I previously spoke on Phil’s show explaining the features/benefits of the Premier Lead Exchange.  On Friday’s show, Mike gets into more detail about Polk Lead Scoring and R.L. Polk’s capabilities within the lead management space.  Specifically, Mike breaks down the ‘Black Box’ that takes in automotive lead data and outputs a lead score which is a highly predicitive indicator of that specific consumer’s likelihood to purchase a vehicle.

Purchase Polk Scored Leads from the Premier Lead Exchange - use the Polk Score to optimize the mix of leads you are buying.  Leads that score a “10″ close 5X higher than those that score a “1″.  This means that your dealership needs to work 5x harder to acheive the same results if you’re only buying “ones”.

Listen to the show.

http://www.autoremarketing.com/ar/news/story.html?id=8534

By Jennifer Reed, Auto Group Editor
October 08, 2008

ROYAL OAK, Mich. — With showroom traffic dwindling for many dealers, compounded by the challenge of getting the customers who do show up approved for loans, sales are suffering across the board.

However, two companies recently joined together to help dealers bolster sales in such a difficult operating environment. The partnership between Detroit Trading Co. and R.L. Polk & Co. is now helping dealers capture strong buyer leads, which display the most chance of turning into sales.

Just how are they doing this? Via their new program called the Premier Lead Exchange.

So, the question becomes just how can this program help? Basically, since 2004, Detroit Trading Co. has partnered with hundreds of lead origination sources, pushing leads into its Detroit Trading Exchange. As of early August, the company is passing all leads on to Polk for scoring that will ultimately identify which leads have the most chance of resulting in sales.

Polk assigns each lead a score from one to 10, with 10 being the most desirable lead with highest chance for sales success. Dealers can then purchase the leads they prefer.

“Until now dealers and OEMs bought leads by the bushel with good and bad leads all mixed together,” Don Campbell, president of Detroit Trading Co., explained to Auto Remarketing.

“For the first time ever, dealers can now buy exactly what they want based on a prospect’s propensity to buy,” he continued. “Every lead traded through PLX is scored by R.L. Polk and Co. The scoring scale is one to 10, with 10s being five times more likely to buy than ones.”

To offer specific examples of the success rates for the program, the companies culled out 100,000 leads and accompanying scores, breaking down the success rate by how many of these leads led to deals within 45 days of submission.

Their findings include:

10: 37.6 percent closing rate
9: 34.4 percent
8: 30.2 percent
7: 26 percent
6: 22 percent
5: 19.3 percent
4: 15.6 percent
3: 12.3 percent
2: 10 percent
1: 7.5 percent

According to Detroit Trading Co., the closing percentages come in even higher after 90 days.

Pricing for the leads is based on the score and the range of scores a dealer buys, thus giving dealers more control.

Leads that match a buyer’s purchase criteria are passed along to TARGUSinfo for basic validation of name, address and phone number prior to being passed along.

Campbell more specifically explained, “For example, a lead scored a one costs $6, and a 10 costs $30. The higher scored leads produce the greatest return on investment because they sell cars. Thus, low scoring leads are expensive; high scoring leads are cheap. The higher scored leads are also the most cost-effective leads to work from a labor standpoint.”

Getting started with the program is relatively simple for dealers. All they need to do is open a trading account with Detroit Trading Co. with an initial deposit, according to Campbell.

“After that they buy only leads with the scores they want. The program may be terminated at any time, at which point the buyer would be refunded any money in his trading account,” Campbell pointed out. “In short, we make it easy for buyers to do business with us.”

This “open business meeting” offers an inside look into automotive advertising using cutting edge automotive advertising technology. Hosted by Philip Zelinger, President of AdAgencyOnline.Net, author of two books on the auto industry and a well known automotive advertising consultant. Today’s Subject: Third party leads sourced through a new market driven trading exchange hosted by the Detroit Trading Company supported by a lead scoring solution provided by R.L. Polk. Special Guest; Jeff Raab, Director, New Lead Exchange, DTX.

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Sean identified the following problems in the lead gen industry:

Absence of an efficient market; static pricing; quality is rarely communicated; limited control to maximize ROI

Reply!’s lead marketplace solutions focuses on the following:  establish an efficient marketplace, auction-based dynamic pricing, quality rating system, filters to maximize control of ROI.

Reply’s Lead Marketplace has a number of unique features/filters:

**The ability to select the age of a lead.  Leads do NOT have to be “real-time”

Ray Fenster - e-commerce director interacted with Sean to discuss how he uses Reply’s lead platform.

Ray manages his campaigns at a very micro-level.  He can expand/contract specific markets, he turns certain make/model campaigns on/off depending on inventory.

One really cool feature is that Ray (the dealership) can rate a lead - they can provide their own score.  How well did that lead perform for them.

Ray touched on how he goes about setting up his campaigns for his stores.  A store’s performance, internet abilities, and effectiveness, really drives his campaign generation.

One factor that’s really important to Ray is true transparency regarding lead source.  His specific example compared Black Book leads vs. dealer website leads.  The leads need to be treated differently.  Only true transparency allows his to know how to treat these leads.

Sean talked about giving more control to the dealer to manage the flow of leads - specifically lead volume based on dealer demand.  One interesting note - consumers know that they will get a better deal towards the end of the month, so maybe it makes more sense to purchase more volume towards the end of the month vs. the beginning.

Summary Takeaways:

One size does not fit all;

match lead flow with systems/personnel;

measure & optimize;

focus on ROI.

Great Session guys!

Mike started with some background info on FordDirect.  FD is 80% dealer owned.  5MM unique visitors/month, 200,000 leads/month.  First and foremost they are a lead generator - focus is at National, Regional and Local levels.  Are also a lead aggregator.  They cannot generate all the leads their dealers want - so they rely on affiliates to generate additional volumes - cast as broad a net as possible.  They scrub 15-20% of their leads.

Areas of focus:  Lead follow up, lead treatment, lead enhacement.

FD Technology requirements:  insight (on demand reporting), flexibility (integration with other systems), reliability

Nat Plane, WambaTech:

Company background:  alternative solution to expensive homegrown systems.  focus on lead aggregators, management and distribution.  Dozens of clients from mom & pop to OEMs.

Challenges WT helped FD solve:  need for on-demand reporting, flexible pricing schemas, integration with 3rd party systems, reliability.

WT has built an extensive suite of tools to allow FD to change their business rules in real-time (reject leads on the fly, manage affiliate lead sources, management pricing schemas, margin rules, etc.)

Another major area of support - 3rd party integration (new suppliers, CRM vendors, etc.)

Nat ended by focusing on the WambaTech Lead Server platform.

First up - Mike Kissman (FordDirect.com) and Nat Plane (WambaTech.com)

I’m always amazed by the level of creativity out there. Personally I found the no-click experience a little frustrating. Everything worked the way I wanted it to without clicking, but my right (dominant) hand experienced some weird muscle tension as I tried to resist clicking anything on the site. I had one ‘intentional’ click, and zero ‘accidental’ clicks.

I especially like the ‘mousewrap’. A simple, yet effective device that helps train your brain to stop clicking.

One big downside - no SERPs. Check this out: http://www.google.com/search?q=site%3Awww.dontclick.it&ie=utf-8&oe=utf-8&aq=t&rls=org.mozilla:en-US:official&client=firefox-a

Another BIG downside for Flash-Only type sites.

The automotive industry is having a rough year, and the effects are spilling over into its advertising. In Q1 2008, online was the only medium for which automotive ad spending did not fall compared with Q1 2007, according to Bernstein Research.

The research firm said that even Internet ad spending by automakers rose only 3.8%, accounting for 8.6% of total advertising—down from Q4 2007 when it reached nearly 10% of the industry’s total.

“After consistently leading the US in advertising spending, the automotive sector has dropped into the No. 2 spot behind retail,” said Lisa E. Phillips, senior analyst at eMarketer.

What’s NOT suprising to me is that all categories of ad spending are off with the sole exception of Internet.  Newspapers and Radio/Outdoor have taken the biggest hit.

So what are you doing with your internet budget?  Buying internet leads?  Hiring an SEO vendor?  Trying some Pay Per Click advertising?  Can your dealership afford $99/month to drive quality traffic, gain valuable SEO text links, leverage consumer reviews, track phone leads and saturate page 1 of Google with your brand?  NO?  Then you should lock the doors and just head home right now.  If $99/month seems rediculously cheap for quality links & traffic, then head over to our signup page and purchase 6 months of advertising - if you don’t think it was worth the investment, we’ll give you 6 months free - and that’s no joke.

From the press release:

The study, which measures dealer satisfaction with online buying services, ranks vehicle-lead providers in two segments: independent new-vehicle and independent used-vehicle. Within those segments, four factors measure overall dealer satisfaction with online lead providers: business generation; dealer support/service; competitiveness of fees; and transmission of leads. An additional factor, advertising, is also included in the independent used-vehicle lead segment.

AutoTrader.com ranks highest in dealer satisfaction with online new-vehicle lead providers for a second consecutive year, performing particularly well in the business generation, dealer support/service and transmission of leads factors. Following AutoTrader.com in the segment rankings and performing above industry average are Cars.com, Dealix and AutoUSA, respectively.

In the used-vehicle lead segment, Cars.com achieves high ratings from dealers in the areas of business generation and transmission of leads. AutoTrader.com follows Cars.com in the used-vehicle-lead segment rankings and performs well in the areas of dealer support/service and advertising.

“The strong performance of AutoTrader.com for two consecutive years is founded on its most notable strengths—the quality of leads and the amount of contact with the dealership—both of which are especially important to dealers,” said Jon Osborn, research director at J.D. Power and Associates. “Cars.com has been steadily improving in the used-vehicle-lead segment rankings during the past two years, so it is not surprising that the service improves from its second-rank position in 2007 to earn the highest rank in 2008.”

The study finds that overall satisfaction in the used-vehicle lead segment has declined considerably in 2008, averaging 581 on a 1,000-point scale, compared with 613 in 2007. The decline is driven primarily by decreases in satisfaction within the business generation factor, specifically in the areas of the quality and quantity of leads.

The study also finds that the average number of online lead providers that dealers subscribe to has increased steadily in recent years—from 5.6 in 2006 to 6.8 in 2008. In addition, approximately one-half (53%) of dealers report subscribing to a lead notification program, which instantaneously alerts dealers to an incoming lead via cell phone voice or text messages. Dealers who subscribe to lead notification programs tend to have high levels of satisfaction with the services. Approximately two-thirds of subscribing dealers “completely agree” that lead notification programs work well and believe that they are worth participating in.

“As both new- and used-vehicle sales decline, it is now more important than ever for dealers to cast as wide a net as possible toward the limited supply of vehicle shoppers, which is one reason why dealers are increasing their use of online lead providers in the hopes of generating more traffic and sales for their dealerships,” said Osborn. “Also, dealers use vehicle lead notification systems to try to differentiate themselves from their competitors through faster lead response times. In this highly competitive industry, creating even a slight edge over other dealers is critical during a period of slow sales.”

Full press release after the jump.