This spring saw an unexpected pause in the auto retail industry. Close rates, sales, and, of course, profits all took a hit. We are seeing some bright spots throughout the summer, with dealers reporting business recovering to an extent, especially as vehicle demand picks back up — some even reporting record months for June and July. That said, the automotive market is not out of the woods. Recovery starts with analyzing how you look at leads. This is a balance of quality, not just quantity. It’s not how many leads you get, but how many good leads you communicate with, that will really make the difference to your bottom line.
As consumer demand in automotive has increased, dealers need to work smarter to prioritize the highest quality leads to maximize sales and recover faster.
With digital adoption for dealers and consumers increasing, submitting a lead is easier than ever for customers. On one hand, this is great news, but it also creates more opportunities for bad leads to fall through the cracks. For example, chasing 200 cattle call leads, or those made by people who are overly optimistic about their finances and robo-leads, can lead to 16 wasted hours by two salespeople per month — and that’s only if they are spending 10 minutes on each. When you add up all the associated costs, that can mean losing tens of thousands of dollars a month, not to mention the emotional toll of chasing leads that never engage. Needless to say, low-quality leads are bad business. So, how do we spot the good ones, or, better yet, attract more good leads in the first place?
One way to cut fruitless leads off at the source is proper merchandising. If people need to submit a lead to get basic information like price, chances are that more unqualified people will express interest. This is fundamental to any digital strategy; consumer experience is greater than lead volume. Educate the customer first and provide valuable information to aide in their purchasing process. Instead of creating false hope and a potential pipeline of bad leads, it’s best to include the price on the listing. Listings that do, get 90% more views on their vehicle description pages (VPD). The same goes for the presentation of the vehicle itself on the VPD. Avoid vague stock photos, as it leaves customers guessing what’s really up for sale. Dealers who merchandise their listings with multiple custom photos of the actual car get 91% more VPD views per listing. By displaying this information, you’re not only defending against valueless leads, but attracting more good ones.
Today, two out of three consumers are willing to buy a car 100% online, according to the Cox Automotive COVID-19 Digital Shopping Study. A 100% online experience warrants some new virtual tools that help replicate the in-person experience. Providing access to tools like 360-degree views, video walkarounds, test drives at home, and home delivery will speak to this majority of customers. Plus, seven in 10 customers say they are more likely to buy a car from a dealership if they can start the process online — per the 2019 Car Buyer Journey Study. Offering virtual tools that can help make an online experience better are more likely to result in better leads, or frankly, turn what may have started as half-hearted interest into a viable lead.
“From our store to your door.” A dealer’s appetite for a competitive advantage has not changed in the past decade. Over the next few years, the dealers that adapt and market this process will find themselves at an advantage. Data across Autotrader continuously shows increased consumer demand with our home service options.
Though the bells and whistles like modern virtual tools do matter, it’s important to stick to the data when selecting third-party sites. Many rightfully advertise large volumes of traffic and leads, but the proof is in the close rates. Cox Automotive analyzed nearly 4 million dealership leads from January to April from four of the top listing sites for lead quality, using aggregated and anonymized data from VinSolutions. While competitors did generate more leads, Autotrader’s 61% higher close rate than the closest competitor meant 14% more sales than the closest competitor. All of this is to say, that paying attention to quality (close rates) is a lot more important than quantity (lead volume).
As consumer demand in automotive has increased, dealers need to work smarter to prioritize the highest quality leads to maximize sales and recover faster. Taking advantage of the right digital tools, strategic merchandising, and the right data will help dealers recover and reimagine their business for the future.
Kevin LeSage is Autotrader’s director of digital marketing.
Originally posted on Auto Dealer Today