When your customers decide to trade in their current vehicle, you know exactly what to do first: make sure they get an appraisal as quickly as possible, since that’s the number one priority for most buyers. Right?
Not so fast.
AutoLoop recently surveyed 1,000 recent car buyers and analyzed over 100,000 leads from various trade-in valuation companies—and we discovered a significant gap in what consumers expect and what dealers think consumers expect. Accordingly, even though many dealers are making significant investments in digital retailing, the trade-in tools on their websites are actually turning away some of their best prospects. In fact, the typical online trade-in tool on dealer websites falls dismally short of consumers’ expectations, resulting in a poor customer experience and lost sales.
It’s all about the guarantee
Case in point: over half of customers surveyed said the most important factor for them in an online trade appraisal is receiving a guarantee of value for the trade. But countless dealers are still focusing primarily on the benefits of a fast appraisal—which, in reality, very few customers care about. In fact, only 1 in 5 customers said they wanted a quick appraisal.
However, many trade-in tools don’t offer guarantees because the process requires more time and intelligence. More specifically, it requires intelligence from a live person, rather than just a machine. Consumers are already distrustful of trade-in valuations from dealers—and our research indicates that without some type of guarantee, many consumers simply move on to another dealer.
Raise rates with the right tools
The good news? Dealers can still get a dramatic jump on the competition by migrating to consumer-friendly trade-in tools that deliver what buyers want most. We analyzed the conversion rates achieved by trade-in tools from various companies and discovered that those offering a guarantee of value have 3x to 4x higher conversion rates. That means dealers who are using a less intelligent trade-in tool are losing 10-15 deals per month! And that’s just the start—according to our survey, consumers who utilize the smarter trade-in tools with guaranteed values also convert to buyers in 10% less time than customers using outdated resources. Since faster conversions mean less time chasing down consumers with phone calls and emails, staff can spend more time selling.
With trade-in tools, the “work smarter, not harder” adage is key. By simply improving the intelligence of your trade-in process, you’ll avoid wasting money on leads and hours lost from your employees. In return, you’ll ensure your dealership is in sync with the real preferences of your customers—and the one they’re more likely to choose when it’s time to purchase.
Doug Van Sach
VP of Strategy & Analytics
Insights | January 19, 2021