How Much Per Lead?

Almost every day I have met General and Special Finance Managers who want to sell more cars in a specific part of the financing market. I say almost because some of them tell me that they are satisfied with the number of cars sold in this market. I think these people should be evaluated because it is at a car at all, but this is just my opinion. However, for people who want to sell more cars, which are usually looking for lower prices leads to create more sales.

The discussions usually start with "What leads you cost?" Great question, but most times there is a piece of unknown confusion. I think you are referring to the price of lead and not how much is this really going to cost me.

The question that hovers over "What is the cost then?" Sparing everyone a big appetite for different types of leads, I will work with a total value and total number of leads generated. The two scenarios are Company A and B will generate 100 leads for $ 5,000 and Company B will generate 100 leads for $ 10,000. Obvious choice is the company A. You can get the same number of leads at half price. This is a great deal!

Time to apply some mathematics. The company sells its lead in the average rate of closure of 4-6%. This is 4-6 cars sold at an average of $ 2,500 gross profit. The good news is that Company A produced only $ 10000-15000 in gross profit. Behind expenses and net income is between $ 5000-10000. Most people here think, "Well, you covered my expenses and made some money."

How about Company B, have an average ratio of closure of 15-18%. This is 15-18 and car rental packages averaging $ 2,500 gross profit per deal. This translates to an additional $ 37.500 to 45.000 monthly gross profit. Behind the costs and that is a net gain of $ 27.500 to 45.000.

Looking for a better and worse, if that is the best of Company A and Company B. worst of the company A, net income was $ 10,000 and the Company B, was $ 27,500. A difference of $ 17.500!

Back to the original question "What drives your costs?" Well Company A had a value of $ 5,000 and made an extra $ 10,000 profit. Company B had a price of $ 10,000 and made an additional $ 27.500 in net profit while generating $ 17,500 more than Company A. So yea, Company A had a lower price, but ended up costing $ 17,500 to lost profit.

In the big picture, Company A will earn an annual profit of $ 120,000. Company B will receive an annual profit of $ 330,000. This is pure profit! This means that the company B, for twice the price will triple the profit. As I once heard a song, you pay for what you get.



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