CDK's purchase of Auto/Mate may create a major disruption in the dealer management system (DMS) industry. Here is our take. DOWNLOAD
The great news (for lead providers like us) is that in the last 6 months, banks have really loosened up, and dealers are back in the business of adding to their bottom line by supplementing their own advertising with third party leads.
The bad news (for everyone) is that there is a seemingly limitless supply of leads available in wholesale markets, and that just about anyone can set up a server in their basement and call themselves a "lead provider." Even worse, all of the pitches are the same: "Our leads are all fresh" or "We make getting credit for bad leads really easy."
As a dealer, how do you know who is really going to provide you with opportunities to sell cars, and who is just full of it? Just asking a couple of simple questions can help you make the right decision.
First, ask specifically which sites they use to originate the leads. This one question will help you to figure out who is generating leads and who is just buying whatever they can get on the open market. I'm not suggesting that a lead is by definition bad because the retailer didn't generate it, but it does increase the likelihood that you're getting a "lead" that has no intention of buying a car.
Second, ask about how the leads are filtered and validated. This can be a little tricky, because some filters that sound great actually leave you with a lead of lesser quality. Credit score is the big one. The only way to legally sell leads with a firm credit range (ie, 520-640) is for someone to have already done a hard credit pull. Trigger leads are a part of our business (we can debate their value in another post), but you can buy them really cheap -- why would anyone pay a premium for them when they are repackaged as proactive finance leads?
Finally, just use a little common sense. If the best sales pitch a provider has is how easy they make dealing with bad leads or how easy it is to cancel, you're probably talking to the wrong folks.
Remember, your goal is to sell cars, so ask specifically how they can help you sell more cars.
The answer you get should really help to narrow down the list of providers you're considering.
Prior to joining Carloan.com six and half years ago, Bob Harwood worked on both sides of the financing process -- first at Capital One and then at a dealership here in Richmond. You can reach Bob at 804-521-8581 or via email at bharwoodATcarloan.com.