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16% is the NEW 10% - ILM Closing ratio

Jeff Kershner

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May 1, 2005
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If you watched today's RefreshFriday show, you may remember the discussion towards the end on ILM Closing Ratios! With all the tracking they do at DriveData, @jon.berna had some interesting stats to share.

They did the math and...

For internet leads in the period from March to August versus the prior six months before Covid, Internet Lead closing rate went up 65% (16.8% / 10.2%) despite response time going up 12.8% (246 / 218).

I can't say ours jumped quite that much but we no doubt have been recording some of our highest ILM closing ratios.

Go back through your ILM reports.
Did your ILM closing ratio take a nice jump? 65%
 
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Patrick O

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Feb 18, 2020
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I've always been curious where the "10% average" came from, tbh? Any month considerably lower than 12.5% has always been the exception throughout my career, but I've always worked out West. Maybe things are a bit different in other parts of the country?
 

Alex Snyder

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May 1, 2006
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One of the issues with closing ratio is how gamed it is in the dealership. I did it :hidepc:

On the more innocent side of the gaming example: You mark all those auto show leads as bad, then kill all the junky bad credit ones, and so on and so on. After you've deducted all those "crap leads" you then apply your sold unit count to the equation and your closing ratio looks much better.

Berna doesn't know which leads are the "crap leads" in each Internet Manager's head, so he looks at the total summation. Much more fair when comparing multiple dealerships. And also a reason why the closing ratios he puts out there may look smaller to the DealerRefresh community. Outside of this community, 10% is gigantically good. 17% is unheard of.
 
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Reactions: ChrisR and Patrick O

ChrisR

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Oct 12, 2015
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Christian
If you know how to work your CRM, I have (for good reason IMO) all CarGurus phone recording leads come in as phone, rather than internet - so we don't get hit for a wrong number that generates a lead. Plus, it's a phone lead, I want it classified as such.
 

georgenenni

Rust & Dust
Apr 13, 2012
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George
A related topic, I assume most seeing website conversion rates up sharply. Lead forms, chats, trade leads, DR leads up most. Conversion rates doubling, even tripling for some. Shoppers are serious and not afraid to give up PII, and once in showroom are less likely to leave, shop around.
 
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Dan Sayer

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Dec 4, 2009
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Anything in this Forum with "Closing Rate" is my Click Bait.

@Alex Snyder is spot on with the "gaming". We've all been in peer groups or chatted with another internet guy who says "we close at 22% all day" (eye roll ensues and then you throw out the "hey I gotta run"). I've been told that AutoNation uses a Close Rate on total leads, Good/Bad/Duplicate, and that 10% for them is "crushing it". I wonder what they saw during this time? Anyone with AutoNation?

I missed the RefreshFriday episode (I just watched it now). We never closed in any of our stores and our Visit Close Rates shot up from shoppers coming in lower in the funnel (60%+ on Internet and Phone Appointments and 35%+ on Walk-In). I don't know if we made vast improvements within our process rather than the shopper changed their process. Our lift was from the conversion increase in showroom vs it was still a challenge to set next steps of a visit (our showroom or their driveway). I wonder if a store that went from 10% to 16% (that didn't close their showroom) on Internet saw that increase come from Lead to Visit or Visit to Sold? Like I said, we saw most of our lift in Visit to Sold because if they made the trek to your store in a pandemic, they were serious.
 
Dec 19, 2018
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Bill
I am glad this became a topic in here, because the 16% number concerned me as this month our conversion rate is hovering around 0. I'm not exaggerating. Anyone else struggling this month?

So I did a deep dive on my own (no outside vendors or tasking a salesperson) and here is the data through the 14th if anyone is interested.

Average lead response time 18 minutes (11 over 30 minutes, 2 over an hour [one excluded that was 3 hours - no I didn't fire them])

*my times ended at 9 p.m. and start again at 8:30 a.m.

15 of 36 people who provided a phone number answered a call.
28 of 40 people who provided an email opened an email.
16 of 40 people who opened an email responded to an email.
16 of 28 people who were texted responded to a text.
45 of 58 leads counted responded either via email, call, or text.

REASON DEALS MARKED LOST OR CURRENT STATUS (AGAIN MY REASON, NOT ANYONE ELSE'S):

19 No response (6 of these had contacts prior and then stopped responding without my being able to deduce a reason)
6 Didn't like vehicle
3 Bad Credit
2 Price
7 Bought elsewhere (4 of which their only response was to tell us the bought elsewhere)
4 Vehicle sold while in process
1 Trade Value
4 Didn't have what they wanted
3 More than 250 miles away
2 Out of market
1 Inequity
1 "Go away" (Ha!)
4 In process
1 Sold (seriously)

19 leads were marked bad or excluded from the above data for the following reasons:

5 vehicle was sold before inquiry
7 repeat customers who went to their salesperson
2 were online credit apps entered as internet leads
1 "car finder"
1 customer overseas
5 GM payoff requests
1 GM lease maturity
1 GM customer in equity

Note that no one has the ability to delete leads other than me.
 

Dan Sayer

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Dec 4, 2009
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Dan
I am glad this became a topic in here, because the 16% number concerned me as this month our conversion rate is hovering around 0. I'm not exaggerating. Anyone else struggling this month?

So I did a deep dive on my own (no outside vendors or tasking a salesperson) and here is the data through the 14th if anyone is interested.

Average lead response time 18 minutes (11 over 30 minutes, 2 over an hour [one excluded that was 3 hours - no I didn't fire them])

*my times ended at 9 p.m. and start again at 8:30 a.m.

15 of 36 people who provided a phone number answered a call.
28 of 40 people who provided an email opened an email.
16 of 40 people who opened an email responded to an email.
16 of 28 people who were texted responded to a text.
45 of 58 leads counted responded either via email, call, or text.

REASON DEALS MARKED LOST OR CURRENT STATUS (AGAIN MY REASON, NOT ANYONE ELSE'S):

19 No response (6 of these had contacts prior and then stopped responding without my being able to deduce a reason)
6 Didn't like vehicle
3 Bad Credit
2 Price
7 Bought elsewhere (4 of which their only response was to tell us the bought elsewhere)
4 Vehicle sold while in process
1 Trade Value
4 Didn't have what they wanted
3 More than 250 miles away
2 Out of market
1 Inequity
1 "Go away" (Ha!)
4 In process
1 Sold (seriously)

19 leads were marked bad or excluded from the above data for the following reasons:

5 vehicle was sold before inquiry
7 repeat customers who went to their salesperson
2 were online credit apps entered as internet leads
1 "car finder"
1 customer overseas
5 GM payoff requests
1 GM lease maturity
1 GM customer in equity

Note that no one has the ability to delete leads other than me.
@BillKVMotorCo thanks for your level of transparency here. I have a few questions on your Bad and excluded (assuming the best but asking to clarify):

Why would you mark a lead as "Bad" if the car they asked about is sold? That shopper still has to buy a car. Why not one of your other units instead of another dealer's "other unit"? Do you have training on what to say in those instances?

If a shopper, who bought prior, chooses to raise their hand through an Internet channel, I can understand it going to their prior sales person, but why wouldn't you leave the Lead Type as "Internet" and then the Lead Source as "Repeat" (not Bad)?

I would say 80% of all our leads throw out "price" as an objection but isn't that par for the course?

Couple of other items:

I see you have a 77% contact rate, which in my book is great. What was the Appt Set rate? What was the Shown rate? Are you getting them to the store and the real disconnect is the closing on the showroom?
 
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Dec 19, 2018
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Great question! I should have clarified that the vehicle that was already sold was a 1998 Pontiac Trans Am. Ha. Not a lot of comps.

Another good question that I could have explained better. The leads that were repeats were not marked bad in the system and were left under "Internet," I just excluded them from the conversion rates, because they naturally converted higher.

Unfortunately, the problem is very clearly online. We only scheduled 5 visits. Three of them were the one that was sold, bad credit on a 2009 Pontiac G8, and a no-show. The other two were a customer that came even though we told them we didn't have the vehicle they wanted (so technically not even an appt), and the last I felt the salesperson did a phenomenal job, but the customer just didn't like anything we had (I'm pretty sure she was just appeasing the spouse because she wanted a Cadillac all along - which she bought).

Honestly, looking through the leads I only felt that there were three the department did a less than stellar job on. I know that it is easy for me to say this through a biased lens, but my entire goal when I started was to show myself and my team that we were (myself included because I built the templates, processes, etc.) doing a poor job. I did not set out to make myself feel better and find excuses. There are only two possibilities in my eyes at this point though:

1. The leads are junk: I hate to be that guy, but that's the feeling I was left with. It was so brutal to go through them that I felt bad for the department that they had to deal with them. I feel like I have good enough self-awareness that I wouldn't use that excuse lightly.

2. Our processes stink: While I think this area always has room for improvement, it seems our response rate and response times hint that our processes probably aren't terrible. I'm going to have to review our templates, retrain on follow up cadence just to make sure we are all on the same page, and listen to some outbound calls.

A less than 1% conversion rate still says there is a problem somewhere, but after reviewing our leads so intently I, like many here, am left to question how honest other dealers are with themselves when calculating their conversion rates. The only leads I excluded were the ones mentioned.

I think one key point that I made when displaying the data was that the data was generated by myself alone. I wonder how many times dealers are using the data that their staff and/or their vendors give them to make the numbers sound good for their own purposes.
 
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