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Focus on Total Conversions, Not Conversion Rate

There's a big, fat lie in the automotive industry that has been circulating for years. The idea that many hold onto is that conversion rate is the most important number when trying to determine the quality of a website. This couldn't be further from the truth.

 

Here's a fact - the worse your search marketing is, both for SEO and PPC, the higher your conversion rate is going to be. This cannot be disputed. If buyers are only able to find your dealership on search if they're typing in your name, that means that the only people visiting your website are already inclined to consider doing business with you. Searches for you by name will always yield the highest conversion rates from the visitors.

 

As your search marketing expands and you start bringing in people from a more diverse range of searches, the traffic goes up, the total number of leads go up, but the conversion rate drops. Total number of leads, however, go up. It's very simple once you understand the dynamic.

 

Let's say you're currently getting the majority of your search traffic from a variation of your name. Look at your analytics to see if this is the case. With the majority of your traffic coming from searches for your name, the math may look like this:

  • Traffic from Search: 5,000
  • Conversion Rate: 10%
  • Total Leads: 500


Now, as you improve your search marketing and expand your reach, your traffic can go up. Let's say you improve your SEO and start ranking in not just your city and for you name, but in other cities as well. Let's say you're outside of a metro area and through proper search marketing you're able to reach into this market and expose your inventory to a wider range of buyers. Your traffic will go up, but because these visitors didn't find you by name and since they're probably further away from your dealership, the rate for these visitors drops in half. You may get 1000 extra visitors at a 5% conversion rate, yielding 50 more leads. You haven't hurt your ranking for searches of your name, so the original 5,000 visitors are still intact. Now, the numbers look like this:

  • Traffic from Search: 6,000
  • Conversion Rate: 9.2%
  • Total Leads: 550


Many would have you believe that the drop from 10% conversion rate to 9.2% conversion rate is a bad thing, but the important number to note is that the total number of leads went up as a result.

 

Your goal as a dealer is to sell more cars. It's mathematically inefficient to extend your search reach and as a result your conversion rate goes down. However, the number to focus upon for your website is total conversions. How many leads are you getting? How many sales are you generating from these leads? This is the bottom line that truly affects the success of your website and your business.

 

Conversion rate is a great indicator that can help you make tweaks and adjustments to your current site, but look at your traffic trends when considering conversion rate fluctuations. Improved conversion rate can be good, but if it's associated with a drop in traffic, you should look at your search rankings and the keywords driving traffic to determine if there's an underlying negative that's making the numbers look good. Conversely, if your rate goes down, see if there's a correlating increase in traffic.

 

Get more leads that convert to more sales. That's the end goal. Don't get lost in the numbers that some are throwing out at you.

Views: 356

Tags: Analytics, Conversion, Conversions, Dealer Website, Marketing, Rates, Video

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Comment by Tom Gorham on November 10, 2012 at 4:35am

Having plenty of data is not the problem.  The problem lies in understanding that data.  The ultimate measure is sales and profit.  Data should show how to improve those results.  JD, you are absolutely right and I have seen this effect first-hand. 

If one SEM vendor concentrates on buying your name, even though you have high natural listings, that vendor will show a high conversion rate that is a false signal.  Another vendor who concentrates on conquest will have a lower conversion rate but bring in new business in addition to those who would have clicked on your natural listings anyway.

Of course it goes much further than that since clicks and visits don't alone get people in the door.  Conversion happens all the way through the process of selling a car.  Great article and insights JD.  Thank you!

Comment by Ralph Paglia on November 9, 2012 at 5:12pm

As a Dealer Principal, would you rather have a dealership website that gets 10,000 Unique visitors, generate 200 Internet Leads, 600 Phone Calls and 800 showroom visitors... OR... A dealership website that takes those same 10,000 Unique Visitors, generate 400 Internet Leads, 600 Phone Calls and 400 Showroom Visitors?

Comment by Ralph Paglia on November 9, 2012 at 5:01pm

J.D. - At the risk of repeating some things I have said to you in conversation, all other things being equal... I would rather have a dealer website with 10,000 Unique Visitors a month, and a conversion rate of 4% than a dealer website that has 5,000 Unique Visitors a month, with a visitor-to-lead conversion rate of 6%.

Let's take the whole "Conversion RATE Mythology" yet one step further; Would you rather have a website that attracts 10,000 Unique Visitors each month, converts 4% to lead form completions, generating 400 "Internet Leads", and 600 Phone Calls which are reported using a separate system and go to the sales floor.... OR... Would you rather have a different dealer website that attracts the same number of visitors (10,000) and have the Visitor-to-Lead form conversion rate of 2%, generating 200 leads, buy a 50% higher phone call from site visitor conversion rate, of 9%, generating 900 Phone calls that do not go to the Internet Department?

The reason why I am posing this question is that I had a conversation with the Internet Director of a Ford dealer client of mine who told me he does not care about phone calls because his team does not get those calls, they are routed to the showroom.  He explained to me that the way his budget and pay plans were set up, he did not want to spend one dollar of his budget generating phone calls, he would prefer to "Force" the site visitors to fill out a lead form so he does not lose the business opportunity to the showroom floor.  Keep in mind he controls the dealer's website!

I agree with you about conversion rates, they are one of the many website Key Performance Indicators (KPI) that are abused and used to manipulate dealer opinions in a deceptive manner by many website sales people calling on dealers.  But... What I find even more abusive and self-defeating is when a dealership manager wants to reduce phone calls coming from visitors to the dealer's website, because they do not go to his team, or into his pay plan!

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