The Truth about Close Rates
As consumers continue to embrace online shopping as part of the car-buying process, automakers are shifting their marketing resources accordingly to activities that drive online lead capture. With the growing effort in lead generation, it is imperative for manufacturers to closely monitor the results of their enterprise lead system. But when it comes to evaluating the effectiveness of marketing programs, as well as assessing dealership performance, automakers today rely on a simple lead close-rate metric. This approach, however, doesn't take into account natural or resultant variations in lead quality. This is warranted because marketing programs will have a distinct impact on lead volume and quality - and generally speaking, large swings in lead volume have an inverse impact on lead quality. And if, for instance, lead volume spikes and lead quality is down as a result of a portal home page placement for a launch vehicle, it might be unfair to expect dealers' close-rate performance to be unaffected. In response to this need for greater insight, Urban Science developed the Dealer Close-Rate Effectiveness (DCRE) metric that incorporates intelligence extracted from lead scoring data.
DCRE is an analytical process that assists marketers in evaluating not just the actual performance of dealers in closing leads, but it also evaluates close-rate performance relative to the varying quality of the leads acquired and provided. This new metric assesses the ability of the dealer to extract maximum value from their leads and arms manufacturers with insights needed to ensure appropriate resources are allocated to get the most out of their lead management system.
Measuring the results of your lead management system by tracking a straight lead close-rate metric is an important first step. But, many internal and external forces impacting lead quality must be considered when evaluating performance, such as:
- Proactive marketing campaigns
- Product lifecycle
- Dealership training
- Lead data processing
- Lead sources (Internet - native/third party, events, brochure request)
So in any given month, if your lead close rate jumps, how do you know where to attribute your success? Is it because you launched a new model, executed a successful email campaign or instituted new dealer training?
In order for an automaker to use this new close-rate effectiveness measure, three steps must be completed:
- Establish the standard. Manufacturers must set up solid close-rate reporting metrics (ideally reported at the brand, dealer, geography and lead-source levels.)
- Predict expected performance. Historical close-rate data is analyzed to assess lead quality and fuel models that predict expected performance of new, incoming leads. (Lead Qualification Services™)
- Assess performance variation. Compare actual dealer performance against the expected.
Automakers are continuing to aggressively invest in lead-generation tactics to help connect buyers with dealers. However, an increase in lead volume does not necessarily correlate to increased close rates and vehicle sales. A high-profile marketing campaign may generate a spike in leads, but will likely mean a dilution of quality. On the other hand, a decrease in lead volumes flowing from manufacturers to dealers may indicate an intentional effort to focus on quality leads over quantity. DCRE is the one metric that empowers manufacturers with the insight needed to understand not just close rates, but true close-rate effectiveness.
To discover your close-rate effectiveness, contact us at insights@urbanscience.com.
CMO Jack Bowen is a thought leader on lead quality and sales performance. With over 20 years of experience in CRM, interactive marketing and advertising, he has guided automakers on how to improve their marketing ROI, keep customers happy for the long term, and improve dealer profitability.
