The True Predictor of Car Sales

True Predictor of Car Sales

The True Predictor of Car Sales

I can still remember being at Jumpstart at Cox Automotive and having conversations about the importance of VDP counts. We were told, repeatedly, that Autotrader wasn’t a lead provider but a marketplace which seemed strange to me because a marketplace, by definition, is an exchange of money for goods, and that is not what Autotrader did at all.  

Our pitch, to potential clients, was that the most important metric for tracking success was the number of views a vehicle got on the Autotrader platform. Early on in my role as a Digital Consultant, this seemed to make a whole lot of sense—a lot of views meant a lot of sales. It was that simple, right? Today, I realize, it goes much deeper than that. Although VDPs are still an important metric for a vehicle’s overall performance, even when appropriately merchandised, some cars are simply in higher demand than others. Some vehicles naturally get attention, and others don’t. 

 So, what is a better predictor of your vehicle sales? How many VDP’s your inventory gets, or how many people will visit your site with ONLY your inventory and no competitors?

 One of the most significant issues with endemics, or third-party classified sites, in my opinion, is the threat that they pose. 

Yes, people can see your vehicles, but they can see your competition vehicles, as well. Your audience is not your own. A further concern is how these sites encourage easy filtering of lowest to highest price listings (and don’t even get me started on the Good Deal /Bad Deal messaging!!).

My simple, straightforward marketing philosophy is based on four pillars: SEO, SEM, display/YouTube video, and social media. This approach allows dealers to capture consumer intent and bring them into their sandbox, which is the land of no competitors. Anyone in the business can attest that the highest conversion and the best leads come from your site. Creating points of intent across these four pillars is the virtual equivalent of a customer pressing his face against your dealership windows and peeking in to see what you have. 

We can accurately predict how these virtual visits correlate to vehicle sales. In this week’s article test, I will give you that calculation so you can run this test at your store. But let’s remember that if you are in charge of your marketing initiatives you are looking at marketing sources (digital and traditional), the cost of sources, and their effectiveness at driving sales. Marketing is constantly being held accountable for verifying the cost per lead and the cost per sale. Yet, in reality, there is no single point of attribution. Every marketing initiative has a degree of value, and if even one person is reached with your brand or message value has been added. However, dealers don’t have infinite amounts of cash, so it is critical to determine where to spend budgets to yield the most results. What’s more, if you are working with broader marketing concepts–such as creating brand awareness–then the number of sales in a campaign or the length of time a campaign runs become secondary to the overall goal of an ongoing, never-ending branding effort.

If you are like me and consistently under the gun for a direct correlation between sales and marketing, then you need something better than how many views your vehicle got. If you break it down, 20% of your inventory generates all of your online activity. The remaining 80% is what dealers need help moving and this is what most decision-makers need help understanding. How often have you seen reporting from Autotrader or VAuto, or whichever platform, that shows a small amount of inventory carrying the majority of VDP views followed by pages and pages of inventory with 0 to 1 view? When looking at these reports, how do you discern which initiatives are selling your cars? The answer can be found in one simple question: How many visits are your initiatives consistently driving to your website? 

 The five sources on your source medium report are telling you an obvious story. In my career, I have been in consultative and discovery conversations where I ask the question: “How many website visits to how many sales are you at?” In 80% or higher of those conversations, the decision-maker did not know the answer to that question but would still have an idea of their VDP count. While VDPs are necessary to grasp, website visits to sales are the holy grail. 

 Ask yourself: “How do I take market share away from my competitors?” You steal it. You steal it with marketing initiatives that take the consumer away from your competition. No third-party site, no outside source, will be as effective at doing this as driving traffic to your website where you can control the experience. 

I recommend reading the book Car Dog Millionaire by Jim Flint. In this book, Flint breaks down strategy and offers tools to help you decipher this perspective of looking at your business.

Flint’s strategies will enable you to utilize mathematics to calculate strategic initiatives confidently. Imagine telling your decision-maker what steps to take to get to specific unit sales with a variance of only +/- ten. Sure, it sounds too good to be accurate, but with the proper processes, proper merchandising, an appropriate number of sales associates, and an appropriate number of frontline units there is no scenario where this wouldn’t be applicable.

 Let me take a moment to stress why the number of sales associates is a crucial key to this strategy’s success. Often, we don’t account for salespeople when projecting sales and growth. A sales associate can sell 10-12 units in a given month. Every once in a while, you may get a rockstar sales associate who can consistently pull 20+ units, but the average is 10-12. If you are trying to sell 50 cars, you should have five sales agents otherwise you are setting yourself up for bottlenecks in your sales process.

The other important factor is how many frontline units you have ready. Some dealers prefer to list all their vehicles online, and if this is you, you have to consider this in your strategy. Personally, I would like to only have frontline-ready units online because it is a better experience overall for both parties, the consumer and the dealer, but I understand the desire and motivation to list everything we have as quickly as possible, especially in this climate.

Now that you have everything in place, you can calculate your strategy. 

I mentioned that I would give you the formula for predicting, with a much higher degree of accuracy, how many sales can be expected. Again, this is something I learned several years ago from the information in the book Car Dog Millionaire by Jim Flint.

First, calculate your “Money Ball Factor” (MBF). This is basically coined after the movie Money Ball. The concept follows: just as runs are needed to win baseball games website visits are needed to win more car sales. 

By the way, if you have not watched the movie, you should, it’s fantastic!

 So, the calculation goes as follows: MBF = # of cars sold /# unique website visitors.

In order to get the number of car sales, you will simply multiply the MBF by the number of unique website visitors. (MBF x website visitors = # of car sales). Now, remember, when I refer to traffic, I mean quality traffic—not bots but traffic from legitimate sources engaging and connecting with in-market shoppers.

Here is your test. Go to Google Analytics for your dealer. Divide the number of units you sold this month by the unique website visitors. This will give you that MBF percentage.

 Now, take your MBF and multiply it by your website visitors. Your sales for the month should be the resulting calculation with around a variance of +/- 10. This exercise will help you to visualize the impact your website traffic is having on sales and how you can steer that in your dealership’s favor. Again, with the proper processes, merchandising, frontline strategy, and robust salesfloor you can easily increase your monthly sales by increasing your website traffic. In next week’s article, we will discuss some of the most effective ways, that I have found, to do just that. For now, take the time to understand the numbers you are seeing. Google Analytics is a powerful tool and the data you are viewing is capable of unfolding a marketing story much larger than at first glance. 

 I would also highly recommend purchasing and reading the book Car Dog Millionaire by Jim Flint.

Herb Anderson / Charity Ann