2007 Buying Influences

2007 Dealer eBusiness Performance Study: The New Buying Influences Presented by The Cobalt Group in partnership with Yahoo! and R. L. Polk & Co. October 18, 2007

New buying influences

• Brand and dealership loyalty is

diminishing • Consumers consider more makes,

models and dealerships, broadening the top of the purchase funnel • New Internet-based influences act

like filters within the funnel • Consumers use filters to narrow

their selection and determine who they’ll do business with

Purchase funnel Shopping filters Pre-selection filter Search • Advertising • Website appearance •

Engagement filter Initial response • Quality of response • Transparency of communication •

Purchase filter Dealership reviews and rankings • Sales professionalism, reviews and price •

Research components Five sub-studies Two consumer surveys: 550 vehicle shoppers and purchasers • 1000 vehicle purchasers •

1 million leads from 1,140 dealerships representing 35 brands matched with DMV data to assess sales rates and time to close 2100 dealerships in eMystery shop campaigns encompassing 20 brands 20 onsite visits to top performing dealers

Pre-selection filter Car buying starts on the Internet • Search is the primary tool

for filtering dealerships • Website is a key extension

of the dealer's showroom • Online advertising grows

dealer sphere of influence

The Cobalt Group, Inc. Proprietary and Confidential. © 2007. All Rights Reserved.

All customers are Internet customers

Car shoppers are qualifying dealers by researching online & using search for vehicle dealership research

Base: Total Respondents (550) Q4 When researching auto dealerships, which of these online search engines did you use to obtain information? (Please select all that apply.) QS10Which of the following resources ‘did you use to gather information while shopping for your new vehicle?’ OR ‘are you using to gather information while shopping for your new vehicle?’ Q0You mentioned that you used the resources shown below to research and shop for new vehicles. How did you reach each of these websites? Yahoo! Search Marketing Proprietary and Confidential. © 2007. All Rights Reserved.

Internet used more than traditional media

Did you do any of the following before actually visiting the dealership? Viewed cars/models available at the dealerships online

48% 37%

See if they had a dealership website

23%

Find reviews about the dealership online

Called to see what cars/models were available Checked newspaper classifieds to try to find more information on the dealership Used the yellow pages to look for the dealership

Online

20%

Offline 12% 11%

Base: Total Respondents (550) Q14 Thinking about the last dealership you visited, did you do any of the following before actually visiting the dealership? Yahoo! Search Marketing Proprietary and Confidential. © 2007. All Rights Reserved.

Consumers consider multiple brands

Consumers visit an average of 6 dealerships, but they visit only one

dealership per brand

Base: Total Respondents (550); Those Responding QS6 Please select the statement that best describes your consideration of each make listed below. QS7 How many dealerships did you visit for each make? Yahoo! Search Marketing Proprietary and Confidential. © 2007. All Rights Reserved.

Geographic area of consideration grows

A third of consumers will drive more

than 20 miles from home 68% of consumers are not willing to travel more than 20 miles

32% of consumers are willing to travel farther than 20 miles

Base: * QS8

Total Respondents (546)* Don’t know responses removed Again thinking about the dealerships you visited, think about how far each dealership was from your home. In miles, please tell us the distance between your home and the farthest dealership you visited for each make.

Yahoo! Search Marketing Proprietary and Confidential. © 2007. All Rights Reserved.

Internet is the primary resource for information

How do consumers find and choose which dealerships to visit? (Choose from a list of 18 sources)

67%

64%

Made me AWARE of dealerships Helped me LOCATE the dealerships

40%

36% 30%

30% 31%

26%

29%

29% 20%

28% 20%

21% 18% 19% 17% 12%

Driven by or seen before

Friends & Family

Search engines

Dealer websites

OEM websites

TV ads

Newspaper Classifieds

Yellow Pages

Radio

15%

12%

Billboards

Base: Total Respondents (550) Q1a-Q1d Thinking about dealerships you’ve visited, which of the following… made you aware of the dealerships?/helped you locate the dealerships? Yahoo! Search Marketing Proprietary and Confidential. © 2007. All Rights Reserved.

Internet is the primary resource for information

How do consumers find and choose which dealerships to visit? (Choose from a list of 18 sources)

Made me AWARE of dealerships Helped me LOCATE the dealerships

36% 30% 31%

26%

29% 20%

Driven by or seen before

Friends & Family

Search engines

Dealer websites

OEM websites

TV ads

Newspaper Classifieds

Yellow Pages

Radio

Billboards

Base: Total Respondents (550) Q1a-Q1d Thinking about dealerships you’ve visited, which of the following… made you aware of the dealerships?/helped you locate the dealerships? Yahoo! Search Marketing Proprietary and Confidential. © 2007. All Rights Reserved.

Key online sources are used throughout the shopping funnel I used the following online sources to…

Learn about vehicle makes/models

SEARCH ENGINES

DEALERSHIP WEBSITES

OEM WEBSITES

3RD PARTY CONTENT SITES

9

9

9

9

9

Get a feel for the dealership Find other buyer reviews on dealerships

9

Find out how many dealers were close to where I live

9

9 9

9

Find out dealership inventory on cars/models I want

9

9

9

9

9

9

9

Find out if dealerships had any special offers

Look up dealership address and contact info

SOCIAL NETWORKING

Base: Those Responding: Newspaper inserts/classified ads (173); Radio ads (105) ; Local phone books (147); TV Ads (177); Magazines (68) 9 Indicates percentage is significantly higher than the all-source average at 95% confidence Q3 Now, thinking specifically about each of the resources you used to research dealerships, which of the following helped you… Yahoo! Search Marketing Proprietary and Confidential. © 2007. All Rights Reserved.

Consumers are submitting quotes at multiple points Did you submit any requests for price quotes on the Internet?

Base: Total (550); Submitted a price quote (346) Q11: How many requests for price quotes did you submit on the Internet? Q12: What kind of site(s) did you use to submit your price quote? Yahoo! Search Marketing Proprietary and Confidential. © 2007. All Rights Reserved.

Engagement filter Lead handling is key to performance • Lost opportunity is high

because lead handling is poor • Poor lead handling can also

cause brand defection • Dealers can turn the tide

through transparency

The Cobalt Group, Inc. Proprietary and Confidential. © 2007. All Rights Reserved.

Overall conversion is steady

One Million New Car Leads

45% of leads did not convert

55% of leads converted

Based on registration information supplied by R. L. Polk & Co. Sales/leases have been adjusted for matching efficiency by a factor of 1.36, which represents a 73% historical match rate The Cobalt Group, Inc. Proprietary and Confidential. © 2007. All Rights Reserved.

Lost opportunity is still high

Sold at “intended” dealership

90% closed at a dealer other than the one the lead was sent to – “lost opportunity”

Based on registration information supplied by R. L. Polk & Co. Sales/leases have been adjusted for matching efficiency by a factor of 1.36, which represents a 73% historical match rate The Cobalt Group, Inc. Proprietary and Confidential. © 2007. All Rights Reserved.

All “missed” sales

Sold at “intended” dealership

Based on registration information supplied by R. L. Polk & Co. Sales/leases have been adjusted for matching efficiency by a factor of 1.36, which represents a 73% historical match rate The Cobalt Group, Inc. Proprietary and Confidential. © 2007. All Rights Reserved.

Too many leads go unanswered

2007 Overall responsiveness Response time average (hrs)

68.6% 7.1

More than 30% of leads going unanswered. Quality of responses: Answered the shoppers questions

28.6%

Use brand or product highlight

25.5%

2007 Cobalt National eMystery Shop, Base: 2,111

The Cobalt Group, Inc. Proprietary and Confidential. © 2007. All Rights Reserved.

Lead response time is slow

2007 Overall responsiveness Response time average (hrs)

68.6% 5.4

20% ofofresponses: consumers Quality

want a response within 4 hours or they’ll go someplace else.* Answered the shoppers questions 28.6% Use brand or product highlight

25.5%

2007 Cobalt National eMystery Shop, Base: 2,111 * “Cars Online 06/07: Understanding the Dynamics of Consumer Buying Behavior and Customer Loyalty” CapGamini The Cobalt Group, Inc. Proprietary and Confidential. © 2007. All Rights Reserved.

Poor lead handling contributes to brand defection Why did you purchase a different brand than you submitted an online inquiry about?

Of those that switched brands, 23% did so because of poor dealer interaction

Poor or no response

Bad dealer experience

QV5 - Those who said they purchased a different make/brand than submitted an inquiry about (301) Which of the following reasons describe why you purchased another make/brand than you submitted an online inquiry about? The Cobalt Group, Inc. Proprietary and Confidential. © 2007. All Rights Reserved.

Quality of lead response is poor

2007 Overall responsiveness Response time average (hrs)

68.6% 5.4

Quality of responses: Answered the shoppers questions

25.0%

Use brand or product highlight

25.5%

2007 Cobalt National eMystery Shop, Base: 2,111

The Cobalt Group, Inc. Proprietary and Confidential. © 2007. All Rights Reserved.

Quality of lead response is poor

2007 Overall responsiveness Response time average (hrs)

68.6% 5.4

Quality of responses: Answered the shoppers questions

25.0%

Used brand or product highlight

19.5%

2007 Cobalt National eMystery Shop, Base: 2,111

The Cobalt Group, Inc. Proprietary and Confidential. © 2007. All Rights Reserved.

eMystery National Shop 2005 vs. 2007

2005

2007

69.7%

68.6%

6.5

5.4

Answered the shoppers questions

25.9%

25.0%

Used brand or product highlights

30.4%

19.5%

Overall responsiveness Response time average (hrs)

Quality of responses:

2007 Cobalt National eMystery Shop, Base: 2,111 2005 Cobalt National eMystery shop, Base: 3,576 The Cobalt Group, Inc. Proprietary and Confidential. © 2007. All Rights Reserved.

Purchase filter Newest influence: dealer reputation • The emergence of a

powerful new purchase filter • Consumer ratings and

reviews influence purchase decisions • Dealership location and

loyalty are less of an influence today

The Cobalt Group, Inc. Proprietary and Confidential. © 2007. All Rights Reserved.

Newest influence: dealer reputation

Experiences influence other buyers

Dealership reviews/ranking becoming more pervasive How likely would you be to: 73%

58%

Base: Q7a

Total Respondents (550) Now we’d like you to imagine there was a dealership review site providing customer satisfaction ratings generated by other customers who visited or did business with the dealerships in your area. How likely would you be to use this type of site? Q7b And how likely would you be to post your own reviews or comments about local dealerships on this site? Yahoo! Search Marketing Proprietary and Confidential. © 2007. All Rights Reserved.

Impact of reputation is growing

Car purchasers who visited customer review sites said this statement described them well:

Q13 - Those who visited at least one consumer opinion source/site (214) Thinking about what you looked at on the customer opinion sites regarding car dealerships, please tell us how much the following statements describe you and your opinions where 5 means it you “describes you very well” and 1 means it “doesn’t describe you at all.” The Cobalt Group, Inc. Proprietary and Confidential. © 2007. All Rights Reserved.

Impact of reputation is growing

Car purchasers who visited customer review sites said this statement described them well:

Q13 - Those who visited at least one consumer opinion source/site (214) Thinking about what you looked at on the customer opinion sites regarding car dealerships, please tell us how much the following statements describe you and your opinions where 5 means it you “describes you very well” and 1 means it “doesn’t describe you at all.” The Cobalt Group, Inc. Proprietary and Confidential. © 2007. All Rights Reserved.

Impact of reputation is growing

Car purchasers who visited customer review sites said this statement described them well:

Q13 - Those who visited at least one consumer opinion source/site (214) Thinking about what you looked at on the customer opinion sites regarding car dealerships, please tell us how much the following statements describe you and your opinions where 5 means it you “describes you very well” and 1 means it “doesn’t describe you at all.” The Cobalt Group, Inc. Proprietary and Confidential. © 2007. All Rights Reserved.

Impact of reputation is growing

Car purchasers who visited customer review sites said this statement described them well:

Q13 - Those who visited at least one consumer opinion source/site (214) Thinking about what you looked at on the customer opinion sites regarding car dealerships, please tell us how much the following statements describe you and your opinions where 5 means it you “describes you very well” and 1 means it “doesn’t describe you at all.” The Cobalt Group, Inc. Proprietary and Confidential. © 2007. All Rights Reserved.

Dealership Preference Selector

The Cobalt Group, Inc. Proprietary and Confidential. © 2007. All Rights Reserved.

Buying attribute importance

Price

7.75

Professional Sales staff Online reviews Location Loyalty

7.23 5.14

1.85 1.32

Q13 - Those who visited at least one consumer opinion source/site (214) Thinking about what you looked at on the customer opinion sites regarding car dealerships, please tell us how much the following statements describe you and your opinions where 5 means it you “describes you very well” and 1 means it “doesn’t describe you at all.” The Cobalt Group, Inc. Proprietary and Confidential. © 2007. All Rights Reserved.

Summary and Implications

New filters influencing customers as they move through the purchase funnel •

Online location and brand is as important as offline

Shoppers make decisions based on quality of early communication Quality of communication may be more important than ever • Customers seek, value and reward transparency •

Reliance on customer reviews and dealer ratings is increasing • •

Invest in dealership staff to drive strong reviews Grow your review base to create a powerful marketing tool

Thank You.

For more information on the 2007 Dealer eBusiness Performance Study go to www.cobaltgroupresearch.com