Category Archives: Leads and Lead Providers

When is a Lead Dead?

How the best dealers keep the sale alive

Got a lead? Time for speed. Because everyone knows that the quicker your response is to an Internet email or phone lead, the higher your closing ratio will be. That’s why the best Internet dealers on cars.com respond to all of their phone and email leads within minutes.

But responding quickly is not enough. Many dealers are leaving sales on the table by responding to leads only once. So what sets the best apart from the rest?

A recent study analyzing cars.com leads conducted by Experian Automotive showed that a lead isn’t dead just because time has passed. It’s true that 79% of lead senders who purchased did so within 90 days. But the other 21% still purchased several months after submitting the lead.* The best dealers know this, and aren’t giving up their leads for dead.

Buy or die. You need to stick with it.
In our dealer training sessions across the country, we talk to thousands of dealers. It’s clear that what separates the very best Internet dealers from the rest is that they continue to work their leads until the lead purchases a car from the dealer or removes themselves from consideration. In short, until the lead "buys or dies."

These dealers develop a relationship with each lead sender and continue to have a dialogue with them until they buy from the dealer, indicate that they’ve bought a car somewhere else, or indicate that they aren’t in-market for some other reason.

Share their secrets. And their success.
The best dealers have a closing ratio of approximately 25 to 30%. Good dealers still manage a 15% closing ratio. So what’s their secret? Actually, there are quite a few.

[list:1axy5e51]Use your CRM system. Follow-up individually and keep the contact strong via email, direct mail and/or phone calls on a regular basis. After all, if a prospective customer has shown an interest in a vehicle, that’s one of the strongest contact points you have. So don’t let that lead grow cold. Keep up the communication stream putting the interest they’ve shown to work for you.

Communicate special offers. If you have a hot offer or promotion, let them know. It’s one more reason for you to contact them, and for the customer to choose your dealership when they’re ready to buy. The email below is a perfect example.

Ask if they are still looking. So they liked that dark green SUV. Don’t let them pass it up. Send an email like the one below, complete with a picture of the vehicle. Simply ask if they are "still interested?" and let the vehicle help you sell it.

Send Newsletters. This is a non-threatening way to regularly remind prospects of your dealership and specials. The key is to keep the content fresh and relevant to your customers. And remember, newsletters definitely get read, just like you’re reading dealerAdvantage right now.

Don’t let them fade away. If a customer is out of the market for the moment, that doesn’t mean they will stay out. The "Thank you" email below shows a strong way to keep the contact solid, proving that your dealership is ready whenever the customer is looking to buy.

Ask why. If they bought somewhere else, ask them why. This is free marketing research and can help you get the edge with the next lead.[/list:u:1axy5e51]

The bottom line is, keep the lead alive until your prospects say they’re no longer in the market. Remember, bringing home that 21% who purchase months later separates the best dealers from the rest.
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Written by Fred Haney a cars.com Dealer Trainer.

When Leads Say NO

It happens to the best of us – sometimes several times a day. Your interaction with a prospect has progressed to the point that it’s time to ask for an appointment. And this is where the prospect starts playing hard to get.

There are two wrong responses to this resistance. One, if you’re feeling beat, you might simply say OK and hang up. Two, you might push even harder, hoping to change the prospect’s mind.

These are mistakes because you probably won’t win, and one way or the other you may wind up alienating the customer. It’s also a mistake because you’re confusing the appointment with commitment. The appointment is extremely important – don’t get me wrong. But commitment is what we need to exist and constantly gain when communicating with any prospect. Commitment is what your sales career is all about. The appointment may be the best form of commitment in this particular situation, but there are other forms, too. Your job is to get some sort of commitment from the prospect, because it’s commitment that turns a prospect into a buyer.

When you encounter resistance to an appointment, remain calm and collected and remember that there’s always another commitment you can ask the prospect to make. This makes it more likely that you’ll succeed in setting an appointment on the next call. Here are a couple of common objections made by prospects when asked to make an appointment, along with approaches you can take to get some kind of commitment from them.

[list:eoud201u]Prospect: I’m not sure how my week is going to shape up. Would you call me next week?

Internet Rep: No problem. How do you feel about early next week? Are evenings better for you? Great! I’ve scheduled myself to call you on . If I don’t hear from you before then, I will be calling you then.[/list:u:eoud201u]
Before you go, let me make sure you have all my contact information. Do you have a pen and paper, or can I email it to you? If you decide you’d like to come in before you hear from me, I hope you’ll let me know so I can make it a point to be here and have everything ready for you.

[list:eoud201u]Prospect: I don’t want to set a time right now. I’ll just stop by when I’m in your neighborhood.

Internet Rep: Of course, that’s fine. But let me explain that we always try to set up appointments so we can be sure to have a car ready for you when you arrive. And so, just to ensure that your time is spent as efficiently as possible, can I ask you to call me before you come in? I would really appreciate that![/list:u:eoud201u]
Naturally, there are many objections that prospects can make. Fortunately, you’ve heard a lot of them before. A great way to improve your ability to get a commitment even when you fail to set an appointment is to list all the objections you can remember and then, for each, devise your own response. In every case, be sure to acknowledge what the prospect is saying to you, and be sure to ask them for something that is in their own best interest. Don’t make them think you’re asking for a favor; make sure they understand that you’re trying to serve them as well as you can.

Part of developing your responses is to rehearse. Putting them on paper is great, but you have to be able to say them convincingly and naturally. Rehearsal is also a great way to catch an ineffective response before you try it out on live prospect, especially if you have someone who is willing to role-play with you.
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Written by Jennifer Suzuki

When Less is More

Targeting lead acquisition for sales success

A primary advantage of online advertising is the ability to drive incremental business, often from shoppers outside of your local market. This is particularly true for used car listings, which capture shoppers from beyond your usual selling radius who are willing to travel for just the right car. But when it comes to new car leads, establishing too wide of a sales radius may actually work against you, leaving you with leads that are unlikely to close and time wasted working them over. So how wide should you cast your net when purchasing new car leads? How can you control lead volume for success?

When buying leads from new vehicle leads providers, you may be tempted to purchase as many leads as possible from the widest sales radius with hopes of generating more new business. But if there are too many leads for your sales team to process, or if the leads are from customers who are too far away, you are probably spending too much and decreasing your closing ratio.

To best control costs and pave the way for sales success, consider these tips when purchasing new car leads:

Start Small. A good rule of thumb is to start small, perhaps by setting a monthly cap on the number of leads received or the money spent on leads, and expand from there. In other words, determine the number of leads you can handle in a given month and then choose the smallest possible sales territory that will generate that number of leads.

Know Your Territory. As you know, it pays to know your territory. Understanding your local marketplace can help you make better lead purchasing decisions. For example, take into account the proximity of competing dealerships when setting your lead radius. If your local competition resides to the west of your dealership, it may be advantageous to create a custom territory that aggressively targets car shoppers in zip codes to the east.

Defend Your Turf. Dealers who focus on protecting their own backyard tend to have the most success. In a metropolitan area like Chicago for example, consumers have their choice of several Honda franchises, and they are not likely to travel out of their way to buy a vehicle – unless it is truly unique. So setting a lead radius of 50 miles is unlikely to generate more business. In fact, the odds of closing the sale decrease. Even if you are able to make the sale, chances are good that incremental revenue from service and accessories will go to a dealership that is closer to the buyer’s home.

Control Lead Flow. To ensure that each prospect receives a prompt response and that the relationship is properly managed across the buying cycle, many successful dealerships control the flow of leads. New vehicle leads typically take longer to close than leads from classified advertisers, and it’s important that car shoppers not get lost in the process. You can regulate the leads you receive by setting a monthly cap or asking the provider to “smooth” the leads. Smoothing evenly distributes the amount of leads delivered over the course of the month so that you receive a consistent number of leads each day. Enabling the sales team to better manage lead follow-up eventually leads to more sales.

Although you may see fewer leads in total with this approach, you should also see a higher closing ratio and a lower cost per sale.

Choosing New Car Lead Providers
You have many choices when it comes to buying new car leads. Understanding the differences between these providers can also help you to better target lead acquisition for sales success. Three common sources include:

[list:1ey75lc7]- Lead generators (e.g., NewLeadsPlus from Cars.com and Automotive.com) use search engine marketing to direct car shoppers to proprietary websites where car shoppers provide their contact information and the type of vehicle they’re considering. With Cars.com’s NewLeadsPlus offering, these leads are generally sent within 30 seconds to 7 minutes.

– Destination websites (e.g., manufacturers and Cars.com) solicit contact and vehicle information directly from car shoppers when they visit the site to obtain specifications and pricing. Leads typically are sent to the dealer in near real-time.

– Lead aggregators (e.g., Dealix and Autobytel) acquire their leads from a variety of online sources, including lead generators, other lead aggregators and destination websites, and pass them along to dealers. Dealers typically receive the leads within 30 minutes to several days. [/list:u:1ey75lc7]________________________________________________________________________________________________________

Written by Fred Haney, Cars.com

You Get What You Pay for with Internet Leads

It’s natural to focus on lead price when you’re choosing a lead provider. But at the end of the day, the most important measurement of your Internet program’s success is your overall return on investment (ROI). The following tables show, in simple terms, how with Internet leads it doesn’t pay to be penny-wise and pound-foolish. You’ll see that quality Internet sales leads that have a higher probability of closing are worth a higher price point. Plus, leads with higher close rates boost your ISMs’ productivity because they have to manage fewer leads to sell more cars.

[img:10sedubt]http://www.dealix.com/corporate/shownews.aspx?pressID=320[/img:10sedubt]

Advertising Cost per Unit

If you’re getting low close rates with your leads, for example, in the 4% range, the cost of your Internet program is equivalent to the cost of traditional advertising. Both will generate an average $575 per car sold in advertising costs. The key is to use the best leads from a leading provider. While traditional advertising can help generate brand awareness for your dealership, it does not match the measurable efficiency of using quality Internet leads.

The reality is, with quality Internet leads, you can dramatically reduce your cost of goods sold. Spending $25 per lead for leads that close at 14% is more cost-effective than spending $19 per lead for leads that only close at 8%. The former carries a $179 cost per car sold; while the latter is $238 per car sold.

When you consider the overall ROI from your lead program, the effects of lead quality on your bottom line become even more pronounced. One thing to keep in mind, when calculating your ROI, it’s important to distinguish the average close rates for each of your lead providers on an individual basis so you can weed out the weak performers.

[img:10sedubt]http://www.dealix.com/corporate/shownews.aspx?pressID=320[/img:10sedubt]

In the example in Table 2, Provider C, with its $19 per lead price may initially seem like a good deal. But if the close rates are off and your ISM has to sift through multiple bad leads to make a sale, that discounted lead price will actually cost you more than if you had paid a higher price for better leads, as with Provider A. Not to mention, Provider C may have a deleterious effect on your ISM’s normally cherry disposition.

In the end, the lead provider with the best leads, even if they’re at a slightly higher price point, is going to make you more money. Lead quality, more than lead price, and your own sales process are the strongest influencers on the success of your Internet sales program.
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Written by Dean L. Evans

Tips To Maximize Internet Lead Gross

As the growing majority of car buyers use the Internet in their buying process, some dealers claim these well-informed prospects can chip away at profit margins. It’s true the days of beginning a negotiation above MSRP may gone, as many Internet-savvy car buyers already know invoice price. Remarkably, the most successful and progressive dealers today cater to Internet customers and make a higher gross with Internet sales than floor sales.

A prime example is Galpin Automotive Group. According to Reuben Muinos, formerly Galpin’s Internet director (now the national director for Web Link) and a pioneer in the use of Internet leads, Galpin’s total gross with Internet sales is far above retail. How do they do it? "I realize it’s a cliché to say building relationships is important," says Muinos. "But in our case, this is the key to working with Internet customers. Internet dealers have to build the relationship with the customer in order to get them to come into the dealership. So, we may give a little on the front end to a customer who is very focused on that initial transaction. As a result, because of the relationship we develop, we make up for any lost margin on the back end. F&I sales are far easier with Internet customers. This is a departure from what traditionally happens on the floor."

In addition to gaining higher back end profits, the best Internet dealers keep front end margins high. Dealers surveyed in the latest J.D. Power Study, Dealer Satisfaction with Online Buying Services, said that of all automotive sales people, including floor sales people and fleet managers, dedicated Internet sales professionals generate the highest profit margins with Internet customers. This is especially the case when they offer an upfront price with room for negotiation. In fact, ISPs that offer reasonable upfront prices yield higher profit margins than floor sales people who offer rock bottom prices to Internet prospects. Again, it goes back to trust and building the relationship with the customer.

For this reason, it’s important for floor sales people to develop specific skills for selling to Internet customers. Even if a prospect walks on to the lot on a Saturday after-noon, the odds are they’ve already been exposed to information on the Internet, including invoice price. A floor sales person who is not prepared to handle this type of customer could lose the sale, or a decent gross.

Some dealers will continue to insist they make a higher gross from non-Internet customers. However, by ignoring Internet customers completely, they face a future of diminishing returns. Car buyers who use the Internet in their buying process are the rapidly growing majority. The best dealers have a defined strategy in place to use the Internet to their advantage with ISPs dedicated to working with Internet customers, lower customer acquisition costs through Internet sales leads, and a strategy for making money on the back end. Dealers, like Galpin Automotive, who understand this can create a winning formula that will net out to higher overall profit margins.
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Written by Dean L. Evans

Use Your Online Efforts to Help Convert

In Internet sales, the conversion from anonymous web visitor to known sales lead is the necessary first step when making a sale. Your web visitors decide when they want to offer up their contact info and start communicating with your dealership, so in order to convert your web traffic into customers, they need to be able to interact with your site and make themselves known. This need to be the number one goal of your site, and everything should work towards that goal.

Using identifiable and trackable web tools like effective incentive campaigns, a virtual assistant and engaging multimedia will make it as easy as possible for them to submit their contact information. Because these types of tools make it easier for web visitors to interact and connect with your dealership, I’ve found that when dealers use them, the number of visitors that convert into leads in increased, often doubled.

After you’ve been able to establish contact with your web visitors, it’s important to convert them from leads into sales. Although you can’t force them into taking the next step on the road to sale if they aren’t ready, you can nurture them through the sales process.

Just like web tools can help you convert visitors into leads, use lead nurturing to turn these leads into customers. Sending surveys will allow you to find out where leads are in their buying process, making sure your follow-up is appropriate for their buying status.

Make sure that your lead nurturing efforts always include a strong call to action in each email, phone call, or voicemail to let your leads know the benefits of taking the next step, as well as how to do so when they’re ready. It’s important to ensure your leads know how to convert into a sale when they want to.

Focusing your website around interacting and communicating with your website visitors will convert more of them into sales leads. You can then use your lead nurturing to direct your leads through the sales process and convert them to customers.
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Written on Dealerrevenue.com

What To Do With The 90% Of Internet Leads You Don’t Close

This month I wanted to take the time to provide you with a practical solution to effectively help you close more Internet leads. Internet leads are hard to get a handle on since you really don’t know much about the person; it’s not as if they walked into your dealership and explained their situation allowing you to build some rapport with them. Dealerships all over the US share this same problem; what do you do with the leads that don’t respond back after they have requested information from you in the first place? After much trial and error, we finally came up with a solution to the problem. For example, let’s take ABCDealership.com, which receives 100 leads per month. Out of those leads the Internet manager closes 10, which is the statistical average nationwide.

The next question is what to do with the 90 leads that don’t close or somehow disappear into cyberspace. You don’t want to stop marketing to these people, but it is difficult with the influx of new leads you receive every day to keep up. You end up dropping the people who don’t respond.

What you need to do is create an automatic process that will send these non-responsive people seven email letters over 8 weeks. Why seven letters and why eight weeks? In direct marketing this is how many contacts you need to have with a prospect to get them to respond. Notice I didn’t say "buy," just respond, and eight weeks makes sure you have kept your dealership in front of the prospect during their entire vehicle buying cycle.

The first thing you need to do is to set yourself up with an automatic system that will send out the e-mail letters for you. Call http://www.aweber.com if you’re using a program that doesn’t have the capabilities to send automatic emails. It is easy to use and is less than $20 per month. If you use a program like WebControl (http://www.avv.com), it has this feature available for a nominal monthly fee. There are other companies out there so you might want to look around. What you do is drop the e-mail addresses of the people who don’t respond into the system and let the e-mail marketing begin.

Here are some features of the seven letters, including how you should develop them and when to send them. All letters need to have the following features:

[list:2czkj6vg]- A bold subject line and letter headline.
– They should be time sensitive (meaning they should expire if not responded to within a specific timeframe), All letters need to have a call to action e.g. "click here to buy" etc. [/list:u:2czkj6vg]

What should you offer in your marketing letters?
Some offers that we found to be great to drive response are limited time low interest rates, special new car pricing promotions, service special (e.g. "buy your next car at ABCDealerhip.com and receive your first year of oil changes free"). You can use the same type promotions that you use offline online to get the hook set in your prospects. Just remember to make them time sensitive and have whatever you write call the prospect to take immediate action. Try to bundle different things together and always keep experimenting with different promotions.

Your direct e-mail marketing campaign should begin 24 hours after your prospect doesn’t respond to you and continue for eight weeks or until the prospect removes himself from your list.

This campaign will have a dramatic effect on the number of people you re-up due to your persistent follow up, even though the computer is doing all the work for you. If you use a system like aweber.com it will allow people to unsubscribe automatically and will also allow you to track what people received what letters as well as allowing you to track when they dropped out. For example, if 35% of all people unsubscribe on letter 3, you might need to change the letter to make it more effective. The object is to drive more people into your dealership – period. As an Internet consultant in a busy dealership it is impossible to follow-up on every lead effectively. But by building and utilizing a system that automatically follows-up on cold and non-responsive leads it allows you to focus your energy on the people who want to buy now without sacrificing good quality leads that just needed a little more information.

To really get the most out of this system you need to track everything as you want to be able to uncover any chinks in the armor of your letters and address them immediately. This has been the most effective system we have ever tried and used to manage unresponsive leads. It will work for your dealership too. Take one day and set it up and start e-mail marketing for your dealership today.

Standard Processes Are Works in Progress

You often hear the term “standard process” when it comes to lead management. It usually refers to an organized and consistent method of responding to leads received by a dealership. Standard processes can include the designation of specific individuals within the dealership receive the leads, the method for responding to the lead (i.e., by phone, e-mail, fax or mail), what the communication to the customer will be, when the response will be sent, and what type of follow-up actions will be conducted.

Standard processes have been touted as a “must-have” for dealerships that want to ensure all leads are properly – and optimally – worked. The belief is that if everyone in the dealership follows the same response formula, more leads will turn into sales.

These processes also make it possible for dealerships to lay down a specific set of actions to be carried out by individuals that can be monitored over time for results and can be changed where needed.

The idea of a standard process is based, in part, on the premise that any system is better than no system at all. And yes, having procedures in place that give direction on what to do with a lead, when to do it and how to do it is an improvement over letting employees flounder around trying to implement (or not) their own methods.

The downside to a standard process, however, is that not all customers are alike. In other words, as David Kain of Kain Automotive often says, “No customer is a standard customer.”

Where this comes into play most noticeably is in what you say to potential buyers and how you say it—specifically, the initial and follow-up communications you send out in response to a lead.

According to Kain, “Each customer decided it was time to start shopping for a vehicle in their own unique manner, and it is important, when you first respond, that you respond out of courtesy with the customer’s needs in mind.”

What does this mean in terms of the e-mail templates a standard process often requires? To begin with, make sure the templates are tailored for your particular dealership and that the language is natural. Your response back to the customer is supposed to be a personal response, not an obvious form letter.

If you received the template from a vendor, find out if it has been used by other dealerships and how successful it was. You can also pilot the use of the template internally and evaluate the results before implementing it throughout the dealership.

Templates should primarily be used, as Kain tells his clients, as “thought starters” that can be modified based on the customer. “Focus on serving the customer and adjust [templates] over time. Once you find an e-mail that is working, you can create it as a template for others to use.”

The key is effective communication—answering questions, providing the information that has been requested, engaging the customer in a way that generates interest. Templates are the springboard to achieving these goals and should be used as such—not as rote, inflexible communications that end up being ignored in favor of your competition.

So, the next time someone mentions “standard processes,” remember that it’s a foundation that you can always build upon and tailor to the specific needs of your dealership and customers to achieve the maximum benefits.
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Written by Phil Dupree
President
AutoUSA
954-769-6659
PDuPree@AutoDealerMonthly.com

Start Profiting from Your Online Lead Investments

If you haven’t heard of e-mail lead parsing, you are missing out on one of the easiest ways to increase closing percentages for online leads. The process of ”parsing” an e-mail lead consists of breaking down the contents of an e-mail and categorizing the data (Name, Phone Number, Unit, etc.) automatically into your Customer Relationship Management (CRM) Program or Dealership Software. Thus, instead of the information just sitting as a message in someone’s e-mail inbox, it is instantly transformed into a working and trackable prospect. All lead information is instantly captured into your system and is never overlooked or lost.

Leads can be parsed from a variety of different sources such as your own dealership’s website, 3rd party lead generating websites (RV Trader, RV Search, RV123, etc.), and manufacturer websites. Without parsing, leads received from these sources typically drop into a designated employee’s inbox as a simple e-mail. Unfortunately, this puts your online prospects at the mercy of that employee. What happens when your internet manager goes on vacation or calls in sick? How do you keep him from cherry picking the promising leads and overlooking the rest? Even worse, how do you keep him from walking away with your advertising dollars if he decides to change employers, leaving behind nothing but a blank inbox?

Internet leads are viable sources of income if you treat them correctly. I have personally watched dealers grow steadily and well out-perform the competition during even the slowest economic times, simply because they embraced internet customers and improved follow-up time & procedures on these leads. Unfortunately, the majority of dealers are slow to catch on. Studies have shown that on average, a whopping 70% of online generated leads are not followed-up on in a timely manner and, even worse, are sometimes not followed-up on at all.

One of the largest benefits of parsing is that the information is already in your system, ready to be tracked. No one can walk away with your advertising dollars, and it doesn’t matter if your internet manager went on vacation – someone else can get to the lead before it gets cold. A good CRM system will have you assign the lead to a salesman (or will automatically do it for you) and will track all communication from that point forward. In addition, management overview tools should be readily available for reviewing a salesperson’s lead progress & follow-up. This instills accountability in every lead that is passed onto a salesman to ensure follow up in a timely manner.

Time is crucial when dealing with online RV buyers because they are easily able to browse the inventory of 10 RV Dealers in the time it would have taken to visit one. In addition, responding to an inquiry quickly sends a message of professionalism and helpfulness regarding your dealership, which actually increases the viability of your lead. Studies have shown that if you don’t contact a web-generated lead within 1 hour, you will decrease the effectiveness of your follow-up call by over 6 times!

There are so many benefits to having leads automatically parsed into whatever Lead Management program you are using. Ask your Dealership Software provider if they offer this service and start increasing your internet sales percentages and overall productivity.
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Written by Carl Sconnely

The Law of Diminishing (Sales) Returns

Quality Trumps Quantity When it Comes to Sales Leads

It seems to make sense on the surface: The more sales leads you have, the more likely you’ll be to convert some of those leads into sales. That’s not the way it often works in practice, however, say several experts on the front lines of the sales battle. Instead, they insist there is a law of diminishing returns beyond which additional leads can actually hurt rather than help dealers intent on closing sales.

“I’ve sat with plenty of salespeople who have to sift through a high volume of internet leads,” says David Kain, president of Kain Automotive, a dealer consulting and training firm. “They receive 100 leads and then close 15 of those leads, but that means they’re also hearing the word ‘no’ 85 times. That can get demoralizing after awhile. Increasing the ratio of ‘yes’ to ‘no’ energizes the sales force and helps salespeople stay focused. It also helps them love their jobs a little more — an important objective in any sales context.”

David Metter, chief marketing officer at MileOne/Atlantic Automotive in Maryland, agrees. He consults with salespeople in the company’s various divisions to determine what effect a reduced number of leads might have.

“I will typically ask one of our sales managers a simple question: If I remove 500 leads from your mix, will you still be able to sell as many vehicles?” he says. “Most of the time, the answer is yes, providing we remove the right 500 leads. Taking some of the noise off the table allows them to communicate with the remaining shoppers quicker, identify which ones are really in-market versus just starting their search, and ultimately present the hottest leads with something that compels them to come into the store. In short, they’re able to provide a better customer experience, which increases their success rate dramatically while helping the dealership build customer loyalty – which, of course, impacts repeat business.”

Define the ’Magic’ Number

Sure, you say, it’s easy to say you want quality over quantity. But what exactly is that point of diminishing returns? What is the correct volume of leads per salesperson that will maximize sales without overburdening the sales staff?

While all the experts we contacted seem to be in the same general range, there really is no one magic answer. Much of it is conditional as well.

For example, Metter says that the accepted industry average for the number of leads a salesperson can manage at any one time is 100 to 115. He believes that number is both too high and too low.

“For a salesperson taking in the lead, contacting the customer, enticing him/her into the store, and then trying to close the sale, 80 is probably a better number – if it’s the right 80 leads,” Metter explains. “With that number the salesperson should be able to sell 15 to 20 cars per month. The number changes dramatically, though, if the person making contact is working in a business development center and then handing the lead off to someone else in the showroom. In that case, that person should be able to handle up to 150 leads.”

Steve Stauning, ecommerce director at Asbury Automotive Group, says his company found that fewer leads led to more sales.

“When we began to check for patterns, we noticed that those stores with both the highest closing percentage and greatest number of sales per person also handled smaller lead counts,” he says. “Our top stores were selling twice the number of vehicles per person with half the lead counts of our lower-performing stores.”

That revelation has led to a reparsing of leads as they arrive. Asbury now staffs its stores based on more manageable lead counts.

Michael D. Capps, internet director for Goodson Auto Group in Houston, says 90 to 100 leads seems to work best for his team.

“In the early days of internet leads, we’d have as many as 150 per salesperson,” he says. “We thought the more leads the better, but we found we couldn’t really service the customers as well and really get to know them the way we should. By dropping the number back to 90 to 100, we found we’re selling as many or more vehicles and doing a better job of it. Our conversion rate is higher, too. It’s all about efficiency.”

Understand What Drives Lead Quality

We’ve talked a lot about the importance of generating smaller numbers of better-quality leads. But even within that thought there are differences between used, certified pre-owned and new vehicles.

Quality leads on used vehicles tend to have higher closing rates than new because someone inquiring about a used vehicle is interested in the vehicle – e.g., a red 2007 Honda Accord with 32,000 miles and certain accessories – whereas new-car shoppers are looking more at a type of vehicle (one of many red 2008 Honda Accords with a variety of trim packages).

“Used vehicles are a lot like the online site Match.com for dating,” Kain says. “You’re selecting someone/something in particular from the existing inventory, and each is unique. New-car buying is much more vague. The customers may have a set of parameters, and they may even be very specific. But they usually have several options of where to get it because the supply of matches is more plentiful.”

The growing acceptance of CPO vehicles among consumers has added another wrinkle. They have had a distinct effect on new vehicle sales, brand loyalty and even store loyalty. According to the November 2006 Certified Pre-Owned Consumer Awareness and Purchasing Behavior study by Cars.com and Experian Automotive, customers on in-market sites such as Cars.com may come in looking for a new vehicle, particularly a higher-end brand, only to find that it’s outside of their price range. But if they can find a CPO vehicle that closely matches what they were looking for at the same store, they’re highly likely to make that purchase.

It also works the other way. Customers who come in open to a CPO vehicle may find that the price difference between CPO and new is small enough that they will pay the premium for a new vehicle.

In the end, the quality of the lead is driven by several factors, including the type of lead and the source. It is important for dealers to understand which factors drive their sales in order to determine which will yield the best results — and thus deserve the most attention.

Create the Optimal Scenario

While there are many reasons to prefer quality over quantity, two factors stand out for all the dealers that spoke to us: having a happier, more satisfied and more productive sales staff and providing an outstanding customer experience.

“The ideal salesperson is someone who loves what they do, is a very talented and progressive individual who’s willing to go the extra mile to personalize phone calls and emails and understands what the customer really wants,” says Kain. “When you have that, the rest is about getting the process in place. Providing an optimal number of high-quality leads, rather than a large number of leads that are all over the board. That is what truly drives success.
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Written by Cars.com