For top-performing dealerships, the question is no longer whether Internet-generated sales leads are imperative. Now, dealers are asking: What's the right marketing mix for Internet leads from OEM websites, dealers' own sites, and third-party lead providers?
What type of car buyer does each attract? Which source is best to optimize sales while keeping costs low?
Here's a rundown:
OEM.com Leads — The Brand Loyalists
In 2002, OEM sites supplied approximately 13% of Internet leads. While OEMs have the smallest market share in the Internet leads business, their sites attract brand-loyal consumers who are high in the buying funnel.
Dealers respond to these leads for the sales opportunities they present and also as a defensive measure. To maintain credibility and a positive image of the brand, these customers shouldn't be ignored.
Dealers should remember that the same lead is most likely being distributed by their manufacturer to several different dealerships.
The biggest Internet value the OEM brings to dealers is not in generating sales leads, but in maintaining brand identity, says Eddie Coleman, CEO of Hyperdrive Technologies and author of Mastering the Art of Selling Cars Online. “Branding is rarely as effective at the local level, so the branding responsibility really lies in the hands of the OEM both online as well as offline,” says Coleman.
Leads from Dealers' Own Sites — The Locals
Dealership websites can be as important as dealers' storefronts in their given communities.
“Local dealers succeed to the degree that they have top-of-mind awareness in their respective communities,” says Coleman. “Having their own websites geared towards their local community is one way to do that.”
According to Ward's Dealer Business, dealers' sites supplied roughly 30% of Internet-generated sales leads in 2002.
Jason Ezell, vice president of sales at Dealerskins, a web design and creation company, attests that dealers' sites are critical for providing local clientele with information. Yet they must meet certain success metrics to be cost effective.
“The average dealer site in the U.S. has about a 4% visitor-to-lead rate, which is barely more than the response rate for direct mail,” says Ezell. “Top performing dealer sites, on the other hand, have high visitor-to-lead ratios, around 9-20%.”
Dealers should have a good sense of their visitor-to-lead and lead-to-sale ratios to get the return on investment that will justify the expense of their own sites.
Ezell notes that local dealer sites, even aided by strategic search engine optimization, will never place first in a general auto search on Google, or compete with the third parties in terms of volume of visitors and sales leads. However, dealer sites do attract the local clientele and yield relatively high closing rates, in the 19% range, according to Ward's.
Leads from 3rd-Party Providers — The Shoppers
The bulk of Internet leads, about 57% according to Ward's, are from third-party providers, which cast the widest net online to capture vehicle interest.
Julie Ask of Jupiter Media Metrix research firm says, “Consumers still perceive third-party auto sites to be more impartial and innovative.”
She and Coleman see little crossover of consumers who submit purchase requests at both third party sites and dealer sites.
Just as most dealers don't choose only one traditional advertising means, such as radio over television and print, it's important that they diversify when it comes to their Internet lead marketing mix.
“There are dealers out there who are still hesitant to buy Internet leads,” says Ezell, “but they're willing to spend ten grand on helium balloons for the sales lot.”
Dean Evans is marketing director for Dealix.