KBB wants to change how auto leads are bought and sold

Guest Posting by Cliff Banks

Kelley Blue Book is launching a bold initiative, hoping to revolutionize the way online leads are bought and sold.

In the process, it's turning its back on a rather successful revenue generator while speeding into a business dominated by AutoTrader.com and Cars.com.

In July, Kelley announced it was launching an online classified listings service for new and used vehicles and will charge dealers on a per lead basis. It's calling the venture KBB's Trusted Marketplace.

For years, AutoTrader.com and Cars.com have employed a subscription-type model, in which dealers pay a flat rate each month to list their inventory on the two automotive sites. The price is determined by the level of service a dealer chooses.

At times, dealers have grumbled about the seemingly high prices AutoTrader charges, and say the cost does not always match the level of performance.

Justin Yaros, Kelley's executive vice president-product design and development, who helped develop the new strategy says the initiative will provide dealers greater control over their lead generating costs, while improving the performance of leads by better matching customers with the right vehicles.

Dealers will pay Kelley $20 for every lead their inventory listed on KBB.com generates.

Although, other firms such as, Dealix, AutoUSA, AOL, Overstock.com and Autobytel Inc. started implementing pay-per-lead strategies with their dealers within the last year, the model has been slow to take off. Kelley's brand cache and consumer traffic should lend weight to the concept, executives say.

“KBB.com adds legitimacy to the pay-per-lead model,” says Anna Zornosa, Dealix's executive vice president and general manager, a proponent of the concept.

AutoTrader's CEO and President Chip Perry declined to comment for this story, but has dismissed the pay-per-lead model at industry conferences and in previous conversations with Ward's.

He can afford to. AutoTrader is the clear leader in the space, generating more than $1 billion a year in revenue. Why kill the golden goose?

“KBB is a strong brand when it comes to used-car valuations,” says Mitch Golub, Cars.com's president. “However, pay-per-lead classified listings are a completely different business. They clearly have their work cut out, especially if they pursue a model that aggregates listings from a wide array of providers. That model has yet to work.”

Although the concept of pay-per-performance is attractive, whether Kelley can move the market sufficiently to create a groundswell among dealers to make a switch to its model, remains to be seen.

Kelley has several challenges. One, it's new to the listings game — a game Cars.com and AutoTrader play very well.

Another challenge for Kelley is inventory. It gets the consumer traffic, but has depended on either Cars.com or AutoTrader.com in the past for inventory listings.

Cars.com or AutoTrader (depending on which firm Kelley was partnering with at the time) paid Kelley millions of dollars to list their inventory on its site.

KBB.com, because of its high consumer traffic, would drive more leads back to AutoTrader's or Cars.com's dealers. Or at least, that was how the concept was to work.

Privately, executives from both firms claim the number of leads received didn't warrant the high listing prices Kelley commanded.

Kelley executives say listing inventory for other firms is an advertising play. While the money is good, the companies listing the inventory controlled the consumer experience, something Kelley thinks it can improve significantly.

Whatever the reason, AutoTrader and Kelley ended their partnership in July, six months before the contract was scheduled to end.

Kelley then turned to Vast Inc., a technology firm that has been championing the pay-per-performance model the last couple of years.

Vast's goal is to create a network of automotive online sites that together will create enough pressure on AutoTrader.com Cars.com to force them into the pay-per-performance model.

“The subscription players underestimate the innovation that comes with the pay-per-lead model and what that does to the quality of the lead,” Zornosa says.

Vast aggregates inventory from numerous industry partners, such as Kelley, Dealix, Autobytel, AutoUSA, AOL, Dealer Specialties and Overstock.com.

Vast then optimizes the inventory and pushes it back out to its partner sites. The value is that each firm's inventory shows up on each of Vast's partner sites, extending their reach and visibility.

Kelley's move is big because the enterprise brings in the most consumer traffic as one of the most visited automotive sites online.

Vast says its value goes beyond just extending the reach of a firm's inventory listings. It's created search algorithms that will match consumers with the right vehicle, which in theory, should lead to more valuable leads.

Each of Vast's partners can customize how they want the search algorithms to work, letting them control the consumer experience on their site.

Like Google, Vast combines its search technology with a bid process to determine where each vehicle appears in the listings. This lets a third party company provide better leads to its dealers by bidding more to push the inventory closer to the top of the listings.

The dealer pays a certain amount per lead. This can include phone leads and online leads. Whom and what they pay depends on which site lead came from. Firms such as Dealix or AutoUSA may charge more or less that Kelley at $20 per lead.

Whichever firm pushed the lead to the dealer pays Vast a percentage of what the lead costs the dealer. Everybody potentially wins: the consumer, the dealer, the third-party companies and Vast.

The end result, says Vast's Ben Cohen, is that, unlike the subscription model, dealers aren't paying for leads they don't necessarily want.

“Dealers have an alternative now,” Cohen says. “But they have to vote with their wallets.”
About the Aurthor: Cliff Blanks is the Editorial Director at Ward's Dealer Business. Cliff also writes for his own blog on WardsAuto.com

The “change” we as an industry are experiencing is going to require us to step it up with how we hire, who we hire and the way in which we manage our Sales, Internet and BDC personnel. In the past we have not given the attention needed to attracting, hiring and managing our sales and customer service people effectively, we have done it by the seat of our pants.

We cannot afford any longer to over look these critical areas in our stores, it’s costly, time consuming and frustrating to everyone involved, management, employees AND the customer.

How we hire and recruit our Sales, Internet and BDC professionals, sets the “tone” for the entire store and how it performs as an employer and a place to do business.

I can walk into a store anywhere in the country and in less than 30 minutes, be able to identify -with uncanny accuracy, if the store has a hiring and employee management process in place that management religiously follows (Employee Life Cycle Management System). Here are the clues:

Clue #1  ATTITUDE
WITHOUT a hiring and management process in place: There is a “feel” to the store of dishevelment, chaos and negativity observed through the actions of the employees. Smiles are not in abundance and seriousness prevails. This is due largely in part to the “uncertainty” that being an employee in the store brings to their lives. Few minimum requirements are established with a solid performance game plan for employees and management alike to follow in order to achieve these goals.

Clue #2  SALES
WITHOUT a process: The stores sales are not anything to write home about, the struggle is constant, and the “struggle” is sensed in the “attitudes” of the employees in the store. Management and employees are stressed due to frustration and fear. Lack of a game plan leaves employees feeling out of control.

Clue #3  CUSTOMER SATISFACTION LEVELS
WITHOUT a process: The stores CSI and SSI scores are below minimum requirements. This is due largely to the fact that stores employees are NOT satisfied, do not feel valuable and operate in fear and uncertainty most of the time. This “fear” and uncertainty is always passed on down to the customers.

Clue #4  CUSTOMERS
WITHOUT a process: Customers in the showroom and or service department do not appear to be at ease. Customers are in the dark as to “what to expect next”, this creates anxiety. Since the sales people are not “managed” consistently, they do not interact consistently with clients.
FACT 1 : Wrong hiring choices and mismanagement of employee’s are the leading factors in unsatisfied employees. Unsatisfied, mismanaged employees is the leading factor in low sales and low customer service satisfaction scores (CSI)

FACT 2 : It typically cost a dealership between $2500~$20,000 to recruit, hire and train a Sales, Internet or BDC professional, not to mention the hidden costs of lost sales, low productivity, poor customer satisfaction, and lack of repeat business.

THE CAUSE: Lack of a CONSISTENT hiring and management plan/process that they follow when hiring and managing Sales, Internet, and BDC professionals

We are notorious for “hoping” that we hired the right employee and that a manager will instinctively know how to manage…hope is not a plan! A simple Employee Life Cycle System is all the average dealership needs to hire more effectively as well as manage and develop employees consistently.

What is an Employee Life Cycle System (ELCS)?

An ELCS is a step by step process that is used to consistently, objectively and fairly recruit, hire, manage and develop employees- from the time they are recruited until the time they leave, voluntarily or involuntarily.

Dealerrefresh.com and HireRite, Inc. will present to you as a four part series a complete “PLAN” or “Employee Life Cycle” to hire, manage and develop your employees more effectively and efficiently. Once implemented you will:

1. Attract better qualified job applicants
   
2. Decrease your recruiting time
   
3. Conduct more effective interviews
   
4. Effectively motivate, develop and manage your employees (in less than 2 hours per year per employee!)
   
5. Decrease the cost of your recruiting
   
6. Decrease your turnover and the high costs associated with it

The 4 part series will cover:

Part 1- Recruiting effectively- how to attract qualified sales and customer service professionals- to our industry and YOUR jobs.

Part 2- Interviewing and screening consistently and objectively- get the information you need to make, educated hiring decisions.

Part 3- Managing as well as developing ALL of your sales and customer service employees in less than 2 hours per year per employee! - eliminating “seat of the pants” managing and therefore “seat of the pants results”

Part 4- Employee retention- how to keep the talent you have AND the new talent you found.

Lets get started...stay tuned!
About the Author: Wendi Venable is the author of Finders Keepers “How to find and keep the best automotive sales and customer service professionals” and President of HireRite, Inc.

AutoUSA Implements TARGUSInfo On-Demand Lead Verification Solution; Improves Quality of New and Used Online Customer Leads for Automotive Dealers

AutoUSA, the industry's leading provider of the highest quality, Internet-generated consumer leads to auto dealers nationwide, today announced it has entered into a definitive agreement with TARGUSInfo, the leading provider of On-Demand InsightSM about prospects and customers, to provide On-Demand Lead VerificationSM services for its new and used online vehicle leads. The new process of making sure each online customer lead is reachable is one of several best-of-class initiatives recently implemented by AutoUSA to ensure its automotive dealer customers continue to receive the industry's highest quality vehicle leads.

Fort Lauderdale, FL and Vienna, VA (PRWEB) September 2, 2009 -- AutoUSA, the industry's leading provider of the highest quality, Internet-generated consumer leads to auto dealers nationwide, today announced it has entered into a definitive agreement with TARGUSInfo, the leading provider of On-Demand Insight (SM) about prospects and customers, to provide On-Demand Lead Verification (SM) services for its new and used online vehicle leads. The new process of making sure each online customer lead is reachable is one of several best-of-class initiatives recently implemented by AutoUSA to ensure its automotive dealer customers continue to receive the industry's highest quality vehicle leads.

"After a competitive review of our options, we found TARGUSInfo is not only a leader in on-demand intelligence, they have the largest repository of consumer data attributes in the nation, including providing the most robust data on wireless, VoIP and other hard to find information," said Phil DuPree, president of AutoUSA. "By integrating their lead verification service with our existing processes, we'll be able to drive even higher quality leads to our dealers that increase lead response effectiveness."

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By integrating their lead verification service with our existing processes, we'll be able to drive even higher quality leads to our dealers that increase lead response effectiveness.
We are thrilled to help AutoUSA pass online consumer leads that are highly contactable to its more than 3,000 automotive retail franchises across the US
Each year, our on-demand delivery network identifies, verifies, scores and locates billions of prospects and customers at the moment they interact with businesses. No other provider gives lead buyers and sellers such in-depth insights to make real-time decisions when needed the most--when consumers inquire.

Through a patented process, the TARGUSInfo On-Demand Lead Verification Solution checks individual pieces of a consumer's contact information such as a phone number to not only ensure accuracy, but verify linkage to that consumer. The real time solution automatically verifies phone numbers, including wireless, for all leads received by AutoUSA from sources such as Edmunds.com, Kelley Blue Book, AOL Autos, MSN Autos, Yahoo! Autos, NADAguides.com, AutoVantage.com, and AutoUSA.com.

"We are thrilled to help AutoUSA pass online consumer leads that are highly contactable to its more than 3,000 automotive retail franchises across the US," said David Wengel, general manager of interactive markets, TARGUSinfo. "Each year, our on-demand delivery network identifies, verifies, scores and locates billions of prospects and customers at the moment they interact with businesses. No other provider gives lead buyers and sellers such in-depth insights to make real-time decisions when needed the most--when consumers inquire."

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About TARGUSinfo
TARGUSinfo, the leading provider of On-Demand InsightSM, provides unique identification, verification, scoring and location solutions that enable communication service providers, retailers, call-center operators, Web-based marketers and others to dramatically increase the quality of their services and the effectiveness of their marketing. A privately held company, TARGUSinfo is headquartered in Vienna, Va. For more information, visit www.TARGUSinfo.com.

About AutoUSA (www.AutoUSA.com)
AutoUSA, Inc., is headquartered in Fort Lauderdale, Florida, and a subsidiary of AutoNation, Inc. (NYSE: AN), the largest retail automotive company in the United States. AutoUSA is an independent third-party provider of leads to more than 3,000 dealerships. The company has built its success on a combination of advanced web-based technology and a network that includes the country's most well respected online automotive resources, including Edmunds.com, Kelley Blue Book, AOL Autos, MSN Autos, Yahoo! Autos, NADA Analytical Services Group, AutoVantage.com, AutoNation.com and AutoUSA.com. The vast majority of Ward's Top 100 eDealers use AutoUSA. More information is available online at http://www.autousa.com.