The Great Internet Lead Debate

Do dealerships need better leads or better lead management? Depends on whom you ask.

Dealership Internet managers say they want better leads. According to 62% of surveyed Internet managers, better lead quality will strongly enhance their dealership's Internet initiatives.

In the same survey, 69% of the Internet managers want auto makers to provide more support for dealers in the areas of pre-qualifying and screening of Internet leads.

While dealers may want better Internet leads, other studies show that as many as 45% of the approximately 1.8 million monthly purchase requests that potential customers send to dealerships never receive a response.

So, what needs to improve, leads or lead management?

The answer is both. No doubt the manufacturers and lead generators need to improve the quality of leads they send. The issue of duplication — when a lead aggregator may harvest a lead and send it multiple times to the same dealer through various channels — still plagues the industry, although better technology is making it less of a problem.

Then there are the lead aggregators, or generators, that send one lead to different dealers. Conventional wisdom says this practice is a bad idea, and many dealers chafe at the thought of paying for a lead their competition also gets.

However, some dealers don't mind because it gives them a window into what the competition is doing.

Despite a need for improvement in lead quality, success in selling to those leads depends on what is happening in the dealership.

One issue is that many dealers still do not hold their Internet managers accountable for how well leads are handled.

It becomes easy for Internet sales people to engage in what is called skimming: working the leads they believe have the best opportunity for turning into a sale. Meanwhile, less attractive leads get left by the wayside.

“It is a natural a thing,” says Dennis Galbraith, a senior director with J.D. Power and Associates. “Some of their best deals are the ones some drunk bumpkin could sell.”

The reality is, says Galbraith, dealers make money working leads, not buying leads. “The salesperson should work every lead as though the person who just entered your store matters as much as the one looking you in the eye,” he says.

Mike McFall, president and co-founder of Veretech Inc., an online trade appraisal service for dealer websites, says a philosophical shift needs to happen in dealerships before they can start talking about tactics.

He suggests dealers include Internet activities in topics discussed in monthly review meetings. That includes developing metrics so progress can be measured.

“If you know you're going to be asked about it, you're going to be thinking about it,” McFall says.

Another way dealers can improve lead management is to employ automated follow-up processes.

“We've seen dealers who are automating their process with technology, improving their close ratios as much as 30% to 50%,” says Mark Garms, senior vice president-dealer operations and strategy for Autobytel Inc.

Typically, a dealership closing 8% of its Internet leads can move the needle to approximately 12%, he says.

But Internet sales people trying to manage more than 100 leads a month are going to fail, according to several studies. In fact, the sweet spot is approximately 80-100 leads per salesperson.

A critical component is understanding how the Internet has extended the buying cycle. Before, customers would spend a week shopping for a vehicle. Today, customers can spend from 60 days to 90 days, says McFall.

“So dealers need to extend out the length of their follow-up processes,” he says.

Dealers also may want to consider ways to leverage their websites more, Galbraith says. According to J.D. Power research 48% of all automotive Internet users will visit at least one dealership website. Meanwhile, less than one in five will buy from the dealership they are referred to.

“We've got to get creative in how we link customers to dealerships,” Galbraith urges. One way is to use the website to match customers with specific sales people, he says.

As technology improves, applications such as video will make walk-around presentations on the website a common occurrence.

Some dealers are seeing strong results using chat or instant messenger technology, as customers become more comfortable with doing more online.

Veretech's online trade appraisal product is starting to take off, after five years of tweaking and selling the concept.

A couple years ago, one dealer called it a product in search of a market. Now that same dealer says the product is driving at least 150 qualified leads per month through the store's websites.