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The question posed by Mark King of Owensboro, KY is significant and most likely to be of interest to other ADM Community members, so I decided to turn the dialog between Mark and I into a fourm discussion.  My responses to Mark are my own professional opinions, they are not facts... So, I would like other ADMers to provide their own opinions in response to Mark's question, copied and pasted below:

Mark King said… So on with the discussion, during business hours., what should be an expected response time? Let's face the music, if we don't have a measured and stated goal, that means to car sales persons that it's not important. A clear process is more important than response time, the combination of both are the key!

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Ralph Paglia's Response to Mark KingMark, you may as well be asking "how many angels can dance on the head of a pin", but if you are not Catholic you may not know what I am referring to... OK, you want to get real? Here it is, NO LENGTH OF TIME beyond an immediate and high quality response to a customer's inquiry is better than a span of time that is any amount less... Think of "Live Chat" and you get the picture.



Now, if you want to set minimum lead response time performance standards and benchmarks for managing Internet Sales Specialists or BDC reps responding to Internet Leads, I recommend that you establish 5 levels of performance, which I have listed and defined as follows:
 
1. Unacceptable Performance; Immediate Intervention Action / Shut Off from Leads
2. Acceptable; Must Improve to Good Level by Next Month / Not Eligible for Bonuses-Spiffs
3. Good; Requires Mandatory Meeting Attendance/Online Training / Eligible for Bonuses-Spiffs
4. Superior; 1 Mandatory Meeting Waiver / Online Training Required / Bonuses-Spiffs @ +10% 
5. Excellent; Mandatory Meetings and Online Training "Optional" / Bonuses-Spiffs @ +20% 

If you want to implement an objective performance benchmark based management system such as the one listed above, then you had better start measuring BEFORE you determine what those benchmarks are going to be, or the metrics based rules you implement will be pure unadulterated BULLSHIT, and will not be credible... Which means the stated consequences will not be enforced and your plans to implement an objective and dynamic metrics based performance incentives program will simply fail.  Let me paraphrase what I believe to be a better question to ask...

"How do you set lead response time and quality performance benchmarks after you get the dealership or group's historical lead response time performance data?" 

Great question, glad you asked... Here are a few guidelines:

1. The data you use to establish a dealership's initial lead response time performance and quality benchmarks should be sourced from the same system (CRM, Lead Management Tool, OEM reports, etc.) that will be used going forward to measure, monitor, evaluate, plan and coach the people tasked with handling Internet leads and responding to them.

2. Use AT LEAST 3 months of data to determine historical performance levels, if you have more, up to the previous 12 months would be preferred. Resist temptation to use last month by itself, or to cherry pick a particularly good month from last year. The key is to have the best measurement of where your team is at today, based on enough data generated over a long enough recent time period to qualify it as being indisputable.  You want the historical data that shows how your team performed while getting to where they are today over the past 12 months, but at least 3...

3. Generate and export to Excel the Average Lead Lead Response Time for all leads that were assigned to THE PEOPLE WHO THE BENCHMARKS WILL BE APPLIED TO... Do not include leads routed to the floor because they came from previous customers, Service and Parts, or Commercial/Fleet if you are setting benchmarks for an Internet Sales Team that has not been handling those leads. 

4. Generate and export to Excel an individual report showing (same as #3) Average Lead Response Time performance metrics for each individual user who handled at least 100 leads in same time period (3-12 months).  I recommend >100 leads as a statistical qualifier.

5. The Average Lead Response Time for the individual performance measured (subject to qualifiers in 1-4) that is the longest amount of time, or the slowest (biggest) average response time to Internet leads now becomes the Performance Level Benchmark for "Unacceptable Performance".  This benchmark is a level that triggers disciplinary action when an Internet Sales Specialist drops to this level or falls below it for either a month or the most recent 100 leads.  The "Unacceptable Performance" benchmark is the level which results in an Internet Sales Specialist being suspended from receiving new leads by being pulled from lead routing rotation until corrective action is taken.  An individual performing at or below this level is no longer qualified to serve as an Internet Sales Specialist/Manager.

6.  The Average Lead Response Time for the individual performance measured (subject to qualifiers 1-4) that is the shortest amount of time, or the fastest (lowest) average response time to Internet leads becomes the initial Performance Level Benchmark for "Excellent Performance".  Performing above this benchmark qualifies an ISS or ISM to receive a bundle of rewards and preferred status in lead routing rotation, mandatory meetings and whatever is determined by management to reward and encourage this level of performance.  An individual performing at or better than this level is qualified to lead and train others to become an Internet Sales Specialist/Manager. This benchmark should be periodically reviewed and adjusted when metrics used for initial benchmark indicate higher performance has normalized.

7. The Average Lead Response Time for the aggregated total of individuals who are the top third (33%) in performance measured (subject to qualifiers) for shortest amount of time, or the fastest (lowest) average response time to Internet leads becomes the initial Performance Level Benchmark for "Superior Performance" Individuals that perform at or above this level, but below "Excellent" are in the "Superior Performance" lead response category.

8. The Average Lead Response Time for the entire team, after removing the bottom third (33%) of individual performance measured (subject to qualifiers 1-4).  Removing the bottom third who have the longest average response time, the slowest (biggest) average response time to Internet leads is used to establish the initial Benchmark for "Good Performance".  Individuals that perform at or above this level, but below "Superior" are rated as being at the "Good Performance" level of lead response performance.

9. Performance levels above "Unacceptable" and below "Good" benchmark levels are "Acceptable"... The "Acceptable" rating and range of performance benchmark should be used to indicate a need for performance improvement.  The "Acceptable" benchmark becomes unacceptable when an individual performs at this level without improvement or a plan to improve.

QUALIFIERS ARE CRITICAL TO SUCCESS
Establishing a set of performance benchmarks to use in determining levels that result in either rewards, improvement coaching of disciplinary action can be very counter productive if the minimum standards for what constitutes an acceptable quality level of that response are not implemented and monitored.

Responding to leads quickly, but not providing the customer with all the information requested, and following the established dealership process defining what is included in an Internet Sales Specialist's email sent in response to that lead, DISQUALIFIES THAT LEAD RESPONSE FROM "STOPPING THE CLOCK" WHEN DETERMINING AVERAGE LEAD RESPONSE TIME. 

This can be done, I have personally been successful by spot checking the responses that have been sent and defining EXACTLY what must be included, as a minimum level of content in each ISS/ISM first response to every lead, by category of lead based on source, form completed and what the customer's expectations are as indicated the web page they used to submit that lead.

Ford has established a set of standards for a "First Response Quality" that is based on the performance metrics and attributes that measurement proves are what determines whether or not a sale is made... These lead response QUALITY attributes have been simplified and boiled down to the five most important criteria, and executing at least the items numbered 3, 4 and 5 on the list below should be considered as a qualifier for each initial lead response to "Stop the Clock" when measuring average response time:


Another approach is to use a point system for qualifying "First Response" to Internet leads, which can be applied to a dealership as a whole, and individual ISM's lead responses, or each individual response to a lead. Here is an example of a point system:


Based on the following categories and point system, check the boxes that correspond to initial Lead Management Process as is actually being performed.  Then, tally up the total score and enter that score into the box provided at the bottom of the section.


Average Personalized Email Response Time to New Leads:

6 Hours or Greater……        0 Points

Under 6 Hours………....        1 Points

Under 3 Hours…………        2 Points

Under 1 Hour…………...       5 Points


Add the indicated points if the dealer, ISS, ISM or BDC Rep provides the following information in their initial personalized Email Response:

Confirm Availability (Specific Vehicle)…...............   1 Point

MSRP (Reference Price)………….…...........……….   1 Point

Selling Price……………….....……..................……...   1 Point

Price “Good Until” Date…….....….………..………..   1 Point

Hyperlinks to dealer web site features…..............   1 Point


Provide info on at least 3 additional vehicles as alternatives in addition to the information (price quote) for vehicle customer inquired about in their Lead....................................... 15 Points



Dealership reviews each Lead, details and comments submitted by customers, then answers specific customer questions in the initial email response……..............  5 Points

Dealership’s Autoresponse and the first personalized email advises customers why direct contact (phone) is a benefit, and that phone contact will be attempted........................  5 Points


Call each customer (look up number) after sending email, with the call made on SAME DAY lead received.......... 15 Points

ALTERNATIVE TO SAME DAY; call made to customer on next day after lead received and email sent..................    5 Points

Total Lead Management Process Points (50 Maximum)       

Tags: How To, Internet Lead, Internet Lead Response, Internet Sales Manager, Lead Management, Lead Response, Lead Response Time, Monitor Process Performance, Optimize Performance, Performance Benchmarks, More…Set Benchmarks

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Replies to This ADM Discussion

Hi Mark -- and other ADM friends who share his basic question about response time and clearly stated goals to process a "lead",

As usual, Ralph left little room for me to improve in terms of providing processes to manage, monitor and motivate a sales staff. Of course you need to provide them with a stated goal and process so they know what is expected of them. To accomplish that just do what Ralph suggested; establish realistic expectations and then inspect what you expect with performance based compensation packages and regular support.

That said, I may have something to add that is perhaps less tangible as far as day to day processes to improve performance of your existing staff, however, the long term potential may be even more profound. Simply put, it is often not "what" people do but "why!" Managing and motivating people who don't share your passion for perfection or take personal pride in their performance puts the pressure on the manager vs. the sales person. The secret is in building the foundation of your selling systems and sales team during the hiring process to choose people who share your reasons for wanting to do better for themselves and their family and then for you and your/their team. Work ethic may be hard to find in the next generation of salespeople -- but the search for the right personality to train and support will provide a better R.O.I. than the most experienced car salesperson who has been recycled from dealership to dealership while fighting the systems in each one.

Invest in supporting your sales team with properly designed compensation packages and processes -- such as offered by Ralph -- but also focus on your HR, employee handbook and hiring/training processes to insure that you are building on a sound foundation of self motivated people who know why they need to do what you hired them to do without taking short cuts. It may take some time to grow your own self motivated team to replace the old car guys/gals that still need to be pushed into doing their jobs but the savings in management time to look forward instead of backwards to keep sales people on track will be worth it.

There are online services that focus on hiring personalities vs. people -- like http://HireTheWinners.Com -- but the solution -- as always -- lies in the people as much as the processes so invest in both and everyone will earn and learn from your investment in people who share your goal vs. merely accepting it.

After all, what are friends for!
Ralph,
As you know... Lead Management is very near and dear to my heart. Do you have any ppts that detail closing ratios based on specific response times as well as based on lead providers (third party/website/etc).

There is SO much great material on this site now, it actually is more difficult to hunt down exactly what I'm looking for.

Thanks,
Joe
Joe - some of the best data on both lead response time AND most effective response attributes comes from the OEM's who track these metrics through RDR match-backs. The challenge is that no car company wants it's data released in a way that another brand may benefit from. Let me make an attempt to aggregate the data points in a way that will make it less brand specific and more generic... But, I can assure you that it is no accident that the car companies that do the best job of tracking these two areas are also the brands that have gained market share in the past 24 months!

I can also state that the data PROVES beyond any reasonable doubt that a faster lead response without an improvement in content quality and phone contact rates, does NOT improve sales results when compared to the same lead response within the same 2 hour window. However, if the quality of response is improved, and the time to deliver is delayed by an hour, then the increased sales rate is significant.

All the data shows that if Lead Response Attributes are equal, faster response time is better... But, lead response attributes have far more impact on close rates than lead response times within any 2 hour window.
Ralph always has great stuff. But so many just focus on 1st response, 72 hour customer and forget about the percentage that is as large or larger. Another key part overlooked is the follow up on the consumer that just started in there process or was unsold in any particular month. That person could be rotating into the market 4 to 8 weeks out. This is the biggest missed process by Dealers. I think setting a standard and process for long term potential customers is critical to seeing numbers spike. My recommendation is strong contact like Ralph suggests everyday for the 1st week, twice the second week, once the 3rd week, then twice a month until they buy or die with monthly specials and any quarterly or semi annual newsletter that goes out to sold and unsold customers. We tell our Dealers to send an email out letting there customers know up front what to expect every 30 days. We are not going to call or email just to email, just keep you informed until you are ready. Just staying in front of the customer like this will increase a be-back 20 to 30%. This formula worked for me personally in stores since 1999 when I finally got into CRM tools that could take on the automated role that was necessary and not overload the expectations that I was putting on staff and BDC's. The customers hate a phone call that has no substance that starts with "How you Doin?"
I completely agree... Once you get your initial response processes sorted out, then follow-up is what makes the next improvement in sales results a reality... However, mid-term and long term follow-up won't do any good if your prompt and appropriate response to the customer's initial inquiry is not happening...

With that said, I do have some experience around going into dealership's that had hundreds of unopened new leads that had accumulated over the past year. Using broadcast emails and lots of apologies combined with giving away cars at no gross, we were able to resurrect a few deals from these dead leads, but I would not recommend that experience to anyone!
In regards to follow-up and lead response times, this chart shows the results from a very comprehensive study from a company that used to be owned by a friend of mine, Yuri Pikover...

Ralph,

Your response to Mark went directly to the heart of the matter when you wrote, "NO LENGTH OF TIME beyond an immediate and high quality response to a customer's inquiry is better than a span of time that is any amount less."

Sending out a price quote has been shown in multiple studies to increase sales. For instance: 60% of car buyers said if they received a competitive price quote from a Dealership they would stop shopping elsewhere. (Kurt Baumberger, Adapt or Die 2010). A major OEM study showed that the sending of a price quote was directly correlated with increased sales. And speed matters too: CapGemini showed that a response in 20 minutes doubled conversion rates.

Best practice is to send the car buyer a multi-vehicle price quote within 10 minutes followed by a phone call.
Catherine, do you have a copy of any of these studies? Or know where to find them?
OK... This stuff has been available for years! But each OEM makes you sign NDA's up the ass not to spread the data... So here are some charts that have been stripped of all OEM brand recognizable ID that show the facts... For crying out loud, these charts have been marched out in front of thousands of dealers by several car companies. I find it hard to believe that anybody has the balls to ask for it...

Joe, I want a 10% commission on any money you make off of these, just because YOU SHOULD HAVE HAD THIS STUFF ALREADY!!! Especially the Lead Response Attributes Correlation to Sales Close Rate Stuff...

How can you be a Internet Lead Process Consultant without this stuff and the reams of data that go with it?

How else would you know which lead response tasks are the most critical in achieving higher sales close ratios?

The amazing part is every year the data from thousands and thousands of leads and the sales they produced show basically the same correlation factors between what a dealer does and who sells what cars to which leads... Like I have stated many times here in ADM... THERE IS NO MYSTERY WHATSOVER AS TO WHAT LEAD RESPONSE ACTIVITIES PRODUCE HIGHER SALES CLOSE RATIOS... The only mystery is how to implement and execute processes that consistently result in their execution, every time...

By the way, EVERYONE fought me when I went to work for Courtesy Chevrolet on executing these lead response attributes... Anyone who would not, got shut off from getting leads. Within 6 months we went from 75 Internet Sales a month to over 250. So, even if the data did not PROVE this is what you gotta do, I could give a rat's ass... I know this is what works from working in the trenches... And so do the 30 people that worked with me during the same time period.

But, with all that stated, there are subtle nuances to the nature of the dealerships that use certain lead response attributes which correlate to higher sales rates which amplify the differentials shown in the data when studying millions of leads, hundreds of thousands of sales from few thousand dealers... THAT INSIGHT IS WHAT I WILL NOT GIVE UP FOR FREE!

You can click on any of these charts to view the full size image in all its PNG glory...

Also... Anyone who knows their brands and studies the metrics that car companies provide to their dealers should be able to spot the two major OEM brands that this data is from. But, if you do figure it out... KEEP YOUR MOUTH SHUT! I cannot handle any more cease and desist letters from attorneys because of stuff posted on ADM that certain people want to keep hidden away.
Thank you for this. Actually, all of the data I collect is specifically from my own dealers and dealer clients - not that I share that info with anyone either :^)

I've seen some amazing studies from my friends at CRM companies, but they are reluctant to share their clients' data as well.

These studies validate everything I've been preaching and teaching for several years so thank you again. And you did a great job branding it with your own name so I have a constant reminder who to reward for any extra business that comes from this.

Everyone else, keep the studies coming.
Yes... It is amazing how much data there is that could be used to drive changes in behavior, but which people are reluctant to reveal due to political pressure. For example, if dealers could see how few of the emails from ANY of the automotive CRM and Lead Management Systems actually make it into consumer in-boxes, they would be shocked... I have seen the server log records for some of the most popular CRM and Lead Management tools that show if an email was loaded into an inbox and then either opened or even previewed, and the percentage is low enough to be surprising to even those of us who understand the role of spam filters and the weakest link in our business model being forms based leads. Or, how about the credit application abandonment rate? I have worked on projects where we TRIPLED the credit application completion rate! Of course, going from a 5% completion/95% abandonment to a 15% Completion/85% abandonment somehow did not feel as good as you would think...

Yup, there is plenty of opportunities out there to improve sales from a wide variety of web based resources... What is really fun is when you can find those points of failure that with about 4 hours of work result in a steady stream of 450 credit apps a month instead of 150... BUT THEN, to realize that the people that were previously abandoning those credit apps are the ones with the good credit, now THAT'S when things get even more interesting!

There are hundreds of ways we can increase car sales, all of which require doing something instead of talking about it.

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