It started as a trickle three years ago, almost as an afterthought. With the sudden appearance of the lead generators available to the franchise dealers at the turn of the century, it was bound to happen.
“It” was the flow of sub prime credit customers looking for the ability to purchase a vehicle, and more importantly, find a way to secure an auto loan.
The myth was that people with sub prime credit just weren’t on the Internet – that they didn’t have computers or the sense to use them.
“In August 2001, we thought what the heck?” stated former dealer and now industry trainer, Greg Goebel. “We were used to working third party and Internet leads, and we had a strong outbound calling process, so we thought if we really do get any of these leads, we should be able to convert them.”
One of the first companies on the scene specializing in generating Special Finance leads via the Internet was InterActive Financial Marketing Group, Inc. (IFMG). They became the first provider of leads to Goebel’s dealerships, which instantly found success with the new type of leads. “We started out closing 18 percent of the leads, and by March 2002 we were up to 31 percent - it blew our minds.”
Shortly afterwards, a stream of other vendors entered the market, most providing dealers and their Special Finance departments with security for the advertising dollars. “We were buying leads with our advertising money, not spending it on ads that we hoped would turn into leads,” explained Richard Tull, a sales consultant with Henna Chevrolet, Austin, TX. “I felt so strongly about it that I paid for the IFMG leads out of my own pocket until the dealership realized how valuable they were.”
Tull and Henna Chevrolet did so well with them that it propelled the dealership to seventh place ranking in the 2002 AutoDealerDaily.com Internet Retailer rankings, and second place among pre-owned Internet retailers.
“The Internet Special Finance leads played a dramatic effect in lowering our cost of advertising per car,” stated Stuart Landsverk, now the General Manager of Russ Darrow Mazda-Suzuki, Greenfield, WI. “Our Special Finance advertising had reached embarrassing levels. We were always searching for new methods to try to attract leads. Instead of spending and spending hoping to attract the leads, we were able to spend the money for what we were trying to attract in the first place.”
“I think I have used them all,” offers Dan Henderson, Finance Director, Thrifty Car Sales of Monterey (CA). “There are many lead generators in the marketplace. We average anywhere from 12 percent to 21percent closing ratios, which is better than leads from any other source.
“We have especially done well with three companies: Cyberlead, AfterBK, Inc., and IFMG” adds Henderson. He believes that they have consistently provided high quality leads, and the dealership has maintained the best closing ratios with them.
With the Internet leads, the challenge remains the same as with any other lead – turning the leads into dealership visits, and ultimately sales.
“We have learned that time is of the essence,” states Tom White, a partner of Rapid Auto, in Wichita, KS. “The key is being able to contact the lead by phone within one hour of their inquiry, and doing so with a very customer friendly approach.”
Landsverk adds, “These customers have been around the block a time or two. Much of what they are trying to do is avoid the embarrassment of being told ‘No’ again.”
“We do our best to make sure that the customer doesn’t lose the ability to see their end goal, which is being able to obtain financing,” commented White. “Since we have financing for all types of credit customers ranging from prime to Buy Here Pay Here, we assure them that we will absolutely be able to arrange financing – all the customer has to do is to come in and select their next vehicle.”
Goebel, now a Vice-President of Leedom and Associates, LLC, a 20 Group company, which also offers consulting and training, has seen significant results among his Special Finance 20 Group members and clients.
“The most significant statistic that I can offer is that the cost of advertising has dropped to under $163 per sale with our benchmark 20 Group dealers – some as low as $110 per sale.”
As president of InterActive Financial Marketing Group, Inc, Travis Weisleder, has had a bird’s eye view of the explosion of the market. “It is hard to believe the volume of leads that we are generating every month. It wasn’t that many years ago that we had a difficult time getting 100 leads per month in many markets. Now, some of our dealers are in the position of receiving more leads than they are staffed to handle.”
It is the philosophy of IFMG that having the people within the dealership properly trained to handle the calls is paramount to success. IFMG offers training at no charge to their dealers to help insure their success. “It isn’t just about selling leads,” adds Weisleder. “The dealers must be able to turn them to sales or our relationship becomes a very short one – which is certainly not what either party is looking for.”
IFMG has gone to the extent of staffing former dealership Special Finance Directors in order to provide the extra level of service and insight that their dealerships need (at no charge).
Romy Suba, president of CyberLeads Inc., echoes those sentiments. “We have had dealers call us up out of the blue, sign up, insisting that we give them all the leads we can. Even without experience they are certain they can just start working them the way they have all of their other Special Finance sales.”
It just doesn’t work that way. Suba adds, “Those dealers will be lucky to hit five percent. We spend significant time assisting and training dealers and their staff. It goes way beyond selling leads. We provide video training from leading trainers, phone training and scripts to get everyone pointed in the right direction. Those that adopt the proven practices will consistently close between ten percent and 25 percent of their leads.”
Jim Thompson, dealer principal of Hammonton Auto Group, Hammonton, N.J. has also experienced success. They first added leads from AfterBK, Inc. “We were thrilled. We got into the game late, and with a number of the companies offering market exclusivity, we were locked out by some of the others. Fortunately AfterBK was able to carve out some territory. We sold two out of the first six leads that we received.”
Bob Marchello, president of AfterBK, Inc. offers, “Obviously we all want to offer leads to as many dealers as we can, but at the same time we are very careful not to tread on the territory that we have made exclusive to someone else. We will always first offer the leads to the original dealer in the market, but at some point, most dealerships just lose the capacity to be able to adequately handle all the leads that they are eligible to receive.”
An additional reason that dealers favor the Internet leads is that they come in at a steady pace, allowing each one to be worked to its fullest. Unlike some promotions that flood the floor for three or four days per month, exceeding the capacity of their sales staffs, the Internet leads allow for a more predictable and manageable flow – all the better to close deals.For certain, Internet generated Special Finance leads have had a major impact on the Special Finance landscape over the past three years, and many dealers are expecting it to only become stronger in the years ahead.
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