Part 3: The Research Portals – The Changing Landscape Of Third Party Sites

Part 1: Buying Opportunity – The Changing Landscape Of Third Party Sites

Part 2: The Evolution Of A Category – The Changing Landscape Of Third Party Sites

Today’s consumers are visiting as many as 24 touch points on their car-buying journey. One or more of these stops inevitably includes sites featuring online reviews as consumers research various vehicles in their top-of-the-funnel efforts to narrow down their selections to as few makes and models as possible. Edmunds and Kelley Blue Book are well-known to consumers and trusted as third party sources of vehicle information with Edmunds being new and used car oriented while Kelley Blue Book is known more for its used car and vehicle valuation information. While Edmunds and Kelley Blue Book aren’t the only research sites with shopping capabilities available to consumers, they are the ones that consumers are most familiar with and trust as third party sources of information.

These sites focus on the independent information consumers need to narrow down their vehicle consideration set, and are often used by consumers in conjunction with visits to both OEM sites (for the most in-depth vehicle information) and dealer sites (for price and availability). Although there is variation in emphasis across the sites consumers can generally perform these tasks:

• Brand feature research & comparison
• Brand/Model reviews (expert and consumer)
• Inventory discovery (new & used)
• Trade-in terms discovery
• Price discovery
• Dealer consumer reviews/reputation
• Dealer selection and engagement
• Credit and finance terms discovery

Edmunds.com

According to Edmunds, upward of 20 million visitors are using their site monthly for a variety of reasons including new and used car information and reviews as well as unique content. They report that 60 percent of consumers touch Edmunds at least once during their shopping process. The wealth of insight Edmunds has on consumer preferences and behavior is second to none and the company has been generous in sharing these insights with the industry and their customers. OEMs watch consideration trends on Edmunds closely to understand how well their marketing efforts are performing.

While it’s unclear how many of these visitors are in a buying stage versus the beginning of research, Edmunds visitors would seem to be more top funnel as they are using it to gain information to use in their decision making process. The site provides estimates of new and used car pricing for the most common configurations to help consumers narrow their preferences. However, joint research Edmunds conducted with CDK Digital in 2014 does provide strong evidence that shoppers who have done their research are farther down the sales process than the average visitor to a dealership website. This research reported that shoppers who had visited Edmunds before coming to a CDK Digital website were 4 times more likely to purchase than the average visitor.

Edmunds does offer the ability for consumers to submit direct form leads to dealers requesting pricing or information about a vehicle. They also facilitate direct consumer to dealer communication with text. Their primary consumer-dealer engagement focus is with their Price Promise offering in which the consumer can obtain a firm price quote from a dealer, addressing many consumer’s concerns about price transparency and negotiating effort. In practice, Edmunds and dealers report that only 6 percent of shoppers end up buying that exact vehicle and only 25 percent the same make/model car.

Recently, Edmunds announced a pricing validation tool called Edmunds Express for in-store use by dealers with consumers that is designed to address what has become a serious problem for consumers – not knowing who to trust around pricing among the different sources they have touched, online and dealership staff. Having dealer sales staff be able to provide independent validation of the fairness of their pricing and vehicle comparison data to the customer from their tablet should help punch through this consumer anxiety.

Edmunds is a valuable independent third-party resource for consumers, which does offer value for dealers who choose to market their dealerships on the platform.

KBB.com

Founded in 1926, the Cox Automotive company, Kelley Blue Book has long been regarded as the go-to source for used vehicle research and valuations by consumers. It is probably the most well-known and trusted brand in this regard amongst consumers. In a reversal of Edmunds history and branding, Kelley Blue Book also provides new car information, reviews as well as dealer and invoice pricing for new cars, but is primarily regarded as a used car valuation authority by consumers. Many dealers and financial institutions use their vehicle valuations as guides when determining what to offer a consumer for their trade as well as how much a consumer can borrow in financing situations. These valuations are typically combined with information gained from other sources including the Cox owned vAuto, which provides real-time market specific valuations amongst other information.

Problems with consumers arise when vehicle valuations don’t match market conditions especially when valuations drop due to a large supply of a particular vehicle being available in a market ­– particularly dense ones. In addition, friction in the buying process can be created when geographical preferences for valuation services exist, as is sometimes the case between Kelley Blue Book values and Black Book values, which tend to be lower. Dealers will typically offer trade-in valuation services through their website which could give consumers a guide with which to be more in line with that particular dealers valuations. Consumers, however, may not understand the differences and choose to visit Kelley Blue Book for a valuation then visit a dealer who uses Black Book, which can create an adversarial conversation over trade-in value between the dealer and the consumer.

In a test conducted by DrivingSales, we submitted pricing valuation requests through both Kelley Blue Book and Black Book. The test vehicle was a 2011 Honda Accord LX Sedan, black in color with 48,000 miles on the odometer. In both cases, the vehicles were reported as being in “good” condition. Kelley Blue Book reported a valuation of between $9,645 and $10,412. The Black Book valuation returned a value of between $7,935 and $10,635. Even if a consumer was happy with the low end of the Kelley Blue Book valuation ($9,645), there would still be a potential valuation discrepancy of $1,710 from the low value that Black Book provided. It would be very easy to understand how the customer experience could be affected based on this pricing discrepancy and the consumer could show distrust toward the dealer.

Best Dealer Fit

When considering whether to allocate budget toward research portal sites such as Edmunds and Kelley Blue Book, dealers must be aware of the benefits and perils involved and their goals as a whole. For example, if you’re a dealership in a dense market that has a large focus on new and used inventory, Edmunds may be a good choice to consider. If your market is rural and there are few competitors, Edmunds may provide less value as consumers will find their way to you regardless. In the case of Kelley Blue Book, dealers actively seeking trade-ins for retail and used car buyers, Kelley Blue Book could prove to be a good fit. Dealers who primarily use alternate vehicle valuation services such as Black Book, however, might want to be more careful as consumer backlash and poor experiences are more possible when it comes to discussing trade-in values with consumers.