It is no secret that leads from third party providers such as Auto Trader and Edmunds have a high sticker price and low quality. These days you can read any industry publication (offline and online) and learn about dealer dissatisfaction with the current state of lead generation in the auto industry. When it comes down to it, these third-party providers cannot even claim full attribution for the leads they sell.
The truth is consumers are bombarded by car buying messages from every channel and a plethora of sources — OEMs, dealerships and lead providers. In 2014, the automotive industry spent more than $6 billion on advertising messages. These ads combined with social media influence the car buyer’s decision-making. Third-party lead providers reap the benefits of the auto industry’s spending on sales incentives, advertising, and marketing efforts. They just happen to have a conversion form in the right place at the right time.
When it comes to closing deals timing is critical, especially when it comes to the generation that is behind the current increase in automotive sales, Gen Y (20 to 37 years old). A recent J. D. Power study reveals that this powerful new generation is NOT loyal to car brands or dealers. If dealers want to acquire young buyers, or retain their Gen Y customers, they must learn how to tap into the car shopper’s online buying journey and use it to their advantage.
Unfortunately, NADA data reveals that 95 percent of dealerships’ website visitors leave because of lack of engagement. The dealers’ inability to meet the demands of today’s consumers has created the perfect storm for third-party lead providers to sweep in and profit. Fortunately, the tools dealers need to cull their own leads already exist, are free, and are quick to deploy.
The Holy Grail leads — the low-cost ones with the highest probability of closing within 30 days — come from the dealers’ trusted partners, the automotive captives. Brands like KIA and Ally provide free leads to their dealers. In fact, industry data says leads generated from a dealer, brand or captive website are four times more likely to close a deal than third-party leads. Why? When it comes to acquiring new customers and retaining current customers, timing, data ,and real-time information are the factors that provide the ultimate edge. Well-timed, relevant data allows dealers to connect with consumers during the appropriate phase in the buying cycle.
This capability is known as present tense marketing, which is not something third-party lead generators can do. Present tense marketing is a byproduct of dealers collaborating with their financial service providers.
Working with the brand’s captive finance arm, dealers can use present tense marketing tools such as credit applications and personal URLs, unique and personalized Web addresses created especially for each recipient of a direct mail or email marketing campaign. These marketing automation tools provide a much higher lead-to-close ratio because the focus is on prospects who are ready to buy.
Most dealers do not think of a credit application as a high quality lead generator. However, when they are deployed with an engaging customer experience on a dealer website, they are incredibly powerful. This is true for two reasons.
First, most consumers only want to submit one credit application because multiple credit checks have a potentially negative impact on their credit score. Second, two of the biggest questions on a car buyer’s mind are:
- Will I be approved?
- How much will my payment be?
A credit application that satisfactorily answers these questions in real time results in a highly qualified buyer walking into the dealership, one who is ready to purchase. If dealers get a credit application completed before the customer walks into the showroom, they are well on their way to closing the sale within a week.
Giving vehicle shoppers the ability to apply for a loan and the ability to receive a realtime credit decision in the comfort of their home or office (on any device) is a win-win. Dealers receive a solid lead. In return, the consumer receives a hassle-free experience and spends less time in the F&I office.
Credit applications are very versatile. They can be embedded in banner ads, set up as separate microsites or handed to the customer on a tablet in the showroom. They can also be used as calls to action. For example, in the product details about a vehicle, dealers can include attention-grabbing buttons or links that say, “Apply for Credit Now” or “Get Pre-Approved.” Dealers can also send a credit application to a customer before or after a visit to the showroom via an email or text message.
The lead cost of a credit application prospect is a fraction of the per-lead cost charged by third-party providers. The bottom line is that dealers often overlook digital tools available from their existing financial partners. These tools drive down the cost of leads and close more vehicle purchases. Timing and relevancy are the keys to low-cost, high-quality leads that drive sales.