Opinions & Advice

The problem with conversion ratios for Dealership Websites

G Guest Poster
Posted onApr 6, 2008 at 8:50 PM
Updated onUpdated on Oct 23, 2008 at 11:59 AM

Jeff asked that I revisit my “Conversion Ratio Myth” argument here on DR, and this time I’ve got pretty graphs to back myself up. I know, you’re hooked already.

The reason I’m always on my high horse about conversion ratios is simply because it’s an unreliable metric for our industry, and I’ve always felt that it’s our job as front-runners of the Internet revolution to prevent dealers from falling back into the old thinking of “Internet = email inquiry”. It ain’t that simple, and it’s detrimental for your store to think that way.

The problem with conversion ratios in our industry is that conversion measurements are best-suited for e-commerce sites, and we’re not e-commerce in any way, shape or form (yet). There are so many things that can happen on a dealer’s web site that could be viewed as a successful visit, yet most of these would never be flagged as a conversion…it’s wrong for us to assume that our site fails if it doesn’t turn a visitor into an email lead.

Now, you could use conversion ratios to measure changes you’ve made to your site functionality, although there’s still plenty of opportunity there for misinterpretation. But most dealers focus harder on marketing their sites to bring in traffic than they do on maximizing user experience once the traffic gets there… and that’s where the conversion ratio ceases to make any sense as a gauge of success, because as a regional business, the more ground your advertising covers, the less effective it gets.

See, all this fancy new marketing you’re doing – SEO/SEM, blogging, social media marketing, etc. – negatively affects your conversion ratio. The visitor most likely to convert to a lead is the one who sought out your dealership specifically: either someone who typed your store’s URL directly, or ran a search query for “Joe Smith Toyota”. But neither of those things require significant marketing savvy on your part … those are your core customers who want to buy from you and just happen to be using the Internet. Anything you do beyond that is hypothetically hurting your conversion ratio, especially in the case of blogs and social media, where you may be hooking users into your site from hundreds of miles away.

Conversion_graph1

Conversion_graph2

So all this leading-edge Internet marketing is decreasing your conversion ratio… should you give it all up and stick to your cake customers for the sake of a 9% conversion? Well, last time I checked, no one in this business got paid on conversion ratios. The more robust your marketing strategy, the broader your presence, the more traffic you’ll pick up, the more units you’ll roll. That’s what it’s all about.

Guest posting by Mitchell Turck
Internet Consultant with WebNet Services

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    Andrew Wright
  • April 7, 2008
Great post Mitchell. I agree with you wholeheartedly. We don't want our showrooms to be sloppy and uninviting, so why should we settle for less with our websites (hello website companies...).
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Mitch - it will be an evolutionary process. It is mostly a matter of better tracking your advertising sources. This is done by managing people correctly along with an easy-to-use CRM tool. I believe any dealer is competent enough to view a report to see what is working and what isn't - it is just a matter of getting the right information into that report. We're just now starting to see good CRM tools that are easy to use, and envelope the entire dealership. This is why I say it is an evolutionary process - it will take time for dealers to discover which of the better, all-encompassing CRM tools works for them, and then develop things enough to get good information into them.

The biggest problem I have with conversion ratios is in comparisons. Nobody counts an Internet deal the same way.
J
Metrics that are important are "time on site", "# of pages viewed", "visitor loyalty" (did they come back for more?), # of pages printed, etc...

The problem is that even these metrics are relative only to YOUR efforts. Your sites marketing metrics (above) cannot be compared to another dealers metrics, unless, your 2 stores have the same... franchise, market size, # of competitors, # of units in inventory, and on and on. The Internet metrics of a site with >1,000 used cars will have no relavance to a site with 70% new and 30% used and 300 units on the ground.

I've said it here before, in the new world order, Inventory is Advertising. Each inventory unit retains the shopper just a little bit longer, there by stealing shopping time from your competitiors. Mega stores internet competition is cars.com and autotrader.com. Small(er) stores need to out effort everyone on the block (better pics, personal descriptions, personal videos, etc..) to stem the tide.

Joe
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Long Distance Marketing:
The geographical size of your "internet marketing sphere" and it's importance, are directly related to the size of adjoining markets, AND, competition in those surrounding markets.

If you have rich adjoining markets, the inventory, the branding and SEO/SEM to attack these markets, then the ROI from the "large internet marketing sphere" should payoff big time.

Joe
K
Nice post Mitch - and I follow what you are saying. Do you "sacrifice" high conversion ratios by expanding your market and pulling in customers further away that are harder to close, and therefore "lower" your conversion rates.. The bottom line will always be sales. Another analogy would be to compare keeping 3rd party leads in your strategy and have a lower closing rate than if you only focused on your own website and OEM leads and have a higher closing rate - but then which resulted in more sales? And Joe, I also agree that it is difficult to compare one's conversion rates against another dealer as there is not truly an "apples to apples" comparison. I find the greatest value in trending our key metrics against our previous year's performance. Bottom line: key metrics are a tool to making better decisions, but do not overrule sound business sense... Kevin Frye/eCommerce Director/Jeff Wyler Automotive Family/ www.wyler.com
C
Mitch -

There is not one website vendor on the market that truly focuses on conversions or conversion metrics. Dealers always being behind the tech curve have not asked for this yet in mass, nor do they really know what site “conversion” means (except us really smart people who read DealerRefresh).

Conversion = consumer site traffic / consumer doing something intended

In the automotive industry “site traffic” aka “hits” is the name of the game today, but no one is focused on a desired action by a consumer.

“Doing something intended” could be:
- Filling out an embedded lead form
- Completing a contact form
- Completing a vehicle appraisal/trade-in form
- Engaging in online chat with BDC
- Calling the website toll-free number
- Completing a credit application

These are just a few examples of conversions, but not one website provider has good metrics on any or all of these. Let me prove that no one is focused on conversion:

- Who offers A/B testing for landing pages?
- Who has a conversion goal vs. actual conversions report?
- Who has a very inviting and warm contact/lead form(s)?
- Who has a mash-up report of web-to-form, web-to-phone, and web-to-chat?
- How many dealerships are running micro-sites to focus on highly targeted traffic?

The providers challenge: many times this data is in disparate organizations (AutoTrader, Cars.com, toll-free call management provider, chat service provider, BDC vendor, etc). For a provider to tackle this would require lots of integration efforts and everyone always has 100s of small projects such as these. The only thing that will drive this massive mash-up of data will be dealers in mass requesting this.

Chad Polk
AutoRevo.com

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If you have automatically scheduled follow up response mechanisms for email leads, it does not hurt to get leads from a wide area.

If you have to "quote" prices + payments to all on the vehicle they inquired upon (plus one with more equipment, one with less and the closest used one that you have), there is a very real cost to leads that don't close very well - whether due to source or customer location. Your time is not free.

You'll hear more about this at the upcoming Digital Dealer conference in Orlando, but the self-serve nature of a shopping cart for vehices + F+I can relieve this pressure; allowing you to automate everything except the late in the stage "need to / want to talk to a salesperson" part.

As for websites, don't junk them up (especially the home page) with a whole bunch of attention grabbers which don't move to a lead / conversion. Consumers do NOT read a website page. They glance at it and click on the first thing that grabs their attention that seems to be related to why they are there.

Do this test... be a consumer in your local market who wants to buy a car of the brand that you sell... go to your website... start counting to 4... In that much time, did orient yourself and see the call to action that as the site designer you want such a consumer to click on?

If not, what got in your way?

Where did clicking on that call to action take you? Every click a consumer has to take that does not satisfy their primary purpose of their visit results in a 35% drop in conversion. Frustrate me, confuse me, annoy me... Click. Gone.

Your website is not a goodwill / PR machine. Online consumers do not care about anything you have to say beyond their purpose + only want to hear any message like "we are good people" within the context of what they want to do in language relevant to what they want to do. Done any other way it sounds like blah, blah, blah and gets between them and the action you want them to take.

IMO... Click to lead generation as conversion is only one metric to study + is only a guidepost to the more qualitative questions about site design and user experience that you should be asking.

Total cost of activity by source versus gross generated from sales including total time, training and supporting software costs is the more important one. In CPA school we called this ROI and it always trumps activity measurements like impressions, clicks, visits, leads, calls, etc.
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    Mike
  • April 7, 2008
Source tracking all floor traffic accurately as much as possible. This truly seperates the ad sources that are working and those that are not.
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@Mitchell - You make some great points and your theory is well thought out. If you are drawing site visitors from a multitude of sources the conversion rate will inevitably go down since the traffic isn't necessarily as targeted as possible. I think the one problem with the argument is that your funneling all of this traffic into a single source (your dealer website). This poses problems because firstly dealer websites in general suck and there is no obvious call to action on the page. If you use a network of very targeted landing pages with concise calls to action to funnel those visitors into you may see a significant increase in conversion rate. We even have dealers foregoing a traditional website for a network of landing pages.

@Chad - Firstly, your site looks great and I might even have a use for your services. Secondly we have been offering very targeted landing pages and campaigns with A/B testing, lead forms etc for quite a while now. We are an ad agency catering to the NY DMA and offer this service for our full service clients. We have clients doing very very well with targeted landing pages. Conversion rates can range from 8%-30% on even very generic terms (We track both calls and emails). Some of the landing pages we have created have been for new car sales, used, special finance & service.
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Joe - I agree totally, in fact I wrote almost the same comments verbatim last time I addressed this topic.

Seems like a lot of you are addressing the concept of "optimizing" your site for conversions... first of all, that's precisely my argument: website providers and third party plug-ins want you to think in these terms so they can validate their existence, but I can think of plenty of elements I'd like to have on my dealer site that don't convert well on their own... what they will do is build a value that brings people in the door, and that's where you have to be on top of your floor traffic sourcing, as Mike pointed out.

The other part of the argument is the marketing you do to bring people to your site... I don't care how great you think your site is at measuring conversions, it goes without saying that the farther your marketing reaches, the less effective it will be. That was the conundrum I was posing here: if you live and die by the conversion ratio, then marketing past 5 or 10 miles from your dealership (relative to geography of course) is bad, and you shouldn't do it. Would anyone be interested in marketing that way?
R
Tracking conversion rates is critical! No lead provider, nor even dealer web site can do this accurately as they do not know what leads buy cars outside of your dealership. That is where the company I work for comes in.
Polk has registration data for all 50 states, including DC and Puerto Rico. We can determine what lead, bought what car, at what dealership! Give us a call, we can provide you the "real data"!
F
I have to agree with Robert Sherman "Tracking conversion rates is critical" If you are not tracking this then what are you doing? I believe you can be over analytical and in some cases this is happening. I have used the conversion ratio formulas for many years and have improved the amount of vehicles we sell. OK you drive traffic to your site, now what? You see how many pages they look at how long they spent on your site etc etc etc, Gezzzz all that is good but what REALLY matters? "HOW MANY LEADS DID I GET TODAY" well that would be called a conversion. Let’s take it a step further “how many of those leads did I sell"? What is important is you convert the traffic into leads from your website, the more you convert the better you are doing your job. If you could possibly convert 30% of your visitors into some kind of lead would you agree you would sell more vehicles? So if you convert let’s say 5% of your visitors you will sell how many of those converted leads? So if you converted 30% wouldn’t you be a hero? Sure use the argument of blogs and social media but give me a break how much of that will bring BUYERS to your website and how much actual traffic? VERY LITTLE. I would say you better measure conversions and find ways to improve that # because if you do you will SELL MORE CARS. I will tell you one reason why, when you convert someone from your website into a lead and you get a “salesman “ on that customer within minutes then you have a great chance of selling that converted lead today. First one to contact is the first one to sell. So in essence if you have 3,000 visitors this month (unique) and you converted 5% or 30%, how many would you sell? From each metric? I rest my case.
J
I'm note sure these comments are EXACTLY on point, but it is my contention that any dealership which claims to have a closing ratio of 20% on floor/phone traffic has a staff full of sales people who are NOT logging all their UPS. Also, any dealership with an internet sales closing ratio of 10% of higher needs to change web site providers because I guarantee they are not getting enough leads, or from a wide enough geographical area.

I absolutely track closing ratios at our dealership, and review them on a regular basis with the sales staff. However, I'd rather have my people log ALL their leads and have a lower closing ratio than to sandbag and only log "good" leads so that they attain a higher closing ratio. The same goes for internet leads. I'm going to log them all, even if they're really weak, and I'm going to work them until they "buy or die." The dealer principal fully understand this, and totally prefers knowing that all leads are getting logged even at the cost of lower closing ratios.
J