In September, J.D. Power and Associates (JDPA) announced the results of its 2006 Dealer Satisfaction with Online Buying Services StudySM, and in the October issue of the Dealix Dealer Newsletter, we spoke with former JDPA senior director Dennis Galbraith and senior analyst Min Cho to learn more about the study's findings. This month, we continued the conversation with Min Cho to gain a better understanding of the factors that make up “dealer satisfaction.”
Dealix Dealer Newsletter (DDN): Thanks, Min, for taking the time to speak with us. To get us started, can you remind our readers of the main areas of dealer satisfaction that were explored by the survey? How did you determine the relative importance of these areas?
Min Cho (MC): The survey measured dealer satisfaction in four key areas: Business Generation, Dealer Support and Service, Lead Transmission, and Fees. Each of these, in turn, was broken down into other components. None was assigned any particular level of importance in advance; rather, we used a statistical technique called regression analysis to calculate how important each was based on the extent to which it predicted dealers’ assessment of their overall satisfaction. This technique makes it possible to determine the proper weight to assign each factor, with a very high degree of accuracy. So, dealers were able to let us know what matters most to them.
DDN: Business Generation was far and away the most important factor, accounting for 53% of overall satisfaction. According to the survey, what were the factors comprising Business Generation?
MC: Lead quality and lead quantity accounted for 30% and 28%, respectively, in this particular area. The fact that online leads represent incremental business was a close third, with 26%. Gross profit margin accounted for the final 15%.
DDN: The lesson, then, would seem to be that giving dealers as many quality leads as they want goes a long ways towards helping them be successful. But I see Dealer Service and Support was also important. What are the key factors here?
MC: 22% of overall dealer satisfaction derived from satisfaction with service and support. In other words, the inherent strength of the service isn’t enough to make dealers happy; they need technical support (40%), regular contact (32%), and training (28%) to use the service effectively and be able to perceive its true value.
DDN: Lead Transmission was the third-most-important factor, but this and Fees were much less important to dealers. How would you explain this?
MC: Yes, Lead Transmission and Fees came in third and fourth, respectively, accounting for 13% and 12% of dealer satisfaction. As a category, Lead Transmission was comprised of two more specific factors: speed of transmission, which represented 66% of dealer satisfaction in this area, and amount of information transmitted, which represented 34%.
One way to think about this is in the context of the high importance dealers assigned to lead quality, in the Business Generation category. It makes sense that lead freshness and the amount of information leads include are two different forms of lead quality, and that both contribute to business generation. But perhaps dealers are more tuned in to the general concept of lead quality, and less to the specific attributes that comprise it.
DDN: What can we conclude about fees? Are they as unimportant as the study suggests?
MC: Fees accounted for 12% of overall dealer satisfaction. That’s not insignificant, but you’re correct - it’s not a huge consideration, either. One possibility is that fees take on more importance in specific situations, such as when dealers are struggling to capitalize on their third-party leads. Otherwise, if dealers get their leads at a competitive price and enjoy an ROI in line with expectations, they’re less inclined to view fees as critical to their satisfaction. At the end of the day, what matters to dealers are sales and a solid return on their marketing investment. It’s their expectation that their online buying services will help them achieve those ends.