Do you suffer from Third Party Lead Dependency?

Guest Authors: Sean WelshJeff Hill of Car Biz Done Better

Auto Dealership Lead Generation

 

A specter is haunting your dealerships! It’s the specter of Third Party Lead Dependency (TPLD) which occurs when greater than 50% of your budget is dedicated to buying third party leads.

Why would this be a problem you ask? Isn’t it a perfectly reasonable strategy to ensure a consistent number of monthly leads for your Business Development Center (BDC)?  While “yes” may seem like the correct answer, in most cases it is typically the opposite.

The problem of severe dependency on third party leads is that although it starts as a legitimate way for smaller dealerships to compete with large groups, it too often becomes a necessity to maintain lead volume. It is the easiest move in the world to increase your lead volume by purchasing from an outside company. The problem occurs when this start-up solution becomes a cornerstone of your lead production strategy. This is what we, and many others, refer to as the “set it and forget it” approach.

As a rule, you should never be spending more on third party lead providers then you spend on yourself. A cycle of dependency forms when you build your BDC to compensate for the leads you are buying. Down the line, when you decide to invest in your own digital infrastructure, the fear of cutting leads and waiting for your website to start generating is overwhelming.

Another point is that it’s expensive to simultaneously pay for both third party leads and grow your digital presence, making it not seem as beneficial from a financial perspective. It also takes time to grow your digital presence through PPC, SEO, Social Media, etc. and few people have the patience. It may help those in this position to know that overall lead submissions are decreasing, whereas phone calls are increasing. Your best bet in this case is to advertise your dealership’s phone number and reduce, or eliminate, buying generic third party leads. Our experience in working with dealerships at the ground level has seen a reduction in close rates on third party leads overall.  If anything the TrueCar model gives us, is a likely glimpse into the future of lead providers. Dealers are far more likely to pay for a sale than for individual leads with low track-able sales.

Would anyone argue that the people you most want to talk to are those looking at your website? If we can agree that, in all likelihood, the lowest funnel buyer is the one looking at your specific inventory, then we should all agree that they are (should be) your highest priority. But what are you doing to contact them (the topic of our next post)? If you’re thinking about spending more money on PPC, Custom SEO, Re-Marketing, Re-Targeting, or Social Media, you should! Your own website is the best source for quality leads and high close rates.

We have worked with several dealership groups to move them away from Third Party Lead Dependence and would recommend it for everyone.  There is certainly a place for such leads, but they should never constitute the majority of your overall lead totals.

About the Authors: 

Car Biz Done Better is an Automotive Accountability Firm based in the South central Wisconsin area founded by Sean Welsh the self appointed loudmouth of the industry.  Together with his much quieter partner Jeff Hill,  they work hands on with their dealer clients to improve every aspect of their digital operation. Their motto is “Anything you can think of we can help.” And they haven’t been proven wrong yet.

For more information about Car Biz Done Better, please visit carbizdonebetter.com, or connect and follow on Facebook, Twitter, LinkedInGoogle+ or YouTube.

 

 

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