89 % Automotive Reputation Management. The Street Smart Guide to. By Beth Latta. & Peter Kahn

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1 The Street Smart Guide to Automotive Reputation Management By Beth Latta Cobalt Senior Product Marketing Manager, Reputation Management & Social Media & Peter Kahn Research Director, Strategic Marketing 89 % of people would go online to read reviews about a potential car purchase. Cone Study, 2011

2 Contents 03 Do Stars Sell Cars? Top Five Reputation Management Myths Additional Resources 21 About the Authors 02

3 Do Stars Sell Cars? Let s start with the elephant in the room: many dealers still don t believe that reviews impact car sales. So do stars indeed sell cars? We decided to find out. DID YOU KNOW: Positive reviews 100 increase search referrals by as much as % Cobalt Business Intelligence 03

4 The Study: 2,500 + Dealership Reputations Revealed We randomly selected over 2,500 dealerships representing all major brands marketed in the U.S. and took a look at their reviews and ratings. We looked at postings for the store on six popular customer review sites frequented by most shoppers: Google + Local (previously Google Places), Yelp, Yahoo! Local, Bing, CitySearch, and Insider Pages. We documented the number of reviews and the star rating for each dealership. What we found in this study is that stars can indeed impact car sales. Take a look at what we found. 04

5 Conclusion: Reviews Do Impact True Business Metrics Leveraging Cobalt Business Intelligence (the largest inmarket car-shopper data warehouse) combined with other leading research from Harvard Business School and others, a direct link was revealed between star ratings and business metrics dealers care about: website traffic and revenue. In short, leading research finds the more stars you have, the more traffic and revenue you have. We took a subset of our dealers who had newly implemented a strategic reputation management program and studied their progress over a period of five months. During this time, we tracked their growth in reviews and star ratings, and then viewed their changes in organic referral traffic from Google. Here is what we discovered 05

6 The stores who implemented a reputation management program had a shift upwards in their star ratings. Star Ratings after Implementation of a Reputation Management Program Stars Days 06

7 As the star ratings increased, we looked at the Google referral traffic and correlated the following lift. Correlation of Star Ratings with Website Traffic Percent Lift 120% 100% 80% 60% 40% 20% 0% -20% 0% 0 78% 32% -4% % 4 Stars Disclaimer: We looked at 50 dealers on our reputation management solution and tracked metrics compared to dealers not on our reputation management solution. 07

8 Makes sense, right? If a car-shopper reads a positive review about your dealership online, they are much more likely to want to visit your dealer website and/or make a purchase from you. On the other hand, one negative review can be all it takes to send them to your competitor. Additionally, a new Harvard study on the impact of Yelp reviews on revenue found that for every one-star increase, there was a 5% - 9% increase in revenue. Although this study covered the restaurant industry, this is still a fascinating landmark look at how much reviews are starting to really impact true business metrics, and it s safe to say this trend will only increase over time and spread across all industries. Long story short, stars can impact sales. A one-star increase in a Yelp review can lead to a 5-9% increase in revenue. Harvard Business School Reviews Study 08

9 Automotive Reputation Management: A Dismal Picture Now that we ve established that reviews do impact car sales, let s talk about how dealers are holding up in the reputation management department. Median Number of Store Reviews by Consumer Review Site: Google Yahoo Yelp InsiderPages City Search Bing 10 Reviews 4 Reviews 3 Reviews 3 Reviews 3 Reviews 2 Reviews 3 6 review sites were missing reviews from dealers all together. When we looked at all the dealerships to see just how they stacked up on each of the review sites, here is what we found. Many review sites actually require a minimum of 10 reviews before they even start aggregating a rating for a business. On average, dealers were missing reviews on three of the six sites. This basic absence of reviews is distressing, to say the least. But the problem isn t just the lack of quantity, but also a lack of quality. 09

10 3.5 Stars: The Review Rating Glass Ceiling The good news for dealers is, you don t have to have a fivestar reputation across the board to positively impact your business. When it comes to star ratings, research tells us that 3.5 stars is the consideration rating, the minimum that propels a business into a consumer s consideration-set. But our study showed dealers only have, on average, a 2.1 star rating. 1 To add insult to injury, across all other industries, the average reputation ratio is 80% positive reviews, 20% negative. However, in the automotive industry, the inverse is true: an unmanaged dealership reputation has an average of 80% negative reviews, 20% positive-ouch! Unmanaged Dealer Reputation 20 % 80 % 10 1 Cobalt Business Study, 2012

11 The Verge of Review Credibility: Unlocking Good Reviews There could be light at the end of the tunnel. Consumer research studies have shown that having 30 or more reviews gives your business credibility in the public eye. 2 Cobalt research discovered a fascinating trend utilizing this 30 review threshold. A great way to actually boost your star rating is to generate 30 or more dealership reviews. That s right, simply by increasing your number of reviews you can improve your star ratings across the board. Check out below to see clearly how, in the automotive industry, an increase in quantity can correlate to an increase in quality. A Ray of Light: How More Reviews Flip your Reputation Ratio Percent 100% Negative Reviews 80% Positive Reviews 73% 60% 62% 54% 40% 46% 38% 20% 27% 0% < > 30 Number of Reviews 11 2 Reevo and BrightLocal Studies

12 So how do you get more reviews? Provide the best customer experience you can and then ask customers for feedback! In general, if customers are asked about their experiences, the majority of them have something positive to say about it. By encouraging customers to participate, dealerships will benefit from customers speaking directly to prospects about the value they received by doing business there. If dealers do nothing, the odds are that no reviews will be posted and more likely the complainers will scream loudly. 30 or more dealership reviews proves positive. Cobalt Business Intelligence,

13 Credibility Caveat: Just Say No to Star Steroids or you will go to Spam Jail While 30 or more reviews could be the key in improving your reputation and growing your business, it has to be done organically and over time. Reviews should be part of the natural process of doing business and servicing customers, every day, month and year. As the review sites continue to fine-tune their algorithms, if there is a mass influx of reviews during a short period of time, you may find those reviews getting filtered out for looking spam-like. Consumers tend to look at reviews from the past six months and the average car-shopper journey lasts 60 days according to Cobalt Business Intelligence. But anything older than that becomes irrelevant to consumers, which means, you need fresh new reviews; you can t set it and forget it. And let s be truthful, if you are a successful business that cares about your customers, you are doing business daily and there should be at least a couple reviews a month, each month, for the life of your business. Now that we know stars can impact car sales, let s talk about the top myths that are holding you back from a great rep. 13

14 Top Five Reputation Management Myths M YT HS 14

15 Myth #1 If people have a good car-buying experience, they ll naturally write a review. We wish it were this easy. While delivering a great car-buying experience is a fundamental part of reputation management, it s not enough to guarantee a glowing review. People get busy. People have short memories. And honestly, no matter how great the car-buying experience was, they d rather be out driving around in their new car than writing an online review of your dealership. This doesn t mean it s hopeless. It just means the ball is in your court to create a successful process for review generation one that includes things like friendly reminder s or in-store materials promoting your presence on the review sites. 15

16 Myth #2 I don t need a reputation management specialist! My receptionist cuts and pastes our auto response like a pro. While it is easy and tempting to whip up a generic We re Sorry/Thrilled You Had a Bad/Good Experience template, cut and paste accordingly, and call it a day; this is not true reputation management. In fact, it s pretty pointless. An auto-response is not a response, and these canned responses are impersonal, transparent, and ultimately inadequate. Reviews are written by individuals, and they require personal responses. 16 Reputation management is a human process, and anything involving real people s feelings needs to be handled with care. A professional Reputation Management Specialist skillfully manages delicate issues like: soothing an angry customer, clarifying store policies and answering automotive questions for confused customers without making them feel stupid, or just warmly and sincerely thanking someone for a positive review. These types of conversations require real human touch. Remember, there s no app for empathy, even in today s technical world.

17 Myth #3 Reviews don t really impact sales. No one takes those silly stars seriously. In fact, reviews DO impact sales. In a recent Cone Study, four out of five consumers said they did not move ahead with a purchase based on negative reviews. The same study said that for 87 percent of consumers, a favorable review confirmed their decision to purchase. 4 out of 5 consumers said that they DID NOT move ahead with a purchase based on negative reviews. Cone Study

18 Myth #4 People only read reviews for books and restaurants. No one reads reviews of dealerships. Not true. The same Cone study specifically states that consumers are even more likely to count on reviews for this type of purchase. The study says, Americans are nearly 25 percent more likely to verify recommendations for high-cost purchases, such as cars, today than they were in 2010 (89% today vs. 72%), while moderate- and low-cost purchases did not experience the same jump. Think about it, if you were about to drop $25K, wouldn t you do your due diligence before you signed the papers? 18

19 Myth #5 If I ignore a bad review so will everyone else. This myth is probably the most popular on the list, and the most dangerous. While it is understandable that some would think that ignoring a bad review may help minimize attention and sweep it under the rug, anyone who has ever done online research knows this is not true. Bad reviews are like car crashes; people can t help but look. People generally read the best review and the worst review, which sites like Amazon.com make very easy to do. But all isn t lost. Everyone gets bad reviews, we can t please everyone all the time. Yet it s not really the bad review, but your response to it that matters. 19 There s a world of difference between an ignored bad review, an angry defensive response to a bad review, and a bad review that s responded to with compassion, tact, and grace. Contrary to popular belief, you don t even have to go overboard providing freebies and discounts to show your remorse. A short, simple, sincere apology can work wonders.

20 Thank You for Reading Thanks for reading Cobalt s Street Smart Guide to Reputation Management. To learn more about how Cobalt s Reputation Management solution can build stars into every car sale, go here: Build Stars into every Car Sale with Cobalt Reputation Management Get a Free Reputation Management Scorecard 20

21 About the Authors Beth A. Latta is a Senior Product Marketing Manager at Cobalt with fifteen years in product and product marketing experience in finance, workforce optimization, and automotive technology. She can be reached at: BETH LATTA Cobalt Senior Product Marketing Manager, Reputation Management & Social Media Now completing his first decade as Research Director of Cobalt s Retail Insights Group, Peter Kahn has delved deep into finding the best ways that dealers can meet shopper needs. This includes looking at usability, search, digital advertising, opportunity management, and website best practices. Representative work can be found under Dealer Insights on the Cobalt website. He can be reached at: PETER KAHN Research Director, Strategic Marketing 21

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