Imagine if your sales team pre-qualified every up, or shouted: “We’re closed!” and slammed the door on every other prospect that came to your showroom, or worse, they sent them down the road to your biggest competitor. Sound crazy? It is. And it’s equivalent to not taking advantage of the enormous opportunity offered by Internet sales leads: grabbing market share while reducing costs.

Get an Edge on the Competition

Successful dealers aren’t waiting for informed prospects to walk into their showrooms on Saturday. They catch the customer as soon as they show an interest in a vehicle online. Every large dealer group today recognizes that they must have a strong Internet program in order to be competitive in today’s market place. On average, the leading dealer groups attribute 15%-30% of their sales to Internet leads.  Gary Marcotte, vice president of new vehicle and e-commerce operations at AutoNation, says that dealer group generates about 25% of its sales from the Internet, at a cost that is significantly lower than traditional customer acquisition costs.  Hendrick Automotive's e-commerce director, Mathew Belk, set an industry benchmark that 20% of all sales should be generated from Internet leads this year. Mark Vickery, Wolfe Automotive's Internet director, says over the past year, Wolfe has gone from 30 Internet sales per month to 300.

Adios, Have a Nice Day

If ten people visited your dealership, and two bought, would you be satisfied saying, “Adios, have a nice day,” to the other eight? Wouldn’t you rather have the qualified and verified contact information for the eight who didn’t buy today so you can follow up with them and get them back into your store? The Internet offers the means to stay in contact with the prospects that didn’t buy today. An Internet customer submits, on average, three different vehicle requests, but they’re only going to buy one car. If you don’t contact them, the odds are that your competitor will, as more and more dealers are realizing the importance of having strong Internet departments. Thirty percent of those customers who submit a lead will purchase from one of the three dealerships where they submitted the lead. Obviously, the goal is to be that dealership—an impossibility if you’re not using Internet leads.

5%-10% Closing Rates? Is This All there Is?

If you only closed 5% of your Saturday floor traffic, would you close the store on Saturdays? No. You’d go to work on your sales process. The same principle should apply to your Internet leads. According to Ward’s e-Dealer 100 issue, the top 100 dealers in the US that best use the Internet to increase sales experienced a 20% growth in sales from 2002 to 2003, at a time when overall sales were flat for the industry. Even as auto sales have ebbed and flowed with the economy, sales from Internet leads have steadily climbed since the lead model was in its infancy in 1997. The dealers using Internet leads that have a solid sales process in place, especially in the major metro markets, are getting a progressively bigger share of the market.

Our Ad Budget is Maxed Out

We’ve all heard the statistic: the average cost per car sold using traditional advertising is $585 while the average cost using Internet leads is $200. It’s puzzling that despite this figure, the auto industry keeps spending more on traditional advertising, year after year - traditional automotive advertising expenses have more than doubled since 1992. In the June 9, 2003 issue of Automotive News, Tom Carney, director of marketing for AmericanSuzukiMotor Corp., in reference to the increase in newspaper advertising spending, said, “We’ve realized that newspapers are one of the last steps a consumer will take before buying a car.” While the newspaper is one of the last steps a consumer takes before they’re ready to buy a car, the first place 80% them go is to the Internet. At what stage would you like to start talking to your prospects?

What stage the customer is in terms of readiness to buy is something a dealer can influence. The playing field is no longer at the customer’s last step; it’s where they are first. Using Internet leads means being there first.

No Longer an Experiment

The Internet lead model has been proven. Even from a corporate level, OEMs are directing more resources toward Internet leads and getting the results they want. For example, Ford has made 90% dealer participation in Internet leads a corporate initiative, so every prospect is responded to by the most Internet savvy dealer network in the industry. In fact, FordDirect states that 33% of its Internet leads result in a purchase within 90 days.

If you choose to take the wait and see approach with Internet leads, it won’t necessarily put you out of business. However, you’ll be missing an unprecedented opportunity. If you haven’t heard your competitors talk about the results they’re getting with Internet leads, you might want to ask yourself why.

This article was originally published in the July 2003 issue of Dealer Marketing Magazine