Before You Cancel Your Third Party Lead Provider
Some of the most asked questions for me are what should I do about my third party lead source providers? Who is the best, who has the cheapest leads? I find from our clients coast to coast the same thing… Dealers are so quick to cancel a 3rd party provider. They will shut them down for all of the wrong reasons. If the closing ratio is off or if they aren’t making enough gross or they didn’t meet their quota. You are probably saying “Yes! That is exactly why I would cancel a 3rd party provider”.
That folks is exactly the problem. Most dealers don’t realize that they are thinking the wrong way. That is a decision based on emotion not science or fact, or even logic for that matter. But, in all fairness to the Dealer Principals and General Managers out there you don’t know how else to make that type of decision. The manufacturer doesn’t give you guild lines; most dealers out there don’t exactly have this down to an art form yet. And the dealers are skeptical of what the 3rd party providers are saying, because they feel that they are being told whatever to pacify them so they keep buying leads. So, in this article I am going to break it down for you.
Even though you are reading this article in Carsdirect’s newsletter it isn’t biased information. I write for several national publications, some are lead source providers, some are website companies and others are general automotive resource centers. Beyond that I was on the front lines as an Internet and BDC director for over five years and have been the CEO of an International automotive training and consulting agency for two years focused on Internet sales and automotive business development. Furthermore, I am the CEO of a Special Finance lead generating service. I have been generating leads for over six years.
Bottom line is this; I am giving you information based on multiple levels of experience, as a dealer, as consultant and trainer as well as a lead source provider.
Granted my AutoCreditApproved.com site wasn’t a national lead source provider. It was geo-targeted to specific locations… but we generated leads like the big boys did.
The very first thing is to realize what a lead is. A lead is simply an opportunity to do business, nothing more and nothing less. Dealers drive themselves crazy trying to grind for a dollar a lead or are worried about if the dealer next door has the same lead. Granted some leads are higher quality than others.
Carsdirect.com has been an industry leader since the beginning and their leads are of higher quality than some of the lesser known companies but why do dealers mistakenly cancel? Why is it that a Ford dealer maybe 50 miles away from another Ford dealership, both on the same lead program not be doing as well? Why is it that you have lead source providers in the business for 10 years… some of their clients are literally making millions of dollars a year and others don’t? Why is that? They are on the same program; they are receiving the SAME lead quality. It goes to show you it is not just about getting a lead. Buying a lead for $20-$25 dollars does not guarantee you will sell an automobile and make $2,000 profit. Sorry, they do not make magic leads.
Again, a lead is an opportunity to do business and in all sales this is also a numbers game. If you purchase 100 leads… you will close a certain amount. Let’s say a modest 10%. That means you will have delivered 10 units. That still means that you will not sell 90 other people that month? Is that ok? If you just made $20,000 of an investment of about $2,000 in 30 days?
But how do you do it? Well there are several things you need to be aware of:
- You need to understand your 3rd party provider’s business model and their site.
- Have an ILM/CRM tool.
- Your ILM/CRM has to be set-up properly.
- Training.
- Have a Standard Operating Procedure for everything.
- The right people in place
- You must utilize all of the reporting capabilities from your 3rd party provider as well as from your ILM/CRM tool
Understanding your 3rd party provider is imperative to your success online. How can you engage a prospect if you have no idea what they know or where they have been? Especially since there are so many different sites out there and they all have different purposes and strategies. For example Carsdirect.com makes a dealer’s life very easy when it comes to price… On their website there is the Carsdirect.com price. The customer asks if you can give him a / the price. Respond “Sure, the Carsdirect.com price is…” Done- I can’t tell you how many dealerships I go to train and they have NO idea about their LSP’s…
You need an ILM/CRM tool. No questions here. If you don’t have one yet, I am guessing that you are still probably using Beta instead of DVD too. There is a ton of reasons for an ILM/CRM but the most important one is because the averaging buying cycle is over 60 days for an Internet customer. Think about that… That means there is also a residual flow factor. For example you generate about 400 leads between the OEM, your 3rd party providers and your dealership website. You close 10% this month. What happens to next month? Where did the other 360 leads go? Most of those leads are still viable opportunities. The following month you generate another 400 leads plus your left over 340 leads for a total of 740 leads. That is a lot of leads to follow-up, not very realistic to adhere to proper follow-up protocol with out an ILM/CRM.
This is why training is so important. Your staff needs to be trained on what to do, when to do it, how to do it and most important WHY they are doing it or having even the best ILM/CRM tool will not be of any service to you.
You need to have a standard operating procedure in place for everything… how to respond to the leads, follow-up cycle, how long, what you are going to say. The phone engagement process, the showroom process, and post-sale process etc…
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