There is a problem with leads; dealers look at them too often and that can create issues for a number of reasons, according to Ian MacDonald, CMO at TRADER Corporation.
In an interview with Canadian auto dealer, MacDonald said that leads have historically been the currency in automotive retail, but that it is less the case now.
“I would probably say that leads haven’t been as relevant as they used to be for a long time now, maybe even 10 years,” said MacDonald. “We still look at leads probably a bit too much, and there are a couple of reasons why leads can be misleading, excuse the pun.”
One of the reasons is that consumers are less willing to submit leads these days, and are more savvy about the internet. They are also more careful about their information and what they publish online, which MacDonald said is not exclusive to auto retail but is happening across a number of different industries as well.
There are also more resources available to consumers now. For example, if a consumer finds a vehicle online that intrigues them, they can also find the name of the dealership, verify information through Google reviews, and locate it on Google Maps. They may even end up on the dealership website browsing for additional information.
“All of these different sources that users are more and more familiar with using mean that they have this really complex and non-linear journey, from the trigger to finding the vehicle and the dealership through to manifesting into something that is kind of measurable to the dealer in terms of response,” said MacDonald.
He notes that autoTRADER.ca did a study in September 2019, where they surveyed approximately 500 consumers walking onto dealer lots and asked them a series of questions — one of them focusing on people inquiring about a vehicle. For these people, the question was: have you had any contact with this dealership before showing up in-person? According to MacDonald, two-thirds said they had never contacted the dealership before.
This type of response should be a nightmare for dealers in terms of how to understand optimizing advertising dollars, because the question remains: where did these consumers — these online users — find them? Was it through Google? On a marketplace like autoTRADER.ca? Was it through a Facebook ad? Or a form of offline advertising, such as a radio ad?
“It’s difficult to understand, and that’s the first thing about leads: most consumers won’t submit a lead,” said MacDonald. “So if a dealer is only looking at leads, then they are missing at least two-thirds of the picture, in terms of where the response is coming from and what’s helping them sell cars.”
The other issue about leads is that they are not all created equal. “It’s tempting to use leads as a measure of ROI for different activities, but a lead is not a lead is not a lead. It really isn’t,” said MacDonald, who compared this to a consumer looking at a Lamborghini and then a Honda Civic and saying, “They both have four wheels and a steering wheel, and they are pretty equal.”
But both vehicles are very different, and the same goes for leads. Some, he said, are “tire kickers,” some are “time wasters,” and others are much higher quality. And unless dealers are tracking the quality of those leads and lead-scoring them very carefully, MacDonald said they cannot be compared because they can be misleading.
As a result, dealers may end up putting more money into an advertising channel that drives high quantity, but low quality leads.
So what can dealers do?
“It really pays dividends to do the hard work of attribution and not to get tempted into looking into just a quick and easy way to try and compare sources and stuff,” said MacDonald. “And there’s one thing more broadly, which is just don’t just look at leads.”
Obviously dealers need to look at something, and one suggestion is to look at the vehicle details page (VDP), and how many of the VDPs have been generated for dealers and dealership websites. Companies like TRADER, he said, try to help dealers understand which sources of traffic and activity are driving the most consumption of VDPs.
How does it work?
To receive a response, a consumer must look at a vehicle on either the dealer website or another channel, such as an online marketplace. Every piece of the response must begin with a VDP (in other words, all roads lead to Rome).
MacDonald said that dealers that understand what a VDP is and how it works are likely to sell more vehicles, while receiving fewer VDPs in general will result in fewer sales. This is because the sale stems from the response, and the response “can only come however it manifests if there has been a VDP consumed at some point.”
Looking further up the funnel, MacDonald advises dealers to speak to vendors about the cost of VDPs, where the volume of VDPs are coming from, and other metrics as well.
“That’s a general philosophical thing,” said MacDonald. “Beyond that, challenge each vendor to prove to you as an advertiser what the ROI is from your advertising with them.”
