Early in the year is an opportune time to assess your business — what’s working and what’s not — to help revenue grow. A major expense for dealerships is advertising and lead generation. In 2021, the U.S. reached $13.29 billion in automotive digital ad spend, according to eMarketer. Are you paying for channels and vendors that aren’t performing?
A common problem I see when speaking with dealers is that they lump advertising and lead generation in the same bucket and expect the same return on investment. But, they are very different. Lead generation includes vendors you pay per lead and any software tools you use on a subscription basis, such as digital retailing tools. Advertising includes platforms where you host your inventory, such as Cars.com, along with social media postings, Google AdWords, etc. Once you separate lead generation from advertising you can see what’s working and what’s not.
Let your customer relationship management software do the work of measuring the ROI of pay-per-lead providers. Your CRM should include reports that break down cost-per-lead and cost-per-sale per lead provider, as well as lead conversion rates.
If your closing ratio on a provider’s Internet leads are below a standard industry benchmark of 7 to 10 percent, it’s time to decide if you want to continue that partnership.
Software tools such as your digital retailing platform should be measured by how much activity you’re generating, and how long customers interact with the tools. We know a prospect who spends more time on your site is more likely to buy.
It’s important to use an average time-on-page benchmark specific to the auto industry. In its 2021 Digital Experience Benchmark report, Contentsquare analyzed data from more than 20 billion user sessions worldwide. They were able to track the average time spent on automotive pages to just less than one minute.
A “good” average time on page also depends on the type of content. For example, you ideally want customers to spend more time on your vehicle pages and using your digital retailing tools. You also want to track how deeply visitors dive into your tools.
Along with measurements provided by your software tools, lean on Google Analytics to help measure average time on page. The metrics are a valuable indicator of how engaging and effective your content is. If your time on page falls below the industry benchmark, it’s time to evaluate your website and what you can improve. Do your pages take too long to load? Are your inventory pages confusing to navigate? Are your digital retailing pages buried behind multiple clicks? These are all factors to audit when working to improve performance.
The effectiveness of your advertising should be measured on brand recognition and views. Again, Google Analytics is an invaluable resource. You can customize analysis to the key performance indicators you want to measure. I recommend tracking search results pages and vehicle detail pages. When you define segments and track for activity, you can inspect the quality of your website traffic from direct advertising, third-party listing sites and social media pages.
You want salespeople to engage with customers on the showroom floor, not chained to their desks responding to emails and chat requests. A business development center is the best option to ensure every lead gets a prompt response.
There’s a lot of back and forth in the industry about BDCs and their value to dealerships. Whether internal or outsourced, I argue from experience that the cost of BDC salaries and bonuses pays for itself in customer engagement. A BDC is extremely important to quickly respond to inquiries, engage prospects and reengage customers over time.
Now is the time to set yourself up for a successful 2022. Auditing your advertising and lead generators helps weed out underperformers, earmark more of your budget for top performers and fine-tune your overall advertising strategy.