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3rd Party Lead Providers

Elizabeth Apps

Green Pea
Oct 26, 2017
4
1
First Name
Elizabeth
For years I have been watching dealers pour money into 3rd party lead providers. It frustrates me because the deal always seems so one sided. They need us as much as we need them. That being said there is value. A lot of customers like a one stop shop to compare and they typically are better with marketing mainly because they have more money and this drive traffic. And now there are so many different providers so what do you choose? Do you have to be on all of them? Just curious has anyone tried to go without them and concentrate on your own sites SEO and PPC? If so how did it work?

If you do use 3rd party lead providers, what metrics do you use to measure their success? Also do you use those metrics to negotiate?
 
Since you specifically mentioned "3rd Party Lead Providers" and not all third parties, my comments will only apply to those who fit this tight definition.

First, in my opinion, there are only two legitimate "3rd Party Lead Providers" left in the market. There is AutoWeb (formerly Autobytel) and there is TrueCar. Each has a slightly different business model and appeal to dealers with good processes. Both generate nearly all of their leads themselves (that is, they don't purchase all of their leads from the lead marketplaces like your OEM does). This, along with their acceptable Cost Per Sale, makes them legitimate providers in my mind.

The metrics to measure these are simple and have been around almost as long as the automotive 3rd Party Lead:
  1. Connection Rate - What % of these leads can my team reach?
  2. Close Rate - What % of these leads can my team sell?
  3. Cost Per Sale - What is my average Cost Per Sale for these leads?
You can add in others, but these are the basic three that dealers should be using. For AutoWeb, if your connection rate isn't 70% or better, your close rate isn't 7% or better, and your Cost Per Sale isn't lower than $350, then you have a process problem. Dealers with good processes in place enjoy $250-$300 Cost Per Sale with these leads. (For TrueCar, most dealers pay a flat "per sale" so that measurement isn't as important as the other two.)

Can dealers do this themselves? No way... not if they want an acceptable Cost Per Sale. The dealer's PPC Cost, for example, to generate a single lead from outside their PMA can run $750 or more (this is the Cost Per LEAD, not Cost Per Sale). They can buy this lead for $25 from AutoWeb in the exact ZIP Code and for the exact Model they want. Why would they spend $750 on PPC to do this?

So, should dealers use both of these providers? I've never found a valid argument against using AutoWeb - that's why I always recommend them to my clients - though I have found valid arguments against TrueCar. (For example, if you're not in a market that contains a military base, you may not need to be on TrueCar. Likewise, if every other dealer in your market is on TrueCar, you can often poach their customers without having to pay the TrueCar fees.)
 
I'm going to copy and paste my own quote from https://forum.dealerrefresh.com/thr...average-cost-per-lead-to-get-a-customer.5619/
Cost Per Lead (CPL) is an an important metric (can be calculated via Web Traffic Attribution), but a lot of dealers are more interested in Cost Per Sale (can be calculated via Sales Attribution).

Web traffic attribution evaluates the true cost per engagement and cost per lead model (multi-touch) so you no longer need to rely on last-click attribution. Sales attribution holds vendors accountable for their performance by measuring what really matters – what’s driving sales, not just clicks. DISC = Does It Sell Cars.

However, from the look of your question you sound like you are looking for benchmark numbers, which can be tough to come by in this industry (I suppose there are averages out there).
 
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