Sponsored by:

Higher Turnover Websites

the #1 Provider of Car Salesman Websites and Dealership Sites

Please note that comment moderation is being used on this blog. This means that you are free to comment on any posts, however they will be reviewed prior to being posted on the live site. We welcome any legitimate comments, but comments including links to your own sites (i.e. "link spamming" or "comment spam") will be marked as spam and will not be published. If you have comments that will be useful to other readers, feel free to post them, otherwise go spam someone else's blog!

Monday, January 29, 2007

Will Cars Sell Better on Craigs List or Autotrader?

I wrote a post a while back comparing a few of the major players in online classifieds. I've worked for a few of these companies personally, and several of my closest friends are National level managers with the other companies, so I have some unique insight into each. One site I gave some opinions on was Autotrader.com. Another online classified site which was left out of the mix was Craigs List. If you're not yet familiar, Craigs List is a "no-frills" type of site with free auto classifieds. Their web traffic is among the highest of all sites, and continues to grow month after month. Currently they're the 9th ranked site in popularity in the U.S., ahead of even AOL.com, CNN.com, and Microsoft.com. Although they pride themselves on catering to individuals, many auto dealers have been using the site to sell cars. What better way to gauge the effectiveness (at least in my local market) than to actually sell a car.

For my experiment I purchased a 2000 Pontiac Sunfire GT for $700. After spending about $1100 to fix a few things (exhaust system, wheel bearing, radiator, power window) and a good detailing job, I was good to go. Into the car for $1900 and it books for a little over $4k retail, should be an easy sell this time of year.....an economy car at tax time.

Two days ago I placed an identical ad on both Autotrader.com ($55 "fully loaded" ad with 9 photos) and Craigs List (Free ad with 4 photos). I'll be updating this post frequently with feedback as to what sort of leads each site provides, and general sentiments.

As far as the listing process, both sites were easy to list and edit the vehicle. One area I feel is a real drawback on Craigs List is that my ad has already moved down the list considerably. Every ad that has been posted after mine is placed at the top of the list, so as time goes by I expect leads to fall off.

Leads #1 and #2
I received my first lead early Sunday afternoon. A younger sounding woman left a message saying she saw the car on Craigs List and had some questions about the vehicle. When I called her back 30 minutes later, her tone of voice told me she wasn't very serious about buying a car. She wanted to know the mileage (120k) and hung up. This brought me back to the days of selling cars and having to answer a lot of questions that I knew didn't matter in the long run.

My second lead appeared in my inbox this evening, again from Craigs List. One thing did catch my eye about this lead...the email subject. This person had somehow seen the ad I originally placed before my edit.....the ad I had up for about 2 hours two days ago before the price was corrected. Not sure how he found a price from two days ago that was fixed, but it could present a problem with negotiating price if he's a serious buyer.

2 days and 2 leads, both from Craigs List

Not much new to report on the leads. Maybe the used car market is really as bad as everyone says, or maybe just that not many people have received their tax returns yet and are ready to shop? I received one additional lead from Autotrader a couple of days ago. A gentleman called wanting to know how many miles were on the car. I told him, and he said he was shopping around for a first car for his daughter, and that he might call me back. The person who had previously emailed me sent another message saying he would check out the car this past weekend if it was still available, but he was a no call/no show. One thing that has proven a little annoying, and takes me back to the car sales days, is that I've taken the time to write a very detailed description about the vehicle, and the mileage is displayed prominently on both Autotrader and Craigs List. For whatever reason, people always ask questions that are already answered in the description. Just part of selling vehicles online I guess, but I have to wonder how many pointless calls are averted by having the detailed info on the ads. Surely I must be saving time by giving the details up front. This begs the question though: is it better to be as detailed as possible up front and weed out the non-interested buyers, or is it better to be vague and give myself the opportunity to sell more people over the phone? From a dealers point of view this depends on personal preference, but I'd rather let the car sell itself so I have time to focus on other activities.

2 leads from Craigs List, 1 from Autotrader

Well as a new twist on my experiment I re-posted to Craigs List to get my ad back to the top, and the listing on Autotrader has been cut down. I wanted to take a closer look at the impact a shorter (and more vague) description has. Sure enough, I got two calls from Autotrader shortly after modifying the description. Both people left messages, and when I called them back and left messages myself, they never returned my call. Found another car? Changed their mind? Who knows, but having SOME leads come in keeps hope alive for me that it will actually sell, and I imagine a dealer would feel the same way.

2 leads from Craigs List, 3 from Autotrader

Seems re-posting the vehicle on Craigs List has helped out. I have pretty much consigned the car through a local dealer I'm working with so interested parties can get financed on it, and also to see if Automart or Autoextra produce any decent leads. I received one call today from someone who sounded serious (off Craigs List) and actually showed up at the dealers lot where I've got the car sitting. Supposedly he'll be back tomorrow with a down payment. Another customer saw the car on Craigs List and filled out the dealer's online credit application, so things are looking good for Craigs List in this experiment. Hopefully I'll have the "dramatic conclusion" over the weekend.

4 leads from Craigs List, 3 from Autotrader

If you've been following this post for a while, you probably think I've forgotten about it. On the contrary! In the three months since first posting, there have really only been 7 total leads and the car is still sitting on the lot. Why isn't it selling? Is it a junk car? Probably. Is the market bad now? Perhaps. Am I trying to get too much for it? Probably. Am I holding out for my price? You bet! This car would not have sat in a dealer's inventory for this long unless they really didn't care about turnover rates. I'm not worried about cash flow or sales numbers, but if I were a dealer these things would certainly come into play. One thing that does surprise me is that Automart and Autoextra have not produced any leads at all. The original purpose of this post was to compare Autotrader and Craigs List, so maybe it's not fair to throw AM/AX in the mix later in the game. Time to repost to Craigs List and see if that drums up any more interest.....

******Latest Update 5/10/07******

Well reposting on Craigs List certainly helped get some action. I know most people on Craigs List seem to browse from newest to oldest rather than search, so I guess it shouldn't be a surprise. I posted 1 week ago, and literally 5 minutes after posting I had a response. Within about 6 hours I had 3 more people who all seemed VERY interested. I couldn't believe it. After talking with the first guy he filled out a credit application and would pick up the car in a day or two. Great, it was sold.....or was it? The guy got to the dealership too late last Saturday to do anything, so he was a "be-back" for Monday. No-show, and a follow up email revealed he spotted another car that he was approved for. On to plan B. The second guy also filled out a credit app and was very serious about the car. I put him on ice for a few days until I knew what the first guy was really doing (since he was willing to pay full price). Once the second guy's credit was pulled, he couldn't get approved without a down payment which he wasn't willing to do. Poor credit, 5 months on the job, 6 months in an apartment, and more delinquent accounts than you'd believe. All those issues, he didn't want to put a penny down on the car, and didn't want to pay more than prime interest. Yup, a crazy person, but still a lead for my purposes. The other two responses seemed like good leads too, but neither wanted to fill out the credit application online so I told them to visit the dealership in person. Not sure if they did or not. Since I'm in a military area, a few of the larger ships are coming in over the next couple weeks and that means a lot of Navy kids with big checks burning holes in their pockets.

8 leads from Craigs List, 3 from Autotrader

******Latest Update 6/3/07******

Activity has definitely picked up, and to my surprise it seems to be people on Craigs List finding my older posting. If they were just browsing they would have to go through a ton of listings before they got to mine, so this tells me that people are using the search feature more. Since the last update I've received another 6 leads from Craigs List and not one from Autotrader. Yup, the car is still for sale......

14 leads from Craigs List, 3 from Autotrader

******Latest Update 7/17/07******

Not a whole lot to report this time around. One email lead came in from Autotrader.com on the vehicle and 6 leads from Craigs List. I did repost to Craigs List again which always produces a spike in inquiries. The usual pattern with Craigs List contacts - several seemed interested and wanted to meet the following day to see the car in person, however no follow up email/call was ever received. I must say I'm still very surprised at the response rates between both sites. At this point Craigs List is generating 5 leads for every 1 Autotrader.com lead, but the most important thing is sales, and neither has produced this after 6 months. I know a dealer wouldn't usually hold a unit this long, so I'm attempting to abandon this project through the only auction I have access to: eBay. eBay is intended to be, in most cases, a wholesale network, so while I may not get as much for the car as if I held on to it I'd rather just get rid of it at this point.

20 leads from Craigs List, 4 from Autotrader

Craigs List vs. Autotrader.com: Who wins? There are a couple of ways to look at this evaluation I've done over the last few months. There are advantages to each classified site. Autotrader.com boasts the highest number of vehicles, and therefore the highest number of visitors for auto classifieds. One thing that isn't known is the number of visitors in my particular area. Sure, the number of times my vehicle was looked at is available from Autotrader, but these numbers are not available from Craigs List, so it's tough to compare. The more important number that auto dealers should be concerned about is the number of sales and return on investment. Autotrader is one of the highest price per vehicle sites out there, and Craigs List is free. Craigs List produced a significantly higher number of leads, and also produced the only leads where someone actually came and looked at the car in person. At the end of the day, neither site produced a sale, but after 6 months I attribute that to poor inventory selection. eBay served its unanticipated purpose in this experiment. I eventually dumped the car on eBay for no reserve and made a few hundred bucks profit, even though it sold for well below book value.

My conclusion: Craigs List generated a lot more action than Autotrader.com, and by numbers I would have to say it would produce better results with the right inventory. The downside is that if a car sits on the lot long enough, it's going to require much more work with Craigs List, because you need to keep posting the same car to keep it at the top of the results. Posting more than once every 45 days is against Craigs List terms of use, but to be effective it has to be done probably once a week. If I made a living out of selling cars, I think first and foremost I would buy the right inventory, and second I would put more emphasis into Craigs List than Autotrader based on cost. Like most dealers out there I would still use Autotrader for its reach and simplicity, but in a limited role based on cost. Maybe only with the Select Ads they offer (pay per listing) for certain units. $80 to finally get rid of any aged units on eBay seems worth it to me too. Even though $80 is a high cost per unit, consider the alternatives: having your cash tied up in a car that's not moving off the lot or paying auction fees at the dealer auctions.

Stay tuned for part two of this experiment which might be coming up in the next few weeks.

Wednesday, January 17, 2007

Buy Here Pay Here Program on Autotrader.com

I wrote a post a while back about subprime finance and buy here pay here dealers (original post is here). It seems that Autotrader was working on a program for this segment of dealers and launched it as an available advertising option about a week ago. In speaking with a friend and past coworker of mine who still works for Autotrader.com, I have to say I don't really know what they're doing. Seems to me like they've taken one step forward and one step back to arrive where they were 6 months ago for advertising options. From what I'm told about features, a major benefit of the BHPH program through Autotrader.com is the pricing. I'm told it's a little cheaper than the similar "Featured" program for traditional dealers, but features don't necessarily address all of the issues at hand. I like to rate things with my own arbitrary scale, so we'll start with +2 Points to Autotrader.com for even venturing into the BHPH marketplace.

Instead of the 3 photos per vehicle on that a dealer would get with the Featured package, a BHPH dealer is only permitted to use 1 photo per vehicle. I hear the reasoning is that bad credit customers aren't shopping for a car that looks good, they're shopping for a car they can afford. Since most BHPH inventory is around the same payment price, wouldn't it make sense to differentiate your vehicle from your BHPH competitor's vehicle through more photos? Especially when Autotrader's biggest differentiator between packages is the number of photos you are allowed. Their dealer training stresses this fact too, and I don't think it can be disregarded just because a dealer is BHPH. (-2 Points for Autotrader.com)

I'm told the BHPH program does give the dealers a secure credit application in their package. I don't know that this is essential since almost anyone can get financed anyway, but the one thing it does do is prioritize your internet leads. Someone who takes the time to fill out a credit app is usually more serious about a car than someone who sends a quick email to ask what the down payment would be. Internet leads are all about getting the customer to show up in person, so I don't know that a secure credit app helps much, only that it lets you know ahead of time who is more likely. (1 Point for Autotrader.com)

The biggest thing I hear is that there will be minimal site changes to the customers. The most obvious need is a section on the site for customers with bad credit to shop for their vehicle. I understand why Autotrader hasn't done this, at least I think so. By separating customers from the beginning of their shopping experience, they're taking them away from virtually the entire dealer base who advertises presently. They've created a double edged sword - they've grown so big that to do something in other markets like BHPH would hurt their bread and butter. To have cars (and dealers) for the sub-prime finance market, you must have an easy way to find those cars. (-1 Point for Autotrader.com)

Total Points: 0

My overall impression of the BHPH program is that it seems Autotrader.com has launched it prematurely. I understand I don't know everything being discussed at the top level of the company, and that they're probably close to launching additional features. I think given the information that I have at this time, there is more work to be done. I'm sure they'll learn this as the sales reps start selling the product and they have some actual data to evaluate. If I were a BHPH dealer I think I would sit it out and see what new features they come out with specific to my market. They can get almost the same thing by spending $20 a car for a "Select Ad", and can get that with more photos too.

Friday, January 05, 2007

Importance of a customized website for your auto dealership

It is very important for an auto dealer to use a website provider that can deliver a customized website design. Your website is just another marketing tool/channel that will display your brand to customers. Whatever your brand image may be, needs to be accurately reflected in the design of your website.

Your website should be one part of an integrated marketing program which should consist of a consistent brand image across all channels. Use the same logo, color schemes and marketing messages on your website, newspaper advertising, tv advertising, business cards, floor advertising etc... This will ensure that every touch point with customers will send the same message and further enhance whatever brand image or message you are trying to portray. Every dealership must have a niche of sorts in the market to effectively compete in today's market. You must get that competitve differentiator message across to your customers and your website is one very powerful way of accomplishing this task. Your website will be visited by a majority of your customers, and a lot of potential customers. Make sure your website will get your message across to your customers.

Over time we have seen that customers are going online before they make contact with dealerships when they begin the process of purchasing a vehicle. This trend is growing as it is easier for customers to get online access and visit dealer's websites. Most likely your website will be the first touch point with that customer, especially if that customer is out of your target region.