Should I Stay or Should I Go Now?


The Clash said it best in their 1982 song "Should I Stay or Should I Go?" During the past two years, I have spent a considerable amount of time visiting dealers for Edmunds.com. Inevitably, the subject of third-party leads comes up and results in a deep discussion ending with the question posed so eloquently by the Clash.

Dealers have become accustomed to measuring the success of their third-party lead programs in terms of cost of monthly leads versus number of cars sold. As BDC departments evolved and grew more sophisticated, dealerships added the matrixes of costs involved in "working" leads into the mix. Many aggregators and factories will suggest closing ratios and "cost per car sold" benchmarks for dealers. Factories, in many cases, micromanaged the leads they delivered with stringent dealer processes resulting in leads being duplicated across their dealer body.

Lead submissions on third-party sites have plummeted in recent years; some site's submissions have all but disappeared, and even the top sites are down substantially. Yet dealers have designed their processes to maximize their success ratios based on the almighty lead. Dealers continue to evaluate success/failure in terms of the specific aggregator and the lead - which quite frankly, is a very narrow view. In the process, dealers have lost site of the big picture - What sites am I on and how does that reflect on my business? Most times we do not have the clarity to see what sites spawned our leads. We pay based on a price for ALL leads in that basket, but the value from site to site varies dramatically. The dynamics of dealers' products and local markets vary widely yet we've arrived at, and have become complacent with, this "plain vanilla" solution.

So, now the questions:

  1. How do you reconcile that shopping on third-party sites is up and continues to grow yet lead submission rates continue to fall?
  2. How can you continue to leverage the growing audience of third-party sites while they become more difficult to source?
  3. Are you determining value in terms of the lead or in terms of the sites that the aggregators have you on?
  4. If it's about visibility and exposure, what criteria should you use to delineate the best sites from mediocre sites?

Some ideas and important facts to ponder:

Understanding why customers are avoiding lead forms:

  • Privacy — Don't submit your name, address, e-mail, and certainly not your telephone number online! You'll be hounded by junk snail mail and e-mail, pesky phone calls, and tracked by endless behavioral ads for months on end!
  • Consumer behavior — In-market shoppers still distrust dealers and would rather educate themselves with independent opinion before they pounce on a dealer lot. These savvy shoppers believe this is the better strategy. Contrary to that theory, transparent, early engagement between dealer and customer has the best result for all.
  • Past Experience — Let's face it. We have not done a very good job as an industry handling Internet activity over the years. There is plenty of blame to go around and a long learning curve. I still run into dealers who have "BDC" departments that won't quote a quote request and call people who have explicitly asked to only be contacted by e-mail. Their leads go unanswered, and managers consider leads dead after a few days of unresponded messages. Consumers who've submitted leads in the past tell us in DROVES that their experience was unsatisfactory and that they won't submit a lead again.
  • Stale Process — Outside of some technological changes that have made it easier to submit a lead, for the most part, there has been no innovation in the lead submission process since its inception.

Most important attributes in a third-party site:

  • Visibility — How large is the audience of shoppers that you are visible to? Are the shoppers in market? Are they serious shoppers? When in the shopping process does your dealer info display?
  • Branding — Is there an intrinsic value to being associated with a given site? Is the site content such that it warrants being a "participating dealer"?
  • Audience Quality — Are you on sites with a demographic of people with the ability to purchase? Are you trying to "upsell" a used car audience by listing new cars there?
  • Factory Support — Does the site contain the type of support ads from the factory that can trigger action for you as the local retailer?
  • SEO Benefit — No doubt that the Google 2010 Algorithm updates are focusing more on higher quality and authoritative content. These changes have been beneficial to Edmunds and the dealers associated with it. Other top sites have benefited too. Are the sites you are listed on garnering these SEO benefits for you?
  • Lead Purity — One thing we've been hearing more and more from dealers is that third-party leads from aggregators and factories seem to be watered down. Many sites are designed solely to generate leads and distribute as many as possible. Many of those prompt for a lead submission before providing ANY consumer information. Some factories continue to distribute leads to all of the local dealers even though a consumer may have expressly chosen only one. Some third-party sites render their lead form with dealers preselected, prompting more submissions. I took a quick look at a few:

Yahoo Autos – All preselected

KBB – First 3 preselected

Edmunds – None preselected

Factory Sites – Vary

What to look for as it relates to your local market:

  • Coverage/Radius & ZIPs — Be as strategic as you can. Focus on the ZIPs you'd like to target and/or the radius of coverage your providers can customize for you into the most efficient plan.
  • Penetration/Competition — Carefully analyze where you stand within your brand from the competition's viewpoint and analyze competitive brands in the segments your store serves. Be sure the sites where you list match those dynamics.
  • Inventory/Merchandising — Inventory listings and proper merchandising opportunities on a third-party site make a big difference in front of consumers. Consider sites that host inventory and allow customizable "Why Buy Here", "Why Buy Now" messages.

In deference to the Edmunds' editing staff, I will not go further as this can go on for a long time and the importance of the subject is critical to your Internet department's success.

JD Power said it very well in their recent press release*

"It is important for manufacturers and third-party websites to work together to provide shoppers with the most relevant information in the formats and locations they expect," said Walker. "Understanding where shoppers go and what information they seek on those websites is critical in meeting shopper needs and providing a good experience."Among third-party websites, AutoTrader.com, Edmunds and Kelley Blue Book garner particularly high visitation rates from buyers overall. Several third-party websites are the first stop for buyers shopping online. Approximately 7 percent of new-vehicle buyers who use the Internet while shopping visit Edmunds before any other automotive website."

The bottom line, find out where you are being listed; mystery shop the sites as a local Internet shopper would. Search and research the Internet for a make and model from scratch and mystery shop the top sites. Make a determination of where to be listed based on visibility to ALL consumers, not just the small amount that submit leads. Customize to your store and market. Source, source and source to be sure of what's working and what isn't. To help you get started, here's a nifty shopping survey you can use with your customers. Download it here for free and use it religiously to get a better sense of where your customers are really coming from. Then, you can sing along very loudly with the Clash.

*J.D. Power and Associates and Compete Inc. Report:
Considerably More Buyers Visit Third-Party Automotive Websites than Manufacturer Websites During the Six Months Preceding New-Vehicle Purchases
WESTLAKE VILLAGE, Calif. 29 July 2010

Good selling!

John Giamalvo

John Giamalvo, Director, Strategic Marketing
DealerInsight@edmunds.com

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