Just What Is Internet Success?

Everything is measurable. Talk to Internet consultants long enough and you may be repeating that phrase in your sleep.

David Kain

August 1, 2007

5 Min Read
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“Everything is measurable.” Talk to Internet consultants long enough and you may be repeating that phrase in your sleep. The fact is, in the context of the Web, most things are measurable.

That gives you the ability to know whether you are getting what you pay for with your Internet leads.

The great equalizer when it comes to Internet marketing is being able to know cost per vehicle sold.

Although this amount is calculated on the financial statement for all forms of advertising, creating a separate category for your Internet marketing will provide a fairly accurate picture of whether you're getting your money's worth.

The value a dealership receives from its Internet marketing will vary from source to source. Even in the best case, whether you feel you are getting a fair return on investment depends on your perspective. Ultimately, the deal has to pencil.

Any two dealers can debate the merits of their return on investment from their Internet sources and claim success. But to really measure it, you need to understand what your goals are.

For example, let's say Dealer A has a goal that is straightforward: “We want to sell more vehicles.” Dealer B, meanwhile, has a goal that is more fiscally focused: “We want to have the highest close rate.”

Dealer A could generate 100 leads and sell five vehicles and consider it a success because he sold more vehicles even if his close rate was 5%. Dealer B may not consider it successful unless he has a 15% close rate and sells 15 vehicles from 100 leads. It all depends on the point of view. Bottom line: determine what your goals are and then work to meet those goals.

It also is important to understand that different sources will provide different results.

As your Internet operation expands you will need to add more sources of leads for both new and used vehicle. Measuring the results from these sources can prove difficult so I have attempted to simplify it as follows:

New-Vehicle Lead Sources

Measuring results with new vehicles is straightforward. If you want 100 leads then you pay a price per lead and you receive 100 leads. So if the per lead cost was $25 then you will spend $2,500.

This is accurate unless the provider only offers them at a subscription rate per month, in which case you still will want to break it down to a per-lead cost.

For example, a $2,500 subscription cost generated 100 leads so the per-lead cost for the month was $25.

Calculating your cost per vehicle sold is the next step and is simple to do.

Let's say you purchase 100 leads that cost you $2,500. If you sell 10 vehicles then your “marketing cost per-vehicle-sold” equals $250. If you sell 15 vehicles then your “marketing cost per-vehicle-sold” equals $167.

No guesswork and no need for the lead provider to tell you that you're are doing a good job. You can tell by the numbers.

Used-Vehicle Lead Sources

Unfortunately, it is not as easy to determine whether your used-vehicle lead sources are providing a good return on investment. Used-vehicle Internet shoppers provide a different buying dynamic than new-vehicle shoppers.

Most times their quest is simple. They have seen the vehicle online, considered the price, considered the options and they want to know if the vehicle is still available. The quickest way to accomplish this is a phone call.

So the customer calls the store, talks to the salesperson and finds out the status. If an appointment is scheduled, then the dealer can track the call. But sometimes the call is not tracked if there is no appointment.

Did the used-vehicle online advertising source generate a call? Yes. Was that valuable? Yes. But what's the value of the call? That depends. Unless you use a tracking tool to measure the call volume and pull out duplicate calls from the same number, you're just guessing.

A few years ago, advertising used vehicles online was a no-brainer because the cost was so low.

Back then, it was not as important to have call tracking in place. Today, tracking is very important with dealerships spending more than $5,000 a month to list their vehicles on a couple of used-vehicle sites.

Sure, the provider can give you a score sheet that demonstrates the call and lead volume generated on your listing. But do you really want the provider to score its performance? Shouldn't you be the one scoring it?

You will not capture all the information to determine the value of the source. But with the ability to measure lead volume electronically and to measure phone calls, you'll get an accurate picture.

It boils down to cost per vehicle sold. If you spend $5,000 to market your used vehicles online and you sell 10 used vehicles, then your cost is $500 per vehicle sold. And that is way too high.

A better figure is spending $5,000 and selling 20 used vehicles making your cost per vehicle sold $250.

Whatever way you measure how your lead sources are performing, understand it is an inexact science. For instance, sometimes a new-car prospect will buy a used vehicle, and a used-vehicle prospect will buy a new vehicle.

So measure the best you can, look through your own lens and decide for yourself whether your return is good.

David Kain is president of Kain Automotive Inc. He can be reached at [email protected] 859-533-2626.

Questions or comments about this column? Send us an e-mail at [email protected].

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