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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: 363

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

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Comment by Alexander Lau on June 11, 2014 at 12:22pm

Nice article! This is exactly what every application and website needs to have done @ http://www.nngroup.com/consulting/design-review-ia-analysis. User-centric, expert analysis of your interface and/or information architecture that identifies what is useful and usable, what is not, and provides recommendations for better business results.

Comment by Tom Gorham on November 11, 2012 at 8:52am

Great conversation!  I love it all.  Larry, the statement to Richard, "For far too long we have allowed vendors to set our strategy instead of setting the strategy ourselves and then finding a partner to help execute that strategy" is an outstanding insight.

Comment by Larry Bruce on November 11, 2012 at 6:43am

Tom a "snow-job" only works if a dealer allows it to. We have to spread the word get more education to the dealers. The more they know the better providers will thrive. 

Comment by Larry Bruce on November 11, 2012 at 6:40am

Richard I agree with you. That's a systemic problem in the auto industry. For far too long we have allowed vendors to set our strategy instead of setting the strategy ourselves and then finding a partner to help execute that strategy. 

Comment by Larry Bruce on November 11, 2012 at 6:38am

JD I would absolutely agree with you. Any dealer that buys into the notion that lead volume going down is a good thing needs to have their head examined. I can see how the provider you were talking to could be misguided into thinking that ranking for a key phrase other than the dealers name would hurt conversion rates.

In fact in some ways that provider is right… BEFORE YOU LOSE IT HERE IS WHAT I MEAN.

If you are working to rank for a product term “Dodge Ram Dallas” and you are sending the traffic back to your RAW (Random Access Website) that was the term you were looking for, the issue still goes back to the landing.

With the above key phrase you know the visitors intent is to find information on a “Dodge Ram” and with the city modifier “Dallas” it’s a safe bet the visitor wants to find it locally therefore in all likely hood this visitor is looking for a Dodge Ram that is  in consideration to buy.

Here is the problem when you want to buy a vehicle there are 3 things you want to know.

1)      Is there a choice – does the dealership have a lot of what I am looking for

2)      Can I afford it – What’s the offer?

3)      Is this place going  to be easy to deal with – What’s their value proposition

 

IN ALMOST EVERY CASE THE RANDOM ACCESS WEBSITE DOESN'T ADDRESS ANY OF THE ABOVE  

So you have an increase in visitor rate and because you dropped them on your Random Access Website, usually on the HOME PAGE that’s the worst but even to a VDP virtually every website provider is missing the 4 elements that are needed to convert a customer.

  1. A headline that will pull the visitor into the Site, SERP or VDP where ever you drop them
  2. An offer – what is compelling me to want to convert?
  3. A call to action – what do you want me to do?
  4. An incentive – why should I do it?

Random Access Websites aren't built this way because they are built for everyone and aren't particularly interesting to anyone, an Encyclopedia Britannica of information that isn't relevant to any one segment of customer.

So your traffic goes up with virtually no conversion and your conversion rate suffers. So you see he’s right that is exactly what happens.

NOW HERE IS WHERE THIS WEBSITE PROVIDER IS AN IDIOT

The above described scenario isn't a reason to abandon SEO for other terms than your name, That’s just stupid!

Look…

Most website providers and so-called “SEO” gurus look to rank for the dealerships name BECAUSE THEY ARE LAZY AND DON’T UNDERSTAND ENOUGH ABOUT SEO TO DO ANYTHING ELSE. So they create or worse fabricate some content do some simple syndication with the dealers name all it and BECAUSE NO ONE ELSE IS WORKING TO RANK FOR THE DEALERS NAME BUT THE DEALER they have instant ranking and the POD… LOL (Page One Defense). This is the oldest SEO “Smoke and Mirrors Trick” in the book.

and YEAH, your conversion rate better go up if all you are doing is showing up for people searching specifically for you!

JD IN REALITY THAT IS 90% PLUS OF DEALERS IN THE COUNTRY AND STILL CONVERSION RATE HOVERS AROUND 5%

So you do the above and your conversion rate goes from 2% to 4% and your overall lead volume goes down…STUPID MOVE

So what should you do?

  1. Use PPC to determine your top performing keywords that convert…THAT AREN’T YOUR NAME
  2. Set your page level SEO to rank for those Keywords
  3. Make sure you address the elements of conversion on those pages so that you get the conversion when the traffic gets there.

Sounds easy right? It’s a bit harder than it sounds but infinitely better than the idiot that told the dealer to give up on every phrase but his own so that the percentage goes up.     

On your Random Access Website there are 3 key metrics you should be monitoring by visitor segment:

  1. Bounce rate
  2. Time on site
  3. Page views  

In a 2011 Digital Dealer presentation “SEO vs PPC” I presented the findings of a 4.5 million in market visitor study we conducted on SEO vs PPC and how each affected GROSS PROFIT. Dealers should at least be segmenting organic traffic and paid traffic in their web analytics and monitoring these metrics. If the website provider you were talking to had any clue at all they would be doing that and your conversation would have been much more intelligent.

JD in this case however you are going to the same extreme that website provider you were talking to did in saying that you should throw out conversion rate all together or that it’s the “Big Fat Lie”. The fact is that it is the most important thing IF YOUR ANALYTICS ARE SET UP PROPERLY and you understand that CONVERSION RATE isn’t the goal it’s the metric TOTAL OVERALL CONVERSIONS (LEADS) that is the goal.     

I hope that clears up my perspective. 

Comment by Tom Gorham on November 10, 2012 at 5:35pm

JD, I could take a good guess who that vendor was but I'll hold my tongue.  The fact is that misleading dealers with artificially high conversion rates based on buying the dealer's name vs seeking new traffic is proof that a vendor does not have the dealer's best interests in mind. But it seems to be a snow-job that's been working for some strange reason.

Comment by Richard Valenta on November 10, 2012 at 3:59pm

Larry, while you have a good product and can demonstrate how to extract more leads from existing visitors through segmentation and testing, that's not what's being sold out there by many vendors.  JD is absolutely correct in that vendors are out there using a dealers name to prop up conversion rates, not what you're suggesting.      

Comment by J.D. Rucker on November 10, 2012 at 3:35pm

Larry - You make some very valid points that have absolutely nothing with the point I'm trying to make. You're confusing dealer websites (I forget the colorful name you give them but it's great whatever it is) with targeted PPC landing pages and you're confusing dealers.

Here's what I'm faced with. Dealers get lured over to website platforms that promise increased conversion rates. They are given reports that show "success" based upon improved conversion rates. However, the rates aren't going up because of better-converting websites but rather worse-marketed websites. Their traffic goes down with only their name driving the search traffic. Their conversion rates shoot up. They think they're doing well.

Unfortunately, when they dig beyond the fluffy reports their vendors give them, they see that traffic went down, leads went down, and sales went down.

What you're describing is absolutely correct if the dealership is building PPC-powered landing pages. In that situation and with your product, efficiency is everything. ROI is directly influenced by driving the right people to the right pages at the right time. As a result, conversion rate becomes THE most important factor as their budgets can be maximized for optimal performance. With your product, you're spot on.

In the world of primary dealer branded websites, dealers are being told that conversion rate is more important than total leads. Any dealer, when presented with accurate and thoughtful data, would rather generate more leads at a lower rate than fewer leads at a higher rate.

In no way am I saying that dealers should not try to improve their conversion rate. I'm saying that conversion rates on websites where the primary traffic-generating keyword is associated with their name should focus on expanding their reach to rank better in other relevant keywords.

Perhaps it would be better to release a tidbit of information that prompted this story. I was being questioned by another website vendor over a drink a while back who was asking if I was aware of the dangers of SEO. He told me that we were silly, that going after any keyword other than the dealership's name had proven to hurt their conversion rates and they simply wouldn't do it. Conversion rate was the centerpiece of their pitch, so they would avoid any other keyword.

Surely you're not arguing on that side of the fence, Larry.

Comment by Larry Bruce on November 10, 2012 at 2:59pm

JD - With all due respect I am going to have to call bullshit on this one.

 

No doubt the goal is to get a lift in leads after all more leads should equal more shows and over all more sales. However you cannot get more leads if you cannot improve, and you cannot improve until you understand your customer... Bottom line not all customers and clicks are created equal, and there in lies 3 flaws in your thinking here.

 

1. SEO & PPC have NOTHING to do with conversion rate. They provide the traffic they don't convert it to a lead that is the responsibility of the website, microsite or landing page.

 

2. If you don't segment that traffic by the intent of the visitor who searched and clicked then track that conversion rate you cannot improve.

 

3. Continuing to feed the channel to produce more and more traffic with out squeezing every last lead out of what you get from that your traffic sources is a losing proposition. The cost of a click will continue to rise and competition will continue grow.

 

Its easy to fall into the trap of thinking that all visitors are created equal when all you can see in your web analytics is home page bounce rate, a few referral sources and a few keywords. Its easy to just say drive more to get more when you have so little control over your landing.

However its a sucker that keep spending more and more money to get more clicks and the same low conversion rate to get more leads and hopefully sell more cars. There are a lot of PPC vendors in this space that can't control the landing and count on dealers to be those suckers, if you're a dealer reading this post and comments don't be one of those.

 

It comes down to what I call BCAA (Be Found, Convert, Attract & Analyze)

 

In reality the Be Found part of that strategy it is the easiest. Understanding "WHY" the customer typed the keyword in the first place, matching the landing to that "WHY" and getting the lead then incentivizing the behavior you want from the customer to give them their WIIFY (What's In It For You), that's the hard part.

 

There is no way you can do the above without segmenting your traffic & tracking conversion rate on that traffic...NO WAY!  

 

So you see JD conversion RATE is still king and its the only efficient & cost effective way to get what you talk about in this post... More over all leads.

 

I'll wrap up with this thought... The lead is NOT the the win.

 

After you get that lead there is still a lot of work to be done that is why you need that Attract part of the strategy. More leads DO NOT always beget more shows and if you don't handle your promise right from your ad to your landing all the way through to your incentive more shows will not beget more sales. I addressed his in an earlier post "The Value of A Promise Kept" last month. 

Hopefully this gets you thinking in a different way about conversion rate. 

Comment by J.D. Rucker on November 10, 2012 at 6:22am

Ralph - I know you're in a tough situation but I would try to have a meeting with the owner because that's a HUGE problem for that dealership. When tracking and accountability (and pay plans) get in the way of unified dealership/employee goals, they do more harm than good. Any pay plan that forces such a disconnection in goals should be addressed.

Bryan, I'd like to know as well. Ralph?

Tom, that's an excellent point. It's a separate issue and one of the reasons that I've always had such a challenge with PPC vendors. It's very similar to the challenge that Ralph described at the Ford dealership. When a PPC vendor is graded on their own individual success, they can "steal" some of the success that the dealership itself is generating just by having a name that is well known and highly searched. I understand that there are valid reasons to buy the dealership's name, but I always encourage dealers to parse those keywords out of their reports when judging the effectiveness of their campaigns.

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