Building the Ultimate Attribution Model in Automotive
I know, I know…that is a pretty bold statement but if you know anything about me, when I truly believe in something, I will stand behind it.
In the infancy and quick growth of the Internet in automotive, everything was supposed to be trackable and accurate. What we found was that because an automotive purchase, done offline in a dealership, it was hard to quantify an absolute ROI. So we stuck to the basics; how many leads could we produce and how many sales came from those leads. All that did was raise more questions. In reality, the real black hole was in the transition of the lead to a showroom visit.
Now, that’s not a revelation. But when you ask most dealerships and OEMs what their “show” ratio is, they are not comfortable with giving you an answer. In fact, in the past two years of speaking at 20 groups, large dealership meetings, OEM regional meetings, and dealerships, I have only run into 3 instances where the answer was given and backed up with data. But that’s ok. We have spent the past 6 years focused on this stat, having driven almost 300,000 “shows” at HookLogic.
What we know is that the national “show” ratio is 17%. So when a dealership looks at their closing ratio of 10,15,18% they are only getting a piece of puzzle. Here is a better way to look at it.
100 Leads = 17 showroom visits = 10-12 sales =10-12% closing ratio
90% of the dealers in the country fit into this bucket. What this basically means is that most dealerships don’t have an operational issue at the store level. In fact, they close 60% of the opportunities that visit their dealership from an Internet lead. Just so you know, this is the national average.
When you see dealerships with a higher closing ratio, it's usually because they have a higher “show” rate, not necessarily a higher in-dealership closing ratio.
For years, this has been our focus; driving more showroom traffic. That’s why our tagline is “We aren’t a Lead Provider, we are a Show Provider”.
HookLogic was first to market and has proven to be the subject matter experts. Others try to copy what we do but most of our secret sauce is behind the scenes. Over the past 6 years, we have an overall “show” rate of 32%, nearly double what the national average is. For those who like simple math, this is what it looks like.
100 Leads = 32 showroom visits = 18-19 sales = 18-19% closing ratio
For most of our customers, they see this everyday. HookLogic has real-time reporting that breaks down lead and show ratios for our dealers. The majority of our clients don’t question the ROI or the math. But this is the car business so you have some level of pessimism and mud slinging involved, right?
So what are the objections? These are the three that I hear:
- "These customers aren’t real car buyers. They just want the gift card."
- "They would have come in anyways."
- "They weren’t buying my car. They wanted a different make, model."
That’s why we have added our latest added benefit to our solution set. It is the last piece of the puzzle for the perfect attribution model in the car business, the inclusion of sales data, not just with our dealers but with surrounding dealers, after the customer has visiting our dealer’s showroom.
Adding another layer to our premier partnership with RL Polk, HookLogic has developed a monthly Purchase Analysis report. Because of the rich registration data that exists with Polk and HookLogic’s prowess for complete customer data, it allows HookLogic to match sales from showroom visits without tapping into a dealer’s CRM or DMS system.
In the example report, HookLogic is able to match nearly every showroom visit to the RL Polk Master Name File. In doing this, we report shows very clearly that the majority of the customers that show up at the dealership for the incentive end up buying a car somewhere, killing the objection that these customers aren’t buyers.
More importantly, over 60% of those driven into to the showroom end up buying a car from that participating dealer. In most cases, when a customer leaves that showroom and buys a car somewhere else, they usually buy the intended make, dispelling another objection.
Closing the loop on the sale helps to quantify Internet Lead Management ROI, not just with our solution, but with a dealer’s website, 3rd party leads, chat, trade evaluation, PPC, direct mail and email campaigns, and many other digital products. Our goal of building the Ultimate Attribution Model in Automotive just got a lot closer with our latest addition. People continue to talk about big data but this is an example of how big data can be used to power more sales and better reporting in the automotive business.