Refocusing Follow-up Efforts to Improve Close Rates
Despite the decline in automotive sales over the last year, new-vehicle lead volumes have actually increased for many OEMs. How does an automaker capitalize on each lead to maximize sales? Selling as many vehicles as possible is the ultimate goal, so ensuring salespeople follow up with the leads within an established timeframe and then measuring the dealers’ performance against response time and follow-up rates is a common approach. A dealer’s goal is also to sell, but profitably, so the alignment of resources with sales potential (ROI) is of greater importance.
The truth is, both goals have merit and can be accomplished together to maximize sales for the brand and profits for the dealers. The key for OEMs is to implement a lead scoring or qualification service in their lead management program. This way, they pass knowledge to dealers that empower them to prioritize resources and focus on leads with the greatest propensity to close.
QUALIFICATION ALONE IS NOT ENOUGH
Lead qualification is the science of accurately predicting lead sales potential by estimating close rates. This in turn enables the development of relevant response strategies, known as treatment differentiation, and can lead to significantly improved performance. A successful marketing effort to maximize close rate performance should begin with a simple segmentation of leads into three categories: urgent, priority, and standard (U/P/S). In short, help your dealers fish where the fish are.
DEALER BEHAVIOR IS CHANGING, AND NOT HOW YOU MIGHT THINK
One of the biggest fears OEMs have is that providing segmented leads to dealers further promotes cherry-picking; meaning, dealers will follow up only with the leads that have a high propensity to buy. Based on our direct experience with clients, this isn’t true. As you can see from the chart below, all segments received comparable follow-up rates. Plus, we are seeing the exact behavior changes we expected--dealers are aligning resources to the urgent leads, improving response time by nearly two hours when leads are segmented.
Chart 1
Chart 2
As the behaviors change, we see improved results for both OEMs and dealers. As evidenced in the chart below, participating dealers increased close rates by 24%. Investing more time and money into urgent leads means more sales for the brand and increased OEM market share.
On the other side, the increased investment of time and money into urgent lead follow-ups increases dealership profitability. In the chart below, urgent leads are not only the quickest to close; they also generate the greatest amount of profit per lead for the dealer.
OEMs are becoming increasingly more sophisticated when it comes to lead marketing. Marketers can use insight gained from lead qualification to develop treatment differentiation strategies and corresponding operational plans that will ultimately maximize sales and save money.
Automakers should embrace lead scoring and treatment differentiation, and change how they measure dealer performance
When dealers properly align resources, they focus on the leads with the greatest propensity to close – improving their profitability and OEM sales.
To learn more about lead qualification services, contact Urban Science.
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