The Lead Acquisition Dilemma Why Dealers Spend Too Much on Advertising

When lead volume decreases, dealers spend more money to achieve their sales goals. The problem is that many of those avenues cost you more and more, with less than desirable results.  Over 95% of U.S. car buyers research a vehicle purchase using the internet. And 98% of the people who visit Tier 3 automotive dealer websites will be “window shoppers,” Meaning only 2%-5 of them “convert” by leaving some contact information, i.e., form fill, email, chat, or phone call.

Think about this…For every 10,000 visitors to your website, you typically only get 200-300 internet leads. So why do dealers spend so much money to attract new shoppers without doing more to convert the people who have already landed on our website?

Today’s customer shopping journey is very different from even 5 years ago. Today, customers visit third-party sites, OEM sites, and individual dealership websites to learn about vehicles, review pricing, and the dealership as a whole…without converting. New privacy laws and market awareness about phishing scams and internet fraud have translated into shoppers being much more reluctant to give out their personal information (PII). A study by ACA Research mapped out the automotive customer journey. According to the research, “the automotive vehicle purchase journey for the vehicle and finance encompasses the following steps.”

• Develop a shopping list of vehicles/brands: approx. 1-3 months prior to purchase.

• Cull the shortlist: 4-7 weeks before purchase.

• Test drive vehicles: 2-4 weeks before purchase.

• Finalize vehicle choice: on average 1-3 weeks before purchase.

 The problem with the research period is that a consumer may visit your website once when they are in the top-of-funnel stage and never return. In the past, dealers relied on forms to capture customer insights. But, with a high retail abandonment rate, forms are ignored at best — and turn the customer away at worst.

Form abandonment is a pervasive issue in the car shopping industry. People prefer to give as little data as possible for fear of being “hounded” by aggressive salespeople. That is the reason completion is at an all-time low.  

Issues facing today’s modern dealership

• Dealerships aren’t able to capture “undocumented” visitors.

• Dealerships can’t capture the right kinds of data.

• Dealerships are unable to market successfully to the thousands of website visitors who visit but do not convert.

The switch from the lead acquisition spending cycle to the lead conversion cycle.

Most dealerships don’t have a problem generating website traffic. But they all have a problem converting that traffic into actionable leads. What happened to the 98% of your abandoned website shoppers? Where are all the people you spent money and time attracting? When dealers can’t generate enough quality leads, they spend more on digital marketing, only to fall prey to the Cost-per-thousand and Cost-per-click metrics that pervade the digital marketing landscape. Those metrics don’t work well enough, so when sales are down, we spend more money, creating a vicious circle of obtaining more traffic that does not convert.

 Dealers need to start using tools like identity resolution and retargeting to help identify their “anonymous” website shoppers and market to them. Just like an up that walks in the showroom and leaves…we all hope for a “be back.” There are now services that de-complicates the data acquisition and conversion process for car dealerships by leveraging big data and website visitor behavior to capture the data of “ghost” website visitors and using a “digital fingerprint” to match them back to a database that identifies them. It then markets to them automatically with offers for new vehicles, pre-owned and certified vehicles, and services based on the pages they viewed on your website. This tactic keeps shoppers engaged and amplifies repeat visits to your website, where they are more likely to convert on subsequent visits.

  Retargeting is another way to reengage your site visitors, but it is tougher to accomplish without building multiple banner sets every month for each vehicle or offer on your website. However, when you put the appropriate small budget into either of these tactics, you bring upwards of over 20% additional traffic back to your website. And you do that without spending thousands and thousands of dollars chasing leads that don’t convert. 

 Now is the time to get smarter by reducing your ad budget on customer acquisition and shifting your focus to lead conversion. Your expenses will go down, your ROI will go up, and you’ll come out looking like a hero!