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Jim Bell

Jim Bell National Sales Executive

Exclusive Blog Posts

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ROI on Internet Sources

I touched briefly on sourcing your internet leads the other day.  Now to the ROI on those sources.  A lot of dealers spend a lot of money on the internet for advertising and marketing of their vehicles.  You have to really evaluate all of your lead sources on a monthly basis to make sure that you are getting the most for your money spent. 

You have to really dig into analytics on the lead sources at the end of the month.  I know that it takes me about 2 days to get through all of my reports to get all of my ROI results for my providers so it can be time consuming.  I look at an internet sale as a lead that was generated from a third party source, your website, or a phone call that is trackable.  Trackable meaning you have a dedicated phone number from that source.  It is a phone-up, but if it is generated from a third party, I do view that as an internet sale.  DO NOT count floor traffic that comes in the door and says "I saw this car on the (fill in the blank), do you still have it?"  Even though there is room for argument, I don't count it.  Has to be a true internet lead or a phone call from those sources for it to count in my eyes.

Dig into your CRM.  Almost every dealership in the country has a CRM that will generate most of the reports for you.  You do have to take those figures and plug them into a spreadsheet.  Calculate your leads and sales from those leads and you obviously have your closing percentage.  You then have to look at your profit.  I run two reports; one with front and back-end profit and one without the back-end.  You then want to plug in the cost of all of your sources.  Take your total cost and divide the cost by the total amount of leads and will give you your cost per referral.  The benchmark should be under $50.  You then want to look at the cost per vehicle sale.  Take your total cost of your sources and divide that by your total sales.  The benchmark of cost per vehicle sale should be less than $250.

Your spreadsheet should look something like this:

 

Lead Source Analysis   Close Rate Analysis   Gross Profit Analysis   Lead Cost Analysis  
Lead Provider Referral Volume  Units sold Close rate Monthly Gross Gross average Monthly cost Cost per referral Ave. CPVS
Autobytel.com     #DIV/0!   #DIV/0!   #DIV/0! #DIV/0!
Autotrader     #DIV/0!   #DIV/0!   #DIV/0! #DIV/0!
carfax.com     #DIV/0!   #DIV/0!   #DIV/0! #DIV/0!
cars.com     #DIV/0!   #DIV/0!   #DIV/0! #DIV/0!
cars.com NLP     #DIV/0!   #DIV/0!   #DIV/0! #DIV/0!
dealix (new)     #DIV/0!   #DIV/0!   #DIV/0! #DIV/0!
Dealix (used)     #DIV/0!   #DIV/0!   #DIV/0! #DIV/0!
ebizautos     #DIV/0!   #DIV/0!   #DIV/0! #DIV/0!
edmunds.com     #DIV/0!   #DIV/0!   #DIV/0! #DIV/0!
google-Honda Certified     #DIV/0!   #DIV/0!   #DIV/0! #DIV/0!
Honda     #DIV/0!   #DIV/0!   #DIV/0! #DIV/0!
Honda QQ     #DIV/0!   #DIV/0!   #DIV/0! #DIV/0!
usedcars.com     #DIV/0!   #DIV/0!   #DIV/0! #DIV/0!
vehix.com     #DIV/0!   #DIV/0!   #DIV/0! #DIV/0!
                 
                 
Total 0 0 #DIV/0! $0 #DIV/0! $0 #DIV/0! #DIV/0!
                 
Marc McGurren
Jim - great example! I am a HUGE advocate for "you can't fix what you don't know." It can be a bit time consuming to generate these reports but it is 100% worth it in the end. One thing I actually added to my spreadsheet (which is extremely similar to yours) is a "Net Per Sale" - basically I take a look at what I averaged per car per lead less my average cost per sale per lead to get a "net per sale" so it gives me a clearer picture of what my true profit is from what I spend. I also then break it down even more for each salesperson and what their close rate is and front average, back average, and total gross. My internet department craves that report at the end of the month b/c they want the bragging rights of who had the most gross, who had the highest closing ratio, etc, etc. I continue to break it down to very minute details in order to get a better handle of how our department is doing. I break it up by dealership (we have 5 brands and 3 used car lots) and do the exact same thing for them. I love it when my sales managers gripe on how we are pricing our vehicles and then show him the reports for the past 6 months showing them I averaged $2000+/copy on NEW cars! I have used this as ammunition to bring to upper level management as well to make more informed decisions and hopefully push more of our advertising dollars digitally b/c I can show them an ROI. Thanks for sharing - mm
Jim Bell
Marc- I do break it down further also, but I think a lot of dealers don't even do what I posted so it is a starting point. Thanks for sharing your parts also!

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