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What’s your COI—or ‘cost of ignoring’?

The CMO Council is out with a new report today on the use of social media marketing in the auto industry.

As might be expected, they find that social is broadly used for building engagement, brand awareness, customer loyalty and the like. But it is not yet much used for actual sales, as it is still difficult to identify where prospects and customers are in the sales cycle and a number of auto makers fear missteps if they push product where customers are not looking to be sold.

But they are all deeply involved in engaging customers and enthusiasts online. Youtube and Facebook are the most widely used channels, with Twitter also significant, particularly for branding and redirecting for further information. Cadillac has found value in Instagram, and Kia has an entire site and awards program, KiaKey, that provides incentives for customers to post about their Kia experience online. AutoNation, the country’s largest auto retailer with 266 dealerships, reports having a number of processes and programs for generating customer reviews and seeing that they are posted online. Ford has a successful program inspiring the submission of home-video testimonials for its products.

As Eric Marx, Director of Interactive and Social Media for Nissan USA says, “ROI is still a bit unclear, but I believe there’s significant COI, or cost of ignoring. At Nissan we have well over one million people who have engaged with us across major social channels and said this is how they want to engage with brands now. If you’re not at least swimming in the shallow end of the social pool, I would say you are well behind where you should be.”

Besides some disagreement on the wisdom of using direct sales tools as they emerge for social media, a number of clear trends were found:

  • Consumers tend to seek out information and advice for such a large and, often, emotionally-charged purchase, thus making the market naturally suited for social media.
  • Community influences on social media are strong, and so there is a lot of value and potential in brand management—including engaging with and satisfying the initially dissatisfied. Also, social media monitoring is widely used for tracking brand perceptions.
  • Social media is growing in importance as part of a broader brand and marketing campaign strategy.
  • Although auto sales are often emotionally charged, it is the cars themselves, not softer human interest stories, that generate the most interest and response online.
  • With new sales generated from a customer only every three to five years, there is much need and opportunity to generate loyalty, service sales, and engagement in the period in-between, rather than to simply target and satisfy customers when a new sale approaches.
  • Tools predicting customer behavior and long-term customer value are rapidly improving and becoming available, but like tools enabling auto makers to identify where customers are in the sales cycle, they are not yet mature enough to be a major factor in the segment.
  • Still, bit by bit, the auto makers are becoming more proactive, such as to reach out via social media and provide direct competitor comparisons when it is clear that a prospect is in that stage of the purchase cycle. And, some manufacturers expect the real value to come when individualized sales outreach can reasonably be supported.

Undoubtedly, the marketing officers who are wary of the direct social media sales push are right to be cautious of that angle, particularly with the currently limited sophistication of online sales qualification. Reputation management is critical in this, as in many product sectors—although the blatant promotion of customer testimonials is likely to diminish the positive value to be gained over time.

Costco Automotive, which provides something of a pre-negotiated purchasing service for its members,  encourages its customers to call for information even when they are at the dealership, and Joey Hershel, the SVP of Marketing and Creative Services, envisions value in being able to provide the content of those queries and responses online as a resource for their other members.

This touches on the dynamic of customers using online, in-dealership research on their smartphones to change or disrupt the in-person car sales process. Notably, none of the automobile marketing officers raised this issue, which is a rising trend in other retail sectors. This study, sponsored by a social media marketing company for the auto sector, unfortunately did not address some of these more interesting and potentially challenging dynamics. Only housing (and now possibly healthcare) tends to be a larger consumer purchase than an automobile, and so manufacturers, dealers and consumers have a significant incentive to use technology that might give them an edge in the sales process.

With the increased use of mobile location data to track customers and extend localized offers, one can imagine a car shopper being deluged with coupons from competing dealerships as he or she crosses the threshold into the showroom of another dealer. Or, a prospective buyer might manage an online auction between comparable dealers while there on site. At the very least, a buyer-and-seller pas de deux seems inevitable.

Frequency, size, differentiation, and type of sale are among the factors for an enterprise to consider in crafting their social media strategy. Competitor practices and customer expectations factor in as well. Auto makers are already sophisticated in brand management, and surely some of their experience in social marketing and sales will prove instructive as well.

While data and metrics are still far better for marketing than for sales, both are improving rapidly. But with the current amount of auto marketing online, is it any surprise that up to half of all marketing department hires this year are predicted to be technical?