“It's mine! No, it's mine! I talked to them first!” This could well be an exchange between the sales and Internet departments at dealerships.

The debate stems from how to define an Internet sale. As recently as a year ago, the answer was simple. Historically, all phone “ups” and walk-in traffic were the domain of the showroom staff while the Internet department handled emails and purchase requests.

But today, with approximately 65% of new-vehicle buyers using the Internet at some point during the shopping process (according to the latest J.D. Power and Associates Autoshopper.com survey) clearly defining the Internet customer has become harder.

Ironically, as technology improves, the definition becomes murkier. With call-tracking technology and more sophisticated lead-management systems, dealerships are better able to determine who and what the sources for their leads are.

When third-party sites first started promoting the Web as a viable shopping channel, all of the focus was on emails and purchase requests.

“The problem is the industry has moved beyond emails,” says Chip Perry, president and CEO of AutoTrader.com. “We have the technology to track phone leads. And there are dealerships who have strong processes in place to track the walk-in traffic that have come in because of the Internet.”

But here is where the definition becomes tricky.

Should dealerships stay with or revert to the historical definition of counting only those customers who send emails or purchase requests?

Or should they also count the phone leads that clearly are generated by the dealer's website? A third definition, and by far the most liberal, counts anyone who has been influenced in some way by the Internet.

“It is a challenge,” says Alex Vetter, a vice president for Cars.com, a third party lead provider. “We're seeing several dealers wrestling with this topic. And it's creating a turf war between the showroom and Internet departments.”

Even auto makers are struggling with the issue. According to Rick Crossland, director-CRM For Ford Motor Co.'s Ford Division, the company is having that “fundamental discussion today. Just what is a lead?”

Does it even matter?

It does, on several levels. How a dealership defines an Internet lead will most likely determine how pay plans are structured for both the Internet and showroom sales staff. It also determines to which department those leads are allocated.

It also will affect where a dealership puts its marketing dollars and how it uses resources and staff. “Dealers need to know where their leads are coming from and should start staffing those areas appropriately,” says Dean Evans, vice president-marketing, Dealix Corp.

Sidney Haider, Internet director for the Galpin Group, in California, is one of the few dealership managers today who counts only the emails and purchase requests. “More than 60% of our sales would be Internet sales if we included the phone calls generated by our website,” Haider says.

He says it would overwhelm his Internet staff if they had to handle all of those phone calls. Including those phone calls as Internet leads would upset the structure of the dealership.

Galpin owner Bert Boeckmann says counting the phone calls generated by the dealership's website does not provide an accurate picture of the those people shopping online.

“We believe that Galpin has such a recognizable brand, that people come on to the website just to get our phone number,” says Haider. “Those customers really aren't Internet customers.”

Having such a strict definition has not hindered Haider as a dealership Internet manager. His unit was on track for 300 Internet sales in September — all from emails and purchase requests. He almost has doubled Galpin's Internet sales from the same time last year by buying all the leads available from third-party sites.

Galpin receives approximately 2,800 emails and purchase requests a month, according to Haider.

He has three salespeople and eight appointment setters who call customers who have sent an email or online purchase request.

Because of the influx of phone calls, though, Haider says Galpin is establishing a designated business development center to handle phone leads.

Many dealerships today, because of the call tracking products available, now count phone calls stemming from their website as Internet leads.

“The Internet is driving phone ‘ups’” says Vetter. “A year ago, not many dealers recognized this.”

AutoTrader.com data indicate nine of 10 customers shopping for a used vehicle on its vast website phone instead of email.

“We do count the phone calls generated by our website and the lead providers simply because we can track that,” says Cathy Morse, Internet director for the Florida-based Ed Morse Automotive Group.

The Bob Baker Automotive Group in San Diego also includes the phone calls.

“For us, Internet sales are defined as an email lead and or phone-pops generated from any of our websites,” says Brenda Ritzman, the company's Internet director.

Cars.com research indicates customers who send an email lead take an average of 72 days to close, while the phone leads take only 12 days to close.

“Every touch point has a different close rate,” says Evans. “Dealers should prioritize their needs according to the close ratios.”

Dealer John Anderson, owner of the Anderson Group in California, already sees the trend.

“We spend three hours a week on processes, zeroing in on how to handle ourselves on the phone properly,” he says.

“If you have 150 sales people, you'll have 150 different processes. The trick is to get that down to 10 different processes.”

Jay Gubala, e-commerce director for the Herb Chambers' dealerships in New England, says an Internet sale must meet two simple criteria.

“First, they must have been positively influenced to do business with a Herb Chambers dealership via at least one of our Internet expenditures,” Gubala says. “And, more importantly, they have completed a lead that we are able to track via our web based lead management system. Period.”

The most liberal definition — counting everybody who has been influenced by the Internet — is the most controversial. This model includes customers who walk in holding a sheet of paper they downloaded from a car shopping or third-party site.

But few dealers have lead-management processes that can accurately count the walk in traffic. Even dealers with strong lead-management processes shy away from this definition.

Several Internet managers disdain dealerships that count the walk in traffic, saying this definition is for Internet managers who are trying to pad their numbers to make themselves look good.

“The truth is, your numbers are only as good as the people entering them,” says Morse.

Although her dealership group tracks the sources for the walk-in traffic, if customers walk in with a printout from an Internet site, they get handed over to the showroom staff.

“It happens every day,” she says.

It does create an issue with the pay plans. “We try to be as fair as we can in allocating the leads,” says Morse.

The Morse group Internet managers are on somewhat of a salary plan.

“We have 18 Internet managers who work 60-70 hours. We pay them a flat rate because we don't want them focused on the gross but on the process,” says Morse.

Gubala says it's an unfair and inaccurate measurement to count as an Internet sale a customer who researched cars on BMW.com, then, printout in hand, enters the dealership and purchases a vehicle.

“While we are pleased that they have used a computer during the process, it would not be realistic to count them as an Internet sale at Herb Chambers,” he says.

AutoTrader's Chip Perry says dealerships should count all customers who appear in the store after seeing any of the dealer's online advertising, even if they have not phoned or sent an email expressing interest.

“A simple measurement of the email is not a good indication of how effective the Internet is in creating sales,” Perry argues. “Unfortunately, we're seeing new-car dealers who still only count the email.”

According to Perry, “a deep-seeded e-commerce mindset is one of the things holding dealers back from seeing the true potential of Internet marketing.”

He says tracking walk-in traffic requires focus and discipline from the top. He thinks that job is best left to the finance and insurance department.

Although Internet managers such as Ritzman and Gubala think a stricter definition is better, in the end it doesn't matter where the leads come from.

Ritzman says, “The Internet is just another medium of information for the consumer to be more astute before arriving into the showroom.”

For Gubala, the Internet is a subset of the dealer's overall marketing efforts. “I am concerned for any dealer who thinks that their Internet responsibilities begins with a website and ends by counting written leads,” he says.

“Just because all e-guests do not send a written lead does not mean that they are not on line,” he says. “Whether it's the manufacturer's site, Kelley Blue Book's site, Edmund.com, a third-party lead source or the dealer's own website — prospects are surfing, researching and starting their shopping on the Web.”

Perry predicts that the Internet department, in its current form, “will go the way of the Dodo bird.”

Ritzman agrees to a point. She predicts that by 2010, 90% of a dealership's sales will be directly created by the Internet. In turn, that will alter the DNA of the dealership with sales consultants trained to handle leads from any source and trained in the entire process.

“By 2010, you will have a showroom floor with sales consultants who will be working deals from the beginning to the end of the transaction,” she says.

Sales managers simply will monitor deals from their offices, establishing pricing thresholds with the consultant.

“Dealerships that don't see this trend coming, may as well pack up their bags and go fishing,” she says.

700,000 Internet Leads Left Hanging

By Cliff Banks

California dealer John Anderson says 93% of his previous 300 customers had conducted part of their shopping process online. And 81% of them had been on his dealership's website.

“I'm convinced that the Internet should be part of your overall marketing strategy,” says the owner of Anderson Honda in Palo Alto. “The key is how you respond to them.”

That's if dealers are responding at all. According to Forrester Research Inc., of 1.8 million automotive Internet leads last year, dealers only responded to 1,023,000, leaving 700,000 customers hanging. Those 1.8 million leads resulted in but 165,000 sales.

How a dealer responds to an Internet purchase request is becoming increasingly more important to the customer. According to J.D. Power and Associates' latest Autoshopper.com survey, 22% of all new-vehicle buyers say the Internet affected their choice of a dealer, up from 14% in 2002.

Anderson trains his sales staff weekly, teaching them how to handle potential customers correctly, whether they call, walk in or email a purchase request. He makes sure each customer's data is entered into a customer relationship management (CRM) system.

The finance and insurance department asks each customer to complete a survey detailing what drew them to the dealership. Tracking where customers comes from helps Anderson determine where to spend his advertising budget.

“The smart dealers have figured out how to monitor their showroom traffic also,” says Mark Garms, vice president-dealer operations for Autobytel Inc. “The customers are starting at different places today. The key is having an effective CRM tool.”

The J.D. Power survey also says:

  • The rate for buyers 60 years of age and older on the Internet has increased to 47% — up from 39% in 2003.
  • The Pacific and New England regions have the highest percentage of automotive Internet users at 72% and 68%, respectively.
  • Import brands attract the highest proportion of Internet shoppers at 73%, compared to 56% for domestic brands.
  • Automotive Internet shoppers spend an average of 4.9 hours online and visit seven different websites while shopping for their new vehicles.