There’s no doubt about it - there are a lot of Internet lead providers out there that promise to connect you with real car buyers. Without knowing these companies inside and out, how do you make a decision on which one, or ones, to go with? When selecting a provider, you should ask some key questions before making your decision. By digging a little, you’ll probably find some valuable information you never considered.
What Does It Cost?
This is probably the first thing you’ll ask. Lately, I’m hearing from dealers that are getting offers for free leads. This sounds like a good hook, but we all know there’s no such thing as a free lunch. What I wonder is - how can a provider give away free leads, or even inexpensive ones, when the best traffic sources out there sell quality leads to providers at a premium? When a provider comes to you with an initial offer of free leads, be sure to find out about any future costs and set-up fees. And be wary of long-term contractual agreements. Hidden costs and a “locked-in” relationship with a weak lead provider can eat away at your profits per unit sold. Another thing to consider when looking at the costs of a particular lead program is the level of flexibility with the pricing structure. For instance, do they offer cost per lead pricing and/or billing caps?
Flat-rates or Per Lead Pricing – Do the Math
Another thing we’re seeing more of in the marketplace is flat rate offers. This might sound like you’re getting a deal on leads. With any provider that offers a flat-rate for leads, you need to make sure they can guarantee a minimum number of leads each month so you don’t end up paying very high costs per lead, such as $28-$40. I have seen some providers that start out supplying dealers leads at a decent volume for a flat rate, and then a few months later they reduce the lead volume dramatically.
What Are Their Average Close Rates?
What goes hand in hand with lead price is close rate. Who cares if you get leads at bargain prices if they don’t close? A lead provider selling you leads at $22 each that have an average close rate of 10% or better is far superior to a provider that sells you leads at, say, $14 each that have a 5% close rate. In the first case, you’d spend $2,200 to sell 10 cars. In the second scenario, you would have to spend $2,800 to purchase 200 leads in order to sell 10 cars. In the end, any ISM would rather talk to fewer prospects than more prospects to sell the same number of cars. I believe lead quality is more important than price. Which brings up the next question:
How Do They Guarantee Lead Quality?
There are a lot of so called lead providers out there that are really just websites with traffic. A lead provider needs to be more than a website. The lead business should be their core business. It’s worth your while to find out what quality checks the lead provider has in place. Partnering with a lead provider that has a clear technology focus can eliminate a lot of headaches and wasted time on your end. The way the lead provider verifies the authenticity of its leads, prevents duplicates, completes missing information, and delivers them in a timely manner is at the core of lead quality. The best providers couple state-of-the-art technology with real people that back up that technology. It takes real people to email with and telephone consumers who submit those leads in order to ensure they’re serious buyers.
Can They Guarantee Lead Volume?
When considering a lead provider, you need to find out what their volume is. Let’s face it - you need a steady stream of leads in order to make your sales forecasts, based on the human resources you have available. Lead volume consistency and flexibility is essential. A good provider can deliver both – the amount of leads you need on a consistent basis, month after month, and the flexibility to increase or decrease your volume as needed.
In my experience, only the biggest, most established lead providers, can really offer the kind of reliable volume most dealers need. By contracting with the most established ones, you're most likely to get the majority of leads in your territory with minimal duplication. Another reason it’s important to go with providers that can promise you volume is for operational simplicity. Wouldn’t you rather just deal with one or two good providers than multiple ones for billing, technical issues, etc.? Most dealers would rather work with two or three lead providers that can offer them 100 leads each than 10 providers that can offer only 20 leads each.
What About Territory?
Part and parcel with lead volume is territory. The ideal situation is a high volume of leads from a close radius – better 100 leads from a 25-mile radius than a 75-mile one. The closer the lead is to where you are, the more likely they will be to buy from you. Some lead providers may make promises on volume but deliver leads to you from out of your desired territory – or even out of state.
Who Are Their Traffic Partners?
Recently, I’ve heard that some providers are telling dealers they supply “all” or “90%” of the leads that another provider is simply re-selling to you. Their pitch is that they’re eliminating a middle man. This is why the biggest lead aggregators are so important – they have a rich, diversified source of leads on the Web and have good relationships with multiple traffic partners. If a smaller website company represents themselves as the sole provider or major source of leads for one of the big guys, they’re giving you a groundless sales pitch.
Are They Known for Good Customer Service?
Finally, you should ask yourself – are these people I can work with? Because car dealers know how important customer service is, you should demand this from your lead provider. Knowing your rep or account manager at your provider on a first name basis can really keep your sales process flowing smoothly. A good way to find out if the lead provider is top notch is to find out who else uses them and ask for references. Can they count large dealer groups as their clients? Can they provide references from dealers representing different franchises in any given market across the country? Is the rep you’ll be working with proactive about calling you and available when you need them? Finally, do they understand your business and what you do every day? In the end, a good lead provider should make your job easier… and a lot more lucrative.
Eddie Coleman is the CEO Hyperdrive Technologies, Inc., an automotive training and consulting company, and the author of Mastering the Art of Selling Cars Online. He can be reached by email at: eddie@hyperdrivetech.com or on the Web at www.masteringtheart.com.
