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| In this article, we will look at the different lead sources and evaluate their pros and cons. |
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Third Party New Car Leads |
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| Companies such as Dealix, AutoBytel, and CarsDirect have made their mark on the car business by being found by consumers and connecting them to dealerships. They each have websites that are well marketed and designed to get the customer to request a quote for a particular vehicle. |
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| These quotes are then sold to dealerships, OEMs, and even each other. Eventually, the lead will land in one or more car dealer internet department’s inbox and called. |
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| Pro: Most leads are “scrubbed” to some extent. In other words, they are emailed instantly to verify an active email address and the phone number is cross-referenced to make sure it actually exists. |
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| Pro: Many of the leads are long and short term. Because they represent a few people who are higher up in the buying funnel and probably weeks or months from purchase, they give the longest lead time for a dealership to make an impression. |
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| Con: Low conversion rates. Much of this is because many dealers do not handle them right. When a customer says they are just getting started and probably won’t buy until early next year, most internet representatives never call again. Those who do call will find that these customers do buy between 3 weeks and 3 months later and that their follow-up was a motivating factor. |
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| Con: ROI. Based upon industry standards, a sale from a 3rd party new car lead provider costs $260-$440 each. While this is still superior to most forms of non-internet advertising, it is still not as good as other sources. |
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Third Party Used Car Leads |
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| Many listing sites like Autotrader, Cars.com, and UsedCarsOnly.com allow dealers to post their inventories on their sites to intermingle with their competitor’s vehicles, as well as private sellers. This “one-stop-shop” mentality makes these websites very powerful and highly visible. |
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| Unlike third party new car leads, the used car leads will normally come in on a specific vehicle. The customer can set up a test drive, get a quote, pull a vehicle history report – the technology on these sites changes constantly. |
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| Pro: Exposure. Some people will never visit a specific dealer’s site, preferring to search through a larger pool of vehicles. If a dealer’s cars aren’t listed somewhere, they’re missing out on a large section of the car buying population. |
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| Pro: The quality is normally good. Conversion rates are second only to direct website leads because people have seen pictures of the vehicle, know the equipment and miles, and are aware of the asking price. |
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| Con: Expense. Getting a good listing on a quality used car classified site is not cheap. In many cases, it is more expensive than the dealer’s own website. |
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| Con: Rate increases. Many of the companies, especially the big ones, know that their service is addicting. Once a dealership tastes the infusion of quality leads and subsequent sales, it is hard for them to let go. Rate increases over the last couple of years have been often and steep. |
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OEM and Other Leads |
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| With credit leads, direct from manufacturer leads, and microsite leads, there are other ways to generate sales. Because these are usually low cost, low return, they should be treated as such. Take them because they’re there, but don’t bend over backwards with them. |
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Dealer Website Leads |
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| These are the jackpot leads. They are from customers who came to your website, many of whom searched specifically for you on the internet. |
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| They are aware of your inventory, prices, location, hours – they have all the information they would need to come to your dealership immediately and buy a vehicle. |
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| Still, they haven’t. They are teetering, searching for more information or some other incentive to make the drive. They want a price, to check availability of a particular vehicle, or some other question that requires a response. |
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| They want to be convinced to buy from you. There is no other reason for them to send a lead to you. Your only job is to sell them. |
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| Pro: Paid in full. Website leads are normally provided as part of the service that you purchased to have your website designed. There is no need to watch the budget or cut off a lead stream for any period of time. You pay for the website so you might as well get the leads. |
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| Pro: No surprises. Often with third party lead providers, the customer is not aware of who will call them. They may have a specific location or area that they want to go to buy their car. With third party leads, they might get a call from a dealer from which they never intended to buy. If they send a lead in from your website, they know it’s your dealership that will be contacting them. |
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| Pro: Multiple lead generators. Website leads from a great dealer website can be credit applications, quote requests, parts or service requests, or directly from live or virtual inventory. With so many calls to action, a customer has every opportunity to make contact. |
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| Pro: ROI. There is no better way to make money from an internet lead than one that comes from the website. It drives traffic, both virtual and real, in a way that makes its cost infinitesimal compared to return. |
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| Pro: Closing rates. They are already considering your dealership or they wouldn’t have put in a lead. A good internet team will take advantage of these gold leads because they have the highest potential closing rates in the industry. |
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| Con: None if you have a great website. |
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