The Basic Performance Benchmarks - Please help!

[PBrooks]

Hello, DealerRefresh!

My name is Pete. I'm fairly new to car sales. I'm not involved in our internet department, yet. I was chatting with my Internet Director and he's been explaining to me the basics of everything, but I'm worried that I'm bothering him too much. I'm the type of person that understands something better when I can see the whole picture and he's been too busy to explain to me the whole picture to me. I've been putting it together in bits and pieces, though.

So, what is the deal with leads? The last time I spoke, we were talking about all the different metrics that he has to keep watch over. I've tried to do some research myself so that he can see that I'm putting forth some initiative, but I can't find much. When we talked last, he mentioned 50% a lot and I got lost. For example, I think he was saying if I got 100 leads one month, I should make 50 appointments, 25 of those would actually show and then 12.5 of them would buy? Did I understand that right?

What is the industry standard for leads? Is there one? Are there any good resources that I can sink my teeth into?

PS - Let me add that my manager has been more than willing to answer questions for me. I guess I'm just looking for a chance to impress him by finding out some answers on my own...and by that, I mean by asking the internet.

 

[Mitch Gallant]

Re: THE BASICS - CAN SOMEONE EXPLAIN THIS TO ME

There are a ton of benchmark numbers out there. It depends a bunch on your lead mix but I'd hope 12.5% isn't his top shelf closing benchmark. The two numbers we watch closely are leads to show and closing. Our benchmark for lead to show is 35% and our closing in 18%. Stretch goal of 40% and 25%. This is based on a heavy volume of our leads being self generated which are far higher quality than a purchased lead or 3rd party.

There was a study done in 2011 by Kain Automotive that I thought really spelled out the key areas for lead success but I cannot find it online. Anyone have a link to this study or similar?

Once you get to know the math and so long as your team has a good way of tracking it you will get the hang of it quickly. Don't shoot for someone else's numbers, that's for them to help manage you, set goals based off your own performance and focus on improvement.

 

[csabatka1]

Re: THE BASICS - CAN SOMEONE EXPLAIN THIS TO ME

It's my opinion, but it's hard to rely on national industry standards in your own internet department. You can use it as a guide, but should create your own benchmarks. There are too many variables (population bases, lead sources, dealer's internet structure, inventory mix, etc.) that play into the numbers. I do look at industry standards, but set our benchmarks and goals based on our previous dealership's performances. Each one of our internet departments have their own set of goals and standards.

 

[ddavis]

Re: THE BASICS - CAN SOMEONE EXPLAIN THIS TO ME

This is based on a heavy volume of our leads being self generated which are far higher quality than a purchased lead or 3rd party.

Once you have this, it's a matter of people and processes.

 

[Jeff Kershner]

Like Mitch and Chad mention above - you want to have your own benchmarks. Especially when it comes to "internet" traffic / leads, because as I have witnessed, no 4 dealers measure it the same way. Some like to throw in phone calls from "internet" marketing channels into the mix while only counting the phone call that resulted in a sale. Making up for a 1 to 1 = 100% closing ratio, throwing off performance percentages.

With that being said, here are few initial performance measurements I consider.

You can sort of back yourself into these numbers.

JD Power studies show the average consumer visiting less than two dealerships before purchase. It seems to fluctuate yearly between 1.3 and 1.8. I personally rounded up to two – the average consumer visiting two dealerships before purchase.

Simple math equates to a 50% closing ratio.

When it comes to web form Internet leads, here's what I initially measure:

Lead to Show - I want to be a 30+ percent. For everyone hundred leads I received (non duplicate for 30 days) I want 30+ of these people to physically show up at my dealership

Honestly, this is a stat that a lot of dealerships aren't aware of. Due to inconsistencies of tracking methods across the showroom floor, a lot of times this that goes unmeasured or is consistently inaccurate.

Show to Close – referencing back to the JD Power stats, we know we should be closing 50% or greater of these shows.

100 leads
30 shows
15 sales

This is equates to a 15% lead to close ratio. Anything above this, I would say that you're performing at above average.

 

[ddavis]

Re: THE BASICS - CAN SOMEONE EXPLAIN THIS TO ME

Due to inconsistencies of tracking methods across the showroom floor, a lot of times this that goes unmeasured or is consistently inaccurate.

That is exactly why, the internet department should have it's own log, separate from the floor sales log. Two different matrices.

As Internet Director, I liked having my own desk and be closing deals.

 

[Jeff Kershner]

That is exactly why, the internet department should have it's own log, separate from the floor sales log. Two different matrices.

As Internet Director, I liked having my own desk and be closing deals.

Not to go off topic - but for years now, when I sit down with a dealership with my consultanting hat one, I always ask WHY do you have a separate "Internet Department?". Don't get me wrong, as I've been there and done that. But really, WHY do you separate your floor into a group of people that are doing things RIGHT and a group of people that won't accept chance and continue to due everything WRONG?

Maybe this is a question I'll post as a new thread... sorry to go off topic.

 

[ddavis]

Not to go off topic - but for years now, when I sit down with a dealership with my consultanting hat one, I always ask WHY do you have a separate "Internet Department?". Don't get me wrong, as I've been there and done that. But really, WHY do you separate your floor into a group of people that are doing things RIGHT and a group of people that won't accept chance and continue to due everything WRONG?

Maybe this is a question I'll post as a new thread... sorry to go off topic.

That would absolutely be the best scenario if you had the facility and could attract enough good people. There was a store in Phoenix that operated that way.