Article

The Right Internet Lead Mix: OEM.com, DealersOwn.com, and Third Party Providers

August 2006, Auto Dealer Today - WebXclusive

by Dean Evans - Also by this author

For top performing dealerships, the question is no longer whether or not Internet-generated sales leads are an imperative. Now, dealers are asking: what's the right marketing mix for Internet leads from OEM Web sites, dealers' own sites and third party lead providers? Are the leads the same or do they differ?

OEM.com Leads - The Brand Loyalists

According to Ward's Dealer Business*, in 2002, OEM sites supplied approximately 13 percent of Internet leads. While OEMs have the smallest market share in the Internet leads business, their sites do attract brand loyal consumers that are high up in the buying funnel. Dealers respond to these leads for the sales opportunities they present and also as a defensive measure - these customers shouldn't be ignored to maintain credibility and a positive image of the brand. One point dealers should keep in mind is that the same lead is most likely being distributed by their manufacturer to several different dealerships, as the OEM's prime goal is to sell one of its cars to that customer.
 
While it is essential for dealers to respond to prospects that come to them via the OEM.com site, they also need to keep in mind that the other 87 percent* of consumers are ready and willing to be put in front of dealers without ever going through the brand experience of the OEM Web site.

Leads from Dealers' Own Sites - The Locals

Dealers own Web sites can be as important as dealers' actual retails stores in their given communities. "Local dealers succeed to the degree that they have top-of-mind awareness in their respective communities," says Eddie Coleman, author of Mastering the Art of Selling Cars Online. "Having their own Web sites geared towards their local community is one way to do that." According to Ward's Dealer Business, dealers' own sites supplied roughly 30 percent of Internet-generated sales leads in 2002.

Jason Ezell, vice president of sales at Dealerskins, a web design and creation company specializing in dealer Web sites, attests that dealers' own sites are critical for providing local clientele with information, yet they must meet certain success metrics to be cost effective. "The average dealer site in the U.S. has about a 4 percent lead-to-visitor rate, which is barely more than the response rate for direct mail," says Ezell. "Top performing dealer sites, on the other hand, have high lead-to-visitor ratios, around 9-20 percent." Dealers should have a good sense of their lead-to-visitor and sale-to-lead ratios to get the return on investment that will justify the expense of their own sites. Ezell attests that localized dealer sites, even with strategic search engine optimization in place, will never come out first in a general auto search on Google, or be able to compete with the third parties in terms of volume of visitors and sales leads. However, dealers' own sites do attract the local clientele and yield relatively high close rates, in the 19 percent range.*

Leads from Third Party Providers - The Shoppers

The bulk of Internet leads, about 57 percent according to Ward's, come from third party providers, which cast the widest net online to capture vehicle interest. In addition to the expertise that the top third parties have in terms of lead acquisition, there is a large cross section of the population that will always, as Coleman puts it, "put a third baseman between themselves and a dealer or OEM." Both Coleman and Ezell agree that in their experience, they see little crossover of consumers who submit purchase requests at both third party sites and dealers' own sites. Leads from third party providers also have the added advantage of enabling dealers to be up and running with sales immediately, without spending any money on advertising.

Just as most dealers don't choose only one traditional advertising means, such as radio over television and print, it's important that they be diversified when it comes to their Internet lead marketing mix. What is essential is that dealers tap into the sales opportunities that all of these lead sources offer.

Internet Prospects from the Three Lead Sources, in a Nutshell
Who are they?
Where do they come from?
What's their average chance of closing?*
What percent of the market are they?*
What makes them a good prospect?

The Brand Loyalists
OEM.com
13 percent
~ 13 percent
They're high up in the buying funnel and they favor your brand.

The Locals
DealersOwn.com
19 percent
~ 30 percent
They're from your community and they have high close rates.

The Shoppers
3rdPartySites.com
12 percent
~ 57 percent
They're the majority of the market and you'll only catch them on third party sites. They're the key to gaining market share.

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