Why you probably waste 75% of your marketing spend.
The term lost lead is a misnomer. As a result, it costs your business money, because by definition winning is gaining sales, and losing is about, well... not winning, and losing an opportunity and a sale.
At Boost Auto, we don’t believe a lost sale is a lead with no value. We believe you should treat lost leads with care and attention. Here’s why.
If it costs you $25 to get an enquiry, and you can convert that enquiry to a sale, then your cost of sale is, in this example $25. That assumes that your closing rate is 100%. But what if your sales team only converts one in four leads to a sale (spoiler alert, it will be a lower conversion rate, but more about that later). With a one-in-four conversion rate, that sale has cost your business $100 (i.e. $25 per enquiry, four enquiries).
Here's why 75% of your marketing spend might be wasted.
Have you ever asked what happens to those lost leads? My bet is that they don’t make the journey from your lead enquiry software (e.g. AutoPlay, Motorcentral) to your CRM.
Which, frankly, is a crime, because, in this example, you have still paid $25 for a lead whether your sales team converts it or not. In addition, you now know some additional information about that customer; what they drive, how much its worth, how much they owe on their car, who else is in their family, what other cars are in their driveway, and how they use their car, plus of course their email, address, and phone number. With a good sales exec you know all of this, with a poor one, well, not so much.
Your good salesperson knows this information, but only the exceptional ones have recorded this in the lead management system. Privacy issues aside, and we cannot ignore the concerns about personal information being held (see later), you have a lot of data about that customer. Knowledge as they say is power, but actually, knowledge makes it easier to find the right car for that customer, even if that customer has deferred buying right now or if they bought something elsewhere from a competing dealer.
From this thought, it is clear that you need both some standards about what is recorded and retained and a clear policy about gathering lost lead data. Consider this; are you better asking someone in the street whether they are interested in buying a vehicle or are you better talking to someone who you know and who has the means and motivation to buy a car?
The former is basically a press or radio advertisement. The latter is an intelligent CRM.
It is time to get a firm grip on your cost per lead and cost per sale. Cost per sale is your marketing spend divided by how many vehicles you sold last year. Cost per lead is your marketing spend, divided by how many leads you generated last year.
These calculations might open a nasty can of worms because fundamentally you are looking for a conversion rate of around 17-20%. ‘It’s too low’, I hear you say. But first, how do you really know that all your leads are being captured? If you are not 100% certain that every lead, every time is going into AutoPlay, then your cost per lead measurement will be wrong.
The author has worked in dealerships where there was a rule of every lead, every time, and the prospect CRM was shockingly poor (that’s about low standards and poor management), and has also worked in a dealership where I was told to only put in hot leads. Both examples are a bit distressing to any good sales manager.
Lastly, remember, AutoPlay is NOT a CRM. It is a sales lead management tool. For many DMS providers, only customer data goes into your DMS (using AutoPlay as a source) and your CRM pulls data from your DMS. So where do your lost leads go? Probably nowhere.
Use the diagram to help you see this more clearly.
So, what to do?
Here are the Boost Auto steps to making the most out of leads and lost leads.
Calculate your cost per lead and cost per sale.
Have a clear standard with your sales team about what enquiry goes to Autoplay or your lead management tool (in our view, 100% of leads, every time).
Have a clear process with your marketing and sales teams about what customer details travel from AutoPlay into your CRM (our view, 100%, every time).
Map and track your lost leads. Where do they go, and what do you do with them? Find out, and avoid dead ends.
Read up on Data Privacy laws in New Zealand, and ensure you comply. https://data.govt.nz/toolkit/privacy-and-security/data-privacy/ is a good place to start. Make sure you have a Privacy Policy on your website.
Develop lost lead nurture and keep the warm programme, preferably with marketing automation. If your in-house marketing team can’t do this, then ask a marketing agency to set it up for you.
Ensure you have undertaken recent sales training with your team. For example, AutoPlay data shows that many leads are closed too soon, without enough follow-up, and Reason for Lost Sale is a good measurement of how thorough your sales team are when following up leads.
Boost Auto is an automotive consultancy working in seven main areas.
• Sales Training
• Sales and Marketing effectiveness for brands and dealers
• Market Insights & Trends
• Business planning and facilitation
• Operational Effectiveness
• Get Ready Automations
• Go To Market strategies for emerging brands
You can contact us at hello@boostauto.co.nz
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