It’s time for dealers to ditch their poor quality leads by considering new approaches on the technology and employee front.
There’s never a dull moment in the automotive retail industry. The pandemic continues to impact the business—including digital leads—while also bringing to the surface key challenges that retailers are faced with.
Foot traffic, for example, is still not up to pre-COVID levels, and digital leads are shifting with consumer interests, according to Sandro Torrieri, President and CEO of Carbeeza. In an interview with Canadian auto dealer, he said consumers are moving towards commercial-less radio and television, while many shoppers are oblivious to Google advertising.
“These models of trying to advertise and spend more money on advertising, just do not seem to work—but the cost is still there,” said Torrieri. “Dealers also have this increasing cost in terms of consumer acquisition that hasn’t brought the kind of returns that they’re looking for.”
He said some dealers are being provided with leads that can cost an average of around $150 per lead or more. (According to a 2021 Invoca blog, the average cost for an automotive lead in the United States is $205—USD.) But for the sake of the example, if a dealer buys 100 leads valued at $15,000 (Canadian!), their return on investment is not justified due to the way the leads are created—which Torrieri described as “nefarious.”
“They’re not well thought out; there’s not a lot of effort that goes in by the lead providers to basically ensure that the leads that are given to the dealers are of value,” said Torrieri. “So it’s up to the dealer who buys these leads now to find those consumers that are looking to purchase vehicles.”
Another key challenge that is preventing dealers from making the most of their digital leads is related to training and staff knowledge, according to Activix General Manager Daniel Racine.
Torrieri said the closing rates on the leads that these dealers are buying are in the four to six per cent range. Which means that for every 100 leads that they purchase, they are closing in that figure—an average of say five per cent—which is like buying those five leads for $15,000. Or $3,000 a lead.
Carbeeza is an end-to-end automotive marketplace that uses an artificial intelligence-powered app to match the customer to their ideal vehicle, while integrating financial discovery into the process. The company says the AI portion has been known to help increase leads (and quality ones at that) for dealers.
For example, an article published by the Harvard Business Review in 2017 found that Harley-Davidson integrated AI into their marketing process, increasing their sales leads in New York by 2,930 per cent (50 per cent lookalikes). The dealership went from receiving one qualified lead per day to 40 per day.
As for Carbeeza, the company closed its public venture in June and officially launched in July, so far in Alberta, British Columbia, and Saskatchewan, with other provinces in the near-future pipeline.
Its business model is not based on selling leads to dealers or OEMs; rather, it is free for consumers, while dealers can showcase their inventory (also for free) and pay a commission when the deal is officially closed. By the time the customer goes through the process and gets to the dealer, Torrieri said they want the car.
He considers poor quality leads and the way they are handled by the store’s salespeople (in the form of “dialling for dollars”) as a key challenge for automotive retailers.
“You know, they’re calling somebody and saying, ‘Hey, I’m from so-and-so dealership. I’ve got a lead from you. Come on down to our store, we’ve got a big sale going on,’” said Torrieri.
He said the consumer in question may have no intention of buying a vehicle, but for whatever reason, they filled out information online due perhaps to a value proposition that had nothing to do with cars.
“This is the dilemma that the industry is in, which is that dealers are paying a great deal of money to buy leads and have their salespeople go out there ‘dialling for dollars,’” said Torrieri.
Training & staff knowledge
Another key challenge that is preventing dealers from making the most of their digital leads is related to training and staff knowledge, according to Activix General Manager Daniel Racine.
“This is because you have different possibilities, so leads can be managed either by a BDC (Business Development Centre) or it can be managed with salespeople,” said Racine. “The thing is, is your team aware of everything that can be done, or do they understand the customer journey?”
He said the issue ranges from replying to emails to contacting the customer by text message and implementing a proper follow-up calendar. It is everything that touches on the employee or dealership’s communication technique and their ability to properly request an appointment with the consumer.
Activix is a CRM provider; its system allows dealers to combine inbound lead management with showroom and salesperson activity into one streamlined dashboard.
It also offers training solutions to dealership employees, and groups together other software providers/offerings like TAdvantage websites, 1-SOURCE inventory management, and Motoinsight digital retailing, among others.
Forms for communication
With the various areas the company touches on, it should come as no surprise that Racine sees a need for dealers to take advantage of all forms of communication when it comes to leads. This means sending more than an email by trying to contact the customer via phone or text message/SMS.
A 2021 Invoca blog found that phone calls convert 10-15 times more revenue than web leads, while the retention rate is 28 per cent higher than web leads. Phone calls can also be tracked, allowing dealers to measure full return on investment (ROI). But salespeople can do more than that; they can also send a personalized video.
“Let’s say you’re sending me a price code request on a specific vehicle. I can send you an email. I can send you an SMS. I can also call you, but I can also send a personalized video and present myself, and explain how I can work with you and answer any questions about the process,” said Racine.
Doing so, he said, will provide the dealership employee with an opportunity to create a relationship with someone that will want to do business with them. The key is to use every available option to reach the customer, which means leveraging video messaging and personalized video messaging.
Follow-ups, strategy & automation
Racine also sees the number of follow-ups as a challenge for dealers when it comes to digital leads. For example, how many follow-ups is the employee conducting (one, two or several), and what is their strategy around these follow-ups?
Furthermore, does the employee have the right tools to be able to do all of that? Are they leveraging the technologies they have with automation and lead nurturing, such as automatic email and SMS communication?
In 2020, Facebook Director Henner Blömer said in a LinkedIn post that “Automation and uninterrupted digital processes (zero friction) are the success factors for qualitative leads,” while adding that “The effect can also be enhanced with appropriate offer incentives.”
Racine also advises ensuring the dealership has a proper follow-up calendar and process in place, so retailers have the right strategy—and that strategy should be different for each department.
Advice to dealers
To improve their lead situation, Racine advises dealers to look at their data.
“You have tools that provide you with great data so you can evaluate your overall performance,” said Racine. “Your performance could be from both a source/provider performance, as well as on human performance, such as your salesperson or your BDC agent.”
He said dealers should look at Key Performance Indicators (KPIs) to understand who is performing and who is not, while also considering response time, average follow-ups, performance source (Kijiji Autos, AutoTrader.ca, dealership website), or provider tools such as digital retailing. Then they should review their ROIs.
Racine also advises ensuring the dealership has a proper follow-up calendar and process in place, so retailers have the right strategy—and that strategy should be different for each department.
“You should have a strategy and a calendar for your pre-owned and your new car department, as well as a different strategy when it comes to more highly qualified leads,” said Racine. “And those calendars could be automated, if you have the right tools.”
Consumer expectations are evolving, and their shifting preferences have been accelerated by the pandemic and new forms of communication. It’s now up to dealers to take advantage of what they have and what is around them to keep up the pace with customers.
