With every year that passes, we’ve seen consumers increase their research and online activity exponentially and it has become increasingly difficult to discover true attribution when analyzing exactly what drove a specific customer into a dealership.
Marketing today mandates an omni-channel approach. No longer can you simply rely on a website and traditional media. An effective marketing strategy should include such tools as a comprehensive SEO and social media strategy, pay per click ad campaign, presences on third party listing sites, display ads and email marketing, to name just a few.
Because consumers are visiting so many sites in their car-buying journey, I think it would be fair to say that attributing a customer’s visit or transaction to a single source would be misleading. A customer could easily bounce from a manufacturer’s page, to vehicle review sites, to a third party listing site, then go to a dealer’s website, and then perhaps leave there to read reviews on yet another site. Therefore, attributing a conversion to a single page, source or form could lead to erroneous information and budgetary decisions based on that incorrect data – this could then lead to campaigns that are not as effective as they should be.
Some of the most common automotive KPIs currently used include Click Thru Rates; Conversion Percent, Site Visits; VDP views; Dealership address and directions; pricing; and engagement rates on any social media pages. I realize that some dealers may not have the time or resources to track the customer’s entire journey. If this is the case, at least pay attention to the two KPIs that give you real and actionable data:
1. Lead to Show Ratio
2. Show to Close Ratio
While these KPIs won’t map out the customer’s journey, what they will do is help you to determine what marketing efforts are producing a return on your investment – and which are not.
A typical beginning of the month has management analyzing marketing sources and measuring their effectiveness by close ratio – i.e.: We spent this much money and sold this many cars for this much profit. While this typical action may help determine if your marketing is producing revenue, it won’t help to determine whether it could be producing MORE revenue.
If you received 100 leads from prospects touched by all of your marketing and sold 10 cars, you would find that you have a 10 percent closing ratio. Whether this number is good depends on the market density.
But what does it really tell you? And what happens when you add your show ratio into that equation? By taking that same number of leads and discovering how many of those leads actually came in, you can determine whether your marketing is effective – i.e.: did it do its most fundamental job – did it drive traffic into your store?
You can then use that number to discover the show to close ratio. The first answer (lead-to-show) shows marketing effectiveness. While the second illustrates organizational effectiveness. You may be getting a high volume of customers into your dealership but fail to close them once they are there. OR, there could be a process issue in how leads are being handled.
Take the time to add these KPIs when calculating your lead providers and you’ll be better able to judge their performance and make better budgetary decisions.