how to manage vendor relationships to Revolutionize Your Approach

vendor relationship management

Back when I was an Autotrader rep, I recall always being frustrated with attributing results. Now, so many years later, I see things through a very different lens. From the myriad of portals that decision-makers at a dealership rely on for performance metrics to so many vendors trying to “one car” us to death—with the simple argument that if we just sold one car from said solution, it would pay for itself—we find ourselves in an interesting position when it comes to identifying what’s working and what isn’t.

On one hand, to date, there’s no single system out there that offers a true ROI breakdown for dealers. On the other, we need this highly valuable information to make decisions—but should we really expect decision-makers to have to go from portal to portal to find that vital data? That is crazy talk, and something that no GM, GSM, or even marketing or Internet director should have to do.

So, what can be done about this? Well, I can tell you with absolute certainty that at this moment, there is no system available to us that effectively measures ROI. How do I know? Simple—no system I have ever seen, from DMS and CRM to fancy reporting portals, tracks the most basic piece of information required to make ROI measurement possible, and that is spend! How can we have an idea of ROI when we don’t even track what each one of our vendor solutions costs us? WE CAN’T! It’s literally impossible. 

Why You Can’t Measure Marketing ROI

I chuckle when we have ROI meetings regarding marketing efforts, knowing that there is no platform where we can actually track what our marketing efforts cost and how much we get in return. I just had a meeting last week with a marketing manager at a store that has been there for many years, yet she did not know what her monthly marketing budget was! Not a single clue. Is that not just insane? And I don’t even blame her, because honestly, where would she track/find this information anyway? 

Oftentimes, decision-makers agree to “try” things and then don’t even inform their staff that they are doing so. Is it in the CRM, you might ask? Nope, it is not. In fact, the CRM is probably the absolute worst way of trying to measure performance for marketing efforts. It doesn’t measure traffic, which, by all accounts, is the most important action we should be focusing on. According to Google, only 26% of consumers buying a vehicle have filled out a form beforehand.

With that in mind, TRAFFIC is what matters the most, along with a digital experience that converts that traffic from digital to in-person. The CRM somehow makes duplicates feel like dirty leads, but these are actually the HOTTEST OPPORTUNITIES in your entire operation! Think about it: The same person filled out multiple forms, meaning they gave you their information on various platforms, maybe even directly on your website. Those should be considered HOT LEADS! 

Worse still, the CRM does not track any expenses for your vendors and breaks it down accordingly into cost per impression, cost per view, cost per lead, etc. The ONLY thing that the CRM does is show the value of the appointment and the actual sale, which is completely NUTS! We don’t have a single source marketing system in this industry, so why are we attempting to measure marketing performance in this way? I can’t begin to tell you how many dealers I’ve seen cut great marketing partners because of this and how many are using not-so-great ones because of the same ineffective way of looking at ROI. 

Marketing ROI

With all that said, what is the answer here? I’ve been talking about and alluding to this in several articles lately: I believe that percentage attribution is the missing ingredient. Currently, we don’t have a reliable measurement for ROI in any way because we don’t have results based on spending, and therefore we don’t understand what percentage of our marketing budget is being spent on X and what percentage of X we’re getting in return. This data alone could solve many of the issues we currently face. 


For example, if we know what percentage of the budget is being spent on a lead provider before we look at appointments and car sales, then we should first confirm that, at the very least, our efforts are ROI positive. If they aren’t, then should I really care about the fact that I set two appointments and sold one car from there? The answer is no! Why? Because this makes the cost per sale and even the cost per appointment astronomically high, and let’s face it—the person that bought that vehicle probably saw it in many places before deciding to make the purchase.

In that case, every single one of those views, form fills, and any sort of engagement deserves credit and could have been the thing that finally got that person in the door. If we truly want to understand where our marketing dollars have the greatest impact, we have to start including our dollars spent on marketing in our performance metrics, and we need to break that down accordingly.

 Not knowing your monthly marketing budget is a problem, of course, but not understanding what percentage of that budget is being spent on driving views, driving leads, generating foot traffic, etc. means not knowing your marketing performance at all, and that is when we make detrimental decisions. This is why so many dealers’ cycles through vendors like crazy and come on and off constantly, which, again, further indicates that we have virtually no clue what is working in our favor. 

One last point: There is a common belief out there that if we measure things based on percentages, we won’t be able to filter out quality from quantity. I call bullshit—precisely because when we measure things based on percentages, we actually filter things in a much clearer way. For example, let’s say you have a lead provider that is costing you 5% of your leads and you get 11% leads in return. That means this is ROI positive for you, right? You’re paying 5% for leads, and you’re getting much more than that back! However, . . .

Imagine if you could actually look at the CRM and see the full picture: how many appointments you set, the resulting number of sales, how many contacts you gained etc. Facebook leads are a great example of this. For most dealers I have consulted with, Facebook leads are generally ROI positive, but when we take a closer look, we can quickly see that a lot of it is just garbage—forms filled out with no contacts, bad numbers, incorrect customer data, etc. Clearly, this is not a very effective use of resources.

Facebook leads

But what if you were not even in the green with the expected result? In other words, if you aren’t ROI positive on FB, should you still spend your time on it considering all the other alternatives available out there? NO! Just cancel it and be done with it. If it’s not delivering the results you expect, then why spend more time digging to see if it’s actually worthwhile with just a little more investment? In this way, the percentage breakdown serves as the ideal tool to help identify where you want to spend your resources and what parts of your marketing budget should get the axe immediately.