Digital Metrics: Taking the Guesswork Out Of Business Decisions
As dealers try to get back on their feet after what has been an extremely challenging twelve months, the industry is seeing a strong push toward digitisation.
This trend, although fast tracked by the pandemic, was already on the cards, with a 2019 study by KPMG indicating that the automotive industry would see significant digital growth in the coming five years.This in turns means that dealers need to be prepared to adapt.
As both a result of COVID and changes in digital behaviour, many customers are reluctant to walk in and browse through dealerships as they once did – preferring to research vehicles remotely until they are ready to test drive. During the lockdown earlier in the year, our own stats showed that dealerships saw an average increase of 43 percent in their website visitors. We also saw phone calls initiated from dealership websites increase by 50 percent.
These high figures have endured throughout the remainder of 2020, showing us that more people are searching for cars online than ever before. As a result, it is clear that having a strong digital advertising strategy in place is imperative to drive new prospects and fulfil your sales pipelines.
But, when it comes to digital advertising, where do you even begin with a strategy? What targets should you be aiming for to know you are getting a good return on investment?
The first thing to understand about digital benchmarks is that they vary considerably across industries.
There is little point in comparing your own results against the local real estate agent or your friend’s homewares store, as what might be considered a good result for them, may not be realistically achievable by your dealership – or vice versa.
So, let’s focus on the automotive industry, and to avoid over-complicating matters, we’ll use Cost Per Action (CPA) as our metric.
The “Action” in CPA refers to a combination of completed goals on a dealership’s website, such as a “contact us” form submission, brochure download, test drive request or putting a deposit down on a vehicle. The Cost Per Action is calculated by taking your total marketing spend and dividing it by the total number of goals completed on your website or social advertising campaign.
According to an analysis undertaken by Wordstream, Google’s global average Cost Per Action for the automotive industry is $44.21 AUD and Facebook’s is: $57.70 AUD. If we combine both social and Google advertising – which any well considered digital strategy should - the average CPA for the automotive industry is $51.00 AUD.
The relatively high CPA for Facebook campaigns run by automotive industry advertisers can be explained by the longer buying journey of vehicles compared to typical retail purchases. Also, unlike Google ads which tend to target customers closer to converting, Facebook campaigns are aimed at those at an earlier stage of the buying cycle, meaning these customers need to be guided through the research phase and nurtured into a sale. Given the lifetime value of an individual customer to a dealership, through finance, after sales, parts and servicing, this high CPA in our industry is quite reasonable and well worth the investment of time to nurture these leads into customers.
Digital reporting and tracking have come a long way over the last few years, and dealerships that work with a digital partner who understands the automotive industry and benchmarks have been able to change the way they track success. Focus is now placed on the metrics that truly matter, such as Cost Per Action, Cost Per Conversion, and percentage of enquiry to sale, enabling them to answer the all-important question: “what marketing is driving my test drives and sales each month?”
Changing the way dealerships measure their digital marketing success allows them to stop treading water in the digital space and start growing - generating a better return on investment month-on-month and year-on-year.
- Find out more about our Digital Reporting & Tracking