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Lead Scoring: Revolutionary Break Through or Arbitrary Misleading System

After listening to an interview on Blog Talk radio with Michael Spadafore, Global Director, Consumer & Commercial Marketing for R.L. Polk & Company outlining the new lead scoring system they are providing to help out the Detroit Trading Company rate the leads they are selling we had a lot of mixed feelings. Basically, there is a pool of leads for dealerships to choose from, Polk uses their magic algorithm to assign each lead a score, basically a likelihood of purchase, then that lead is sold based on its score, the higher the score the higher the price. We see an advantage, and a disadvantage (what a surprise!) with this new system. On one hand we find it hard to believe you can really truly rank a lead given the anonymity of the web. We will use two examples below to illustrate our point.

2 Leads Examined-Food For Thought

Lead A: Customer A loves Pontiac G6’s. Visits web pages 5 times a week, spends a lot of time on research, looking at pictures, and visiting other pages centered around the vehicle and submits several leads giving the impression that this person is very interested

Lead B: Customer B visits a page about the GMC Sierra once, configures what they want and submits a lead, never returns again, and visits no other pages about the Sierra.

Now conventional wisdom would suggest that customer A is far more interested, and customer B is only casually interested. We are not allowed the privilege of examining the algorithm used to determine value of a lead but it is safe to assume it would value customer A much higher the B.

Why We Don't Fully Endorse Lead Least Yet

Here is where we fall off the who lead rating system because after your dealership buys these leads you find out lead A is a 16 year old kid while Lead B is from a business owner with a 800 credit score and cash to burn. It is perfectly reasonable to assume Lead B just knew exactly what they wanted and submitted the lead. Outside of obvious flaws in the system we see a bigger problem with the lead scoring system and the culture it will begin to create inside dealerships. Once we start pre qualifying leads, in our opinion it is a slippery slope, and not far off from having salespeople pre-qualifying floor ups, and dealerships doing the same in their service isles and marketing. We are still old school perhaps and believe every customer should be treated the same way. We aren’t against saving dealers money, we just fear where this may lead for customers.

We should of course admit about the only pre qualifying factor we would care about as a dealer is their credit score. Knowing a leads credit score before hand, to us, would be the only stat strong enough for us to pay a premium for leads. Send us all the A and B tier leads you want! (That’s not likely to happen….well at least for a while)

There are Better Ways Of Getting Better Dealership Leads

We do like the idea of the Detroit Trading Company and dealers being able to hand pick leads they want. We really feel this will be a big part of the future for lead generation companies, and pooling their resources, in this case their leads are a huge step towards providing a higher quality product to dealers. We are eager to start getting feedback from some of our dealers who use this and other lead rating systems, if it works we will certainly offer kudos to Polk and others who have offered this rating system, were just not too sold on it.

It could be our bias towards generating your own leads but that is only a slight possibility. The fact of the matter is the best converting leads are going to be ones you generate from your own dealership website, and instead of going out there trying to fix the issue by buying leads you might want to consider how you can spend that money generating your own high quality leads you don’t have to pay for. Buying third party leads has its place in a dealership marketing budget but we see it only as a supplementary effort, you shouldn’t rely on them. Get your own website pumping in leads, and capture even more customers by purchasing third party leads, if your website isn’t generating enough leads the answer isn’t buying them, it’s fixing your website.

Jeremy Hambly
SEO for Dealers (read more on our blog)

Views: 173

Tags: 3rd, auto, autobytel, dealix, detroit, exchange, lead, leads, party, polk, More…scoring, sem, seo, third


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Comment by Chris Hanson on March 12, 2009 at 12:00pm
Yes, I do. Depending on what Lead Management system you use, it can be very easy to set up or just takes a little time to manage. Either way, I do think its worth it.

Yes, I think I described it right, referring to it as "beta testing". Its newer of course so everyday they are collecting more info on the leads and how it is working.

Comment by Chuck on March 12, 2009 at 11:48am
So you think it's worht my time?? It seems like it can't hurt. So that's why it's free. They are Beta Testing it??
Comment by Chris Hanson on March 10, 2009 at 8:43am
Hey Chuck,

Its totally free. They are still beta testing......

I posted some of my experiences here but feel free to contact me with any other questions you might have

Comment by Chuck on March 10, 2009 at 8:39am
I have a question. Trilogy approached me about Lead scoring. They stated that it's totally free?? How are the getting paid?? Or is it not really free?
Comment by Bill Playford on January 23, 2009 at 9:07am
If anyone still has any questions regarding Trilogy's SmartLeads program, we will be attending the NADA Convention. You can reach me at 517-518-1456 to set up a time to meet.

Comment by Chris Hanson on January 14, 2009 at 3:38pm
Good point Jeremy. I did not share the "Hot", "Warm" or "Cold" score with my salespeople.
Comment by Bill Playford on January 14, 2009 at 2:45pm
Jeremy, thanks for getting the conversation started on lead scoring. As Ralph mentioned in his post, we (Trilogy) launched our SmartLeads lead scoring service early last year. To date, we have scored over 3 million leads, and have been able to verify that actual sales truly do correspond to our scores. In some stores, the sales people don't even see the score: only the Internet sales managers do (therefore, no self-fulfilling prophesies)! Ralph has a valid point about cherry-picking...if the dealer purely uses scoring (or any other tool) to only work selected leads, then the end result will be fewer sales.

As Matt mentioned (in Ralph's post), our service categorizes leads into three simple buckets: "Hot", "Warm" and "Cold". In conjunction with these segments, we counsel the Internet representatives to work all the leads: just to start with the "Hot" leads first. When dealers follow this formula it works extremely well, thus resulting in increased sales. For our larger partners who pay for the service, Trilogy GUARANTEES the partner will experience increased sales as compared to their results when not using our service!

As we progress, we will continue to find better and better ways to segment leads so that we can further assist the dealer in how to treat each lead. We feel like this is really exciting stuff, and we are already making great progress.

Let's keep the discussion going!

PS—Tom Vann uses SmartLeads
Comment by Chris Hanson on January 12, 2009 at 7:06am
Please send it my way too.

Comment by Ralph Paglia on January 12, 2009 at 12:05am
gimme dat whitepaper... please, sir.
Comment by mike lesinski on January 11, 2009 at 6:15pm
Perhaps I don't understand what some of these firms are using Lead Scoring for. Nonetheless, take a good relevant topic, mix some great participants into the debate, add a little passion and who knows, maybe we'll change the industry. If not, perhaps we can share a drink at an event in the future and laugh about the attempt.

I can tell you that if lead scoring is used in the right manner it can provide logical business value. And, by the way, the rudimentary example I provided in my initial comment is more reflective of segmentation than a score. Scoring is more robust but harder to explain in a forum such as this (but I digress). Seems like some of the business value as been mentioned/alluded to already. But I'll dare to try to add a little more color.

As mentioned in my initial comment; Lead scoring can be used on the front-end, when transacting leads as well as on the back-end for patterning unsold lead follow-up communications. On the front-end it can help optimize efficiency of spend on leads based on value of leads. On the back-end it can help optimize sales efforts and conversion rates leading to increases in revenue.

It is not a surrogate for a timely and relevant response to each and every lead. It is not an excuse not to respond in a timely and relevant manner to each and every lead.

On the front-end, you can either use the score to calibrate the price you are willing to pay for a lead or there is no real value. This assumes you are transacting leads using a Ping/Post process, not just a Post process (which is more prevalent).

On the back-end, you can use it for unsold lead follow-up (just as Ralph mentioned). This is the area where we've seen the greatest payback. Especially when you consider the percentage of leads that convert out beyond a 30 day window but it even applies to near(er) term conversions.

I have seen some companies send a "scored" lead through with an discoverable code (ie., they will label the lead with things such as "Priority Lead" versus "Lead"). This is apparently to let the sales person know which lead to follow up with first versus later ("Priority Lead" first). I have a fundamental disagreement with this tactic (and if this is the "Cherry Picking" referred to earlier, then we're on the same page) because it can promote bad habits.

Once a lead has been transacted, regardless of how it has been transacted (with or without the use of a score) and regardless of how much it was transacted for, there is one mission: Respond to the lead in a timely and relevant manner (with the appropriate content). That is the minimum treshold for success at that point in time and there is no substitute.

Going back to the score. Whatever the score is. However it was derived. Whatever it is to be used for. It should either not be visible to the sales personnel or better yet, it should be non-discoverable to the sale personnel. In my experience, the debate is more appropriate around discoverable versus non-discoverable.

Think of it this way. Whether it were used to buy a lead at a high price, an average price or a low price, the sale person doesn't need to know or cherry picking will result. Whether after initial follow-up, the score will be used to populate the sales persons calendar with three follow ups per week or three follow-ups per month, the sales person doesn't need to know or cherry picking will result (where cherry picking is assumed to NOT meet the minimum threshold for success for the initial follow-up of the lead).

The point is, the techology (the LM or CRM tool, the BDC tool or some other technology-based entity) needs to be able to interpret the score so that the appropriate follow up can be cadenced (populate an email template, prompt a call script, etc).

Lead scoring still garners the same emotions as the circular arguments that preceeded it. About 7-8 years ago, before lead scoring came out of the closet, I would sit in conference rooms with various OEM personnel. Someone would inevitably introduce the topic:

"Our dealers are complaining that we're sending them too many unqualified leads. They can't keep up with them and the bad leads are preventing them from selling to the good leads. We need to help them identify the good leads from the bad leads"

to which someone else would chime in with

"the moment you identify which is a bad lead versus a good lead, no one will ever follow up with anything tagged as a bad lead ever again. Since bad leads also convert, we'll lose sales. Where are you going to get the additional volume of good leads to make up for the lost sales from the bad leads?"

And the debate would rage on until everyone disassembled for their next meeting.

There far more points to contemplate in this debate but this has been good so far. As an FYI, I've co-authored a whitepaper on this topic. If anyone is interested, let me know. I am happy to share the entire point of view.

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