Stop Stressing Credits, Focus On Selling Cars
I am seeing a disturbing trend happening in our industry. A lot of dealers are focusing way too much on getting credits from 3rd party providers instead of focusing that energy on selling cars. Now, before you react. Please read the rest of this article.
Remember that I was an Internet Director (5+ years) before I started my company. Now for almost 10 years now I have been building Internet Sales departments and Business Development Centers. I say this just to show that I am not “pro vendor or anti-dealer”. I am a Car-Guy and all I care about is selling cars. And it seems that there is a trend with Dealers that are so focused on getting credits with leads. Some dealers spend so much time trying to track down credits it diminishes the amount of time following up with actual prospects. I am NOT suggesting that you should not be compensated for leads that are invalid or duplicates. I am just expressing my concern with Dealers that spend so much time focusing on trying to get credit for leads. Actually grinding their reps for more credit(s). I have clients that do it sometimes for sport. I said clients, so I know it’s a fact. Some dealers demand credits because they know that most lead source providers will concede rather than argue with a dealer or possibly lose a client over something as silly as a credit. There are dealers that sometimes not choose a particular lead source provider because of their “Lead Credit Policy”, or worse even cancel a 3rd party lead source provider or aggregator because they didn’t get a credit or the amount of credit back they thought they were owed.
This blows my mind because the average cost per lead in the United States is only $20 (give or take a couple of dollars). The upside is off the charts. If a dealer buys 100 leads at $2,000 and sells 10 percent (10 units) with an average Front and Back, total gross of $2,000 per copy. That is $20,000 Gross. The Return On Investment (ROI) is SICK!! We are talking about a Net profit of $18,000 from 1 lead source provider. Especially when you compare it to traditional advertising. NADA says that the average cost per sale in advertising is $640+ per car. In the model I just mentioned, 10 units sold out of 100 leads at $2,000 per copy means that the 3rd party lead source provider model is ONLY $200 per car sold. That is less than 1/3 of what the AVERAGE dealership in this country sells cars for.
Here is the problem; most dealers forget that leads are NOT magical beans or silver bullets. They forget that they have to work at these leads. And when I say “work”, I mean WORK and work them hard. Dealers need to have the following:
Bottom line is that 3rd party providers have tremendous value. To realize that true value, dealers need to be prepared for these leads and have a proactive mindset that leads are gateways to opportunities to sell an automobile. Its not a guarantee, only an opportunity to do business. It is up to us how we maximize that opportunity.
If you have any questions about this article or if you would like me to review your Dealership’s Internet or BDC lead follow up process. Please email me at [email protected] or call me on my cell at 267-319-6776.
I look forward to seeing you at the upcoming www.internetsales20group.com that AutoUSA is a Platinum Sponsor in Los Angeles, November 12-14