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Not All Leads are Created Equal

Letter blocks flipping to say Fact or Fake
Article Highlights:

  • See if you can pick apart these lead scoring statements.
  • How predictive analytics changes the way you approach leads.

Have you played “two truths and a lie” before? The concept is simple. I give you three statements – two are true, one is false. It’s up to you to determine which are which. Our topic will be about consumer leads and their likelihood to buy. Think you have what it takes?

Let’s play

  1. A customer currently driving a two-door coupe is likely to upgrade to a newer two-door coupe.
  2. More leads do not equal more conversions.
  3. Negative equity can be used to your advantage.

Do you know which are true and which is false?

Let’s dive in

  1. A customer currently driving a two-door coupe is likely to upgrade to a newer two-door coupe.

This statement is false. Just because a customer bought it before does not mean they will buy it again. There are a variety of factors that could have altered this customer’s position to buy.

Perhaps the customer purchased her two-door coupe when she was twenty-two and single. Now, seven years later, she’s married and expecting her first child. Do you think a two-door coupe still fits her lifestyle? Likely not.

Perhaps the customer has moved and changed jobs since she first purchased the two-door coupe. Her new neighborhood and income have changed her buying position. Now, she is more likely to purchase something accommodating to her long commute and luxurious to fit her new lifestyle.

  1. More leads do not equal more conversions.

This statement is true. You might be thinking that a constant stream of leads coming in is like Christmas morning, and the more leads you have, the more you close. Not true. It’s about the quality of leads, not the quantity. Carefully crafting your lead funnel to the leads that will actually buy hold much more value than a random assortment of leads thrown at your salespeople. It’s about analyzing your inventory, the market, and your database to identify not only possible leads, but those likely to close.

  1. Negative equity can be used to your advantage.

This statement is also true. At first glance, you’re probably thinking a customer with $6,000 in negative equity is a reason to run for the hills and wait a couple years to call. Not a chance would you consider approaching this type of customer. Not so fast. You might be surprised to find that factoring in incentives and personal buying habits brings this customer from a D rating to an A+.

Moral of the story: not all leads are created equal, so why treat them the same?

Let me explain

How am I coming to these conclusions? Predictive analytics.

Predictive analytics uses demographic, behavioral, and transactional data to determine customer buying likelihood. It considers life circumstances and compares it to historical data of similar customers to make an informed decision.

Just like leads are not created equal, predictive analytics engines are also not created equal. In each statement above, the predictive analytics engine is going against the odds and the norm. Consider implementing a predictive analytics engine that goes beyond traditional data mining. The right solution will leverage previous deal information, in-stock inventory, OEM incentives, and behavioral and demographic data to propose buying propensities and likelihoods. You’ll be able to identify customers you would not have considered targeting before, and you’ll walk away with a new approach to and outlook on selling vehicles.

See what your salespeople think about this round of “two truths and a lie”. Did they get them right?

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Product Planning Manager, Reynolds and Reynolds

Hayley Holmes is the product planning manager at Reynolds and Reynolds for XtreamService. She formerly served as a marketing specialist and team lead, providing XtreamService to dealerships, and assisting to build and develop the marketing services team.

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