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Jeremy Patterson

Jeremy Patterson Chief Technology Officer

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Third Party Lead Providers - Some are just saying ‘No’

The Wall Street Journal recently posted an interesting article* about third party lead providers.  Sites such as TrueCar, Cars.com and AutoTrader, once mainstays in a dealership's digital ad spend, are now falling by the wayside.  What some dealerships are finding is that independence from third party lead providers has not resulted in a loss of sales, rather the opposite.  Many dealers are noticing upticks in leads and sales when the shopper's focus is brought to their website and their brand.

Dealers pay monthly and/or per-lead fees from these sites in order to drive sales on inventory.  What many now claim is that third party lead providers are using this revenue to boost their own brand, which in turn lessens the dealership's brand.  In addition, some sites such as TrueCar have been accused of acting as if they are the ones actually vending the car instead of the dealership where the vehicle is actually being sold.

Third party lead providers originally got their fame by becoming full of information about the vehicles and less about a hard sell, which helped to gain the trust of many customers who have been leery of stereotypically untrustworthy car dealerships.  A shopper could theoretically do all of their research and submit a lead all on the same site.  But dealers are beginning to fight back by adding similar research tools to their own websites in order to compete.  In order to prevent a fall-off in business, some third party lead providers have moved to a pricing model that only charges upon the successful sale of a vehicle.  While this may help save on the cost to a dealership, it does not address the issue of branding and where the customers are actually browsing and shopping online.

Every dealer has to decide where they will source leads, and for some, third party lead providers are another way to show the world their inventory.  For others, opting for independence and building their own brand will result in longer lasting benefits.  How are you all dealing with getting traffic directly to your website vs using third party vendors?

*http://www.wsj.com/articles/car-dealers-aim-to-curb-online-rivals-1434204002

Alex Lau
Good article! Having set up plenty of accountability or attrition models for dealers, it depends on the 3rd party source. Measuring 3rd party leads all the way to an actual sale (ROI) process, which can be easily done. We can't just say "all 3rd party lead providers are worthless." That's unfair and frankly untrue. Many quality leads are provided via AutoTrader, Cars.com (more so), Edmunds and TrueCar. I see a bigger problem, the lack of proper sales process (salesmen and BDCs) within the rooftops themselves. There really is no such thing as a bad lead, in my book. It's the failure to process the lead, the failure to understand and engage the potential buyer that's the problem, not the lead providers. Additionally, who's to say dealers have the same reach or buying power as the automotive 3rd part lead capture titans (aforementioned)?
Michael Bilson
@ Alexander...Very insightful feedback....I find that many dealers will determine the Quality of a 3rd party lead provider based only on closing percentage. Example...Dealership A, B and C all receive the same lead. Dealership A and B do not sell the customer but Dealership C does. Dealer A and B don't feel this vendor is providing quality leads and cuts them while Dealership C increases its spend with this Vendor. Point being...the Vendor still submitted a lead that purchased. What many dealerships fail to measure is ENGAGEMENT. How labor intensive is a lead source for your sales team or BDC? How many emails, dials and or attempts does it take to simply make contact? True Car leads are notorious for providing leads that are non-responsive or will require three times the effort to even reach.
Alex Lau
@Michael, thanks for your kind words and insight. Yes, I feel as if artificial intelligence could help a BDC with engagement and closing ratios, such as https://www.conversica.com.
Alex Lau
Oh crap, you work for Conversica! HA HA HA what are the odds...???
Michael Bilson
Odds would be Fair to Midland....lol. Thanks Alex.

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