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Autobytel

IHS SPECTRUM Excellence Award

Autobytel’s Network Captures Consumers that Represent Over 4% of All New Vehicle Retail Sales in 2014

This online automotive leader established a comprehensive program to analyze aggregated statistical sales results. Its analysts confirmed that consumers submitting leads through the company’s network accounted for 4.35 percent of all U.S. new vehicle in 2014 and that its leads close at three times the industry average.

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Challenge

  • Develop a credible, consistent, quantifiable way to measure the conversion of online leads into retail vehicle sales
  • Demonstrate the value of the company’s online solution to dealers, OEMs, stakeholders, and the investment community
  • Enhance company’s market leadership position

Solution

IHS Automotive Audience Optimization

Results

  • Established comprehensive program to track 100% of leads against vehicle registration information
  • Contributed to the generation of 6.6 million online leads – up 30% from previous year
  • Created insight to know that consumers submitting leads through the Autobytel network accounted for 4.35% of all U.S. new vehicle sales in 2014
  • Demonstrated the value of leads to over 4,000 dealers, 20+ OEMs and the investment community using measurable data
  • Measured the quality of the company’s internally-generated leads, closing an estimated 18% - i.e. about 3x the estimated industry average rate
  • Showed that dealers and OEMs realize a favorable ROI on investments in leads

Autobytel Helps Consumers, Dealers and Automakers

Autobytel has helped tens of millions of automotive consumers research vehicles, connected thousands of dealers nationwide with motivated car buyers, and helped every major automaker market its brand online.1

Since 1995, Autobytel has revolutionized the automotive marketplace by pioneering Internet innovations to enhance the vehicle shopping process. The launch of www.Autobytel.com gave auto dealers and manufacturers a faster, easier, more effective way to connect with consumers and help them find the right vehicle to meet their needs. Since then, the company has continued to provide consumers with a comprehensive and positive automotive research experience, while offering auto dealers, dealer groups and auto manufacturers one of the industry's most productive and cost-effective customer referral and marketing programs.

As a result, Autobytel has maintained its strong market leadership position and generated outstanding financial results for its investors. In 2014, the company achieved a series of record-breaking revenue goals, including a 39 percent annual gross margin and 84 percent growth in non-GAAP income.2

"We founded this industry 20 years ago, and since that time it’s evolved quite a bit,” said Jeff Coats president and CEO of Autobytel. “Our goal is to continue to be recognized as the market leader and provide in-market consumers to our dealer and OEM partners to help them sell more cars. We began working with IHS many years ago as an internal quality measurement and four years ago expanded our relationship to include valuable insight for our clients. Today, IHS is a trusted partner.”

Measuring Success: Credibility, Consistency

Autobytel previously lacked a consistent and sustainable method of measuring the effectiveness of its efforts to connect consumers to dealers and auto manufacturers. “We started working with IHS because we had little visibility into the ‘closed’ results. We’d put a consumer in touch with one of the over 4,000 dealers we work with, but we didn’t know what happened next. Or if we did get sales reporting from our clients, the methodology would be inconsistent. We wouldn’t know if the consumer had bought a car or not. The evidence of our lead quality was anecdotal at best,” said Rich Shugg, Director Strategic Accounts, Autobytel.

Using IHS automotive vehicle registration information to determine the number of retail vehicle sales of consumers submitting leads through the Autobytel network made sense to company leaders. “We have a direct relationship with more than 20 OEMs so using IHS data, with consistent measurement results is important,” said Shugg. It was important for our data to be procured by an independent third party industry expert like IHS. We compare close to100 percent of our leads against an IHS unique data set so this is not a “snapshot in time or a small survey.”

On our earnings call, our President and CEO Jeff Coats spoke about how IHS aggregated vehicle registration information helps drive our success by giving us key metrics to assist in developing our plans going forward.

John Steerman, SVP,
Mobile, Lead Operations, Product Development

Converting Leads into Proven Sales

Now Autobytel can prove to its customers if consumers submitting purchase requests through the Autobytel network resulted in sales of a new or used vehicle from a specific dealer (in non-restricted states).

“Leveraging IHS aggregated vehicle registration information in the lead-to-sale process helps Autobytel quantify and optimize the value and impact of our solution to our customers,” said John Steerman, Senior Vice President of Mobile, Lead Operations and Product Development. “We also find a lot of value in being able to tell dealers they are losing sales. In the industry, for example, there’s a perception that a Honda dealer’s primary competition is the Honda dealer down the street. But, the reality is that many people are still considering multiple brands, so the competition is really every dealer in the area.”

Automotive dealers access their own IHS results from Autobytel’s dealer extranet to better understand how they can position themselves against the competition and actually see who their competition is. Specifically, they can see “who they are losing sales to; which store location (in non-restricted states); which make; and which financing source,” said Shugg. Armed with these insights, dealers can work with Autobytel to improve their marketing and sales processes to turn more leads into sales. Both dealers and OEMs are able to optimize their online marketing strategies.

Enhancing Lead Quality, Marketing and Sales

With the help of IHS, Autobytel now has a consistent, accurate, data-driven approach to help their customers develop more effective digital marketing programs. In addition, the company continually leverages IHS data to determine which lead sources and destinations generate the best results.

“In the past, we had no real way of understanding if something worked or didn’t work,” said Shugg.“Now, we have a closed-loop process.We have an efficient, reliable way to test new approaches so we can easily turn campaigns on - or off - if they don’t deliver the expected results. And we can do so at a faster pace than before.”

Gaining fresh insights into consumer vehicle shopping behaviors has led Autobytel to work with dealers to change their internet sales process,” said Steerman.“What we’ve seen from the information that IHS shows us is that many people submit a lead for a new car but then buy a used car, and vice-versa. So, we coach dealers to present used car options to new car shoppers and new car options to used car shoppers.”

Autobytel actively leverages its quantified lead performance evidence during dealer presentations “We use data from IHS as a sales tool with individual dealers, and with the entire industry,” said Steerman.

Delivering Bottom-Line Results

In 2014, Autobytel generated 6.6 million leads, up 30 percent from the previous year.Consumers submitting leads through the Autobytel network accounted for 4.35 percent of all U.S. new vehicle retail sales.3 Autobytel’s leadership team feels that its partnership with IHS helps the company maintain its market leadership position.“On our earnings call, our President and CEO Jeff Coats spoke about how the IHS unique data sethelps drive our success by giving us key metrics to assist in developing our plans going forward,” said Steerman.

For many dealers, the investment in working with Autobytel delivers a positive ROI starting with their first sale. With an estimated close rate of 18 percent, for internally generated leads, Autobytel’s leads close at three times the rate of the estimated industry average and, that is a point of company pride and market leadership cited by Jeff Coats in Autobytel’s latest earnings call: “Our lead quality and close rate is superior to anyone else in the market.”

“Everyone in this industry is data-driven, and now we are able to work with our clients to provide insights they otherwise wouldn’t have. So, it’s a great story for us as we have earnings calls and follow-up calls with individual investors and analysts that follow our stock because they see this capability as a real differentiator for us,” said Steerman.

Over time, Autobytel’s strategic goals have evolved significantly.“What started as a way to gauge the quality of our leads has essentially turned into a key metric contributing to how we run our business,” Shugg concluded.“IHS has become part of our DNA.We know we can count on IHS to support our objectives as we continue to evolve.”


1 Autobytel United States Securities and Exchange Commission Form 8-K Feb 26, 2015 - http://investor.autobytel.com/secfiling.cfm?filingID=1415889-15-724&CIK=1023364
2 Autobytel earnings call, February 15, 2015: http://investor.autobytel.com/releasedetail.cfm?ReleaseID=898723
3 Sales number from IHS Automotive/Autobytel Collaborative Study based on consumers that submitted a lead through the Autobytel network. IHS Automotive is part of IHS Inc. IHS acquired R.L. Polk in 2013

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