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…Dealers and Internet lead providers working together to sell cars seems to be a match made in heaven
J.D. Powers and Associates

Is the Internet a Viable Tool for Sales Leads?

Excerpts from Dealer Marketing Magazine
While slow on the uptake, automotive dealerships in the U.S. are now placing a high value on the Internet, and specifically how third party lead providers can enhance dealerships' overall sales. For those that truly take advantage of Internet marketing, dramatic sales increases, and ultimately a new mix of customers, can be garnered. Simply stated, Internet sales leads can be a golden goose if captured and managed properly.

With two of three households in the U.S. using computers on a regular basis (Nielsen/NetRatings reported that 204.3 million Americans have access to the Internet from home), it is little wonder that research sources claim that more than 80 percent of buyers interested in a new, or pre-owned vehicle check out the Internet before making that ultimate buying decision. So here is the question: do you want to take advantage of that ever-growing field of potential customers who regularly use the Internet for sourcing their vehicle purchase? The answer should be a resounding "yes".

Vehicle Websites are a vital link to generating those valuable sales leads. Every day, hundreds of thousands of potential vehicle buyers are using dealer, manufacturer, and third party sites to obtain information on virtually every model of new and pre-owned car, truck, minivan, SUV, motor home, and special use vehicle. Dealers must be able to capture those viable leads and to react promptly and professionally to generated leads. Most stores do that in conjunction with a third party lead provider that processes and filters leads for dealers. With the proper results, dealers get quick, clean leads that dealer sales personnel can contact within a timely period.

In order to take advantage of Internet sales leads, two basic issues must be addressed: 1) the development of an Internet Sales Department (ISD); and 2) the partnering with a third party that can provide you with high-quality, filtered leads.

There are a variety of excellent resources that can provide stores with marketing and lead services. Many offer advertising assistance in addition to lead generation, but the ultimate goal for you is to obtain not only the quantity, but especially the quality, of filtered leads that can actually produce sales.

In an optimum example, if your ISD was to meet all of the consumer demand in your market area, you will want 350 leads available for your marketplace (An approximate number based on metro dealers representing volume franchises). At an average of $24.00 per lead, you allocate $8,400 of your ad budget to buying leads. If the average Internet sales person (ISP) handles from 80-120 leads per month, your ISD should have three to four ISPs dedicated to closing your allocation of leads. If the average close rate was 18 percent, the ISD would close about 63 sales per month, or 16 sales per ISP.

It proves how powerful this medium is, and how important it is to react to it."

By Jarold B. Smith: Dealer Marketing Magazine

Internet Sales Leads Increase Dealer Market Share
As competition in the auto sales marketplace becomes increasingly fierce, dealers are funneling even more money into advertising to gain consumers' attention. In 2003 it cost about $495 in traditional advertising to sell one car. Today that number has climbed by 15.3% to $585, according to Automotive News.

The silver lining in the clouds is - Internet sales. Dealers with solid Internet strategies are still doing phenomenally well, despite a tough market. With Internet sales leads, the cost per vehicle sold still hovers around $200. Even the argument that Internet sales yield lower grosses than non-Internet sales doesn't faze the best Internet dealers…….

All in all, 15%-30% of the leading dealers group's sales are a result of Internet sales leads. And they're using this channel in a way that keeps profit margins up.

The tide has turned and those dealers that have a strong Internet strategy in place are in the best position to keep sales up and advertising expenses in check.

Another way to put it, automotive sales leads from the Internet, is reaching a level of maturity that F&I did three decades ago, there are now some good data points that really make the case for how important third party Internet leads are for dealers. In 2003, auto dealers used 12 million Internet sales leads. Assuming 17 million new vehicles sold in the U.S. annually, Internet leads, with average close rates of 10%–15%, were responsible for approximately 7%–11% of all vehicles sold, or 1.2 – 1.8 million new vehicles last year.

Another important fact is that the majority of car buyers (over 57%, according to Ward’s Dealer Business) who submit these leads are doing so at any of the hundreds of third party websites that have auto content; and not at dealers’ own or OEM-owned sites. The reason for this is that many online consumers want to put what they perceive to be an objective third party between themselves and a dealer or OEM.

Essentially, a dealer that does not accept leads from third party sites is equivalent to a retail floor sales person who ignores a prospect just because they say they’re “just looking.” In short, every prospect that walks into your dealership and every Internet prospect that is screened and verified by a reputable lead aggregator should be viewed as a serious buyer.