When Less is More

A primary advantage of online advertising is the ability to drive incremental business, often from shoppers outside of your local market. This is particularly true for used car listings, which capture shoppers from beyond your usual selling radius who are willing to travel for just the right car. But when it comes to new-car leads, establishing too wide of a sales radius may actually work against you, leaving you with leads that are unlikely to close and time wasted working them over. So how wide should you cast your net when purchasing new-car leads? How can you control lead volume for success?

When buying leads from new vehicle leads providers, you may be tempted to purchase as many leads as possible from the widest sales radius with hopes of generating more new business. But if there are too many leads for your sales team to process, or if the leads are from customers who are too far away, you are probably spending too much and decreasing your closing ratio.

To best control costs and pave the way for sales success, consider these tips when purchasing new-car leads:

1. Start Small. A good rule of thumb is to start small, perhaps by setting a monthly cap on the number of leads received or the money spent on leads, and expand from there. In other words, determine the number of leads you can handle in a given month and then choose the smallest possible sales territory that will generate that number of leads.

2. Know Your Territory. As you know, it pays to know your territory. Understanding your local marketplace can help you make better lead purchasing decisions. For example, take into account the proximity of competing dealerships when setting your lead radius. If your local competition resides to the west of your dealership, it may be advantageous to create a custom territory that aggressively targets car shoppers in zip codes to the east.

3. Defend Your Turf. Dealers who focus on protecting their own backyard tend to have the most success. In a metropolitan area like Chicago for example, consumers have their choice of several Honda franchises, and they are not likely to travel out of their way to buy a vehicle – unless it is truly unique. So setting a lead radius of 50 miles is unlikely to generate more business. In fact, the odds of closing the sale decrease. Even if you are able to make the sale, chances are good that incremental revenue from service and accessories will go to a dealership that is closer to the buyer’s home.

4. Control Lead Flow. To ensure that each prospect receives a prompt response and that the relationship is properly managed across the buying cycle, many successful dealerships control the flow of leads. New vehicle leads typically take longer to close than leads from classified advertisers, and it’s important that car shoppers not get lost in the process. You can regulate the leads you receive by setting a monthly cap or asking the provider to “smooth” the leads. Smoothing evenly distributes the amount of leads delivered over the course of the month so that you receive a consistent number of leads each day. Enabling the sales team to better manage lead follow-up eventually leads to more sales.

Although you may see fewer leads in total with this approach, you should also see a higher closing ratio and a lower cost per sale.

Choosing New-car Lead Providers

You have many choices when it comes to buying new-car leads. Understanding the differences between these providers can also help you to better target lead acquisition for sales success. Three common sources include:

  • Lead generators (e.g., NewLeadsPlus from Cars.com and Automotive.com) use search engine marketing to direct car shoppers to proprietary websites where car shoppers provide their contact information and the type of vehicle they’re considering. With Cars.com’s NewLeadsPlus offering, these leads are generally sent within 30 seconds to 7 minutes.
  • Destination websites (e.g., manufacturers and Cars.com) solicit contact and vehicle information directly from car shoppers when they visit the site to obtain specifications and pricing. Leads typically are sent to the dealer in near real-time.
  • Lead aggregators (e.g., Dealix and Autobytel) acquire their leads from a variety of online sources, including lead generators, other lead aggregators and destination websites, and pass them along to dealers. Dealers typically receive the leads within 30 minutes to several days.

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