Lead scoring is not a popular topic among most Internet directors, but it is a practice they may have no choice but to adopt.
The concept is as Internet leads come in, they are assigned a number based on their likelihood to turn into a sale.
Urban Science came up with the idea about five years ago, but didn't really start talking about it till last year.
Most of their work has been with OEMs, which is typical for Urban Science, a firm that many dealers do not consider a friend.
The R. L. Polk Co., meanwhile, is launching a scoring tool for dealers, and any other automotive-related entity this month. It began piloting it last spring with the Mile One Automotive Group, with some impressive results.
There is a lot that goes on behind the scenes to make the idea work. Polk takes the dealership's historical sales data and lead data going back one year and matches it against its market and registration data.
It then builds a scoring algorithm that all of the leads are run through. In theory, it becomes more of a science and less of a gut call.
One question is, are these solutions in search of a market? Many Internet directors tell me they would not use such a tool.
They bravely say they want their sales people handling every lead as if they can be sold today. They don't want their people scoring leads.
Other experts wonder if assigning a numerical value to leads will turn the leads into self-fulfilling prophecies. Their point is a good one.
For example, the Internet salesperson fires up the computer in the morning and finds 20 leads — seven are assigned a number between 8-10 (which means they are most likely to sell), while 13 are in the 3 to 5 range, thus not likely to sell. Which leads do you think will get the most attention?
The problem is, lead scoring goes on all the time without the data to back it up. Internet sales people often make judgment calls, using only what their gut tells them about which leads to work hard. This practice is called “cherry picking,” or “skimming.”
We can deduce that by looking at the large number of leads that are not responded to. Depending on which study you want to use, the percentage of leads that do not get a response range from 40% to 60%.
I've been wrong before, but I'm guessing third-party lead providers already are devising ways to use lead scoring as a way to charge dealers a higher premium for their leads, especially for the “hot” leads. Can you imagine paying $30-$40 a lead? Maybe so, if you know that lead has a 40% chance of closing.
I also would bet that there are some savvy dealers who are planning on using lead scoring as a way to force the third-party vendors into providing them with better leads. There are a multiple of ways to make it work in your favor.
Just don't reject the concept completely. The point is, don't let the vendors get the upper hand and use it as a tool to beat you over the head with. Find a way to use it to your advantage.
It is possible that Polk's approach to the market may be faulty. Lead scoring already has a negative vibe in the dealership, so why not position it differently, such as lead segmentation or lead categorization?
Instead of scoring leads based on their likelihood to close, Polk or Urban Science could create a model that segments the leads based on how they should be handled.
Many of those leads that receive a lower score possibly are buyers just starting their shopping process and may not be ready to buy for a couple of months.
You could structure your business development center or Internet department in a way that funnels the leads to the appropriate person or department. One group could handle the hot leads, while another group handles the shoppers who aren't ready to buy.
Even if you don't like the idea, you'd better start paying attention to it.
Questions or comments about this column? Send us an e-mail at Dealers@wardsauto.com.