PriceGrabber Autos - For Serious Car Buyers Only
December 14, 2005 Update: Read my latest coverage of Experian’s acquisition of PriceGrabber.
Ok, I’m impressed with PriceGrabber Autos because it’s not just another lead gen system. As opposed to collecting an email address and sending it to 10 dealers, PriceGrabber qualifies the lead by forcing potential buyers to jump through a number of hoops. Because of this, the consumer gets motivated dealers bidding for business and the dealer gets a buyer, not just a lead.
While the simpler lead gen services might not always send the highest quality traffic to dealerships, they do get a referral fee from a ton of dealers. This means that these lead gen companies can afford to spend a lot of money on the PPC engines to acquire traffic. If PriceGrabber only gets a referral fee from a couple dealers and fewer leads are making it through the pipeline, theoretically, they will not be able to spend as much money to push the service. Eventually, because PriceGrabber’s referrals are much higher quality, they will get paid more per lead, but I think that means the system might bleed money for the forseeable future as dealers are not going to pay more for an unproven service.
I met with Darren Davis, Business Director for Autos, at PriceGrabber a couple weeks ago. Talking with Darren was a blast as he has some great stories from the early days of the internet boom, having worked at Autobytel (8th employee) from ‘95 - ‘98 and Goto.com from ‘98 - ‘03…
A little introduction…
“What [our Autos section] does well is get customers 3 or more quotes from dealers they prescribe – they tell us who to invite and who not to invite. These quotes are every bit as competitive as if you walked into a dealership because the dealers know that other dealers are providing quotes. Also, the dealers want to work with the sites that do more to pre-qualify the buyers.”
“PriceGrabber’s Auto section is the most customer focused, dealer friendly car site. We scrub our customers more than anyone else out there. We actually make it hard to get your request while others have tried to increase volume. We have no problem showing a big, ugly stop sign as a warning. Because of this, dealers know that when they get a PriceGrabber request, that person is going to buy, it’s just a question of whether that person is going to buy from you. There are a lot of garbage providers out there. We are the exact opposite. We’d rather send a dealer 1 request a month from someone who is going to buy a car vs. 10 requests from people who won’t buy.”
“[After customizing a car], the customer has to answer a couple simple questions. First, the customer has to specify exactly which dealer he wants to compete for his business. You can refine the choices by distance [and specify that you only want to see dealers within a 50 mile radius] or you may have already talked to a couple dealers [and want to skip them]. In this way, the customer has complete control. Next, we verify the customer’s contact phone number. The user gets an automated call with an authorized code. [Darren demonstrated this on the spot.] You also have to create a user name and password as your quotes appear through PriceGrabber.com.”
“Privacy is huge. We don’t give your information to anyone who doesn’t deserve it. None of the dealers get your contact information except the lowest priced ones or if you choose to be introduced to a dealer. Also, we keep the dealer’s identity private so if they’re not the lowest priced, they don’t have to worry they might lose business.”
“At this point, what we need to do is improve what the stop signs mean to the customers; it’s about education and commitment.”
“[PriceGrabber’s system] is different for the dealers in the sense that it’s much more performance based than what is currently out there. As opposed to the pure play lead generation (lead gen) guys, we don’t bill any of the dealers unless they get introduced to a lead. “[As for payment], it’s more than the bottom end of the lead gen guy, but it fits in with the rest of the industry towards the high end even though it’s more of a purchase request rather than a lead. Even though the economics are the same the quality is much better.”
How can you compete with the established players in the market?
“Dealers are going to acquire business through a number of channels; they want to keep diversified channels of traffic coming in. The biggest single challenge is that people don’t think of Autos as something that shopping comparison engine would have. We are the diamond in the ruff. We have a model that works as well or better than anything else, but because people don’t think of vertical search as the way to shop, they are not going to immediately flock to us.”
How do you market?
“I think we’ll have success in marketing to our community. PriceGrabber users trust that we bring them value. We’ve had great success in PR; when people read about [Autos] , it’s easily digestible. Dealers are competing for your business. Dealers have to do their best for you, and there’s no obligation. It’s a lot like IAC’s LendingTree…”When banks compete, you win.” Getting eyeballs is difficult, but if you develop a great product – if you build it - they will come. We’ll do PPC, SEO, and paid inclusion. At this point we don’t have an affiliate program.”
“The thing is that I don’t need your business right now. I want you to know about my service and come back when you’re ready. I know that with a product like this, we’ll see longer term returns.”
Read more PriceGrabber posts:
PriceGrabber Suitors - November 30, 2005
PriceGrabber - Interview with Kamran Pourzanjani - November 29, 2005
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