Oh, The Dollars you Waste! How You Squander Your Marketing Budget and How to Fix It - AutoSuccessOnline
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Oh, The Dollars you Waste! How You Squander Your Marketing Budget and How to Fix It


There’s an awful lot of time, effort and dollars that go into selling the automobiles on your lot to willing purchasers. You have to attract prospects to your dealership to have any opportunity to sell them a vehicle in the first place, so it’s safe to say that your marketing and advertising efforts are critical to your success.

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​I want to talk with you about the dollars wasted in your digital marketing and advertising — and help you look at those things in a different way. Doing so will help you obtain the best value for what you’re already willing to spend and ultimately enable you to grow your business, which boils down to getting more people into the dealership

Dr. Seuss
“The more you spend in haste, the less effect can be traced, the less facts that are faced, oh, the dollars we waste!” That’s Dr. Seuss, for the unfamiliar.The good doctor was right — we spend considerably on marketing and advertising in an effort to grow our business, yet we fail to plan and are often unaware of what we’re actually getting for our money. I’m going to get you started by focusing on how to grow your business and while spending less money.

Focus on the Right Metrics
To grow your sales business (not your fixed operations), we need to first determine that you’re measuring the correct things. A pet peeve of mine is the focus within automotive on the “close rate.” Can close rates really grow your business? The answer to that is “No.”

Why? Because the biggest dealerships in the country have the same close rates as many of the smallest. There’s a couple of percent here or there, but you’re not going to double your sales this year by doubling your close rates. Nobody has a close rate of 100 percent, so that’s not really the answer. Besides, close rates are always looking backwards at business and you need to look forward, with a focus on how to grow.


What about simply increasing the number of leads you purchase from third-party providers? Once again, the answer is “No.” In fact, you’re going to have to start holding your third-party lead providers’ feet to the fire. Doing so will require that you determine the lead engagement rate for every third-party provider — it’s the key metric to growing your dealership.

What is Lead Engagement?
Simply stated, engagement is defined as a lead you reply to in some manner — call or email, for example — who in turn responds back with a call or email. The key is that you have to talk with them at least one more time. The real process is getting the lead to respond. Growing an Internet department requires you to get a lead to engage, which will equate to an appointment, eventual showroom traffic and, finally, a sale.


Engaging the Best Leads
Effective Lead Rate and Effective Lead Cost are two important metrics you’ll need to know. The Effective Lead Rate is calculated by multiplying the number of leads purchased by the actual engagement rate, which is the true number of leads you have to work with. The Effective Lead Cost tells us what we paid per lead based on the Effective Lead Rate, versus the total number of leads purchased.

Example: Provider A delivers 200 leads with a 45 percent engagement rate for $2,200. This seemingly equates to a price of $11 per lead. But with a 45 percent engagement rate (Effective Lead Rate), your effective reach is just 90 people out of the 200 leads, leaving you with an actual Effective Lead Cost of $24.44.


The key, though, is not the Cost Per Lead, but whether there is value in the leads purchased, no matter their cost — quality over quantity. In making that determination, it’s important to remember that the leads who don’t respond often require twice as much time as the ones who do, so you end up wasting precious time on the wrong people. This takes your people away from the prospects who want to buy from you, which is an inefficient use of your time. My experience is that you’ll see more sales and efficiency as your engagement climbs.


90-Day Challenge
Bringing this full circle, I want to challenge you to undertake a plan that will increase your engagements while cutting your costs over the next 90 days.

You’re going to start by measuring each of your third-party providers. Then you are going to fire those providers who aren’t delivering a high Engagement Rate. We consider that to be 51 percent and above. Doing so will allow your people to use their time efficiently in attempting to get those prospects that engaged — they represent the real meat on the bone.

Next, you’re going to cut 10 percent off your budget. Trust me; while that seems drastic, you’ve definitely got 10 percent waste in your operation, so it’s easier than you think. Doing so will help you to get rid of those relationships which are bad while providing cushion for you to invest in the higher-engaging lead providers. This helps ensure you’re spending money in the correct way.


Then you’re going to invest in your own site. I’m a big believer in organic traffic, which requires driving people into your Website and chat. Our experience has found that the highest engaging leads you’re ever going to find come right from your Website, chat and finance app. You need to always work on building your organic traffic. Doing so equates to investing in your inventory and owning your area.

Finally, I’m challenging you to grow your engaged leads by 20 percent. Doing so will require figuring out where you’re wasting money and working harder to ensure you’re purchasing the highest-value leads possible. Focus on the growing the lead volume, but only through high-engaged lead providers.


​Bottom line: Your goal is to spend the same amount of money, but getting more engaged leads for those dollars.

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