KBB Pres. Rowe Explains Data Syndication Shift
Kelley Blue Book is making a change. Not so much in the sense of how it operates or what it offers, but a change in focus.
Having already made great strides on the consumer side, KBB’s leadership said the company has decided to put more focus on its data syndication efforts within the industry side of the car business.
KBB president Jared Rowe recently talked one-on-one with Auto Remarketing about this change and what prompted the shift.
As many likely know, data syndication is one of the company’s product lines. KBB syndicates its data not only to consumer-facing sites, but also finance, insurance and government institutions along with dealers and OEMs, as well.
“We look at the consumer side of the business as largely being taken care of by a lot of the work we’ve done in terms of the investment in the brand over the past two-and-a-half years," Rowe said.
“We’ve spent a lot of money in traditional media,” he added. “We’ve spent a lot of effort, time and energy in SEO improvement and SEM improvement, and we’ve really shown that in terms of our awareness scores from a consumer perspective as well as our traffic.”
Just look at KBB.com traffic numbers. During the first quarter, Rowe said, the site generated roughly 19 million unique visitors each month, and this was about a 20-percent year-over-year increase.
Rowe said that unaided awareness is more than 39 percent with aided awareness higher than 85 percent.
“From a traffic perspective, we’re getting the message out, and we’re getting consumers to the Kelley site,” he said, later adding: “As we think about our syndication strategy, we’re thinking less about how we reach consumers — because we’re reaching most of the consumers; over half of all consumers come to Kelley before they buy a car — and so now what we’re focused mainly on, from a syndication perspective, is the industry side.
“We think that we can really help dealers, OEMs, finance, insurance and government by syndicating our values in new and unique and different (ways), and focusing our energy there,” he continued. “Because what we’re really trying to do is align consumer and dealer expectations when a consumer transitions from the online world to the offline world.
“We think that’s a huge point of friction. Because we don’t, as an industry, do a very good job of setting expectations that are acceptable on both sides. That’s really where we’re focused with our syndication strategy, which is why you see us shifting in the marketplace.”
How KBB Works with Dealers
Traditionally, the way KBB has syndicated data to dealers is through one of two ways: through its own tools, or through various tool providers, who then serve it to dealers, helping them in inventory acquisition decisions.
“We’re also starting to work with some of our partners on helping them understand pricing dynamics. And these are more bespoke relationships, but we are working with some of the dealers across the country, both large and small, to help them understand pricing dynamics as we see it,” Rowe noted.
“Because as you can imagine, from a Kelley perspective, we have a unique view into the market. We understand supply; we understand demand; and we’ve been doing pricing for years … so working with dealers to help them understand how to represent their pricing online is something that we’ve been hard at work at for a while now,” he added.
Through this process, KBB has been “learning as we go,” Rowe said, but one thing that has really stood out is the opportunity for the company to help the industry in the sense of matching consumer expectations with dealer expectations.
This, he said, can aid in the online-to-offline transition for consumer and reduce friction.
“And a lot of that has to do with visual display, as well. One of the things that surprised me with the research that we’ve done is just how important visual display is. It’s not about just getting to the number and having it be the right number. It’s also about representing that number in a way that actually creates confidence for a consumer,” Rowe explained. “A lot of our research shows that if you don’t represent a number in the right way or in a specific way, then a consumer can actually question the number and be pre-conditioned to want to come in and negotiate off that number.
“It’s one of the reasons we went to this range-based approach, as opposed to a point price. Because what we’ve found is that a range-based approach creates more confidence for a consumer. It also better mimics how they shop; it better mimics what dealers do on their side as well; and it basically helps to set expectations in a way that both parties are closer than they would be had we just syndicated a single point price. It’s a fairly sizeable step for a lot of our partners to take, because historically, this business has been based on point price.”
Rowe honed in on four key metrics that are vital in presenting data: it should be presented as fresh and local, have a large sample size, and the display should really look like a tool.
“We’ve worked really hard to imbed those kinds of concepts into our pricing display, but that’s important. If you get a consumer to engage in that way, they just have confidence in that number. And so, setting a consumer up — upfront — from the perspective that you give them everything they need to feel good about the number is one thing,” Rowe said. “And that’s a big issue, because historically we (the industry) haven’t done that. Historically, we’ve just put a number out … we haven’t given the consumer context as to why it’s the right number.
“Setting expectations appropriately up front is really important, because that can create unnecessary margin compression just by not feeding the consumer what they need to be confident. Because then they’ll just want to negotiate, and they’ll want to push the number down.”
Another key point in this area is addressing why a price number moves, particularly if the consumer doesn’t understand why.
“These numbers slide around for a whole host of very, very good reasons as consumers go through the shopping process. We as an industry have not always done a great job of showing our math,” Rowe explained.
It’s important, then, to guide the consumer in understanding the reasons for a number moving. It could be the condition of the vehicle, the mileage of the car or even supply-and-demand factors.
“The real net-net here is that we can actually help create expectations which are more reasonable for the industry, because if you don’t set expectations correctly, you get in this distributive price negotiation with the consumer,” Rowe said, offering some overarching analysis. “And we know that value isn’t built in a distributive price negotiation. Value is built in talking about relationships; value is built in talking about the product; and ultimately, gross equals value. If you build value in the deal, you get gross.”
Work with Other Industry Players
KBB’s data syndication efforts, as mentioned earlier, go beyond dealers. Residual values have been a big part of its business and working with OEMs in this regard.
KBB also assists insurance and government institution in providing them value for various purposes that include taxation or asset management, an area in which it also works with fleets.
Point is, the company has decided to ramp up its focus on this side of the business.
“It’s less about doing new things. It’s more about putting more of our energy around those efforts. For a long time, Kelley had put a lot of our efforts around the consumer side of the business. And were going to continue to do that,” Rowe said.
“My big message here is that we’re also going to put equal effort on the industry side of the business, too, because it is vitally important. Because this is not just a one-sided transaction, and we need to deliver value equally to both sets of constituents, both buyer and seller, and then any adjacent players who are in the market, as well, like a finance institution, an insurance company, or government,” he continued. “Those are very, very important and, candidly, it was just something that we hadn’t spent as much time and energy on as we should — and we’re going to do that.”