Experience Is Key in Car Sales

Is the economy coming back? Here's a sign: According to a Mintel study released in March, new car and light truck sales increased by 11 percent between 2009 and 2010, marking the first increase in car sales since 2000. I had written about the role of experience and word of mouth in getting consumers to purchase cars. The Mintel study also underscores the importance of hands-on experience in getting shoppers to seal the deal. When asked about the influences on the purchase of the last new car model, majority of consumers (63 percent) pick test drive from the list of retailer offers and features. The trend holds true across age, gender and income groups. Consumers across the board are checking on marketing claims and deciding which car suits their needs best through hands on experience, on their own. Word of mouth may bring them to the showroom, but it needs to match what they experience to close the sale. 

 

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Gap Between Online and Offline Word of Mouth Narrows For Car Purchases

A study on large purchases made in the past five years confirms the impact of customer satisfaction and word of mouth on car purchases and brand choices. According to the Large Purchase study by S. Radoff Associates, about one-third of car purchasers in the past year said they were influenced by their past experience (35 percent) and face-to-face or phone communications with friends and family (30 percent) when making their car choice.

In the hierarchy of information sources that influence car purchases, offline word of mouth has a bigger influence on consumers than online word of mouth. Yet, the rising role of online word of mouth in closing car deals is a noteworthy trend. Over the past five years, online word of mouth sources (e.g., online reviews, blogs, social networks, forums, friend emails) have been increasingly influential in driving consumers’ car purchasing decisions and brand choices. Five years ago, one-fifth (20 percent) of consumers pointed to online word of mouth among the sources that shaped their decision. A year ago, more than one-quarter (26 percent) indicated that online word of mouth helped them choose and buy their car.

As car purchasers increasingly rely on online word of mouth sources, automotive brands need to be prepared to monitor and join online conversations. For car buyers experience is a fundamental decision factor. They assess their hands-on experience along with others’ experience in driving vehicles. Online marketing and communication initiatives that highlight positive consumer experiences and provide extended service to potential customers are bound to drive sales.

To read more about how various car purchaser segments (e.g., women, parents, young adults) make their buying decisions and brand choices, download the ebook What Drives Cars here.

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Study Shows Social Media Has More Impact Than Paid Media on Car and Technology Sales

S. Radoff Associates, a NY-based research company, just released a report about the impact of word of mouth on large-ticket item purchases. The results remove any shadow of doubt on word of mouth’s impact on tangible business results. And we understand that social media drives sales for considerable investments in cars and technology, not just CPG products.

The study delves into large purchases made in the past year and the information sources that shaped brand choices. The results show that one-half of consumers say word of mouth was a key influencer for car (50 percent), technology and electronics (49 percent) product choices they made in the past year.

We know from Keller Fay Group that much of word of mouth actually takes place offline. Interestingly, these two categories are pretty balanced in terms of their source of buzz. In fact, online and offline word of mouth were just as likely (29 percent, respectively) to influence technology and consumer electronics purchases.

Online reviews are at the source of online buzz. Consumers say online reviews influenced nearly one-quarter of technology and electronics purchases (24 percent) and 17 percent of car purchases made last year.

The most counterintuitive factoid from the study is that consumers are four times more likely to be influenced by social media than paid media for their car purchases made in the past year (21 percent vs. 5 percent). Social media has been more influential than paid media for technology purchases as well (26 percent vs. 7 percent).

Considering the typical budget spending on advertising vs. social media, these numbers signal the need to seek efficiencies in our integrated marketing plans for 2011 and beyond. Marketers planning for automotive and consumer electronics/ technology brands can shift dollars from traditional advertising budgets to social media and focus on elevating consumer opinions and customer experience. 

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