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How to Convert Leads in a Down Economy

April 2009, F&I and Showroom - Feature

by Michael Snider

If the past year hasn’t taught us anything, then maybe we weren’t paying attention. Our market has changed and, in my opinion, the only way we can ensure success is to change with it. This applies to every component of the special finance sales process. We will need to create more opportunities by making more calls and spending more time on each deal.

“If you keep doing what you’re doing, you’ll keep getting what you’re getting.” Keep that old saying in mind as you take a closer look at the processes you have in place at your store. Are they unchanged from a year ago? If so, it’s likely they can be improved. During challenging times, we have to work twice as hard and expect half as much.

Appointment setting

Through extensive research and analysis of our in-house business development center, we have found that the best strategy for reaching potential customers by phone is to call three times in the following time slots:

8:30 a.m. – 10 a.m., 11:30 a.m. – 2 p.m., 4 p.m. – 6:30 p.m.

These are the times when people are most likely to (a) pick up the phone and (b) discuss a vehicle purchase. If all goes well, set an appointment. We have also found that people are more likely to answer a call from a local number, as opposed to a private or toll-free line. In the event the number on the lead is a cell phone, that may be the one and only contact number. However, if it is a home number, be sure to ask for a mobile number as well, along with the best time to call. All the contact information your reps gather should be entered in your CRM for future use.

For most Americans, their vehicle is the second-largest purchase they’ll make. With consumer confidence at a very low level, the people you speak with are going to be hesitant to go into debt for the sake of a new ride — less so than a year ago, at least. Make an effort to be understanding and explain that now is a great time to purchase due to high rebates, low interest rates and available discounts.

Having set appointments for dealerships across the country, I’ve learned to avoid these four common mistakes:

1. Jumping the gun. Unless they ask, don’t try to pre-qualify leads over the phone.

2. Too much information. Your objective is to get the customer into the store. Give them as much information as they need to get interested, then set the appointment.

3. Low volume. Reaching a prospect after one or two calls is ideal, but we have found it sometimes takes eight to 10 calls to get a lead on the phone.

4. Failure to confirm. Making a follow-up call to confirm each set appointment is an important step that too many dealers ignore.

Return on investment

When working leads in the current market, we have found it difficult to measure the success of a lead-generation program based on average gross profit or even cost per delivery. One benchmark that many successful dealerships have started to use is cost per show up/appointment kept. In this market, if you are able to keep each up/appointment under $125, the cost-per-delivery and gross profit numbers will work themselves out.

Take these figures as an example:

100 leads purchased from Internet lead provider at $20 per lead = $2,000 total cost upfront.

18 ups/appointments kept derived from leads purchased = $111 average cost per up/appointments kept.

Due to the current lender situation, it is tough to determine how many of the ups/appointments kept will turn into deliveries. However, spending less than $125 to get someone onto the lot — someone who otherwise might not have made the decision to visit — is money well-spent. In the example above, only one-third of the ups/appointments kept became deliveries. The campaign produced roughly six deliveries at an average cost of $333. Most dealers would agree that’s outstanding in the current market.

Remember, when working third-party leads, the simplest yet most time-consuming task is to set the appointment and confirm it, no matter how many calls it may take. The only way to turn leads into closed deals in a down market is to turn each lead into an up once the customer’s on the lot.

In closing, don’t let panic spur changes in your approach to special finance. That will never work. Adjustments should be based on actual market and economic conditions. Go back to the basics, look at every opportunity to increase lot traffic and make the hard decisions sooner rather than later. Remember, tough times never last, but tough people do!

Michael Snider is the vice president of sales and marketing at Clearwater, Fla.-based Voisys. E-mail him at [email protected].

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