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Nearly every day that I meet with dealers, I’m going over statistics. The metrics that dealers are most interested in are always the same: leads, leads, leads.  I constantly field questions like: “Why are my email leads down this month?” “Great, my phone leads are up!” “Why are my hours and directions visits… wait, what are those again?” Sounds familiar, doesn’t it?

The truth is, this fixation on leads is short-sighted. According to a 2011 study done by AutoTrader.com and Polk* 69% of consumers don’t fill out a lead form before they walk through your front door. Why is that so important? Because it means 69% of consumers weren’t a “lead.” It means every time a GM wants to know how many “Floor UP’s” they had, what he’s really asking is how many people were on the dealer website today and didn’t contact us before they showed up in our showroom. 

So if leads are not as important as you think, then what statistics are important?  I believe that the single most important statistic is one simple word: VISITS!  Hold on, that’s it? Yup that’s it.  Let me ask you a question; do you think a dealer who has 1,000 visits a month to their website sells as many cars as a dealer who has 10,000? Every dealer spends money advertising his dealership, and now a day’s every print ad has it in big bold letters and every TV and Radio commercial ends with “or visit us at www.MYDEALERSHIPSWEBSITE.com”. So it seems like you are trying to get as many people as possible to go there anyway, aren’t you? 

Let’s look at some math for a moment.  I developed my own predictor model aka “Matt’s Magic Website Formula” to tell any dealer roughly how many new cars a month he sells just by asking how many visits he gets to his site, and I would really love to get some challenges with someone’s actual statistics!  (Averages please) So let’s take two dealers. Dealer A gets 3,500 visits per month and Dealer B gets 7,000.  Let’s assume the both websites convert at 15%, an average number.  So this means Dealer A gets 525 opportunities and Dealer B gets 1,050.  Let’s also assume both have an overall closing ratio of 7%, also an average number.  That means Dealer A sells 36.75 new cars on average per month.  Dealer B sells 73.5 new cars on average per month, exactly double.  So here’s the secret sauce of my model-- simply take the first 2 numbers of your average visits per month and that’s how many new cars you sell.  There is a range of course, probably a bell burve: 3500 visits equals 35-40 new cars, 7000 visits equals 70-75 new cars, 10,000 visits equals 100-110 new cars on average per month.

Of course, all visits are not created equal. Our Cobalt business intelligence shows that the top sales indicators are deeper actions committed by qualified visitors: inventory views, time spent on inventory views, and hours and directions page views. The real message is to stop focusing solely on leads and think about other digital factors that predict sales. Tune in next time for my piece “Measuring Success----Why Lead is a Four Letter Word”.

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Tags: advertising, marketing, websites

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Comment by Matt Tedesco on June 21, 2012 at 3:01am

Hi Eric, thanks for the comments. To answer your questions, I was using total visits and it was only for new cars.  I haven't figured out how to add inventory as a variable but that could certainly be a very interesting factor.  I only used new vehicles because what I found was that most dealers ability to sell used vehicle fluctuates wildly and has so many other factors, that used just doesn't work in my formula. I wonder if someone from vAuto might respond? It seems that the sales actually tend to be a bell curve, where your market can only sustain so many sales regardless of how many visits you had and conversely you will sell cars just because your doors are open. So this certainly does work best for the majority of midsize dealers that would fit under the curve. Your final point is exactly what I was hoping people take away from this, if you want to sell more cars, you need more people to your site and there is really not much way around that.  You could drastically increase your closing ratio, but that's probably a little harder to accomplish.  Thanks again for the comments Eric.

Comment by Eric Miltsch on June 20, 2012 at 10:29pm

Matt - I like your thinking with this & especially like the Matt’s Magic Website Formula.

Couple of questions: 

  1. Are you counting total website visits, or uniques?
  2. Are you applying this to only new cars?
  3. Are you factoring in total inventory available?  

I can see where applying your formula to midsize traffic sites, like your examples, can be an accurate predictor. Larger sites/dealerships may see some degradation as the shear volume could lessen the formula's accuracy. 

Using the traffic from my former group's site, it was off a bit (~110,000 visits per month while selling 550-700 units/month.) But - that's also why I asked the questions above; we were only used and the inventory selection between locations was always fluctuating.

Good stuff Matt - this seems like a simple way to get dealers to wrap their head around where their site may need to be at, to hit these target ranges while also considering the digital marketing needed as well.

Interested in hearing how other dealers fair using this formula...

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