WHY A “LEAD DISTRIBUTOR” IS A BAD CHOICE20 september 2022, Paul
The concept of a Lead Distributor is a new trend emerging at many dealerships I have spoken with recently, primarily Asian brands. The Lead Distributor is someone who can see whether the lead is interesting and determines who best to forward that lead to. In my view, it is an expensive way to encourage a lower conversion and thereby destroy your marketing investments. In other words, a Lead Distributor does not work. I have several arguments to illustrate that.
In my view, it is an expensive way to encourage an EVEN lower conversion and thereby destroy your marketing investments.
In today’s world, everything has to be fast! You want a fast checkout at the register. You want quick answers to your questions. Many, many companies are developing systems, processes, and apps to be able to meet customer expectations as rapidly as possible.
Even longer warranty?
Most brand dealers do not suddenly make a move to extend warranties to two years or 18 months. The majority stay at twelve months and, therefore, they are on the same playing field as the universals. However, the question I have is the following: since an extra six months of warranty is a cost, do we see those costs reflected in the vehicle price? In other words, have the prices of used cars increased because we have to include more costs?
The answer is no, we didn’t!
I asked Marktplaats analysts to investigate the price increase of cars offered by brand dealers and universal car companies in the price range of € 5,000 to € 50,000.
Due to the current market conditions, which includes too few staff, everything takes much longer than the customer normally considers acceptable. When selling a car, we should not bury our heads in the sand. The market is already rapidly changing from a seller’s market to a buyer’s market. Now, you may have ten customers for a car, but this is changing faster than we think.
After 10 minutes, your opportunity has dwindled!
A Lead Distributor causes delay. Looking at our Call Drip data for the past 36 months, which equates to hundreds of thousands of leads, we see that the best chance to speak to someone is within five minutes of their request. The chance of a connected successful call is then more than 70%, which still means that 30% of potential customers still do not answer the phone.
After ten minutes, you have less than a 40% chance of engagement, so as a seller you have to make a second, third, or fourth call attempt. And we know, those extra calls are ‘supposed’ to happen, but typically do not. So, using someone as a gatekeeper slows down the follow-up process to such an extent that the chances of a conversation decrease dramatically.
Quality of the leads
Bottom line: no one can tell if the lead is good or bad. After the first telephone conversation, you know the quality of the lead. A Lead Distributor who can assess an active lead based on the source burns more opportunities than you, as an entrepreneur, would like.
For example, if those Facebook leads were so bad, why let your marketing department advertise on that channel at all? Every active lead is of good quality! The customer has enough interest that they took action to get in touch with your car company to request information. Not that all customers will buy within four days; it could also take 40 days or even four months, but your sellers should want to get in touch with everyone that exhibits interest.
A passive lead is an opportunity that may come from your own database and is someone who the data analysts say may be in the market for a new car. This lead, in my opinion and experience, is a long shot and does not belong with a salesperson. Such a lead can be automatically forwarded to your external or internal BDC.