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Cost Per Lead - what's yours

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glh222

glh222

Rust & Dust
Jul 29, 2012
28
9
First Name
Gregg
#1
hey all- wanted to put this question out to the group. Would anyone be willing to share how their 3rd parties are performing in terms of this metric. I will get the part started...

Autotrader- $175 cpl
Cars- $225
Organic-$87 cpl
Facebook- $48 cpl
CarGurus- $95 cpl (only went live with paid version 3 months ago)
EBay- 62 cpl
Internally Developed Trade Tool- $18 cpl
Oem- $52 cpl, adding back for assistance monies

Would love to hear from y'all....
 
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#4
Dive into some of the prior insights.
http://forum.dealerrefresh.com/threads/does-cost-per-lead-matter-to-you.4406/ - @Bill Simmons makes some great points in here.

Essentially, there a number of things that have to be considered:
  • What is a lead? Is it just a form submission? Are you tracking phone calls? Are you tracking the silent shoppers somehow?
  • Is cost based on total cost of the lead provider, or are you assigning some of the cost to things other than just leads? (ie: exposure, SEO, etc)
  • Are you factoring in inventory capture?
  • Are you tracking AdWords vs Organic and assigning them a CPL?
  • Are you tracking showroom traffic? Most stores I work with have a greeter who "interviews" customers, often adds another 5-10 leads to AutoTrader queue, but many of those customers also saw the vehicle multiple places
And the list goes on and on.
I don't have a definitive formula or CPL but many of my clients have their own ways to calculate it.

The problem I see today is that leads are no longer King in many ways - consumers hesitance to give up their contact information shouldn't affect the ROI of a provider if the vehicles still get the same # of eyeballs and interactions in other ways.
 
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Reactions: Jeff Kershner, ed.brooks and Rick Buffkin
#5
craigh said:
Dive into some of the prior insights.
http://forum.dealerrefresh.com/threads/does-cost-per-lead-matter-to-you.4406/ - @Bill Simmons makes some great points in here.

Essentially, there a number of things that have to be considered:
  • What is a lead? Is it just a form submission? Are you tracking phone calls? Are you tracking the silent shoppers somehow?
  • Is cost based on total cost of the lead provider, or are you assigning some of the cost to things other than just leads? (ie: exposure, SEO, etc)
  • Are you factoring in inventory capture?
  • Are you tracking AdWords vs Organic and assigning them a CPL?
  • Are you tracking showroom traffic? Most stores I work with have a greeter who "interviews" customers, often adds another 5-10 leads to AutoTrader queue, but many of those customers also saw the vehicle multiple places
And the list goes on and on.
I don't have a definitive formula or CPL but many of my clients have their own ways to calculate it.

The problem I see today is that leads are no longer King in many ways - consumers hesitance to give up their contact information shouldn't affect the ROI of a provider if the vehicles still get the same # of eyeballs and interactions in other ways.
Click to expand...

Another one to add... Do you or should you include co-op dollars? http://forum.dealerrefresh.com/thre...your-co-op-dollars-in-your-calculations.4024/

I would say no. What difference does that make?

Somethings to consider @glh222 - as important and the cost per lead can be, it's the trends that matter most to me. I wanna see consistency or improvement, while knowing what outside influences could be altering the trends. This also allows you to keep your own cost per lead measurement, ignoring what others are "saying".

Something else - a cost per lead could be at $75.00, but for whatever reason your gross per sale from that lead source is a consistent average of $2,000. High cost per lead, but would you drop it?
 
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#6
Jeff Kershner said:
Something else - a cost per lead could be at $75.00, but for whatever reason your gross per sale from that lead source is a consistent average of $2,000. High cost per lead, but would you drop it?
Click to expand...
This is a great point. A couple of years ago I did a really in depth analysis with a dealership and we determined that lead sources absolutely had different average gross tied to them. In addition to that, we found that different lead sources also had different service retention and future sale results as well. Finding a dealership with 24+ months of sales attributed to source was a gold mine to me.

For example: the Unhaggle/CarCostCanada/TrueCar models tend to bring out consistent gross, but a much lower service retention due to the fact that consumers drove a further difference to the dealership to save money on the deal, but aren't driving that same distance to service the vehicles.

A few exercises I really enjoyed:
  • Calculating the generic cost per lead (essentially what you've done)
  • Calculate the average gross per lead source
  • Calculating 18 month service retention per lead source
  • Mapping all sales by lead sources on a Google map with different coloured dots for different lead sources (can be very interesting - we also use a similar method to try and identify the impact of traditional marketing)
    • Bonus points: map these next to your AdWords target areas and site analytics
  • Expert Level: Calculate the # of interactions (in your CRM) before a sale per lead source
 
#8
Thanks everyone for the replies, very helpful to hear/see the differing viewpoints and opinions. To answer the question as to whether or not im happy about my CPL numbers, my answer would be yes and no. Of course, like everyone else I would like to minimize the cost of my leads period- but I also agree with the consensus that the metric of a Cost-Per-Lead on its own is does not convey enough information to tell a clear story. My opinion, for what its worth, is that a CPL is a good metric to keep an eye on, so long as its a part of a host of other metrics that collectively serve the purpose of what I would call "evidence". The process I use to grade my lead sources has evolved over the years and the excel dashboard I use/built is a document im pretty proud of....however, I am honest with myself in the sense that I recognize that too much information isnt always a good thing and paralysis by analysis is a very real concern, hence while the routine of looking deeper than lead volumes, conversions and return is there- I find myself routinely coming back to the same key KPI's- CPL being one of them. Specifically, the data my eyes gravitate to monthly are the following:

1. Lead & Sales Volume
2. Total Conversion
3. Appt Conversion
4. Total Cost
5. Engagement Rate (# of leads/responses)
6. CPL and CPS
7. Gross Per Sale
8. Total Gross Generated
 
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