RelationshipResearch & Analysis

In my last article , I touched on a few trends that we are starting to see after 3 years of doing our Hispanic Car Buying Preferences surveys.   This article will dig into the data to see if we can surface more details about the topics I covered in the last post, and add some additional trending data that was not discussed. Please note that in some cases, the data is only available for the final 2 years since we’ve been refining the survey as we go along. Let’s get started! Reputation A dealer or manufacturer’s reputation is critical for their ability to sell in general, and sell to the Hispanic market in particular.   Top 3 Favorite Brands Fortunately for this section, we asked the same question for each of our 3 years conducting our surveys. When we asked our respondents for them to rank their top 3 favorite automotive brands, the said the following: Notice a trend here? Toyota holds the #1 position all three years in a row? Why? Toyota, of all the manufacturers, has a well established history of consistently marketing to the Hispanic community.  Here’s a news article from NPR from back 2011! Spend a moment surfing and you will find this same commitment to multicultural outreach continues to this day. No surprise that Toyota is consistently popular and effective at capturing the Hispanic market. This statement is no disrespect to the other brands, but consistent commitment works. Hispanic Referrals Next in our lineup is a look at the question, “How likely are you to refer a customer to a dealer who speaks in Spanish AND treats you well?”. We asked this question in 2021 and 2022. What we discovered is that the trend dipped down between the two years. In 2021, 79% said that they were Very or Extremely Likely to refer someone if the dealer spoke Spanish and treated them well while in 2022, that number dropped to 68% . What this tells us at this point is that we’ll need to ask the question again in 2023 to see where the responses trend. Advertising and Social Media Now we get to delve into US Hispanics’ attitudes about bilingual advertising, social media, and the search methods they use to hunt for their next vehicle.  Advertising So, when we asked, “How likely are you to visit a car dealer who advertises in Spanish?”, the results were a bit odd over the period, varying unpredictably. However, overall, the data suggests an upward trend, especially with the big jump in 2022 AND if one takes into consideration that the 2020 and 2021 advertising answers might be skewed by COVID related attitudes during that time period. Speculation aside, this is a very important question since it gets to the ultimate question of why dealers who don’t advertise in Spanish should consider doing so. If you just did some messy math and averaged the results over the 3 years, you would see that over half (or roughly 54% ) of the respondents see Spanish language advertising as valuable. That’s still a mighty big chunk of people, especially for dealers who have large Hispanic populations around their dealerships. Conclusion: Outreach = money. Travel Further to a Dealer that Advertised to You in Spanish? Now let’s look at the impact of Spanish language advertising in the community and how it might influence behavior. For 2021 and 2022, we asked shoppers if they would travel further to a dealer who advertised to them in Spanish and the results were significantly different between the two years. For 2021, only 43% gave a positive response, while in 2022, 74% , nearly double, had the same answer. Since a picture is worth a thousand words, here you go: 2 Most Popular Social Media Platforms One question that we’ve started to explore is which social media platforms rank highly for Hispanic shoppers. When we asked the simple question, “Which are your two most favorite social media platforms?”, the breakdown showed a consistent pattern between the two years with Instagram in first , YouTube second , (and Facebook third). This data, especially if it is supported in our upcoming 2023 survey, tells us where we might focus our digital outreach when targeting Hispanic shoppers.   Top 2 Online Resources for Doing Research As we all know, everybody uses a range of resources to conduct online research. For Hispanic shoppers, what happened when we looked at the question, “Which online sources are you likely to use when you research buying a car, truck, or SUV? (Check all that apply)”? Since we didn’t ask this question in 2020, we lack it here, but for 2021 and 2022, the data speaks for itself. In short, it is consistent from year to year: Search Engines were first , dealer websites second . What does this mean? Simply put, you should make sure that your website ranks well organically (while taking care in spending some money to boost that ranking). Next, you should make sure that your website is easy to use for Hispanic shoppers. A mix of English and Spanish would be wise, especially if your Spanish copy is customized to the dominant Spanish sub-culture in your area (for example, people of Mexican origin). Do You Want a Test Drive? The test driving data is quite interesting and it merits further study. We asked this question all 3 years and found that there is a big difference between 2020 vs 2021 and 2022. Here’s what the data looks like in a nice little bar graph. As you can see, there is a clear upward trend for Hispanic car shoppers when asked, “How important is it for you to test drive a vehicle before you buy it?”. What’s notable, and not seen in the data here, is that a vast majority of Hispanic women think that a test drive is very important. This should tell your sales people to think about this fact when an Hispanic woman contacts them about purchasing a vehicle.      Buy Online… or Not? COVID, most certainly, accelerated a change in public attitudes and behavior regarding digital retail. Consequently, for 2021 and 2022 we introduced a question so that we could trend Hispanic car shoppers’ attitudes toward online car shopping over time. For both years, we asked, “How likely are you to buy your next automobile online?”. Here’s what we found out: Notice something here that we did differently? The blue column represents 2021 respondents where only 12% said that they were Moderately, Very or Extremely Likely to buy online. The red and orange columns, on the other hand, are 2022 results but separated by one response. For Year 2022, we just included Extremely or Very Likely responses (at 23% ), while Year 2022+ includes all three (jumping to 43% ). We provided the visual distinction so that you could see the difference between those who felt strongly about digital retail in 2022 vs those who were wishy-washy about the subject. Regardless, the data shows us that attitudes started shifting heavily about only car buying from 2021. It also tells us that there is a portion of Hispanic shoppers that will buy online. In 2023, we plan to see how these attitudes shift with income. Now, that will be fun! Data Whisperers Listening to data is important; acting on it is even more important. This is why we love using data to inform our decisions, and those of our customers. All of the trending we see above lacks sufficient data for certainty, but it does whisper to us certain things that are happening in the market.   First, brand reputation is always important, but Toyota does a consistently great job at promoting a good reputation in the Hispanic community while Honda, Chevrolet and Ford compete for lower rankings. The OEM that rivals Toyota will be the one that makes multicultural marketing an everyday part of doing business, not a cool idea to pursue on the side. Second, Spanish language advertising is important to US Hispanics. Even though the positive responses to the question took a dip in 2021, it is clear that a growing majority see it as valuable. And, if you include the very positive behavioral element of whether Hispanics would travel further if a dealer advertised to them in Spanish, advertising becomes even more important. Don’t advertise at your own risk, or to put it differently, don’t let your competitors steal business from you because you’re not advertising to the community. Finally, while covered only lightly above, Hispanic women hold some very strong opinions in contrast to men. We see this in the case of test drives where 100% of women thought that test drives were very important in contrast to roughly half the men. We saw this same division elsewhere on other questions, such as the question about whether an Hispanic shopper would travel a distance to shop from a dealer who marketed to them in Spanish. Again, women held strong with a 100% vote for Very and Extremely Likely while men were much less committed. With all that said, let’s wrap up on this point: The data revealed by the three annual surveys is very important if you want to develop a nuanced marketing message to your local Hispanic community. For 2023, more data is needed to suss out attitudinal trends over time. This means that we’re REALLY looking forward to 2023’s results, with the survey outreach planned to start at the end of this month. Should you wish to contact us about these surveys, or other data, you can find about our services via surgemetrix.com , or contact me via adam.dennis@surgemetrix.com , or 954.507.6468.

CarGurus and GfK recently studied the digital path to purchase of over 3,000 car shoppers. We dug into that data, as well as data from a series of  COVID-19 Sentiment Studies  we conducted this year, to see how the shopping journey has evolved.  What we found is that today’s car buyers aren’t experts on car shopping anymore. Since many only replace their vehicles every five years, a lot can change between purchases. As a result, the process takes around five weeks for most. This leaves lots of time for shoppers to spend hours researching online and comparing options across multiple devices — all with the goal of finding a reliable vehicle at a price point they’re comfortable with.  Car Shoppers Are Full of Uncertainty at the Start of the Journey  Today’s consumers are increasingly beginning the research and shopping process full of uncertainty. In 2020, 41% of shoppers were undecided on the price they’re willing to pay for a vehicle — up 25% in just two years . Similarly, uncertainty around whether to buy new or used has also increased since 2018, going from 26% to 32%. To fill in the gaps and inform the many decisions they must make along the journey, shoppers turn to online sources to research their options. Shoppers estimate roughly 60% of their shopping process is spent online, researching, and comparing options.  While there are many online resources shoppers can use, including dealership, OEM, and industry sites, auto shopping sites are the most commonly used resource by car buyers: 93% of shoppers use auto shopping sites. And they visit this category of sites multiple times: the average shopper visits auto shopping sites 12 times before buying a vehicle, with the use of these sites only accelerating as the purchase nears. In comparison, 63% of car shoppers visit OEM sites, and 58% visit dealership sites, with the average shopper visiting them only 5.5 times total before purchase.  Car Shoppers Have Different Objectives When Using Desktop and Mobile Devices More and more consumers use a combination of desktop and mobile, switching continually between devices while shopping for their next vehicle. Though this makes it clear that the shopping experience must be optimized across all devices, each device plays a specific role throughout the process: Desktop drives vehicle comparisons and selection.  Desktop sessions deliver more engagement and play a critical role in the journey, especially as the purchase nears. Car shoppers spend 2x as long per session on desktop as on mobile, likely because the desktop experience provides a larger screen for comparisons and is free from distractions like text messages and push notifications.   Mobile is used at the dealership and to prepare for negotiations.  More than two-thirds of car buyers continue to research mobile during the dealership visit because of its convenience. The use of mobile devices on the lot has been steadily increasing — from 59% in  2018 , to 64% in  2019 , to 67% in 2020.  Vehicle and Dealership Selection Come Down to Price and Reliability When it comes to dealership selection, price greatly influences where consumers buy. That doesn’t necessarily mean shoppers are only looking for the lowest price though. It’s that they want to feel confident they’re paying a fair price for the vehicle they’re purchasing. On CarGurus, 81% of all leads go to vehicles with a fair deal rating or better, with the biggest percentage (37%) going to Fair deals.  Ultimately, reliability is paramount to consumers when choosing a vehicle. And it tends to be especially important to shoppers searching for a vehicle less than $10,000 (58%) and Gen X shoppers (49%).  Interest in Digital Retail Has Surged Since the Spread of COVID During this rollercoaster of a year, it’s not just car dealers who have been forced to adapt and evolve — consumers’ preferences around buying have also changed. Among car shoppers, both openness and preference for buying online roughly doubled due to the pandemic and, despite dealers re-opening to foot traffic, have not declined. Before Covid, 32% of car shoppers were open to buying online. According to CarGurus’ recent  COVID-19 Sentiment Study , now 60% are. Similarly, 37% would now prefer to buy online — up from 19%.  Ultimately, car shoppers are spending more time online, leaving fewer decisions to be made during the dealership visit. Optimizing the car shopping experience across both desktop and mobile, providing digital retail solutions, and offering competitively priced, reliable vehicles will increase your dealership’s likelihood of converting more shoppers into buyers.

In the earliest of days, weeks, and even months for auto dealerships returning to business (open doors at the facility), we are getting some encouraging early indications of leads being a decent volume, retail sales bouncing back a bit, and revenue and profit returning to levels of operational survival. At least that seems to be the narrative. Inventory depending on the brand and model can be challenging, but nonetheless, a fairly good bounce back from the days of March through May, by most indications. As being reported by Ward's and others, June auto sales will defy bragging about compared to year-over-year and by expected standards, but at least they're on an upward trend. July retail deliveries aren't expected to set off firecrackers either, and fleet sales with the rental agency bankruptcy and economic woes deflate total volume as well.   On a yearly forecasted perspective, there is some upwardly hope as well. Wards Intelligence expects June's seasonally adjusted annual rate to total 12.9 million units  (See chart below).  That compares with May's 12.2 million and April's awful 8.7 million. Moreover, it is well below June 2019's 17.2 million-unit SAAR and the 16.8 million deliveries that were predicted, pre-pandemic, for 2020. Yes, unemployment and production start-up and interruptions, consumer confidence, the pandemic, and fears of normalcy all weigh in on this. But are we looking at the right figures and metrics to see what is really happening?   Are we even evaluating the right measures?   I would also argue that we will have to shift, and in fact, transform the very way in which we both "sell" cars and evaluate the industry as a whole. While some indicators may not be entirely easy to quantify, there are new measures and KPI's that we must start considering, and in fact running our retail business by and guiding our new business practices and operations towards. Some examples of the new metrics that I believe will 1) drive survival through this crisis, and 2) transform your retail business into a next normal thriver, include: Now I am not going to suggest we throw out the old standard measures, but in order to transform, in order to think differently, we must establish new targets and metrics. These new measures will keep us focused on what the needs of consumers are and will be and how we fulfill them. In order to accomplish an auto retail industry and business transformation, I believe there are four major components (or capabilities) to consider: 1. Not vehicle sales, but vehicle usage The industry analysts, OEMs, captives and banks, third party retail portals, and certainly dealers must all monitor shifts to measuring and supporting vehicle usage over vehicle sales. I won't go into a ton of detail why the world of vehicle sales, vehicle needs, and vehicle mobility has been disrupted forever, but I think most of us realize it has. What we knew as daily work and social commutes, weekend get-aways, road trips, and all of our life is under dramatic shift and unknown future. What will be constant is our need for mobility when we want, how we want, and where we want.   This provides both a challenge and an opportunity for auto retailers. How do I support the market for people to gain access or usage of a vehicle, and provide the product, the service, and/or the experience to do so and make it a profitable endeavor for my business? In fact, how may that actually become the guidepost for my business of the future? Dealers (and OEMs and financial institutions) will need to redefine what success looks like and how it can be profitable. It will have to include the idea and strategy and measurement of providing access to vehicles, and not just the transaction of vehicles. This may or may not include versions of providing fleet and rental, subscription or license options, car sharing and car riding, new flexible lease and mileage options, other vehicle and service options like electric charging, vehicle and fleet disinfecting, pick up and drop off (not just to the dealership but as a more mobile customer journey service), and much more that will be supportive of overall customer vehicle usage and customer mobility. That is the target for future success. 2. Focus on customer experience The idea and practice of customer experience are certainly not new, but it did take on a magnified focus with the pandemic crisis shifting how many people interacted and expected any retail business to operate and accommodate. I even wrote about "experience" needs to be the North Star for an organization. It should be the ultimate goal, and the functional operations and capabilities need to be transformed and configured to deliver upon it. Customer experience and fulfilling customer expectations will be the very thing that defines the auto retail industry of the future as we work through this shifting landscape.   In auto retail, this is even more of an imperative. Consumers are now more than ever walking from one industry and one experience to the next, expecting a certain standard. We must follow the customer's lead. How can we serve them and empathize with their journey and daily life and intersect in a meaningful and valuable way? This absolutely means pick-up, drop-off, driveway delivery, "no touch" servicing, mobile service, omni-channel and preferred channel access, and support for their mobility needs. It will mean even more yet to be determined. The customers are telling us what they want and need. The key is, are we listening?   Be sure to listen. Apply your own experiences and expectations of other organizations and industries. Start by supporting customer empathy and customer experience, and you will find the revenue and opportunities from it. Customers will pay for better experiences. 3. Don't simply digitize current processes This is a pitfall too many businesses and too many dealers fall into. If I just add technology, it will help, and things will get better. The technology is then either not adopted, does not work well with the current business operation, and overcomplicates and becomes cumbersome for the users. Digital change ultimately comes through People + Process + Technology. But process is first! Understand what the goals are, the North Star of customer and employee experience, and then make sure all processes are focused on delivering value to that end. If the process is not aimed at value for the customer or employee experience, it is simply adding unproductive and unsatisfactory work and noise. A lot of current dealership processes need to change. It is great we have added more online selling and scheduling tools. But the workflows and processes need to support an efficient value-add process. There is no reason after conducting a majority of a sales process online that a customer should have to be at a dealership for, on average 3.5 hours to finish paperwork and take delivery. There is just not! It is the number one dissatisfaction with the car buying process and is just one of many that need to change. I can buy and sign for a house in less time. Before any technology is ever implemented or added, make sure to consider and re-design the processes it will support. It is your opportunity for transformation. It is the best chance to advance and leapfrog ahead of a current state. 4. Become flexible, agile, transformative Inherent in all of the above components and capabilities is the core principle to be agile and flexible. What does that mean? It means don't do business as usual. It means you may have to get uncomfortable. It means you may have to pivot and shift from a plan or previous strategy based on results and feedback and customer interest. Your transformation strategy and plan should be a living guidepost. One that can be altered and changed to adapt to conditions and opportunities. To be agile, flexible and transformative is an actual capability; and probably the most valuable one. It will allow you to not get stuck chasing decaying margins or performing tasks that are not valuable. A lot of insight and direction will come from your data, the old and new measures suggested your customers and a general sense of the business opportunities. Listen for it! Be agile, flexible, and humble enough to follow it. This is not an overnight challenge or change. What I am suggesting is that life as we know it has changed. How we interact with retail has changed. How we use our vehicles or need mobility has changed. All has changed at least for quite a while, and some like the raised customer expectations have changed forever. So, let's understand those factors before we simply try to optimize some already archaic retail processes. We must measure factors that are the real evaluation of what is happening with mobility, vehicle usage and access as well as customer mobility expectations. Those measurements are where we need to drive our future business to operate and perform. Those will indicate new capabilities an auto retailer must develop to keep evolving and transforming to a future state of what's next and what's successful. Start with a North Star guide of what you want to deliver as an experience to customers and to employees. From there, create a plan and roadmap to build towards the capabilities necessary to deliver upon it; the people, process and technology. But always be agile, adaptive and flexible. Listen, pivot as needed, and pursue the customer experience. That will lead auto retailing through this crisis and into a new era of high value, high engagement and high satisfaction retailing experiences.

While most dealerships offer some degree of prepaid maintenance (PPM) or complimentary dealer and OEM maintenance plans, many questions how effective these plans really are and if they do in fact provide the intended retention and ROI. Good news—research shows that they do and additionally they provide the unique opportunity to tap into the highly desirable younger market segment. DMEautomotive’s recent national consumer survey provides fresh insight into the state of prepaid and complimentary maintenance plans, along with evidence of their powerful ability to provide consistent dealer retention. Research shows that strong programs can keep customers coming back for repairs long after the expiration of their respective maintenance package—shifting business that typically bleeds into the aftermarket, into firm dealership territory. Below are some of the key findings of DMEautomotive’s recent survey: Roughly one in four U.S. vehicle owners have a dealer or OEM prepaid or free service plan. Free or prepaid, 35 percent of customers are not using plan for all maintenance. While 65 percent use plans for all scheduled maintenance, a surprising 25 percent only use it for “some” and nine percent have not used it at all. Plan usage and satisfaction levels align: those using their plans for all scheduled service at the dealership report the highest satisfaction and 75 percent are either “extremely satisfied” or “satisfied.” Next-generation servicers (under 35) are more likely to have a plan (31 percent) than those over 35 (18 percent) making these plans a powerful tool for young, dealer-disloyal servicers. Plans drive long-term retention as 56 percent of consumers with a prepaid or “complementary” service plan report they are likely to continue servicing their vehicle at their dealership after the plan expiration. Loyalty during plans impacts future loyalty—almost twice as many consumers who use their plan for all maintenance (versus those who only use it for some ) report they’re “very likely” to continue servicing their vehicle with that dealer at plan-end (30 percent versus 17 percent). One of the most valuable pieces of information gathered from the survey is that there is a new way to reach our younger customers. Results show that younger consumers are significantly more likely to use their plans for all maintenance than older consumer segments. Notably, 84 percent of those aged 25-34 (who used the plan for all maintenance) reported high plan satisfaction, in addition to 62 percent stating they are likely to service at the dealership post-plan. Given that the 25-34-year-old age range is typically the largest group of dealer-disloyalists, it’s clear that maintenance plans can be yielded as a uniquely powerful tool. While maintenance plans provide a powerful opportunity, they do take effort. We have learned that customers covered by maintenance plans often stray from the dealership for repairs. While this may initially be seen as a profit gain, research shows that customers who stray are more likely to take servicing needs elsewhere upon expiration—demonstrating the importance of consistently engaging with customers post-sale; something to keep in mind as you manage your ongoing customer relationships. Mary Sheridan is a CRM insights analyst for DMEautomotive’s strategy and analytics team, which is focused on producing cutting-edge research on service customer behavior to help automotive retailers build greater customer loyalty and retention. Sheridan has a PhD in clinical psychology and has nearly a decade’s experience in primary research, including over four years in customer experience and loyalty.