Mastering Used Car Acquisition: Lead Generation Basics

Private-party vehicle acquisition is one of the most talked-about trends in retail automotive. There are three main ways you can generate a lead for a private-party seller: inbound, outbound, and third-party sources. While each method has its merits, one approach stands out for its potential to build direct relationships and drive significant results. Let’s break down the pros, cons, and key takeaways of each. 

1. Inbound

EXAMPLE: Website form fillers, warm current customers, and cold local consumers. 

• Pros: some text
  • Data Collection: Customer gets added to CRM & marketing lists.
  • 24/7 Availability: Prospective sellers can reach out at any time.
  • High Lead to Close %: Leads are serious about doing business.  
  • Ease of Use: Simple to set up and low cost to maintain. 
• Cons:some text
  • Dependent on Traffic: Requires substantial website/foot traffic to be effective at scale.

Takeaway: These leads are generally the best, low cost, high intent, and no matter what you get a marketing contact out of it. However, most dealers don’t rely strictly on this method, especially if they aren't running direct response ads locally. If not, it's hard to closely control, track, and monitor success.  

‍

2. Third-Party

EXAMPLE: Kelly Blue Book Instant Cash Offer (KBB ICO)

• Pros: some text
  • Trusted Brand: Leverages KBB’s reputation. 
  • Reliability: Depending on market size you should expect a reliable amount of leads. 
• Cons:some text
  • Spam & Info Gatherers: Often paying for non-serious inquiries.
  • Low Lead to Close %: Team spending valuable time working on unqualified opportunities.
  • No Control: Pricing data and Instant offers will be generated on your behalf. 
  • Expensive: Pay per lead can sometimes get pricy with the risk of low or even negative ROI if not staffed properly. 
  • Low Customizability: The ICO Widget will not match your branding and sometimes look like an eyesore on your website. 
  • Traffic Redirection: Customers will sometimes be diverted to the main third-party site away from your page. 

Takeaway: This channel is best suited for the larger more established franchise store/group that can afford to spend upwards of five figures a month and have a BDC to make the best use of the leads. If you are looking to bootstrap leads, generate instant returns, or are just starting to buy off the street, it’s not recommended.

‍

3. Outbound: 

EXAMPLE: Active sellers on Facebook Marketplace, Craiglist, Autotrader, etc. 

• Pros: some text
  • Complete Control: You pick the cars and the price. You aren't at the mercy of someone or something else. 
  • Unique Inventory: You can’t find the personally touched vehicles anywhere else. 
  • Sustainable & Scaleable: What is measurable is repeatable and scaleable. It’s hard to track and measure the other methods. 
  • Rapport Building: Grants a much more personal approach and opportunity to create a relationship before they ever even come into the store. 
  • Brand Building: You are introducing new prospective customers to your store every day. 
• Cons: some text
  • Time Sensitive: You aren't the only one seeing that listing. 

‍

Takeaway: For any dealership big or small the outbound approach for private party acquisition is hands down the most profitable and lucrative. Dealers have been leveraging AI and Automation to scale outbound. When using a private-party management software dealers see up to an 84% reduction in acquisition costs and can 2-3x total purchases per month (Source: VETTX.com). 

‍

What’s your Acquisition Strategy?

‍

The million-dollar question is “What should my acquisition strategy look like”

The short answer… All of the Above 

Acquisition is not a science; there’s no silver bullet. Every dealer is different and has different personnel, resources, and markets. At the end of the day, the important thing is that a strategy exists in the first place.

The intentional dealers win here.

Bryan Bough, UCM at one of the largest auto groups in Boise, ID, recently said in a VETTX interview: 

‍“If you’re not buying cars from the public, you’re making a huge mistake… that’s the number one piece of inventory you want to bring in and resell.”

If you aren't actively generating private party leads, then, well… START.

The keyword here is “actively.” There’s nothing wrong with putting a form on your website and waiting for local consumers to inquire. But the real opportunity lies in dedicating some resources to outbound efforts.

The outbound approach allows you to form a direct connection and an immediate relationship with the consumer better than any other method. Imagine how much potential rapport you can build with a seller when taking that deal from cradle to grave.

It’s pretty straightforward: the more aggressive the approach, the higher the gross profit (lower cost, i.e., no buy/transport fees).

As Corey Abel, COO of VETTX, recently said on the AutoSuccess Show with Brian Ankney:

‍“I want my team to meet everyone in my market all the time.” 

It’s really that simple. Reach out to as many sellers as possible and get them into your store. It all starts with having the biggest supply of leads.

This article was featured on Auto Success Online Magazine!