Keeping a Close Eye on Leads Will Pay Dividends; Audit Your Services
By Peter Perotta
Most Dealers Sign Up With Internet Lead Providers and Leave It With That
When considering your dealership's Web presence, it is obvious by now that simply having a Web site is not good enough. You need to have an effective Web site that draws traffic and leads to closed Internet sales.
The same can be said for the third party lead generating services most Internet car-selling dealers are subscribing to these days. It simply isn't enough to just sign up with a handful of the top lead generators and then figure that everything else is going to take care of itself and the money is going to start rolling in.
Taking this approach might mean that your money starts rolling the other way...out the door never to be seen again.
Remember this: They're your cars and it's your territory, not AutoByTel's. You must protect them both.
What I'm driving at here is this: You must pay attention to your lead generating services. Paying attention means actively auditing and keeping a close eye on them.
Well, what do I look for, you might ask?
Doug Waikem, a successful Internet car seller and owner of the Waikem Auto Group in Ohio, says he likes to adhere to the "10 to 25" rule. "I like to buy leads for less than $25 and maintain a 10% closing ratio," he says.
Generally, these services charge dealers a monthly subscription fee that is based on the size of the territory they will be getting leads from, usually divided up by zip codes. However, Autoweb uses a different model and charges dealers per lead sent.
Autoweb needs to be watched more carefully than others, Waikem says, due to the fact that you will be paying per lead. The trick here is to make sure they are sending you good leads with good phone numbers and e-mail addresses and not some chicanery from a 13-year-old who is trying to buy a Corvette.
So decide what services you think you might want to sign up with, talk with other dealers and start making your calls. But here is a little pre-sign up test you can put the lead service through before you sign on the dotted line.
According to Waikem, it isn't inappropriate to ask the lead generating service for a printout of the leads you would have received from their service for the past three months had you been a customer. You can also ask for leads from the past year. The services should provide you with this information, by zip code, if you ask. The trouble is, most dealers don't ask.
"Negotiate with these guys," Waikem says. "Ask them how many leads would I have gotten. They can give you that information."
Once you are signed up with a service, it is your job as a dealer to audit those services. The best way to do the audit, according to Waikem, is manually. Print out the leads you get. Put them in books. Sort them by zip code.
Once you have that information booked, the next thing you want to do is look at your closing ratios for those leads. That will tell you if you are getting quality leads.
However, there is a more important number Waikem likes to hunt for. That number is cost per vehicle sold. That is the real tell-tale sign, he says.
Waikem is no small player in this game. His group includes 13 car dealerships in Ohio and he is absolutely gung-ho about selling cars on the Web.
Several months ago, he conducted a self-audit of the lead generating services he subscribes to. He was hunting for that cost per-vehicle-sold number. His results were that AutoByTel and AutoVantage were costing him about $170 per vehicle sold, by far the best numbers.
Following his top two came MSN CarPoint at $440 per vehicle sold and AutoWeb at $460 per car sold, and bringing up the rear was CarSmart with a whopping $600 plus per vehicle sold.
"CarSmart was off the board. I dropped them immediately," Waikem says.
Interesting enough, Waikem noted that CarSmart is also one of the only lead providers that won't provide you with a list of leads you would have received prior to signing up.
Another auditing technique Waikem warns about is lead generators sending your leads to other dealers they are trying to woo after they have already signed you up.
"It is not beyond them to start sending your leads to other dealers," Waikem says.
This tactic is employed at times, Waikem says, when the services are in the "honeymoon" stage with a particular dealer. "You have to know when your lead providers are making mistakes."
One method Waikem has devised is to track his leads by zip codes. He actually has a bulletin board in his dealerships that has a red pin dot on each lead on the map by zip code. "Make the lead generators accountable. Track your zip codes like we do."
The goal of some of the services, and many dealers testify to this, is to shrink your territory and raise your rates. "You have to convince them not to shrink your territory, and one of the ways to do that is by keeping track of your closing ratios by zip code," Waikem says.
For dealers who are using AutoWeb, the service that charges per lead and not by territory, Waikem recommends keeping a close eye on the quality of the leads. "Some leads they give you are not good. AutoWeb will routinely take 10% off the top if you can show them you got bad leads," he says.
These are just a few of the things dealers can do to save money and increase the effectiveness of their Internet selling department. While you may not have the time and resources to do all these things, start by simply paying closer attention.
Peter Perotta is the editor of Auto Retailing on the Web and Fixed Coverage for WD&S Publishing, Metuchen, N.J. WD&S is a provider of information services for the automotive retail industry. pperrotta@dealeronline.com
