Before we get into the difference of active vs. passive lead scoring, it is important to set the stage of how lead scoring was born in the retail automotive industry. Five years ago, I was fortunate to be in the right place at the right time when I participated in a RL Polk meeting with my previous dealer group. We had given a year’s worth of internet leads to them to bounce against their registration data. Our dealers knew what we had sold but now we wanted to see how many of these customers had bought from someone else. This exercise had been done before but this meeting would end with a different plan of action.
Like previous meetings, I saw that up to 40% of our total leads bought a car but in most cases, a typical dealership only sells 11-15% of them. That meant that more than double what we sold went to other dealers in our market area. This frustration got the best of me during the meeting when I blurted out “Why do we always have to look at old data to know we are failing? Why can’t we know if these customers are true buyers BEFORE they go somewhere else?”
Luckily for me, the right people from Polk were in this meeting. They shared that they were working on a lead scoring platform and were looking for a test partner. Taking hundreds of strands of data that included registration data, lifestyle info, household status, etc, Polk was betting that they could score a lead in near-real time and pass that score along to the dealers so they would react differently. It was suggested that a 10 was better than a 9 and a 9 was better than an 8 and so on. This was radical thinking at the time but it was a better idea than how salespeople had cherry-picked leads in their current process.
Sell More Cars Faster
As we started testing, the data proved that the higher scoring leads purchased more and faster than the lower scored leads. At least the registration data showed that. What we realized was if the salesperson changed his behavior for the higher scoring leads, we sold more cars. If they didn’t, the score didn't matter. We later named this active lead scoring. It took action on part of our dealership to drive a higher conversion.
As lead scoring was socialized in the automotive community, it was highly controversial. OEMs started scoring leads but chose not to pass this along to dealers for fear that they wouldn't know what to do. Dealers were afraid of scoring because it was something new and went against what every trainer had told them previously; handle all leads the same. As someone who helped co-architect and test the lead scoring platform, I found myself defending the practice ad noisome, even though the data showed it worked. Then, one day I woke up and the idea of passive lead scoring was born.
I decided to take the great data that Polk provided and create a new executable for our dealership teams. Instead of asking the internet salespeople to change their behavior, I thought it might be easier to change the behavior of the customer. We knew they were buying, they just weren't always buying from us. What if we scored the lead, didn't share it with the dealership, and created a reason for the customer to give us the opportunity over our competitors? That was the introduction of passive lead scoring.
Taking some of the great components of HookLogic‚s industry-leading Web to Show 1.0 tool and marrying it up with Polk‚s lead scoring, we created Lead to Show 2.0. When a customer submits a lead to a dealer, no matter if it comes from the website, an OEM, or a third party lead, the lead gets scored and based on the score, the customer is incented to come into your showroom instead of going to a competitor. All of this happened without changing any of the processes at the dealership level. It was like putting the chocolate in the peanut butter.
Once we turned this on behind the scenes for dealerships, we instantly saw an increase in show rate and closing ratio. Some dealerships experienced a closing ratio as high as 38% during the test. It only made sense. Drive the highest intent to buy into your showroom and your internet team will sell more cars...and your competition will have no idea what you are doing because it is behind the scenes. It quickly becomes a secret weapon.
Passive Lead Scoring is a much easier decision for a dealership to make. It allows an internet team to use great data to drive the highest quality at-bats into the showroom without changing the lead follow-up process at your dealership. Adding Lead to Show 2.0 allows you to motivate action while lead is still hot and stand out from the competition.