It's 2019. What is a good Web Lead Close Rate? [Insert "yeah but our leads are different" here]

[Dan Sayer]

If there was ever a question that invited a landslide of caveats in my 18 years in this industry it would have to be "What is your close rate?". Lead source mix, Lead type (New or Used) mix, Sold in Timeframe vs From Leads, and what your store counts as a Bad lead all contribute to a wide range of close rates on web leads.

I would be interested in knowing what this community's 2019 goals are which also would need your definition of what a Bad lead is.

Here are mine:

15% Lead to Close rate goal (sold in timeframe)
That number comes from considering any lead with a name and one working contact path as Good even if they never reply in the 120 days of our follow-up. Lead still is Good, but just Lost at that point...

These are our "stage" targets:
35% Appointment Set (typically needs a 60% or higher contact rate)
75% Appointments Show
60% Shown Appointments Sold (may be sold on be-back)

Here is my caveat. Where I'm struggling a bit is where that breakout is, and where that Goal is, between New and Used. We have a higher Used closing rate than New which I'm sure is normal. I have some stores at 13/18% and some at 7/20% with variations in the volume ratio of New to Used as well. Do any of you speak to New and Used as completely separate Goals or do most of you still have a singular Goal that you target for the entire Lead Bucket? Thanks fellers!

 

[John.H]

Generally speaking, you want to separate New Vehicle Leads from Used Vehicle Leads, and track statistics for them both down the line.

Let's be super transparent and a bit off topic here. No dealership is looking to generate "Leads", what they're looking for are actual sales appointments. People who are committed to coming into a dealership and looking at inventory.

We're seeing these statistics across the board (multitude of dealerships):

70% Lead to Appointment.

17% Appointment to Sold.

Our appointment-to-sold ratio is a bit low because we're targeting some very interesting markets. Such as subprime, rideshare, and trade in.

 

[Dan Sayer]

Generally speaking, you want to separate New Vehicle Leads from Used Vehicle Leads, and track statistics for them both down the line.

Let's be super transparent and a bit off topic here. No dealership is looking to generate "Leads", what they're looking for are actual sales appointments. People who are committed to coming into a dealership and looking at inventory.

We're seeing these statistics across the board (multitude of dealerships):

70% Lead to Appointment.

17% Appointment to Sold.

Our appointment-to-sold ratio is a bit low because we're targeting some very interesting markets. Such as subprime, rideshare, and trade in.

So your Lead Closing is at 11.9% IF 100% of your Appointments show up. What is your Appointment Show rate?

 

[Zhendrix]

Great topic. Since close rate is simply a numerator and a denominator made up of lead volume and sales it can easily be F*#*ed with. For example, during cash for clunkers we saw sales and lead volume both go up, but not at the same velocity. Lead volume went up drastically more. Even though everyone sold more cars, close rate went down drastically.

Close rate % should be your desired variable return on investment by lead source/mix broken out by new/used. Your goals should be different based on the lead source mix and time of purchase or resolution. If you exceed your goal, consider investing more in that lead source. If you do not hit your goal, consider investing in dealership processes or more resources to respond to leads.

"Thanks, but what are good industry benchmarks" - said every dealer ever. Industry benchmarks are like best practices... They are not always best for you. I challenge you to find your own benchmarks. To find your own benchmarks, start by asking yourself some of the following questions:

Pulling 2018, or a year, or whatever larger sample size/timeframe of data...
Basic questions:
1. How many leads did we get?
2. What was the source of the leads? hint: The Keebler elf factory is not a lead source and does not exist.
3. How many cars did we sell?

Intermediate questions:
1. How many leads did we get from each source? What is our lead mix by source, by month?
2. Where did the leads come from, by source? literally, on a map. if you can get it. Map plot it out using Googles free tool or another free tool, like www.batchgeo.com. example included.
3. How many cars did we sell by each source and during a certain time frame?

Advanced questions:
1. Did we make any changes in the way we responded to leads (qualitative, better responses and quantitative, more responses) during that time frame?
2. Did we make any changes with our lead purchasing preferences or advertising strategies during that time frame? For example, many OEMs have third party lead programs where they purchase leads from several auto lead providers and then you receive them as source "OEM Digital Lead" Chances are your OEM is buying from the same lead sources you may be doing business with or investigating. If you have a direct/retail partnership with that provider, it usually trumps your OEMs ability to purchase from that provider which changes the lead mix you might receive. If you changed your radius or desired lead limits then you need to account for that change in your performance benchmarks.
3. Did we change our website conversion strategy during that time frame?
4.. How many cars did we sell that can be attributed (direct or assisted) back to a lead provider?

Alas, Here's my opinion on benchmarks for closing rates by lead source with a sample lead volume of 100 leads and lead mixture as follows. Keep in mind, your lead mixture might be very different therefore your close rate goals should be also different.

100 leads
70% 3rd party leads
10% brand site leads
20% dealer website leads

3rd party leads new cars: 5-7% close rate
OEM Brand Site leads: 13-15% close rate (can be volitle based on lead volume)
Dealer Website leads new cars: 18-20% close rate
Close rate goal all sources: 12.5% close rate

Here's what you need to do to get to a 10-15% close rate assuming 100 leads.
100 leads
60% contact rate
50% appointment set rate with the 60 people contacted
50% appointment show rate with the 30 people you set appointments with
Customers visiting 1.2 dealerships before purchasing? = 10-15% close rate

 

[Dan Sayer]

Great topic. Since close rate is simply a numerator and a denominator made up of lead volume and sales it can easily be F*#*ed with. For example, during cash for clunkers we saw sales and lead volume both go up, but not at the same velocity. Lead volume went up drastically more. Even though everyone sold more cars, close rate went down more than Adam Lambert backstage at a wham concert.

Close rate % should be your desired variable return on investment by lead source/mix broken out by new/used. Your goals should be different based on the lead source mix and time of purchase or resolution. If you exceed your goal, consider investing more in that lead source. If you do not hit your goal, consider investing in dealership processes or more resources to respond to leads.

"Thanks, but what are good industry benchmarks" - said every dealer ever. Industry benchmarks are like best practices... They are not always best for you. I challenge you to find your own benchmarks. To find your own benchmarks, start by asking yourself some of the following questions:

Pulling 2018, or a year, or whatever larger sample size/timeframe of data...
Basic questions:
1. How many leads did we get?
2. What was the source of the leads? hint: The Keebler elf factory is not a lead source and does not exist.
3. How many cars did we sell?

Intermediate questions:
1. How many leads did we get from each source? What is our lead mix by source, by month?
2. Where did the leads come from, by source? literally, on a map. if you can get it. Map plot it out using Googles free tool or another free tool, like www.batchgeo.com. example included.
3. How many cars did we sell by each source and during a certain time frame?

Advanced questions:
1. Did we make any changes in the way we responded to leads (qualitative, better responses and quantitative, more responses) during that time frame?
2. Did we make any changes with our lead purchasing preferences or advertising strategies during that time frame? For example, many OEMs have third party lead programs where they purchase leads from several auto lead providers and then you receive them as source "OEM Digital Lead" Chances are your OEM is buying from the same lead sources you may be doing business with or investigating. If you have a direct/retail partnership with that provider, it usually trumps your OEMs ability to purchase from that provider which changes the lead mix you might receive. If you changed your radius or desired lead limits then you need to account for that change in your performance benchmarks.
3. Did we change our website conversion strategy during that time frame?
4.. How many cars did we sell that can be attributed (direct or assisted) back to a lead provider?

Alas, Here's my opinion on benchmarks for closing rates by lead source with a sample lead volume of 100 leads and lead mixture as follows. Keep in mind, your lead mixture might be very different therefore your close rate goals should be also different.

100 leads
70% 3rd party leads
10% brand site leads
20% dealer website leads

3rd party leads new cars: 5-7% close rate
OEM Brand Site leads: 13-15% close rate (can be volitle based on lead volume)
Dealer Website leads new cars: 18-20% close rate
Close rate goal all sources: 12.5% close rate

Here's what you need to do to get to a 10-15% close rate assuming 100 leads.
100 leads
60% contact rate
50% appointment set rate with the 60 people contacted
50% appointment show rate with the 30 people you set appointments with
Customers visiting 1.2 dealerships before purchasing? = 10-15% close rate

Good input and all things that I was too lazy to detail out in the initial BUT still waiting for a retail-based Refresher to input on what they do. C'mon guys! (oh, and wasn't that "1.2" mantra dispelled in DR a while ago? It is still 2.4 or something like that...)

 

[Zhendrix]

Change any numbers in the close rate equation to get whatever result makes you happy.

 

[Dan Sayer]

Change any numbers in the close rate equation to get whatever result makes you happy.

I'm merely asking for the goals that store's have set this year for their teams. The math can be manipulated to any number of scenarios, we know that. Just look at the "Internet" pages of any NADA 20Group composite. I remember spending a year's worth of meetings with Driving Sales and Dennis G. and getting to the point where it was obvious we would never come to a common standard of measure or goals. Anyone in retail have, or consultants with knowledge of, goals for New and Used broken out by stages?

 

[Jeff Kershner]

Good input and all things that I was too lazy to detail out in the initial BUT still waiting for a retail-based Refresher to input on what they do. C'mon guys! (oh, and wasn't that "1.2" mantra dispelled in DR a while ago? It is still 2.4 or something like that...)

Dan, you're right. For years different media outlets were saying that the average customer was visiting less than 2 dealers before their purchase. There have been several studies to debunk this "theory."

J.D. Power 2017 New AUtoshopper Study shows 2.3 visits before purchase - https://d1j3qugeyybc8o.cloudfront.net/uploads/2017/10/JD-Power-2017-NAS.pdf

Urban Science conducted an internal study and out of 2,748 responses 70% of those customers surveyed visited two or more dealerships before purchasing, with 46% of the 70% said they visited three or more dealerships before purchasing, and 26% said they visited four or more dealerships.

Although the "less than 2 dealers" or 1.3 makes for a more compelling story on why dealers should have a higher closing ratio on customer shows.

 

[Zhendrix]

Dan, you're right. For years different media outlets were saying that the average customer was visiting less than 2 dealers before their purchase. There have been several studies to debunk this "theory."

J.D. Power 2017 New AUtoshopper Study shows 2.3 visits before purchase - https://d1j3qugeyybc8o.cloudfront.net/uploads/2017/10/JD-Power-2017-NAS.pdf

Urban Science conducted an internal study and out of 2,748 responses 70% of those customers surveyed visited two or more dealerships before purchasing, with 46% of the 70% said they visited three or more dealerships before purchasing, and 26% said they visited four or more dealerships.

Although the "less than 2 dealers" or 1.3 makes for a more compelling story on why dealers should have a higher closing ratio on customer shows.

Again... Change the "dealership visit" input to whatever you want. The real equation should be an efficiency equation. How many opportunities did you get vs. the total amount of opportunities that bought a car any where? Efficiency = total number of people who bought a car vs. the number of people who bought from you. For example if you get 100 leads and 20 buy from you and 20 buy elsewhere your maximum close rate possibility would be 40%. If you only sold 20 out of the 40 possible, your efficiency would be 50%. The equation shouldn't be linear or monthly, it should be rolling. Here's a simple calculator as the closing rate can be impacted by whatever lever you choose to push or pull.

 

[Dan Sayer]

Again... Change the "dealership visit" input to whatever you want. The real equation should be an efficiency equation. How many opportunities did you get vs. the total amount of opportunities that bought a car any where? Efficiency = total number of people who bought a car vs. the number of people who bought from you. For example if you get 100 leads and 20 buy from you and 20 buy elsewhere your maximum close rate possibility would be 40%. If you only sold 20 out of the 40 possible, your efficiency would be 50%. The equation shouldn't be linear or monthly, it should be rolling. Here's a simple calculator as the closing rate can be impacted by whatever lever you choose to push or pull.

Your brain thinks like mine and you are right, there are numerous underlying concepts that we need to be aware of when building our process or correcting a process. I measure stores' and sales peoples' performance on a 60-day rolling (at any point in time). I'll look at Monthly for a trend analysis. I do like your calculator but it still ties online shoppers that raise their hands by click or call to 100% of the digital ad budget. You and I know that the majority of walk-ins/drive-by/lot-up were influenced by our dig ad as well. I don't want to go down the Attribution rabbit-hole in this thread...