More cars and more leads do not fix a follow-up problem
Work your used car leads before you worry about pricing and getting more leads. I'm bringing this up because we get a lot of dealers right now, things have slowed down and we're making price adjustments. I was just on a call with several dealers looking at inventory, photos and descriptions and pricing, trying to make sure we're driving more traffic. But when you really dig into it, they have a lot of traffic that they're not following up with, more times than not.
We talk to dealerships and they think, okay, we carried a hundred and we sold eighty, but we want to sell a hundred, so let's go buy another twenty units. Buying more cars to try to get to a hundred when you're not even selling what you stock doesn't make sense. Throwing more cars at it doesn't mean you're going to sell more cars, because we're not even handling the cars we've got efficiently. So before we add another twenty units, let's get our sell rate up to where we can handle a hundred percent turn rate. Once we can do that, add another five units, and another five, and eventually grow it. Same thing when it comes to leads. We're worried about all these price adjustments and photos and descriptions to do what? To drive more leads. And I look at the leads and you're not even handling what you have. Throwing more at it is not going to get you better results.
What's cool is that's something you can do today. Pick up the phone, call, email, text, start driving some appointments and some sales that way, because dropping a price doesn't guarantee you're going to get a lead on it. Not only that, a lot of gross problems come from this. Trying to gauge what cars are successful on your lot is hard when we have a messed-up process. That car has sat there for seventy days because you had leads you didn't follow up with. You had leads when you had a thousand or two thousand dollar markup. Now you're losing five hundred bucks, now people are paying attention, and you're selling it to a fresh lead instead of working the older lead you had on this car in the first place.
1,100 active leads on 132 cars
Here's a really efficient dealer. They do a great job with their inventory. About 60% of their sales right now are going out in the first 30 days, and their goal was 55%. They wanted to carry 175. They're a little heavy right now and they're throwing more cars at it. That was my concern. Our goal was to carry 175 and sell 125. At 175 we're only on pace to sell about 140. So we've got to solve that problem first. But before we adjust pricing, here's what I wanted to go over. They have 1,100 active leads, and those 1,100 active leads are only on 132 cars. So you're only going to get 132 cars out of this. If you're just going through your CRM working 1,100 leads, three-day calls, seven-day emails, you're killing your profitability and your time.
The first whack we're going to take at those 1,100 is to look at the 472 leads on cars that are still in stock. This is our LotWalk software, where we combine your inventory with your leads. If you've got vAuto or VinCue, we take that data and combine it with your eLeads or DealerSocket or Tekion or Momentum or VinSolutions or DriveCentric. We take your inventory data, combine it with your lead management, and say, let's manage leads based on my inventory issues on my lot, not just based on the age of the lead.
Of the 1,100, 472 active leads are on cars still in stock. Let's stop right there. If I've got an active lead and the car's still in stock, I should be reaching out every day, or every other day at least. We want to reach out at least every other day, but I give a grace period of every three days when I look at the numbers. So instead of working 1,100 leads, let's focus on the 472. And you don't even have to worry about all 472. What I want to do is reach out to any active lead on a car still in stock that I haven't talked to in a couple of days. Out of the 472, 298 haven't been contacted in two days. So my team just needs to focus on the 298. Not 1,100 leads, not the 30-day call. That says 63% of their active in-stock leads haven't been contacted in two days, and that goes all the way down this list.
One salesperson, 146 leads, 53 that matter today
Take one salesperson as an example. He has 146 active leads. I don't need him to worry about 146 active leads. Of those, 67 are on cars still in stock. But here's the problem. Of those 67, 53 haven't been contacted in two days. So I just need him to click on those 53. Here they are. Here's a 39-day-old lead we haven't contacted in 30 days. If I sort this list, look at this. A customer on a Tahoe that's a 123-day-old car. We need to get rid of that car. It's a 42-day-old lead. Your traditional CRM process says, ah, it's a 42-day-old lead, reach out every couple of weeks, or let automated emails follow up. But hold on. We haven't engaged with this customer in 17 days.
Your older leads are going to be on older cars. A 42-day-old lead is going to be on an older car. But our traditional internet process says it's not a fresh lead, so don't worry about it. In reality, I should be reaching out to any active lead on a car still in stock every day, or every other day at least. This 42-day-old lead has had two contacts. That's it. This 28-day-old lead has had five contacts. That's it.
Let's give them a grace period. Go down to this 30-day-old lead. We haven't reached out in 11 days. I'm using the 30-day lead because it's easy math. I like every two days, but give yourself a grace period of every three. A 30-day-old lead divided by every three days means I should have at least 10 contacts, and we've only had five. In my eyes, this lead over time hasn't been followed up effectively. They can go in here, call, email, text this customer, and catch it up. But over time I should have had 10 contacts and I've only had five. I've mismanaged that lead.
So here's the concern. Of his 67 active in-stock leads, only 76% have been followed up with every three days. Look at the next guy. He has 35 active leads on cars still in stock, and only 46% of those have been reached out to every three days. Less than half of those leads have been reached out to every two to three days.
All that AI work, to drive leads you will not handle
The reason I bring this up, too, is we do a Friday morning Clubhouse, all things used cars, and we're talking about AI and what triggers we could use to help AI get our cars to show up. We're down to the photos and descriptions and how to maximize our inventory for AI searches. I think it was Brian Kramer who threw out that 20 to 25% of searches are now done through AI. Somebody says, hey, what's the best 2025 Ford F-150 XLT in my market? You want AI to pick that car up. And why? To get more leads. You're going to do all this and then not handle the leads you have? You're worried about this new shiny tool and how to get the inventory exposed, to do what? To drive more leads that you're not even handling in the first place. Sending more leads to this dealership is not going to help. They need to get this lead process right. Yes, we're off pace, but dropping a bunch of pricing just to get more traffic is not going to save your store.
The 30-day phone call with nothing to offer
Here's the other part. Now I'm looking at all active leads where the car's no longer in stock and I have no alternative vehicle to sell them. I can't say, hey, that F-150 sold, would you like this other F-150? Or that F-150 was 40 grand, here's a Silverado around 40 grand. These are active leads where the car is gone and I have nothing else to offer. Take a look at this 30-day-old lead. We called them a day ago. Why? The Ford Expedition sold and I have no other vehicle to offer them. 36-day-old lead, called them a day ago. Why? 30-day-old lead, called them a day ago. Why? That 2023 Silverado heavy duty at 45 grand sold, and you have no other vehicle to offer them.
Why are we wasting time calling, emailing, and texting these 30-day-old leads? If the customer answered the phone, what would you tell them? Hey, that car sold and I don't have anything else, I just didn't want you to think I forgot about you. The reason they called this 30-day-old lead is their internet process said, it's a 30-day-old lead, call, email, text. With 1,100 leads, they go into their CRM and they've got 80 tasks to do today. 30-day phone call, 10-day email. We complete the task. Great, good job. But guess what? You've got an active lead on a car that's no longer in stock and you don't even have an alternative. In the meantime, we had all those active leads where the car was still in stock, a 120-day-old car, and we haven't reached out in 15 days. What are we doing, guys? That's not efficient lead management.
And it's not just internet leads. It could be a phone up, a walk-in, whatever kind of lead you have. You need to be managing leads based on the situation on your lot. Active lead, car still in stock, reach out every two to three days, every day, until they tell you to stop. The highest probability of setting an appointment today is on a car that's still in stock. The highest probability of getting a good weekend going is to call the active leads on in-stock cars and set appointments. But instead we're wading through the 30-day phone call, the 10-day email, the 45-day phone call, the 14-day email. No rhyme or reason to the customer's buying cycle. No rhyme or reason to the situation on your lot. You can say, good job, you completed all 80 tasks today. To what? Fifty percent of that activity had no rhyme or reason to help me sell a car today, because half of your active leads are on cars no longer in stock. 1,100 leads and only 400-plus were on cars still in stock. So there are 600 or 700 leads in this system that are active leads on cars no longer in stock. And of those, 200 have no switch alternative. What are you going to do, have your team call 200 customers with nothing to offer them and waste everybody's time?
Car problem or people problem?
So that leads to the other problem. When we've slowed down, when this dealer hasn't hit their pace, and I'm looking at cars going, oh man, the market's moving, maybe we need to drop the price. Then I go look, and we've had four leads on that car, and none of them have been followed up with every two to three days. Hold on a second. I know the market's moving, but before you drop your price, go call and email and follow up with these leads. When my lead management process is failing, I can't tell if it's a car problem or a people problem. Are the customers no longer interested? Because I'm not engaging with them, I don't know.
But if my follow-up process is effective, and every one of those leads has been reached out to every two to three days, and this car's still sitting, and I haven't had a lead in five, seven, ten days, and the market's moving, then I know it's not a lead problem. It's probably a price problem. Let's make an adjustment. The market moved, I'll move with it and drive more leads on this car, because the leads we have, we've been beating the heck out of them and they're not pulling the trigger. Dropping your price 500 bucks doesn't guarantee you a lead. You're doing that activity with no guaranteed result. But if I do all my calls and emails and texts, I'm going to get results. I'm going to get more appointments. I'm going to get more sales.
Once that's fluid, now I can focus on inventory. I know and trust that my team's doing their job. Now I can make adjustments on the inventory, readjust the photos, the pricing, the descriptions for AI, because I know this part's taken care of. It's no different than a dealer carrying 100 cars and selling 120. They're very efficient, so they can explore and say, let's try these new makes and models, let's try another 10 units and see if we can push it to 130. When you're efficient on inventory, you get to play around. When you're efficient on lead management, you get to be even more efficient on inventory. They go hand in hand.
I'm sick of hearing all this about how to position cars and how to price cars, for what? To drive leads that you're not even handling in the first place. Let's get that done, and then we can talk about the other stuff. Hope this was helpful. A little passion on this one. We're halfway through the month. Hope you have a good finish to the second half of August. If you'd like to see how we can help you combine this and make your team more efficient, go to lotpop.com and set up a demo.
Transcript lightly edited for readability from the live stream. Watch the video above for Jasen's screen share.
