Third Party Leads Are Ruining Your Sales People

Dealerships around the country have a fear they won’t have enough leads. Their sales staff isn’t busy enough so they NEED to increase their lead volume. 

Lead volume runs the feeling of the sales floor. After all, how many dealerships actually want less leads? 

The bulk of most dealership leads close below 8%. They crush the soul of sales people as they are conditioned to expect low quality leads.

Dealerships have a specific goal: Sell more cars and make more money

It’s not about working MORE less quality leads, yet that’s the majority. 

The problem with measuring lead volume in an absolute number is that it is very surface level. (Example: we had 250 leads last month)

Value lies in breaking down lead volume by sources to evaluate a dealership’s lead DNA or lead make up.

This allows a dealership to actively understand which lead sources are helping sell more cars, and which lead sources are not producing sales.

In addition, this will allow a dealership to understand the quality of different lead sources that the sales team is handling. 

3rd Party Leads vs CORE Leads

and why you should separate them

First, let’s define what a CORE lead is. 

CORE leads are leads which have been attributed to your website, including, but not limited to form fills, phone calls, and chat leads. They’re highly interested in what you have. 

CORE leads were found to be more valuable than third party sources in a variety of ways. 

  1. These leads are of the highest value to a dealership as CORE leads close 35%  faster than 3rd party leads.
  2. Grosses  from CORE leads are 25% higher than 3rd party leads. 
  3. Lower cost per acquisition 

The graph below shows real data from a real dealership. 

Our client now has a marketing strategy focused on driving CORE leads to reduce the dependency the dealership has on third party sources. 

By focusing on CORE leads, dealerships can sell more vehicles with less leads.

In this particular case, 100 CORE leads result in 22 sold cars compared to 100 AutoTrader leads which would result in only 6 cars sales. The same amount of leads just results in 16 additional car sales. 

Cox Automotive confirmed what we understood: “Many buyers are heavily marketed by third party providers and people love starting their experience on those sites. While that may be true, your buyer loves finishing and making quick decisions on local dealership sites.

A dealership’s website is a valuable asset that can be used to help sell cars. It’s worth allocating dollars in your marketing budget to find and bring in-market consumers back to your website that convert into high quality CORE leads. 

Without efforts focused on in-market consumers, a dealership will be dependent on low quality third party lead volume the dealership has little control over. 

Inefficient Spending 

Across the country, it’s normal to see dealer’s close third party sources at extremely low rates. Below are just a few examples of real dealer’s closing percentages with a few vendors. 

  • Cars.com closes at 1.90% at a Ford dealership in Illinois
  • Cargurus closes at 4.50% at a CDJR store in Texas.
  • Cars.com closes at 2.40% at a CDJR store in Texas.
  • Cargurus closes at 3.25% at a different CDJR store in Texas.

After months and months of receiving the low quality leads, dealerships across the country are ineffectively spending thousands and thousands of dollars to flood their sales people with hundreds of leads throughout a year. 

The sales team wastes time handling chasing low quality leads that only result in a handful of sales. 

These dollars can be allocated better to target in market consumers that are brought in through your dealership as CORE leads. 

The same place your buyer loves finishing the buying process and making quick decisions!

Dealerships can “cut the fat” out of advertising budgets with a lead source analysis. 

We have not proven any loss in opportunity from purging out all ancillary products and just having inventory listed. 

In fact, in working on Toyota of Katy back in 2015 they were the top CPO Toyota Dealer in Texas AFTER shedding over $200,000 in annual spend with AutoTrader.

Once you’ve purged some of the money spent on third-party sources, spend the money on getting new core customers and developing community relationships. It pays. 

In Conclusion

Regardless, it can’t hurt to know your lead DNA. Third-Party Lead Providers are not bad, just don’t depend on them! 

Just as there are lead sources that close at low rate, some lead sources provide tremendous value to your dealership. Find out which lead sources they are!

It’s worth knowing how efficiently your dollars are being spent and the quality of leads you are giving your sales staff. 

If you would like an experienced team to audit your dealership’s lead breakdown to see where you’re inefficiently spending money, click the link below!

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