By Sean V. Bradley, CSP, President,
To sell cars, you need opportunities to do business. You need prospects, "ups," and the right processes to engage and convert. There are many different types of prospects, but we'll focus on Internet purchase requests for this article. But first, did you notice that I did not call them "leads" so far? You shouldn't either. If you/your team think of prospects as "leads," there's a good chance they won't purchase.
They Are BUYERS
The reality is they are BUYERS! They either are in the market to buy now, they will be in the market to purchase an automobile in the future, they know someone who is in the market now to buy a car, or they know someone who will be in the market in the future to buy a vehicle. Buyers are IMPORTANT. Buyers deserve your time, attention, effort, dedication, and respect. We sell, at a minimum, the second largest item the average American will ever purchase in their lifetime. And in some cases, an automobile will be the single, most expensive item Americans will ever buy. So first and foremost, remember that, and do not minimize or take it for granted.
50% Respond to Potential Buyers AFTER 48 Hours
Autoweb says approximately 50% of their national dealer clients do NOT follow up with Internet purchase requests within 48 hours. Wait, what? Yes, that's right, 50% (we're talking THOUSANDS and THOUSANDS of dealers here). So, why, in 2023, do 50% respond to potential buyers AFTER 48 hours? One reason that I am sure of is that they think of these people as "leads" and NOT buyers.
Today's Buying Cycle
Before the pandemic, the OEMs said the average gestation period (buying cycle) was approximately 83-87 days on a new vehicle. So, for example, and let's round up to 90 days- that means if someone submitted an Internet purchase request on March 1, the average buyer wouldn't purchase a new vehicle until May. Again, that was BEFORE the pandemic. Now, because of the vehicle inventory shortage, increase in pricing, etc., that gestation period is upwards of 150 days on average! But there's more to it - so let's dive in, starting with the residual flow factor:
When I refer to the residual flow factor, I mean that- say, for March- if a dealer receives 500 Internet purchase requests and sells 50 cars that month from the Internet / BDC, that is NOT a 10% closing ratio. Yeah, read that again. Confused? I'll elaborate and explain with our example:
On March 1, ABC Motors did NOT start with zero Internet opportunities. The dealer would first run a report in the CRM to identify how many opportunities are 90 days or less (remember the average gestation period WAS 90 days). ABC Motors would probably have at least 900 BUYERS on March 1 that were 90 days or less old
Now, add another 500 fresh internet purchase requests they received in the month (on top of the 900 buyers), and that's 1,400 total working opportunities. 1,400 opportunities, only to deliver 50 units, is very bad. It doesn't matter what excuse anyone wants to deploy; If you have 1,400 opportunities in a month and sell 50 units or less, you are BROKEN.
10% of the total opportunities in the month would be 140 units - a considerable difference of 90 units. If you are a larger store or dealer group with 1,000 - 2,000 purchase requests per month, it's even worse because the residual flow factor compounds like interest. So dealers are missing hundreds of thousands of dollars to millions per year from not maximizing total opportunities- BUYERS.
Now let's go deeper down the rabbit hole. Earlier in this article, I mentioned that the gestation period is now upwards of 150 days (and not 90) due to the new vehicle inventory shortage and rising costs for automobiles. Since most dealers' CRMs are not set up for the correct gestation period for follow-up, they will not convert properly. Let me be hyper-specific:
The analogy I love to use here is that it is just like this:
That is exactly what is happening day after day, week after week, month after month, year after year. Only it is getting worse with the longer gestation period in the buying cycle.
My advice is simple:
Also, make sure you attend my session at Digital Dealer
Tampa. I will be taking this article to the next level!
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Sean V. Bradley, CSP, is an entrepreneur, published author, speaker, and award-winning international trainer. He is an eight-time NADA/ATD convention speaker and a FranklinCovey Certified Facilitator. He has earned the coveted "CSP" designation in the National Speakers Association. Sean is a member of the elite "Million Dollar Speakers Group" in the NSA and is a State Association Speaker and Trainer. He has presented at over 217 NCM and NADA 20 Groups. He has personally trained over 25,000 automotive sales professionals in 1,100 unique rooftops.