How Much Should You Really Pay For Auto Leads?

Depending on which cars you’re selling, many retailers are applauding 2018’s consistent outpacing of the previous year. If you’re working to build your clientele and not seeing the kinds of results that other retailers are excited about, you might be paying too much for auto leads. If you’re struggling to get leads and you’re finding it costs you an arm and a leg to get them, you need to assess your costs.

Here are five questions to ask yourself when selling cars this year.

1. What’s Your Closing Ratio?

If you think you’re paying too much for your auto leads, you have to start your investigation by thinking about how much you’re getting from them. If you’re not keeping close tabs on how much they’re costing you, you can’t determine how much you’re getting from them.

Usually, you spend based on how many impressions you get. If you’re spending $1,000 to get 10 leads, you could say that you’re spending $100 per lead. However, if those leads only yield a sale 10% of the time, you’re actually spending the full $1,000 on each lead that you get. If this rate doesn’t sound worth it to you, you need to find an alternative. Paying $1,000 on a sale that you make $5,000 from means that you’re paying 20% just to get your customers. This might be worth it to some auto sellers, but it’s not good for everyone.

Reassess your costs if you don’t think you’re closing on enough of the leads you’re getting. If you’re getting a high closing rate, then all you need to do is lower the amount that you’re spending.

2. Are You Building Clientele?

Part of running any business is building a clientele. If you’re building that clientele on your own, paying a lot of money for leads might not be worth it. If your paid leads only account for 5% of your sales but cost you 50% of your marketing budget, you’re overspending. While you need to spend where you’re missing an audience, you don’t need to spend desperately if you don’t think there’s a response coming.

Build your clientele on your own.

Use your website, posting sites, and social media to get the word out. Assess your market to figure out where you should be promoting yourself. If every other auto seller in your region is buying up ad space on radio stations, maybe that’s the right move for you. However, if you’re just going to end up on a crowded network that everyone else is fighting for, don’t bother. Build your clientele by improving your outreach. Get involved with your community. Sponsor local sports teams and special events.

3. Can You Pay As You Go?

With some lead generating tools, sites, and companies, you can pay as you go. If you’re currently paying a very low amount, there’s a good reason why you’re not getting very many leads. If you’re paying too much for a subscription service, see if less exposure makes a huge difference. Paying as you go allows you to scale your business as you grow and change. If you’re paying for internet leads and getting a low closing ratio, you can always try a new company. Trying a company that offers “pay as you go” solutions will allow you to take them for a test drive before you invest.

Study the tools that are out there and if you subscribe to any industry newsletters, see what people are using.

Lead generation platforms sometimes work across a variety of industries. This means that they could be able to reach a new market that a specialty lead generation specialist wouldn’t be able to. However, if they don’t know anything about your industry or your market, they might make some rookie mistakes. If your goal is to sell more cars, you typically need a tool that is meant for that.

4. Are You Using Social Media?

With 72% of social media users now using that platform to influence fashion and style based purchases, other industries aren’t far behind. While buying a car is a much bigger investment, they are also a matter of style that you should consider. If you’re not using social media on your own, you should hire someone who can manage your online presence. If the words “search engine optimization” seem like a foreign concept to you, that’s all the more reason.

Social media is the best way to spread the word about your products, deals, and services. If you offer a better warranty than anyone in your market, you can write posts about it and let people know. Social media also allows you to micro-target your audience. If you want to tell buyers between 28 and 40 about a family-friendly vehicle with a sporty style, you can do that. If you want to tell sports fans about your Super Bowl-themed sale, you can do that too.

5. What Are Your Competitors Using?

While you might not want to spend a lot of time thinking about competitors, you need to spy on anyone who is doing better than you. It’s likely they’re doing something right that you could learn from. While it might be stressful to devote thought to them, you need to follow their moves. If you can find out how your competitors are generating leads, you should try competing with them in that way. If the pond they’re fishing in is big enough, they might not even notice you’re there.

Ask around to people who have worked at those places or any insiders you can. If not, you might continue spending too much on each lead.

Auto Leads Should Be Easier To Come By

When you’re struggling to get auto leads and paying through the nose for each one, it’s hard to stay positive about the industry. If it’s going to be a frustrating line item in your budget for the next year, reconsider how you’re getting your auto leads. You shouldn’t be worrying about spending too much for each lead. If you want to see some all-around growth this year, check out this guide for improving auto sales for your dealership.


Nathan Sharpe
Nathan Sharpe
NATHAN Sharpe is the entrepreneur behind Biznas. He knows that the life of an SME isn't easy, and you have to wear many different hats in order for your business to be a success. He helps others achieve this success by sharing everything he knows over on his blog, as well as any new lessons he learns along the way!

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