Unless you’re viewing an archived version of this magazine or you just picked this up in the service waiting area at the dealership, you are likely reading this article within a week or two either way of the 10th Digital Dealer Conference and Exposition in Orlando. Like the last few Digital Dealer Conferences and every 20 group I’ve addressed in the past 24 months, there are still a lot of dealers interested in social media. Dealers want to first understand and then leverage this medium to grow their sales and create loyal customers.
Facebook is the most visited website on earth. That’s where all your prospects and customers are, right? If you are like most dealers, you refocused much of your e-commerce sales efforts toward social media in the last year. In fact, you may even be among the group of dealers who’ve completely sworn off third-party leads in favor of new media. So, how is that strategy working out for you and your sales team? Are they having fun posting cool updates on Facebook and Twitter? How about unit sales growth from social media? How is that going?
This is not an article about social media, except that I am hopeful it puts a better perspective on what is and what is not truly driving your online success. No, this is an article about how successful dealers are putting away their egos and fears, taking a pragmatic approach to Internet sales and leveraging all lead sources for growth. This article is also a sneak peek into a ground-breaking (if I might say so myself) study that David Kain from KainAutomotive.com and I have been working on for over a year. The study, a deep-dive into what truly separates the great from the good with respect to Internet sales, will also be the subject of our joint session at 10th Digital Dealer Conference and Exposition.
Why a study?
Although social media as a primary marketing source has (finally) begun to have a few vocal detractors in the automotive blogosphere, it still seems that everywhere you turn the loudest and most talkative people in our business are touting the success-inducing aspects of Facebook, Twitter, FourSquare (not what you think) and even social buying services like Groupon and LivingSocial for your dealership. These same folks, you’ll have to agree, have also downplayed nearly every “traditional” way dealerships acquired Internet customers in the past.
We listened to what was being broadcast to dealers. We read it for ourselves, we attended the lectures and we heard about it from dealer-clients and at industry gatherings. While most dealers have cautiously (and correctly) taken a wait and see approach towards unproven avenues as primary marketing sources, we did begin to discover that some previously pragmatic dealers were abandoning some of their successful customer acquisition activities, like third-party leads, and moving all of that budget to what amounted to acts of building goodwill.
We found the shift from the concrete (customer acquisition) to the abstract (building goodwill) interesting, and when you coupled that with the loudest industry voices screaming that dealers weren’t making this shift fast enough, we found it a bit alarming. All of this signaled to us that a closer look was necessary.
The famous ‘magic bullet’
Because so many vendors over the years claim to have discovered a true magic bullet – that illusive product/service/process that requires no work or dealer oversight but will deliver incredible and unprecedented sales and profits – that I am still shocked every time I see a dealer fall for this pitch.
Who can you believe when every source claims to be “The One” and that all of the others have run their course or aren’t worthwhile? Additionally, because so many of these sources can quickly and easily secure endorsements from high-profile dealers, it’s hard to know which vendor can be an asset and which one will just be a drag on your budget.
Do you remember the promise of lead scoring at the dealership level? How about video search engine optimization? Selling directly to consumers online from your own website? Flash websites? Five-dollar leads? Female-friendly certified salespeople? Each of these “solutions” came with the promise of phenomenal results and at least one high-profile dealership as an endorser. Yet while a few of these are still around in one form or another (lead scoring is valuable at the provider level, for example), none of these ever came close to the promises we were pitched, nor did any of them replace a proven way to acquire an Internet customer.
Independent Internet leads: The first and still hanging in there…
Interestingly, the one lead source that started it all in automotive Internet sales, the Independent Internet Lead (IIL, also known as the third-party lead), has been declared dead by “the next big thing” more often than I can count. Once dealers got their own websites, they would no longer need Independent Internet Leads. With the growth of classified websites, eBay, Craigslist and others, the IILs were expected to drop like flies. After dealers discovered pay per click advertising, IILs would be cast aside. As soon as dealers began to adopt search engine optimization, they would no longer need IILs. With behavioral targeting and retargeting using dealer banner ads, no one was going to have to buy these leads. Social media would surely spell the end to the IIL business. And so on…
The reports of their demise seem a bit, if not greatly, exaggerated. Although they’ve survived and even thrived through the various predictions of their elimination, the term “third-party lead” is sometimes considered a dirty word in many dealerships today. In fact, while all of the big players in the IIL industry have instituted better quality controls, adopted improved lead scoring, added quality pledges, incorporated additional lead-generating products and/or improved their lead targeting for dealers, they still seem to be in the crosshairs of every new product that is competing for dealers’ marketing dollars.
This quality disagreement begs the question: “What is the value of Independent Internet Leads to today’s dealer?” Not surprisingly, the answer to this question depends on whom you ask. Surprisingly for most dealers, however, is what can drive closing percentages up or down for any given lead source.
Why do some dealers rave while others rant about various providers?
There are a number of reasons a dealership manager might be a fan of one lead source and a foe of another. Throughout my career, I’ve encountered biases for and against every single “solution” in the automotive space. More often than not, negative biases that are unjustified are the result of poor understanding, poor training, a preference for the previous supplier or a prior bad experience with the given provider; while unjustifiable positive biases are most often caused by poor understanding, a lack of true measurement, friendship or other relationship with the seller, a hatred for the previous supplier or a need to rationalize the new product/purchase.
Whatever the cause of competing feelings about a lead source, when you encounter, however, an equal number of detractors as you do supporters for a given product, you have to be suspicious of the motivations of both sides.
This reminds me of a discussion with a large store’s Internet team in 2008. The store was expanding their Internet sales team and needed to acquire additional leads. When various suppliers were mentioned as possible additions, roughly half the team would explain how ineffective that source was, while the other half would argue just the opposite. This was the case whether we discussed specific IIL suppliers, automotive classified sites or dealer website parasites. It seemed everyone had a reason for or against everything, and there was no consensus. Moreover, no one felt any provider was “average” or “okay;” they were either the best or the worst.
How is it possible that a group of Internet salespeople, working in the same dealership and under the same rules, processes and management could have such differing opinions? The answer, of course, is that they didn’t form the bulk of their biases while working for this dealership – they acquired them over the years while working for others. Of course, this begs the question: “How is possible that a group of Internet salespeople, working in the same city with similar brands could have such differing opinions?”
A formula for success: progressive leadership + innovative marketing + continuous process improvement
Without disclosing everything about the study on these pages (otherwise, why would you need to see us at 10th Digital Dealer Conference and Exposition or read the study cover-to-cover?), the answer to the last question I asked is that all of these Internet salespeople worked under different leaders, with different levels of innovation in their marketing and different commitments to process improvement.
More than anything else, our study showed that truly successful dealers can have success with virtually any source of leads. Those dealerships that provide progressive leadership, encourage others’ ideas and innovation, and are deeply committed to growing their Internet sales have not abandoned any lead source. In fact, as our case studies demonstrated, dealerships with these three traits embraced every opportunity to capture contact information for new prospects. Moreover, they clearly understood that this attitude gave them a distinct competitive advantage.
By realizing that no matter what you do, you cannot drive every in-market prospect to your website or Facebook page, (nor can you compel every one of these consumers to complete a lead form or pick up the phone), the progressive dealers in our study came to the conclusion very early on that by leveraging lead sources abandoned or downplayed by their competitors, they could kick their competitors’ collective butts and drive incremental sales and revenue. And, that’s just what they’re doing…