Your prospect database is one of the most valuable marketing tools for determining what you could do to get those few extra deals per month. Let’s say you sell 200 cars a month. If you have a 30% closing ratio, which means you see about 667 prospects. A dealer once told me that he doesn’t have a 30% closing ratio– he has a 70% failure rate. If you currently have a 70% failure rate and you reduce that by 10% – that would mean about 46 more deals per month.
How can you use technology to reduce your failure rate? The first step is to track all your prospects – in one place. Unfortunately, some dealerships have prospects stored in many different databases; lead providers, CRM, and BDC. Your DMS system is the perfect place to join all your prospects. The common point of entry is the sales manager’s desk. Once a sales manager quotes a customer, the prospect needs to get captured into the DMS. This is the one true place that the successful deals end up going – so we need all the failures to get there too. Unfortunately, many DMS systems were not designed to store prospects – they store real customers and finalized deals.
So what is a prospect – an unsold customer or a failed deal? I feel that every prospect that comes into your dealership must be stored in your DMS systems’ customer database. I can remember when I was a cashier and it took a receipt for a down payment for me to issue a customer number. These expensive, pre-numbered customer number forms were actually kept locked in my desk!
In addition computer disk drive space was expensive, so you didn’t want it cluttered up with a bunch of “non-buyers.” It might take some convincing, but it is time to start entering customers who are merely prospects if you want to reduce your failure ratio.
Let’s look at some reasons why deals fail. The most common is that the customer bought elsewhere. It might seem that “all is lost”, but you can invite these customers to have their service work done at your dealership and assign them to a salesperson. Keeping a close relationship with these non-buyers means that you have a better chance of getting them next time. You can also survey them to find out the reasons for purchasing elsewhere. You might find out that it was actually “price” or that you didn’t have the vehicle they wanted.
Another reason that is getting more common is a customer who was turned down for credit. Is bad credit permanent? No, bad credit can improve, so don’t discard those customers – keep them for follow-up in two to three years. Some customers didn’t get approved because they didn’t have enough down or were “buried in their trade.”
A nice manufacturer rebate program can give your buyers the money they need to make the down payment. They should be the first group to get notification of a new rebate program. In addition to saving customer data, storing their trade information in a trade database might help you find a vehicle for another customer and you’ll get two deals.
Going back to the beginning – it’s important to track all your prospects. If you over-manage your closing rates, you might find that ratio improving by the simple act of salespeople or sales managers not recording all prospects.
Look at your gross prospect numbers for the last few years by month. Is there a drop in prospects? Did it happen at the same time you improved your closing ratio? Look at your credit bureau reports and Internet lead billings. If you have 697 prospects but run 900 credit reports, I bet you’re not tracking all prospects. Find out what this ratio should be for your dealership. You can hire greeters, or have daily contests to increase your number of recorded prospects. Why track all your prospects?
These are people took the time to either call or visit your dealership and they wanted to buy something from you. Wouldn’t you want to know who they are? Don’t you want to store that information so that when they are ready to buy again – you’re the last one who called, mailed or e-mailed? The best way to reduce your failure rate is the increase the amount of “shots” that you have at a customer.