Detective Work

When you agree to invest a portion of your net profit with a vendor, you are doing so with the expectation that you will receive a reasonable return on your investment. Every dollar you spend reduces your net. With a 2% or 3% net to sale ratio, you will have to earn an additional $150,000 to cover that $3,000 vendor invoice.

Did that new expense pay for itself in additional sales?

When you sign up with a new Internet lead provider, they will soon begin sending you multiple, detailed reports that calculate the number of leads submitted, phone calls generated, maps printed, vehicle detail page visits, click-throughs and more. You can use your CRM (sold separately) to monitor the performance of your new leads, tracking everything from number of leads and sales closed to average front- and back-end gross.

But that’s not all. Your lead provider will surely remind you that, although many of your customers didn’t actually submit an Internet lead, a significant percentage of them showed up because they saw one your vehicles online. If you decide to end your relationship with the provider, you may be waving goodbye to all that foot traffic.

They may be right. So is it truly possible to accurately measure the results from any online marketing campaign?

Answering that question — and measuring the ROI from any vendor — requires more than reading reports. You have to get down to street level, act like a car buyer and test the software yourself.

Routine Checks

The past two decades have brought untold numbers of technical solutions to the dealer market. They all promise to make our stores run better, more efficiently and more profitably. At the dawn of the Digital Age, many, if not most, dealers were wary of straying from proven sales and marketing strategies. Skepticism soon gave way to unbridled enthusiasm.

I believe we have lost that healthy level of distrust. We assume our fully automated lead-generation and inventory-management systems are flawless. They are not! The only way to truly know whether that basic system itself is functioning as designed is to look at it and test it on a regular basis.

Several months ago, I discovered that our inventory feed to a major third-party retailer had crashed. Our listings had been frozen in time for 30 days. We had more recent reports than that. But nowhere in those numbers were there any immediate, glaring changes that indicated any problem had occurred.

I found the problem as part of a routine check. I searched for some of our newer vehicles and was unable to find them. My heart sank as I realized we had gone a full calendar month without adding inventory or applying any price updates. A phone call later, we were back in business. The provider wasn’t trying to cheat us. But the software did fail, and for four straight weeks, our ROI was essentially zero.

In this business, we can’t rely on reports. We must approach sales from the customer’s point of view. Search for a specific car. Search for a generic car. Search for the specific terms your lead provider said would lead in-market buyers to your store. Check everything! Descriptions and pricing should be up to date. Inquiries should result in a phone call, auto response and follow-up response. Your next report should include your test leads.

You rely on a number of automated systems to help you serve customers and move units. I guarantee you that, right now, at this very moment, one of those systems is failing you in some way. It is up to you to find issues and resolve them. Help your vendors do a better job of giving you the ROI you want. Until then, you will continue to get the ROI you deserve.

Steve Fox is general manager of Lithia Chrysler Jeep Dodge in Santa Rosa, Calif., and a 25-year auto retail and service veteran. Email him at [email protected].