Moneyball, Digital Vendors and You
You know the routine : A vendor hawking their digital wares promises you more leads, more conversions and ultimately more sales if you’ll simply buy their product. And what a product it is! It’s either “revolutionary”, “ground-breaking” or patent-pending. Or maybe all three. But it’s going to generate more sales, right? Right?
Trying different approaches and taking risks is the hallmark of a successful business. However, trying new things without having a plan in place to measure the results is litt
le more than hoping. And hope isn’t a viable business strategy.
So how do you
measure the effectiveness of a digital vendor? It’s easy to say “It’s working if I’m selling more cars!” but that’s overly simplistic. Your sales, or lack thereof, could be attributed to a number of things; things that a vendor can’t take the credit or the blame for. We have a saying in data science : “Correlation is not causation”, which is really just a fancy way of saying that two things might seem related, but that doesn’t mean that they are.
To create a plan for gauging a digital vendor’s effectiveness against other digital vendors, you need to identify things that can be measured and that can be attributed to a specific vendor. By measuring specific things (Let’s call them “metrics”) and assigning point values to each metric, you have a simple way of measuring and comparing a vendor’s effectiveness.
Let’s take a look at measuring and scoring four metrics: Inbound leads, phone calls, macro and micro conversions on your website and attributable sales.
This one is pretty simple; If the vendor is going to drive leads then they should be driving leads using the ADF standard so it’s easy for a CRM and other tools to track how many leads they generated. Don’t rely on the vendor to provide this information via that nice, snazzy looking report that they send you every month. Rely on your CRM or other tool, such as Dealer Insights, that is receiving copies of their ADF leads. Trust. But verify.
It’s becoming quite common nowadays to track a vendor by assigning them a call tracking number, but I’m still surprised at the number of times that I see dealers spending thousands per month with no independent, quantifiable way to measure phone traffic. Once again, do not rely on the vendor to provide this information. If your CRM doesn’t provide a way to generate a call tracking number then use a platform such as Dealer Insights that integrates with all major call tracking platforms as well as let’s you generate your own call tracking numbers.
Website Conversions – Macro and Micro
Your website should be your primary digital presence. Do not relegate that out to 3’rd party classified sites. While they certainly have their place, the goal should be to drive as much traffic to your website as possible.
Once that traffic comes to your website, it’s important to measure it. But how? Just measuring the number of visitors a vendor sent to your website tells you nothing. How do you know that they didn’t click away immediately? Measuring form submissions is great, but just because a visitor didn’t fill out a lead form doesn’t mean that the traffic was worthless.
You want to measure what I refer to as macro-conversions and micro-conversions. A macro-conversion would be things like filling out a lead form or initiating an online chat. These are outward signs of engagement; they are asking you to talk to them.
But there are also micro-conversions. These are the small events that are still demonstrating engagement and can ultimately lead to a sale. Things such as viewing the testimonials page, or viewing the Maps / Directions page.
VDP views are another example of a micro-conversion. But not all VDP views are created equal. A visitor that clicks through a dozen VDPs and only stays on each page 1-2 seconds isn’t as valuable as a visitor that views 2-3 VDPs and spends a few minutes on each one.
Google Analytics makes all of this information available. For the uninitiated, pulling form conversions, VDP views, time on VDP, etc for each of your digital vendors can be a bit daunting and time consuming, so I’d recommend looking at platforms such as Dealer Insights that can do all of this for you automatically.
Lastly, you should run a DMS matchback report so that you can attribute sales to your digital vendors. Now, you might have heard of the term “multi-channel attribution”. We know that most car shoppers are influenced by multiple advertising channels and it’s not usually accurate to give 100% of the credit for a sale to a single vendor. Multi-channel attribution is a topic that I’ll cover in greater depth in my next post, but for now you should be aware that there is usually a mix of vendors that participated in getting the customer into your dealership and it’s important you are looking at this interplay between them.
Most CRM tools can provide some types of DMS matchbacks reports, but they often lack the ability to look at multi-channel attribution. Consider leveraging a platform such as Dealer Insights that can not only perform DMS matchbacks, it can also examine the interplay between your digital vendors to assign proper attribution.
Putting It All Together – Scoring A Digital Vendor
Once you’ve gathered this information about, it’s time to play moneyball. For each of these metrics; inbound leads, phone calls, VDP views, average time on VDPs, number of views to the contact us page, number of sales, etc, you want to assign a score
With this information, you can make informed decisions about your digital marketing spend by ranking vendors according to your scoring method.