Help your third party lead providers generate better quality leads
When it comes to purchasing third party leads, OEMs and dealers want to buy more leads that are likely to purchase a vehicle, and fewer leads that are not. That’s been easier said than done – until now. Progressive OEMs and dealers are beginning to score leads based on their propensity to buy and use that information to help dealers decide how to best treat those leads in order to drive sales rate improvements. That’s great for maximizing opportunity from the leads they have. The next evolution of the third party lead marketplace is to take scoring upstream to help third party providers generate better quality leads in the first place.
FIND THE QUALITY IN EACH SOURCE
Close rates vary among third party lead providers. Some have higher average close rates and some have lower ones, but all have a mix of both high quality and low quality leads. In the following example, two lead sources have widely different average close rates; Source 1 is at 21% and Source 7 is at 9%. To date, OEM’s and dealers have leveraged this performance variation insight by eliminating or limiting leads bought from lower average score lead sources.
Scoring leads based on their propensity to buy looks beyond average close rates to reveal the true mix of lead quality between third party providers. The example below shows the quality distribution of leads between two different lead sources. The scoring model distributes leads across deciles, with the first decile being the most likely to close and the tenth decile being the least likely to close.
Fifty-seven percent of Source 7’s leads are of lower quality, meaning that they fall in the bottom half of the model. Source 1, on the other hand, generates higher quality leads with essentially zero leads in the bottom half of the model. But volume must also be considered: Source 7 generates significantly more high quality leads than Source 1 – 87,000 and 50,000 respectively. By only purchasing from Source 1 based on average quality, you’d be losing out on a large volume of high quality leads from Source 7.
HELP EACH SOURCE GENERATE BETTER QUALITY LEADS
In developing third party lead purchasing strategies, OEMs can partner with third party providers by sharing scoring insights to help third party providers generate better quality leads. Third party lead providers acquire leads in a variety of ways. Some generate leads from their own marketing campaigns while others purchase them from sub-sources. The key to driving higher quality leads is to understand which marketing activities or sub-sources generate the highest quality leads. Since third party lead providers do not have access to close rates by campaign or source, it is difficult for them to know where to focus their efforts in order to achieve that goal. This is where the partnership comes in.
If third party providers were to provide consistent codes with each lead for the campaign or sub-source that generated those leads, OEMs could share insights with those providers regarding the close rates of each lead source. That insight could help third party providers better direct their own marketing dollars to generate higher closing leads to meet OEM objectives for volume and quality.
One primary reason OEMs and third party providers have not shared this key data is a concern by third party providers that OEMs will use the insight to cherry-pick which leads they will purchase rather than assist them in driving overall lead quality. To assuage these fears, OEMs should set aggressive lead quality performance improvement goals, coupled with mutually beneficial pay-for-performance compensation schemes. This results in a “win-win” for both the third party provider and the OEM. Third party providers can command higher prices for higher quality leads and OEMs can sell more vehicles through higher quality leads.
To learn more about how scoring can you improve the quality of your third party leads, contact Urban Science
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