Whether you’re planning to start buying new-car leads or drive additional performance from your existing program, your success essentially hinges on two points: where you purchase the leads and how you manage them. Effectively working with new-car shoppers not only helps you close more new-car sales, but it also can boost sales in your used- and certified used-car departments. Now that we have your attention, let’s look at how to get started.
Look for a Connection When purchasing leads, look for vendors who provide you with quote requests from real, in-market shoppers. You want to be sure you’re not paying for casual internet surfers who may have simply traded their name and email address for a sweepstakes entry. Companies such as Cars.com, for example, source leads from search engine marketing and partnerships with automotive destination sites to connect you with local car buyers who are actively researching their next automotive purchase. Many other providers acquire leads through less-desirable tactics (e.g., pop-up ads, sweepstakes and unsolicited email) to supply you with the quantity of leads you want, if not the quality.
Beyond high-quality sources, let’s look at additional factors to consider when buying leads:
- Scrubbing: Reputable vendors also scrub their leads to ensure the inquiries are submitted by in-market shoppers. Cars.com, for example, incorporates a multistage process and works with an outside expert to ensure the contact information provided with the lead contains a valid phone number and/or a working email address.
- Speed: The sooner you receive the lead, the quicker you can begin responding to the inquiry. While receiving leads can take up to 48 hours with some providers, Cars.com delivers them within 15 minutes. In many cases, you can reach out to prospects while they are still online.
- Satisfaction: Because car shoppers sometimes submit quote requests through multiple sites, you may receive information about the same prospect from different companies. A vendor committed to your satisfaction will refund your money for any lead you’ve previously purchased from a competitor — or one that should have been blocked in the scrubbing process.
Map Out a Strategy Once you’ve identified a high-quality source for new-car leads, you now need to decide how many you’ll purchase each month. There are several factors to take into account when setting up or refining your program.
- Radius: Depending on your market and your internal resources, you may be able to simply purchase leads from within a set distance from your store. To drive the most sales and keep costs low, you might begin by buying leads from within several miles of your dealership and branching out from there. While some car buyers are willing to travel 20 or more miles to purchase a car, ask yourself if you have the budget and staff to properly pursue leads from this large of a radius. You similarly need to decide if the effort to win the occasional sale from farther out merits the time and expense. Are these buyers, for example, likely to travel to your store for repairs and scheduled maintenance, or will they keep this more lucrative business closer to home?
- Smoothing: When do you want your leads? Do you want to receive them — and then attempt to manage them — all at once, or would you prefer to have them spread evenly through the month so you can give every lead its due? If you opt for smoothing, be sure your vendor is providing you with fresh leads as the month progresses rather than holding back aging leads for later delivery.
- Make/model: Your new-car lead program can also be tactical. If you have an undersupply of specific vehicles at your store, buying more leads for those cars is not a good use of your budget. Ask your lead provider(s) to withhold inquiries from prospects interested in vehicles that are in high demand and tough to keep in inventory.
- ZIP codes: Instead of a fixed radius around your store that may not allow you to reach the prospects you want, ask your lead provider to target specific ZIP codes. This approach allows you to fine-tune your program and helps you optimize your results. A downtown store, for example, will want to avoid buying leads from the financial district and concentrate on neighboring residential areas.
- Monthly budget: At the end of the day, you want to buy only the leads you can afford. Once you’ve determined the other parameters, you may want to put a cap on how much you spend.
Process Matters Variety may be the spice of life, but consistency sells cars. Dealers with the highest close rates tell us they determine the process that works best for their stores and their customers and then stick with it until they identify areas for improvement.
- Determine your strategy. Components you’ll want to nail down include the use of autoresponders, the time frame in which you provide an initial response, phone scripts, email templates, your pricing policy and how long you actively work a lead before turning it over to database marketing. With respect to these automated initiatives, you may want to consider a monthly or quarterly newsletter to maintain top-of-mind awareness for recent prospects and existing customers.
- Give the sale time. Taking a long-term approach with new-car shoppers typically works to your advantage. Studies by J.D. Power and Associates, for example, indicate that these prospects, on average, go online to do their research 11 weeks before they intend to make a purchase. While some of these customers can be persuaded to buy sooner than they'd planned, many more will stick close to their intended timeline. By sticking with these customers and occasionally checking in with an email or a phone call, you re-establish the relationship and remind them of the assistance you initially provided. We often hear from dealers who pursue leads beyond 60 days that they record closing rates in excess of 15 percent — notably more than the 8 percent to 12 percent reported by dealers who manage them for 30 to 60 days.
- Offer alternatives to help the shopper decide. Also, you should be prepared to discuss pre-owned options with shoppers. In responding to a new-car inquiry, we recommend you also include information about a similar late-model used car and a similar certified used car if you have them in inventory. Why? Some consumers may be shopping payments or may be more price conscious than they originally indicated. By making these options available for these shoppers to consider, you keep them searching your inventory and not your competitors’.
- Make time for the sale. Another factor to consider: How many leads should salespeople manage? Your mileage may vary, but a large dealer group recently determined that the optimal number is 65 to 70 per month. With this recommendation in place, Asbury Automotive Group found it was able to desk more deals. Why? With fewer prospects to manage on a daily basis, the sales staff had more time to concentrate on process and give inquiries the immediate attention they deserve and the regular follow-up they require.
Measure So You Can Manage The old saying – “You can’t manage what you don’t measure.” — applies to new-car leads. To determine whether your new-car lead vendors and sales processes deliver, you need to monitor, record and evaluate the business results they drive. For example:
- Appointments made/kept: What percentage of the prospects agreed to visit your store and did so? This information helps you evaluate the quality of the leads you’re purchasing and determine how well your sales staff is following your process and building rapport with shoppers.
- Cars sold: The percentage of leads that led to a sale similarly allows you to gauge the quality of the leads themselves and the effectiveness of your sales processes. Many dealers tell us they average 8 percent to 12 percent for leads they pursue for 30 to 60 days. For customer inquiries that they actively work beyond the two-month time frame, dealers say their closing ratios climb to 15 percent or higher.
- Cost per sale: This figure helps you gauge whether you’re buying the correct number of leads and properly managing them. If, for example, you purchase $3,000 worth of leads this month and sell 22 cars, you’ll probably be pleased with your per-sale cost of $136 — especially since NADA pegs the offline expense to sell a new car at $590. By contrast, if the same allocation culminates in three sales, you need to evaluate your processes and how consistently they’re being applied.
Additional Resources Looking for additional tips you can implement in your store today to drive more traffic with your online advertising and desk more deals with your internet sales processes? Check out Cars.com's DealerCenter. Here, you can read previous editions of our DealerADvantage enewsletter or listen to archived recordings of our DealerADvantage LIVE webinar series. Earlier this month, our DealerADvantage LIVE session, “New Year, New Sales: Process and Persistence Help Win the Business,” included tips and techniques used by successful dealers to close more new-car leads.