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Leads? Customers? What is the Difference?

john.quinn

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Dec 2, 2009
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**This article was originally posted over on the DealerRefresh Blog

A guy walks into a bar and says, "Bartender...." -- oops.. wait.. different story.

A guy walks into a dealership and says, "I'd like to see an SUV with 3rd-row seating."

Who is this guy? Is he a lead? Is he a customer?

If you ask the Salesperson, he's an "Up," but again, that's a different story.

What is he in your system? Does it matter?

If you've ever attempted to produce Lead ROI reporting, generate Customer lists for targeted Campaigns, or just generally wondered what the heck was going-on with your data, then yes, it matters. It matters a lot. But it's really not that complicated -- let's make this easy.

Leads:
Rule of Thumb: you cannot shake hands with a Lead.

Think of a Lead as a starting point: data with a need to be understood:

A Lead is an entity with unverified information and unverified intent that has purposefully contacted the Dealer.
Sounds a little complicated, but think of leads as simply words on a piece of paper or words sandwiched between tags in ADF/XML -- just words sent to a dealer or dealer's system that need to be understood. The words don't change -- ever. Leads are immutable, a fact from a particular point in time. Once we start to understand these words, the game starts...

Customers:
Rule of Thumb: you can shake hands with a Customer.

Customers are often people, although businesses can also be customers. Therefore, let's use the word "entity" in our customer definition:

A Customer is an entity with verified and sufficient information that has purposefully been in contact with the Dealer.
"Customer" is synonymous with "identity;" the answer to "Who?" when the question is asked.

Does "Customer" indicate a transaction has occurred? Not necessarily -- but a verified person or business has been in contact with the dealership.

We have the concept "verify" in both of our definitions because verification logic is a key to determining the maturation path of a lead: do we have enough data to make a determination that the words reasonably represent an identity? Or are the words a bunch of gobly-guk destined for the trash can or in need of further information to make sense?

If we're shaking hands, it's pretty easy to verify that there's an identity. Systems are not so fortunate, so verification logic is put in place to start separating the wheat from the chaff: the maturation of a lead.

This Maturation Path is what it's all about -- commonly referred to as The Road to the Sale. In the old days, The Road generally started when a customer walked through the door. Today, that door is no longer the glass rectangle hanging on the front of the building, and very often our systems are performing the first Meet-n-Greet. When a system understands the difference between a Lead and a Customer, the system's foundation is set to be an integral partner as the dealer travels the Road alongside his or her customers.

And when your system understands the difference between Customers and Opportunities.... then WOW!

RIght?
 
I get the sense that this might be part of a series, but I'm a little lost on the logic. A significant portion of "ups" aren't logged into the CRM every day, handshake or not. Do those entities, as you call them, have more value than a lead or inbound phone call with all of the relevant contact information?
 
Hi Bill -- are you asking if someone (a potential sale) who's been in the store "has more value" than an internet lead? I can't imagine there's much debate there... (how many stores do customers actually visit before making a purchase? Isn't it less than 2 now? I'm sure someone reading this has the latest stats...). But "customers" are not limited to those who have made their presence known in the physical dealership.

But first things first -- you've got a problem at your store if a "significant portion of "ups" aren't logged into the CRM..." That's another topic.

Really -- the article is simply about knowing the difference between a Lead and a Customer. Steve S recently posted about "crusty old leads." What I'm saying is that there's much more value in chasing "crusty old customers" vs. the ubiquitous "Internet Lead," and knowing the difference leads to efficiencies.

Thanks for reading and commenting!!

JQ
 
:iagree:

I like it when technology mimics the real world. Sales agents do say "that's my customer" when a prospective *up* drives back on the lot. It does not always apply to someone who has purchased a vehicle from that sales person or dealership in the past.

And let's deepen this argument with real world terms from the perspective of the sales department...

  • A lead is 70% of the time, a waste of time. It is around 7% of the time a monetary value with a trackable cost.
  • An *Up* (technically an opportunity and also known as a customer) is a 50/50 shot at becoming a monetary value without a trackable cost.
  • A service customer (also known as a customer and an opportunity on occasion) is someone who has bought a car before and is 70% likely to buy from you again assuming all is handled well.
  • And then there is the wild card repeat buyer who is loyal to her salesperson (A.K.A. Mom) or is disgusted with his local dealership's sales team. This person is nearly a *laydown* 100%.
 
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Bravo, Alex!

Given the lengthy automotive purchase cycle, I think an argument can be made that many purchasing entities are merely transactions. I think we all agree the data suggests that transacting entities visit less than two dealerships on average. However, it can be concluded that the transacting entity purchased from the second (or third) dealership because the first dealership royally messed it up somehow. Just because Dealership B isn't Dealership A doesn't mean that they'll ever go back.

Long-term revenue, especially on new vehicles, requires a level of stickiness to get the transacting entity to come back for service, parts, and repeat business. The lifetime value of the transacting entity is truly what separates a customer from anything else.
 
I get the sense that this might be part of a series, but I'm a little lost on the logic. A significant portion of "ups" aren't logged into the CRM every day, handshake or not. Do those entities, as you call them, have more value than a lead or inbound phone call with all of the relevant contact information?
https://findface.pro/en/face-recognition-for-customer-analytics.html
Verdict is still out on this type of technology (biometric data for marketing purposes) and as you well know things generally come late to the automotive vertical or at least products that have been branded as "automotive-centric." I don't see anyone doing this in automotive and I've incurred with various companies to find out about reselling or configuring their wares.

But, the only conversion that a dealer truly worries about is the one that they make on the showroom floor. There is technology out there that will help a dealer understand who truly IS walking on their lots and showroom floors (*see aforementioned).
 
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