The close is the ultimate measurement of the effectiveness of a sales process.  Retailers around the world go through countless steps to drive interest in their product but it is wasted energy if it doesn’t translate into sales.  Really nice and talented Internet directors lose their jobs every month when they forget that their responsibility is to push unit sales.

There is not one standard within the industry for metrics beyond the basics; close by lead source and a monthly budget.   What is a good closing ratio today? Should a dealership determine a cost per close per lead provider and cut off providers that do not meet a certain minimum standard?   If I have the budget, should I simply continue to buy leads to drive sales?  Are there tools to help?  These questions were given to a group of directors.

Diane Anderson is e-commerce director at Hubler Automotive Group in Indianapolis.  Diane was hired as the BDC manager for Hubler Chevrolet in February 2009 and was then promoted to take over the group in June and create a centralized BDC. The Chevrolet closing ratio moved from 5% to 15% (recent months) while the group (10 stores) is now averaging 11%.  Diane actually accomplished this while cutting both staff and ineffective lead providers.  Her staff includes two full-time business development representatives (BDR) and one part-time employee.  Third party providers were cancelled for poor performance and to streamline the current initiatives. “It made more sense to get the department up to par before wasting money on leads that were not being managed correctly”, stated Diane.

Diane initially focused on producing a quality process in the following areas:

• Management of the leads as they came into the CRM tool (Auto Jockey).
• Phone skills with inbound opportunities.
• Phone skills for outbound follow-up.  Rather than forcing X number of calls, the focus and pay was directed to shows and closes.  Both measurements jumped.  Show ratio jumped from 42% to 63% and the closing ratio moved from 33% to 52% (close/show).  Follow up on every lead (presently at five attempts in 21 days…with a goal of nine attempts).
• Long-term follow-up of the unsold leads.  This included a series of e-mails based on the current status of the client and scheduled reminders for outbound call follow-up (180 days).

Bottom line: the Chevrolet dealership in 2008 delivered 454 units from 9,141 leads with five BDRs.  In 2009, the same dealership delivered 460 units from 4,165 leads with two BDRs.  The additional nine dealerships for the Hubler group consolidated leads to the two BDRs at the Chevrolet dealership in July.  For the second half of 2009, those additional 2,851 leads accounted for an additional 294 deliveries (10%).

Wayne Ussery is the e-commerce director for the Jim Ellis Group in Atlanta.

Wayne considers a cumulative close rate of 10 % to be the floor. The Jim Ellis Group strives for higher percentages, but most stores average 9-12% for a close rate against total leads.  All leads must be tracked to accurately get a true ratio. Wayne does not believe that a true closing ratio is a diluted top number.  Some dealerships for example have a practice of deleting out of market customers.  Wayne also includes phone leads, tracked by sales people gathering data and inputting into the CRM system, as well as chat sessions.

The Ellis Group does break out closing ratios by lead source. They monitor the cost per sale, as well as the “trending closing ratio”.  “We make the choice to cut off a lead source when the trending reaches a low, sometimes based on just closing ratio, but other factors are also considered”, according to Wayne.   If the lead provider generates traffic to the Jim Ellis sites, those leads hold more value which is factored into the analysis.   Those providers, responsible for driving web traffic, will receive some additional grace. Wayne also considers the true value of the lead providers before cutting them off. If the closing ratio is low, AND they are not sending traffic, those providers are fired quickly.  Quality leads are critical to the Jim Ellis team.

The Mile One team consists of 65 dealerships in the northeast.  The better Mile One dealerships exceed 20% with their closing ratios.  The group tracks in excess of 15%.  The goal of the group, according to David Metter, is to drive organic and VIN specific leads for each dealership.  David and his team developed strategies to cut out the fat by developing metrics that allow them to score leads with 50 data points.  One company supporting the Mile One team is RL Polk, which developed a lead scoring tool.  Metter compares it to buying individual stocks.  You would not invest money in a company without some type of analysis.  Metter wants to have the ability to focus on the people most likely to buy and he wants to know what the best possible match is for a prospect (type of unit, price…).  This approach has also cut turn-over with Internet sales people to 3%-4%.  “If you have a stable sales team, you can always get better closing ratios”, according to Metter.  If you can provide the sales people quality leads with a good pay plan, people stay.  The Mile One team has performed well at being process oriented and tactical with their approach to e-commerce.

Apple Auto Group is based in the Minneapolis area and it includes two Ford dealerships and a third location for pre-owned.  Michael Groves is the e-commerce director.  The group has a minimal acceptable performance goal of 10.5% for their closing rate.  The expectation is 12.5% with 15% being a stretch goal.  This includes all Internet, phone, and live chat leads combined.  Michael also grades his staff on how many leads to appointments are set as well as appointments set to show.  The BDC’s job is to get the maximum amount of customers through the door as possible.  When a guest gets to the dealership the hand off process has to be streamlined and consistent to ensure a maximum level of customer service.  All set appointments are confirmed by a sales manager.  The customer is then greeted by that sales manager and introduced to the sales consultant.  The sales consultant is responsible for starting and warming up the VIN specific unit that the guest is interested in looking at.  This also includes confirming that the car has fuel and that it is ready for a test drive, to ensure a good guest experience.

All Internet leads are tracked into their Autobase CRM.  The dealership also tracks sales calls which are routed into a global BDC.  All calls are uploaded to the BRM tool for notes and they are followed up for 180 days.  Michael believes that you need to have a source of truth for all data to ensure the least amount of data error.  Accurate data with notes, email history and the source allows you to make smart decisions on where to invest your marketing dollars.  Michael also believes that it is imperative to break out data including closing ratios by lead provider.  Any lead provider over a cost of $200 per sale is in the red and they may be cancelled. Some providers may be higher than $200 but are a necessity to hit certain volume levels.  One provider for example was slightly more than $200 per sold unit but that provider was specifically tied to the sale of 27 units.  The Apple team will still bend on this formula for good business.   The end result is that Michael’s team delivered 166 units (only Ecommerce deals) during the month of December from 988 leads for a 16.67% closing ratio.  This placed Apple Ford 50^th in ranking for ecommerce sales for all Ford dealerships.

Here are some suggestions:

1. Develop a process that tracks all leads.  Don’t eliminate leads to make your numbers look artificially high. You will never know if you are doing a good job.
2. Track the performance of each lead provider and set store standards with closing ratios and cost per sold unit.
3. Develop a process which treats guests coming in on an appointment special.
4. The goal should not just be grapping any lead provider that you can find.  Higher volume doesn’t always lead to a better department.  You may frustrate your team by providing leads that add little value.
5. Develop a means to score the leads.
6. Focus on quality.  As in the case of Hubler, you may need to take a step backwards to get the basics in place before moving forward.
7. Seek knowledge.  It is only hard if you refuse to improve.  Attend the next Digital Dealer Conference, read the magazine, and subscribe to a blog (Digital Dealer will be starting a blog and you can join Dealer Refresh).