Traveling Down the Online Auto Buying Funnel

It is inevitable that auto buying will be increasingly conducted online. How well can your credit union help members make their next vehicle purchases?


The motto for online auto shopping could very well be "Here Today, Here Tomorrow." If there is one thing that analysts and writers agree on when it comes to shopping for cars online, it is that the online car shopping experience is a force to be reckoned with and is only going to get better. A lot better. It's inevitable.

Or is it?

To be sure, car shopping has evolved. More and more consumers now use the Internet to make smarter purchasing decisions. Smart sellers use it to better meet customer needs. And value chain providers, from vehicle history services to insurance companies, employ the Web to make the buyer-seller trip more enjoyable, every step of the way.

Understanding the evolution of online car shopping-both the technology and the behavior-can enable your credit union to offer a more meaningful member service experience, not to mention generate more car loans.

Back in the Day
Online shopping is a new phenomenon, of course, with the briefest of track records. Prior to the Web, we did our research the old fashioned way: we read car magazines and books, talked to our friends and neighbors, visited show rooms, kicked tires.

But by now the trend is obvious. In 1999, 40% of new car shoppers used the Internet while only 26% of used car shoppers used it (with 2.7% of shoppers actually making their purchase over the Internet). By 2000, 54% of new car shoppers and 30% of used car shoppers used the Web. Two years later, the numbers jumped again, with 60% of new car and 47% of used car shoppers doing their research online.

Clearly, online shopping is here to stay.

Are We There Yet?
Unfortunately, it's just as clear that all car shopping online experiences are not equal. In fact, some are downright poor.

The Wall Street Journal's "Cranky Consumer" column by Eileen P. Gunn recently evaluated five leading online car shopping services and found disparities in service and usage. That said, the Gunn still recognizes the power of the Web to generate car sales and even cites a dealer who claims ൜% to 25% of his dealership's sales" are the direct result of customers seeking a quote online.

If online car shopping is here to stay, why can't we get it right?

I think we can and we will. But what's missing today from many sites is an appreciation of what I call the Online Auto Buying Funnel. This "funnel" addresses three online shopping stages: Awareness, Consideration and Purchase.

What, Why, Where
The technological contribution to the Awareness phase first occurred circa 1998 with the online introduction of basic vehicle specs and photos in a static format. Awareness in the behavioral half of the funnel is best represented by the simple question: "What are my choices?"

Around 2000, technology and data providers introduced the Consideration stage, empowering shoppers with more tools, such as side-by-side comparisons, vehicle configurations, advanced searching capability and richer content. These tools helped shoppers to answer their second critical purchasing question: "Why this vehicle?"

And by 2002, technology was able to take the shopper even further down the funnel, by offering dealer locator and vehicle locator tools. From the sales half of the funnel, this answered the key "action" question: "Where can I find it?"

Today, the most successful sites offer a dynamic consumer-centric sales process that enables the shopper to remain in control of his or her purchasing decision. To a credit union, this means providing all of the tools necessary for members to do their research.

Driving through the Funnel
Why does it help to view online car shopping as a funnel? The answer lies in how well your credit union helps its own members make their next vehicle purchase. Here are several ways to ensure your members enter the funnel and exit with a loan:

Stage 1 - Awareness

  • Place your credit union at the beginning of each member's research phase
  • Provide members with the service they need to make an informed decision
  • Market this valuable service to them
  • Educate them on using the Web to their advantage

Stage 2 - Consideration

  • Make sure they trust the information you're providing
  • Give them tools to leverage the information
  • Let them fully research and compare vehicles
  • Offer one-stop shopping

Stage 3 - Purchase

  • Offer real inventory from your local dealers
  • Provide online financing options
  • Make it easy, make it fast

You Can't Go Home Again
Yes, shoppers will still want to kick tires, touch upholstery, take it for a spin. But there's no going back. Internet classifieds will ultimately outnumber print classifieds, if they don't already. Technology will appear more and more seamless. Accurate, complete vehicle content will be expected and, therefore, required. In short, your members will be doing more and more of their shopping online. That's the inevitable part. The profitable part is up to you.

Chrome Systems, Inc. pioneered the technology behind electronic vehicle configuration close to 20 years ago and continues to lead the industry. Today, Chrome's complete and accurate vehicle descriptions and prices facilitate online loan origination and enable lenders to better understand the true value of their collateral.



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Sept. 12, 2005


  • Great job summarizing how the internet plays a unique role in each step of the auto purchasing cycle. Well done!