dammed. How does the latter variety maintain a customer base, you might ask, well, to a large degree they depend on a) mass advertising, as in densely populated areas they can advertise extensively and always have new (or almost new) prospects entering the funnel, b) a not very fluid “word of mouth” network, as the majority of those consumer that are taken don’t really want to advertise that fact to friends and neighbors on a face to face basis.

The Manufacturers or Conventional Media Wouldn’t Pioneer Dealer Reviews for Fear of “Reprisals,” but Consumers on the Internet Will…

I’ll tell one more little secret here, as it’s just between “friends.” Manufacturers, for as long as I’ve been in the business, proclaim to hate the “rape and pillage” type of dealer to the external world (who wouldn’t), but as these folks tend to sell the most cars and have a lot of the highly profitable metro stores on which these manufacturers depend, the OEM’s quietly, internally embrace these folks, the masters of the “up sell,” and actually reward them financially with extra stair step rebates, special contest trips, etc. It’s a fact that, as a dealer, the top retail sales contest prizes offered by the manufacturer where always high end $15k+ valued cruises on the QE2, while the top “CSI” (Customer Satisfaction Index score evaluations) were recognized, in total, with a once a year banquet dinner at a local restaurant and a plaque – so, putting their money where their mouth is, you tell me that the manufacturers really communicate…

Also a fact, some of the most “in demand” automotive product, Toyota, Honda etc, have the worst dealer satisfaction scores in the business (just ask JD Power). These dealers simply don’t have to be nice, as they know in most cases, regardless of how they treat their customers, they have a somewhat captive market, since those franchises are not “over dealered” the way Detroit brand are, the consumer has less of a convenient choice in picking an alternate same make dealer for the brand.

In any event, the transparency of the Internet will do what the conventional media, to date, has not ventured to do…and there is no secret as to why conventional ad supported media wouldn’t pioneer this…remember, automotive advertisers have historically represented the number one revenue source for print and broadcast media, so this same media is hardly going to venture into mass populist dealer review type communication. Ironically, the facts relayed above explain why the worst “CSI” dealers are often, and indeed, must be, the highest mass advertisers (they need to generate new traffic, they can’t count on repeat buyers).

Transparency Changes Everything

By opening up the consumer review market to rank and review dealers, not just to specific vehicle make and models (old hat now on the Web), those “high pressure” stores will be “outed” much more easily. The disgruntled customer can easily and indirectly vent their frustration, and, alternately, the potential car shopper has easy access to broad based “word of mouth” recommendations. This, more than any manufacturer CSI study carrot/stick, will change automotive retailing for the better, probably one of the biggest changes wrought by the Internet to date, in my opinion.

Are there any opinions out there on this? Do you think it’s a good idea to see more dealer based review programs easily accessible on the Web? Let me know your thoughts, either in public comments or privately at carguy@driveitaway.com.

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J.D. Power and Associates Web Intelligence Division, which specializes in blog research and consumer generated media for market insight, has released its first comprehensive look at consumer conversations about environmental sustainability, global warming, purchase trends and user demographics, which are captured from online blogosphere conversations.
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