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How important is your online advertising strategy?

Dealers rely on customer relationship management to gauge how many shoppers are citing the Internet as incentive to visit a dealership, but this practice may not be providing accurate results, according to a recent study. 

This week, AutoTrader.com released a new white paper called “The CRM Paradox,” which highlights research the company says shows that the Internet is cited 3.5 times more by shoppers than it is recorded in dealership CRM systems.

The study covers an analysis of over 4,700 car buyers from 42 dealerships nationwide.

And results show “material inconsistencies between the sourcing information dealers entered into their CRM systems and car buyers’ actual behavior,” the company said.

Where this discrepancy was the most noticeable was in regard to the influence of the Internet in the car-shopping process, according to the white paper. 

“Measuring the ROI of advertising sources is critical for dealers to ensure that their budgets are allocated effectively, and incorrect data entry into CRM systems results in dealers not getting the insights they need out of these tools,” said Kevin Filan, vice president of customer marketing at AutoTrader.

“We hope that the information in this white paper sheds light on the need for dealers to more accurately identify — and record — which sources are influencing customers to walk into their dealerships.”

AutoTrader stressed that these findings may be particularly important to dealers, because many of them “rely on CRM reporting to understand the effectiveness of their various advertising expenditures.”

Delving into the results more, on top of the gap the study found in how often the Internet is cited by car buyers and how often it is recorded in CRM systems, the study also revealed that third-party automotive sites were cited 4.6 times more by car buyers as the source that brought them in, compared to the number of times these sites were credited in dealers’ CRM systems.

In analyzing the results, AutoTrader.com looked into the ways dealers traditionally gauge Internet activity.

“In struggling to measure the effectiveness of online advertising, dealers have typically relied solely on metrics such as clicks, leads and direct referrals from other sites to their dealership website, which only account for a small portion of measureable shopper activity,” the company said.

“The white paper emphasizes the importance of proper sourcing in CRM systems, introducing the risk that inaccurate or missing information can be costly and potentially translate into misallocating their advertising budgets and therefore missing sales opportunities with in-market car shoppers,” the report continued.

The white paper also covers the avenues dealers use to advertise to car shoppers, and their respective influence on the process.

“Car buyers use multiple online and offline sources while shopping, but study after study, including those from Polk and J.D. Power and Associates, have shown that the Internet is the most used and/or most influential source in their shopping process,” AutoTrader said.

The company also offered some key take aways from the study in hopes dealers will turn “insight into action.” They are:

1.    Develop a customized selection list by identifying lead sources based on a number of criteria that is specific to the individual store.

2.    Train staff on CRM policies and processes, including instruction on performing routine tasks.

3.    Enforce data quality standards.

4.    Improve internal communication.

“We strongly believe that transparency goes both ways in the auto industry — that while car shoppers have access to an unprecedented amount of information about the vehicles they are considering, dealers have access to more information about how consumers are shopping for vehicles,” Filan continued.

“For dealers, this level of transparency can help them advertise more efficiently and influence car shoppers more effectively. At AutoTrader.com, we are committed to providing the industry with as many actionable insights as possible to help them reach that goal,” he concluded.

The full white paper can be seen here.

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