Has it been a while since you submitted a new vehicle inquiry or walked through the trade-in process on your website? These online forms are the frontline of your dealership’s customer experience, but they are often neglected in the hustle and bustle of everyday business.
You can’t know what your customers are experiencing during their journey if you don’t take the time to walk a mile in their shoes.
There are plenty of tools out there on the market today to help car buyers interact with your website, and a number of them are pretty good. But many aren’t. The same holds true for a dealership’s internal processes. Some are great, others, not so much.
Catching Up with Customer Expectations
Today’s consumer is in the driver’s seat - literally and figuratively. They have high expectations because major online retailers have set the bar that way. If our industry wants to compete, we must provide a convenient, easy, and intuitive car buying experience.
We recently conducted an informal analysis of the trade-in process which, for millions of consumers, is the first and most important step in the car buying process. Because our core business is the appraisal process, we naturally wanted to immerse ourselves in the trade-in customer experience.
We tested four popular trade-in pricing channels.
- OEM websites
- Algorithm-based cash offers
- Used car listing sites
- Third-party value ranges
Here is what we found.
OEM Website Experience
First, we submitted information about one of our staff member’s vehicles - a popular 2014 SUV - to the trade-in process on a major OEM website.
When we entered our model year, the field immediately pre-populated to a different brand altogether, even though we had not conducted any prior research for this particular vehicle. This didn’t feel like a big deal, but straight out of the gates, the customer experience could be better.
We bypassed the automation and manually entered our make, model, and options. The site then told us our estimated value was ready, but we had to enter our personal contact data to unlock the number.
Unlocking the number also meant entering our next dream vehicle, while accepting the terms that we could be contacted by affiliate partners, dealers, and dealer partners.
Although our team had four different dream vehicles in mind, we agreed on one and typed it in.
The estimate we received, which was good for 10 days, ranged from a low of $15,335 to a high of $17,825 - a difference of $2,490.
Algorithm-Based Cash Offer Experience
Next, we submitted identical information for the same popular SUV to two separate algorithm-based instant cash offer providers.
Provider #1 informed us they were unable to provide a cash offer and that an in-person inspection of our vehicle at a nearby dealership was required. That’s definitely not the customer experience we were expecting.
Provider #2 gave us an estimated cash offer range, to start, with a low of $12,850 and a high of $14,850 - a difference of $2,000.
After entering our personal contact data, we were provided with a final cash offer of $13,850.
The final offer we were provided was $1,485 less than the lowest OEM value we received, and $3,975 less than the highest OEM value we received.
We submitted these cash offer requests exactly two weeks ago and have received a total of 28 email follow ups from various dealerships.
The staff member whose phone number we used has received phone calls to both her office landline (the number that was submitted) and her cell phone (a number that was not submitted). She also received email replies to her work address (the address that was submitted) and her personal email address (an address that was not submitted).
It’s safe to say, this customer experience is less than satisfactory.
Used Car Listing Site Experience
Next, we visited two popular used car listing sites to compare prices of the same year, make, model, and trim, with similar mileage and within a 100-mile radius of our staff member’s address.
We found two vehicles that fit our criteria.
Vehicle #1 offered at listing site #1, with approximately 6,000 more miles on the odometer than our test vehicle, was listed by a private seller for $18,250.
Vehicle #2, offered at listing site #2, with approximately 5,000 more miles on the odometer than our test vehicle, was listed by a private seller for $16,988.
Third Party Value Range Experience
Finally, we submitted identical information about our test vehicle across four of the industry’s most popular third-party pricing publishers.
Here are the various condition guidelines they offer:
- Very Good
Here are the various value ranges they offer:
- CPO Retail
- Private Party
Here are the results of our analysis:
Our research netted a low of $11,850 and a high of $19,550 across all major pricing publishers - a difference of $7,700. We submitted identical year/make/model/trim, mileage, and options information, and replied exactly the same way to each condition question for each publisher.
The Overall Trade-In Customer Experience
Take a look at the overall customer experience a car shopper has using today’s automated value range and cash offer tools.
Here is what we found during our analysis - sorted by price from low to high:
|Third-Party Publisher 1||$11,850||$13,850|
|Algorithm Cash Offer||$13,850|
|Algorithm Cash Offer Range||$12,850||$14,850|
|Third-Party Publisher 2||$14,172||$15,983|
|Listing Site 2 (Asking Price)||$16,988|
|Third-Party Publisher 3||$14,197||$17,402|
|Listing Site 1 (Asking Price)||$18,250|
|Third-Party Publisher 4||$17,040||$19,550|
Our Perspective on Today’s Trade-In Process
We invested a lot of time in this experiment, only to receive a range of offers and trade-in values that differ by nearly $8,000 on an average value of $15,600.
In aggregate, this data is virtually meaningless in helping a customer determine exactly what their vehicle is actually worth.
Sadly, our staff member, whose test car we submitted, and who legitimately wants to trade her car in towards a new car purchase, is no closer to determining what her vehicle is worth than she was when we started this long process.
Additionally, she has been inundated with emails and phone calls from multiple dealers, including being contacted through personal accounts she never even submitted. She has received dozens of contacts over two weeks since this experiment was conducted, and she will likely receive dozens more in the weeks to come.
The messages she has received are solely about the new vehicle purchase. Not a single one has offered to help her determine what her trade-in is worth.
The end result is that she has very little idea about whether or not she can actually afford her new car purchase. She does not know the equity she has in her existing vehicle, so she does not know what her down payment will be, so she cannot calculate what her monthly payments will be.
The customer experience speaks for itself.
The fact is, it doesn’t make sense for our industry to quote automated cash offers or value ranges without the involvement of live appraisers. Every used car is as unique as the person who drives it – each with its own specific set of characteristics that can positively or negatively impact value.
The information that is available online, including condition guidelines and resulting value data, varies widely from publisher to publisher. As this experiment shows us, it's nearly impossible for consumers to rely on algorithm-based values to find a meaningful number.
The trade-in process is extremely important for millions of consumers. In order to achieve any chance of success in the future, we must provide customers a vastly better experience than the one we offer today.