Kia Motors America wants to cut its outsize dependence on third-party shopping sites for online sales leads.
Now, 80 percent of the online leads Kia sends to dealerships come from third-party vendors or sources other than its retail Web site, kia.com. Kia wants to reduce the figure to 55 percent, it said in a May document obtained by Automotive News.
Kia hopes to improve the quality of the leads it sells to dealers -- and lower the leads' cost -- by generating more of them from kia.com.
"Doing so will increase our overall close rate and improve dealer satisfaction," says the document describing Kia's program. The document, released to dealers in May, is titled "Enterprise Lead Management Update."
Kia joins AutoNation Inc. and other auto retailers that are attempting to reduce their use of third-party leads.
The retailers say leads from the third parties can be from less-serious buyers and are sold to multiple dealers, which wastes salespeople's time and results in fewer vehicle sales than high-quality leads from corporate and dealership Web sites.
Plus, many dealers prefer to build their own brands online rather than channel money to third parties, which from the dealer's standpoint, elbow their way between customers and dealerships.
Kia provides leads generated from its Web site at no cost to its dealers, while it charges dealers about $20 for each lead it buys from third-party vendors, said a Midwest dealer with multiple Kia franchises. The dealer asked not to be identified.
More than 250 online vehicle shopping sites use Google advertising and other marketing methods to get car shoppers to come to their sites. When shoppers provide contact information, that's a lead.
Kia spokesman Scott McKee acknowledged the memo but declined to comment on the program.
Don Hobden, dealer principal of two Kia stores in Alabama, said the new Kia program is a step in the right direction.
The lower-quality leads he has received from Kia produce half the vehicle sales he would expect of them, he said.
"They need to do something about their leads," said Hobden, who is chairman of the Kia national dealer council.
He said his stores, Kia Store Gadsden-Rainbow City and Kia Store Anniston-Oxford, achieve vehicle sales of between 7 and 13 percent of the Kia leads. Better leads, he said, would double that.
When the document was shared with dealers in May, year-to-date Kia leads to dealers totaled 266,472 and contributed to 20,252 vehicle sales, or 13 percent of the national total of 159,286 vehicles at the time.
Third-party sites use various methods. Some, such as AutoTrader.com and Cars.com, charge dealers monthly subscriptions for their inventory and advertising. Others, such as Autobytel, generate leads from their own Web sites, supplement those by buying leads from other sites and package the leads to dealers.
The Kia document does not say where Kia gets its third-party leads.Low profits, too
The Midwest Kia dealer said Kia leads bought from third parties tend to produce less profit when they result in a sale.
That's because some third-party shopping sites use advertising phrases such as "lowest prices on Kia cars" to draw in shoppers. These inducements condition those customers to expect the lowest price when the dealership contacts the shopper, said the dealer who asked not to be named.
"The customer's ready to beat us down on price," the dealer said.
The dealer said some other brands he sells, including Honda and Chevrolet, generate from their Web sites about 40 percent of the leads they send, or about twice that of Kia today.
In the document, Kia did not detail how it would generate more leads from its retail Web site other than through the improved use of free and paid search on Google and other search engines.
Meanwhile, the document says Kia's 765 U.S. dealers will be required to handle leads differently under the program that is now under way.
Among the biggest changes, each franchise will have to use a customer relationship management vendor certified by Kia or similarly certified lead management software so Kia can see whether the lead was turned into a vehicle sale, the document shows.
If a dealership doesn't choose a vendor, it will be assigned a Kia-provided lead management tool at a cost of $159 per month, the document shows.Poor visibility
Today, just 6 percent of dealerships have software tools that allow Kia to track their progress with leads, the document says. Kia said in the document that it is planning to have multiple customer relationship management tools certified by Sept. 1.
Kia said using certified tools will allow faster delivery of leads to dealers, more sophisticated reporting and best-practice recommendations for handling leads efficiently.
Hobden, 62, at the Alabama Kia stores, said he has spent six years and hundreds of thousands of dollars developing a customer relationship management tool. He said he is worried that the new policies will minimize that investment, especially if they crimp his plans to sell the in-house technology to other dealers.
The two stores combined sell about 160 new and used vehicles per month.