When is a lost lead truly lost?

The national statistic

80% of manufacturer leads are flagged as lost

Why 80% of leads are flagged lost

Not every customer that walks through the door is going to purchase.
This is not only a base fact of sales but the most logical launching point for development and growth. If used correctly, this negatively skewed statistic could be the greatest sales tool a manufacturer has at their disposal.

After all, as author, Amit Kalantri says, “great losses are great lessons”.

The problem with the term ‘lost’, when referring to non-purchasing leads, is that its mighty scope directly hinders any opportunity to learn from it, as it often conceals fact.

Lost is such an arbitrary and contradictory word, conveying so much yet so little information. Within the dealership it is commonly used as a full stop when in actuality it is more of a semi-colon, indicating a pause in proceedings rather than an ending. As such, marking a lead ‘lost’ is often an act of finality, requiring no further follow-up or questions and absolving the user of any fault or blame. Its convenience and power means it is often used incorrectly and can have varying definitions. At dealership level and when referring to leads, ‘lost’ can mean:

  1. To eliminate enquiries of confirmed non-purchasers
  2. To eliminate enquiries of pending non-purchasers

The former refers to customers who are no longer in the market (genuinely lost) and the latter pertains to customers who may still be in the market but have not been properly followed up (status pending).

This inconsistent use means both clearly distinct groups are inexplicably lumped together, hindering the validity of any subsequent data. It begs the obvious question; are 80% of leads truly lost or have they just not been followed up?

Why 80% of leads generally stay lost

Current Op2ma Sales Executive and former Salesman, Craig Smith describes the practical issues the sales staff encounter with the follow-up, which he explains is plainly obvious.

The average salesperson doesn’t like following up.

“I remember as a salesperson, the task I hated the most was following up customers that didn’t buy. I’d attempt to contact them, either on the same day or next, but after this, my attention to these customers reduced significantly with every day that passed.”

Salespeople are hunters, he explains. “We look for the next new customer – we hate picking our way through scraps.”

This explanation speaks to the pressures of the sales floor and the urgency the staff experience to make the sale, opting for a fresh, more receptive lead to an old one who initially displayed limited enthusiasm and will require a lot more work. These older enquiries may be revisited but only in down periods when there aren’t new customers walking through the door and taking precedence.

Whether this is good or bad practice, it is the reality and undoubtedly a key contributor to the large number of leads being marked lost.

Surveying lost leads

Op2ma’s Lead Recovery Program contacts every single one of these enquiries. Conducted out of an in-house call centre, each lost lead is contacted to complete a customer feedback survey, gathering feedback on their dealership experience from initial enquiry right through to any follow-up. The surveyor comments reveal some telling statistics…

Are they really lost?

Every month, on average, 4-15% of leads flagged ‘lost’ are still in the market and looking to purchase.

There is no one reason for this oversight and, in many cases, it actually comes down to clerical error – flagged lost because they are a duplicate entry or being handled by another salesperson, rather than anything untoward.

What is of concern however, is the 9-29% of monthly lost leads that end up purchasing with another brand, as a direct result of their dealership experience.

In this instance, ‘dealership experience’ refers to every dealership contact point, from customer service, to follow-up, to dealership finance options, to advertising and price.

Repercussions

Using the above Lead Recovery Program averages, if a manufacturer takes 1000 enquiries for the month:

  • 800 leads are flagged ‘lost’
  • 76 of these leads are still in the market
  • 152 of these leads will purchase with another brand, primarily due to an unsatisfactory dealership experience

When these 32-120 leads that are still in the market are re-forwarded to the respective dealerships from the Lead Recovery Program:

  • 88 re-enter talks with a salesperson
  • 72 purchase a vehicle

Recovering lost income

The extra income of the 72 purchases is easily calculable, as, to a lesser extent, is the additional and recurring revenue generated through aftermarket and service. What is not so easy to calculate but every bit as valuable, is the information gained from these lost leads on why they didn’t purchase, detailing how the dealership/manufacturer can improve in the long.

Summing up

As stated previously, lost leads, if properly explored, can be the greatest sales tool a manufacturer has at their disposal.

So, in summary, 80% of manufacturer leads are, at some point in the sales cycle, lost but they only stay lost if you let them.