In these tough economic times, many dealers are looking for ways to cut expenses and protect cash flow. Some will feel the need to cut back on advertising, while others will recognize that advertising can be a lifeline in a down market. The trick is to focus advertising dollars on those things that produce the best results in relation to the dollars spent.
Purchasing quality leads and effective direct mail programs can be a good use of advertising dollars. If generated correctly, Internet leads and direct mail can produce some of the best results for the money. Here’s my list of the top ten attributes dealers should look for in a lead provider:
2. Ask about the quality of the leads and where they come from. Are they bought from other providers or aggregators, or are they generated by the lead provider itself? Obviously, providers can better control lead quality if they generate the leads, especially if they employ targeted marketing techniques focused on consumers truly interested in obtaining auto financing. Good lead providers will take steps to ensure the leads they acquire from other providers and aggregators also represent consumers seeking auto financing.
3. Ask about the freshness of the leads you’ll be buying. You probably want leads that were generated in the last 30 days or less. A lead’s financial circumstances can change dramatically in a short time. And if the lead is motivated, he won’t wait long for you to contact him. Old and recycled leads are a waste of time and money. You may pay more for fresh leads, but your results should be better.
4. Make sure your direct mail provider is using a mailing list that is in line with the customer attributes and demographics you’re seeking. Your return on investment will only be as good as the quality of your mailing list. Like Internet leads, your mailing list should be generated just prior to the drop date. This simple step will help to increase the likelihood of positive results.
5. Check references. Ask for a list of references and call them to discuss their experiences with the lead provider. Don’t be shy about asking what kind of return the reference feels it gets from the provider. In this economy, you don’t want to spend money on campaigns and leads that don’t work.
6. Understand the bona fides of the providers you select. Many lead providers have been around for a long time and are well respected. New providers can be good, but be sure to check out their experience. No need to take a chance on a fly-by-night outfit.
7. Make sure your mail piece is clear and not misleading. Your state’s unfair and deceptive acts and practices laws may provide the basis for a class action lawsuit if your mail piece takes too many liberties with the truth. Don’t cross the line from puffery to deception. You want the respondents to do business with you, and they won’t feel good about it if they think they’ve been misled.
8. If your provider uses prescreened lists derived from information in consumer reports, be sure that the mail piece contains a firm offer of credit. Don’t rely on your lead provider to get this right — you’ll be liable even if the provider indemnifies you. Spend a little money to have your counsel sign off on your mail pieces as well — it will be worth it in the long run.
9. Use lead providers who understand your business. It’s a waste of time and money if you have to teach a provider how your business works.
10. When you find a good provider, stick with it. You’ll always haggle about the price, but it may be worth it to pay a little more for proven results and a commitment to quality.
In short, don’t be afraid to vet your lead providers as you would any other vendor. The good ones expect it, and you probably don’t want to take a chance on the ones that don’t.
Michael Benoit is a partner in the Washington, D.C., office of Hudson Cook LLP. He can be reached at [email protected]. Nothing in this article is intended to be legal advice and should not be taken as such. All legal questions should be addressed tocompetent counsel.