This is a question that regularly pops up in conversation and online and may just as well be followed by something like “Where can I find a perfect lead?”
Of course, the easy answers are “The one that works the best for you” and “In a perfect world” in that order! However, those will satisfy neither you nor me nor my editor’s demands. So let’s examine the questions and perhaps quench the curiosity of the above queries.
What types of lead are we talking about, anyway? We should consider Internet Leads, third party or those that come from your dealership website. Then you have the Trigger Lead that comes from credit reporting agency inquiries. How about leads from an IVR system such as VOISYS Loan by Phone? And we can’t forget leads from referrals and of course, repeat customers. There are Direct Mail leads and other variations of those we have already listed.
Now there is not much sense in talking about repeat customers and referrals. They are going to come out on top in any conversation. Those leads are money in your pockets.
No one will ever dispute that these are the best of the best! But what about the rest? What really works and what doesn’t?
Again, an easy answer! They all work in varying degrees depending on your tolerance for pain and rejection. The so called Trigger Lead (it’s called that because a request for a credit report triggers the lead) undoubtedly provides the greatest effort vs. productivity ratio. While reports vary on the closing ratio of these leads, it is generally about 1%. In other words, 1000 leads should produce about 10 sales. That is an awful lot of haystack to move looking for a few needles. Is the value of a lead measured by the gross profit of the sales or the relatively small hit to the budget? Most dealers who successfully use this type of lead have a BDC or designated person following the leads. The real value of the Trigger Lead is in building a database of long-term prospects.
Gathering either IVR leads or Internet Leads from your own website will produce similar results at similar costs. The main cost of the IVR lead is the media (direct mail, print, etc) that drives the prospect to your number. The main cost of the Internet lead is the cost of the SEO, or Search Engine Optimization, which drives the prospect to your site. While the cost/benefit ratio will vary greatly depending on the day, time, media and other uncontrollable factors, the leads are generally higher quality leads and will result in a significantly higher ratio of sales to incoming leads. These types of lead generation will also allow you to blend lead generation with a branding message. The value here is the control over the population that receives your media message. The challenge is controlling the media and/or SEO budgets.
The third-party Internet Lead has had its highs and lows in our industry. Today’s Internet Lead, depending on your supplier, can be on either end of the spectrum. This type of lead lends itself to a higher than average number of bogus leads. Internet leads can be cheap in an unfiltered format and they can be inexpensive in a Scored and Filtered format like those available from VOISYS. I’m certain that you noticed the choice of words in the last sentence. Cheap and inexpensive are in no way the same thing! All the hassle of weeding through the bogus leads to find a real prospect can be eliminated with a scored, filtered lead. The prospect on the telephone can be expected to be qualified to purchase a vehicle. 100 quality Internet Leads should produce 10-12 sales with an upfront cost equivalent to any other type of lead. The value is ; 1.) you know exactly how many leads you will be receiving for your budget dollar and 2.) as compared to a Trigger-type lead, you work through fewer leads. What is your time worth?
So which one is better? They all can be made to work well!
Every prospect will respond differently, so you really need to cover all the bases if you want to maximize your impact. No two prospects are the same, other than in their desire to have a good experience in purchasing and financing a new vehicle.
If you have enough repeat and referral business to keep you and your staff busy all day, week and month, then you don’t need to spend any money to attract additional prospects. As a matter of fact, you probably don’t even have time to read this.
However, if you need to find a way to expand your Special Finance profits, then you need to generate leads. In my, not-so-humble opinion, you need a balance of self-generated (IVR and Website) leads and purchased Internet Leads. The best program blends a base of purchased Internet Leads (preferably the Scored, Filtered type) and fills in with leads from the Dealership website and an effective IVR (Loan By Phone) system. Talk to your vendor(s) about this or give me a call or send an email. I will be glad to give you my suggestions for your situation.
Which is the best value? The value is a measure of the productivity of the lead for your situation.
Just my two cents worth!
About the author
Dick Hassberger, of Lake Orion, Michigan is a veteran of over 50 years in the Automotive Financing and Leasing industry, starting his career with the former Wayne Oakland Bank in September 1960. Dick currently represents VOISYS in Michigan. He has held executive positions with Major Banks, Lending Institutions and Leasing companies and has accumulated a vast store of knowledge in the automotive financing industry, which he regularly shares with his client dealerships as well as readers of this blog. Dick was a regular author for World of Special Finance Magazine.