Have you noticed the new trend in web-based auto retailing? From companies like 'carsdirect.com' and 'priceline.com' I have proposals for our dealership to be 'exclusive' and the only cost to us is when a car is sold, usually about $250 (plus some sort of annual 'subscription fee...). This is different then the lead generators in two ways: 1) the close ratio has to be 100% or you don't pay, 2) this is more of a 'broker' arrangement vs. advertising. While the broker laws vary from state to state (California requires a 'broker licence' thru the DMV) what gets me is the change in strategy.
I'm still getting my info together but what I remember is that the lead generators provided prospects for about $10 each. The companies also contend a close ratio 'better than your floor traffic' which should be about 25%. You'd expect, then that any sale associated with the lead generator would cost about $40 ($10 divide by 25%) but the new programs are about $250! Why the difference? I can only think of one reason: The lead generator system must have a true close ratio around 4% ($10 divide by $250) or that the $250 per car sold is way too high. Wow, that means 96 out of every 100 prospects does not buy from you.
Am I off base with this assesment?
What are your experiences with 3rd party referrals??
Comments please!
Scott