The Internet Buying Cycle (continued)
Last spring I had the privilege of attending a summit with the best
automotive CRM and online retailing experts in the country.
 One of the
first questions asked was, “What is the true buying cycle of an Internet lead?”  
This is a very controversial topic and can cause heated debate. There are
several schools of thought on what the true buying cycle of an Internet purchase
request is.
    In the car business, we work the “Buy or Die” technique.  However, there is a time
    when a lead is really “hot” and the target of opportunity rests in the cross hairs for
    only a certain amount of time. I have always held the opinion that a lead is never dead,
    and I continue to market to the customer until they tell me to stop calling and emailing
    them. But hitting the lead fast and furious the second it comes into your inbox is a no-
    brainer. A lead that is not responded to immediately cannot be saved by even the best
    follow up procedures.
    Over a 15-month period, I conducted an exhaustive analysis of leads - from the top third party lead generators,
    from a multi-franchised dealer website, and from four OEM/factory sites. Statistics from my research show that
    the average person who buys a car after submitting a purchase request does so within 13 days of
    the submission.
Copyright © 2008 Automotive Dealers Network. All rights reserved.
    Buying Cycles Vary by Month

    While the overall average lead buying cycle is 13 days, there are
    variations depending on the time of year. One thing in my research
    that I found surprising is that the typical months considered to be the
    height of the buying season - June, July, and August - did not have
    shorter average buying cycles than I originally hypothesized. Looking
    at lead buying cycles from dealer websites, which historically have
    higher closing ratios, the average time it took for a customer to buy
    after submitting a lead was 10.9 days.  December leads had the longest
    closing period of 22 days; and October had the shortest with 7.7 days.
    Further analysis could determine why there is such a huge disparity
    from month to month. October had the shortest buying cycle at 7.7 days
    - so this is your month!   

    Here is the break down for buying cycle times in days, for each month:

By Gilbert Chavez
E-Commerce Director/Planet Automotive
Email
gchavez@automotivedealersnetwork.com
Gilbert has held the positions of E-Commerce Director, VP
Business Development, VP Operations, E-Marketing Director,
COO, General Manager, GSM and Internet/Fleet Manager.
Gilbert's expertise is in CRM, online campaigns, e-mail
marketing, BDC development and other managerial aspects
for dealer profitability. He is Currently E-Commerce Director for
Planet Automotive.
    Never Forget - It's Always a Matter of Return on Investment

    I’ve also found that leads from different lead sources and providers will yield different
    buying cycle times.  Does this mean you should simply disqualify a lead source because it
    has a longer buying cycle on average?  ABSOLUTELY NOT!  Why?  Because it’s your ROI
    that matters with a lead source, not necessarily the buying cycle time.  Getting a good
    return on your investment from that lead source is what you should count on. Some
    colleagues and I developed a 5-to-1 ROI Analysis, which means that we want to earn five
dollars back for every dollar we spend with a lead source.  I take my total gross generated in sales from each lead
source and divide that by what I spent for leads with that source that month. And, I break it down per store if there
are multiple franchises.
    The 5-to-1 ROI Analysis

For example, in one month at one dealership we spent $576 on Dealix leads.  We earned $11,079 dollars in total
gross for that month, achieving a gross ROI score of 19.2.  Thus, we made back $19.20 for every $1 we spent on a
Dealix lead.  Furthermore, it is a more effective analysis to calculate the ROI than it is to calculate the closing ratio.  
It is important to do both; however, knowing what you put in the bank is more important than knowing a closing ratio.

As technology evolves and media melts into one amorphous entity our challenges will increasingly get more
complicated. We will all have to become more innovative than ever. We are all trying to distinguish ourselves from
the other guy. Seeing ourselves from our consumer’s perspective will play a major factor in making us unique and
different. Regardless of the technology, the “belly to belly” human touch will never disappear from the car buying
experience. (Never say never)  
Having a fast response time and knowing that the average Internet lead is
HOT for 13 days will help you sell more cars.
MONTH
DAYS
JAN
11.2
FEB
11.1
MAR
14.5
APR
10.9
MAY
13.4
JUN
10.2
JUL
8.5
AUG
14.3
SEP
11.7
OCT
7.7
NOV
13.8
DEC
22
    Don’t Fall into “Analysis Paralysis”
    Measure the Right Numbers
    Some dealers are infamous for crunching numbers.
    However, they can get into “analysis paralysis,” or get
    overzealous in crunching all the wrong numbers.  Moreover,
    dealers tend to under analyze their Internet department
    numbers.  Consequently, they do not know if their Internet
    department is under performing or shooting the lights out.
    Internet sales should be scrutinized as closely as any
    department in the dealership or dealer group.  
    In a monthly analysis, measure:

  • Number of sales for new and used
  • Front and back end gross
  • Return on investment for all third party lead vendors
  • Buying cycle times for all lead sources
  • Monitor all ISMs' emails with their customers through your lead management tool. (Get one if you do not
    have one.)
  • Also, measure what email leads were sold by the sales floor to see what your penetration is with those
    leads.
  • Furthermore, count those sales in your ROI analysis.  If people who sent leads in are buying on the floor,
    most likely your ISM got them to come in.  The majority of those sales are made because of the initial
    quotes made by the ISM.
    Numbers to Track in Your Internet Sales Report:

    Develop a comprehensive Internet sales report that covers all aspects of monthly Internet sales.
    This report must include, but should not be limited to:

  • Departmental totals
  • Sold comparisons
  • Total gross comparisons
  • All third party lead services and their gross totals
  • Year to date ROI
  • Buying cycle times
  • A break down of store total sales, including year-over-year comparisons
  • A break down of individual ISM’s numbers, including: sales; response times in minutes; CSI averages;
    gross analysis for front gross; back gross and total gross average; commission analysis; and a graphs
    comparison page
Hold monthly Internet sales meetings to cover team topics only. This meeting should cover team goals,
incentives, bonuses, etc.  On a daily basis, either speak with or Instant Message each team member.  Review their
sales numbers with them at that time.  At the monthly meeting, review team performance, sales numbers and other
metrics, lead management tool questions, deal problems, vehicle specials to be placed, and any other issues or
problems.


Always remember to keep the Internet lead in the cross hairs and fire away!
It is more effective to calculate ROI
than it is to calculate your closing ratio.

While it’s important to do both;
knowing what you actually put in the
bank is the most important.
View Gilbert Chavez's profile on LinkedIn