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Calculating Tomorrow’s ROI on Internet Leads

August 2009, F&I and Showroom - WebXclusive

by Rob Hagen

Most dealers have a love/hate relationship with internet leads. More and more dealers are shifting their advertising dollars to the internet, but many get frustrated with the leads they get. Well, I am here to tell you that there are no bad leads, just bad processes.

Next week, I’ll dive into good practices for handling leads, but this week I want to get you thinking about return on investment (ROI).

Most dealers calculate leads ROI this way: “I bought 100 leads this month and sold eight cars for an 8 percent ROI.” That might be today’s ROI, but my question then becomes: What did you do with the other 92 people? This is where you find your hidden treasure, or as I like to call it, tomorrow’s ROI.

Every dealer in the country has spent the last year cutting staff and expenses, but in the very near future, dealers will be creating a new position: database manager or database supervisor.

Think about it. What is the single most important asset to a dealer? His database! There are car deals just waiting to happen every month from your database, but very few dealers work their database the way they should.

Let’s say you have 92 people who want to be customers of yours. How do you handle them after the first initial attempt at contact?

Internet leads don’t close as often as walk-in customers. That’s because Internet customers are in the earlier stages of the car-shopping process, and most are simply looking for information.

Credit lead customers are looking for information to see if they can get approved. New-car leads are looking for information on the newest models, incentives, and availability. They want information to help them get closer to the decision stage.

So what can be done to stay in touch with your database long term?

E-mail blasts are becoming a staple in dealer’s ad budgets. Several of my clients have experience mixed results using e-mail blasts. However, considering that there is virtually no cost associated with running such a campaign, any sales is gravy, or lagniappe (“a little something extra”), as we call it here in New Orleans.  

You can do them in conjunction with manufacturer programs. If Toyota comes out with zero-percent financing on the Camry in the middle of the month, you can email anyone who came in on a Camry over the last year or two, or however long you want to go back.

If you have a business development center, a great way to work your database is by doing phone call blasts. You can purchase very inexpensive software that will call a portion of database and leave a message or play a recorded message of your choice.

A dealership newsletter is also a great way to stay in touch with your database. You can do a newsletter that incorporates every aspect of your dealership. For example, service and parts can incorporate coupons into the newsletter, sales can list new rebate programs or used car specials, and finance can offer discounts on aftermarket warranties.

Besides that, it is a great place to let people know about how your store is involved in the community. Plus, you can give special recognition to employees, salesmen, and service techs of the month.

E-mail blasts, phone blasts, and newsletters are great, but you need to make sure your database is as current as possible. When you talk to a customer either in sales, the BDC, or service, update your CRM with new phone numbers, addresses, and email addresses.

In our earlier example, you had 92 people that went unsold in the month you bought the lead. Let’s say you properly work these leads for the next year and sell one of them each month. What is your ROI now? Let’s see, add 12 sales to the original eight from the first month and now you’re looking at an ROI of 20 percent.

It’s been difficult in the current economy to look beyond the current month, but you need to focus on the big picture. You need to realize that you have a huge opportunity to find hidden treasures in every lead, but just remember it takes a little digging to find the gold.

To e-mail Rob, e-mail him at rhagen@special-finance.com.

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