CASE STUDY: Dealer Group Subprime Auto Leads Generation Program

auto loans lead generation subprime

How we increased subprime auto sales revenue by 437% in 120 days

I recently had an opportunity to help an automotive dealer group increase subprime auto leads. Their goal was to multiply last year's numbers by 2.

So I wanted to share my findings, good and bad moves so you can take a better angle on your end. 

By the end of this post, you should be able to make your subprime auto lead gen funnel larger, more profitable and predictable

Location: Texas, United States
Dealer Unit: Multi-store dealer group, all makes (domestic & imports. no high-end)

I was excited about this project because, for the longest time, I was in charge of taking the customers' orders, but I could not be the chef actually managing the ingredients! 

I was an online campaign manager many years ago, and I very much enjoyed turning an OK campaign into a money-printing machine.

In total, I managed nearly 25$MM in digital campaigns for automotive brands like Nissan, General Motors, Ford & BMW aside from managing campaigns for AutoTrader, Wal Mart & Subway.

I got to learn a few tricks I can now apply on smaller ad budgets using the good old 80/20 rule. 

Although managing one single account like this is not a scalable model for me right now, being able to apply principles helps me create even better online marketing courses on Autobahn Academy. 

Everybody wins. I like it when everyone wins. 

Imagine if you could turn a few of those subprime auto leads into sales every month. Better yet, what if you could increase those high-profit unit sales each month? 

What would be the impact on your closing %, sales, and profits? 

How I approached the problem

For that particular order, I was able to apply what we call here the "Autobahn Formula", paired with my favorite optimization technique: JITO. 

More on that later. 

When you have to compete and beat past numbers, you better know what you're fighting against. 

Does that make sense? 

Let's take a look at last year's numbers to see what we're up against:

From day 1, we knew where we had to put our energy.

The group in question has dedicated subprime people, so it was easy to get feedback and adjust quickly on what was yielding the best ROAS (return on ad spend). 

As much as I'd love to tell you we have a secret recipe that works every time on day 1, it doesn't always do. I'm OK with it because when you know what levers you're looking for, you can optimize very quickly. 

So here's what came out of a very enlightening session with the dealer group's management team. 

I always have a ton of questions for you guys when I decide to take on a challenge. I need to understand what you want and how fast you're looking for a result. This helps dictate the whole process. 

If you are to build a sustainable digital sales funnel, sorry to break it you, but you'll need more time. 

The good news is, it's always a good time to get started with a clear strategy. 

Challenge #1: "I don't have an in-house subprime guy or girl." 

If you don't have a subprime auto expert in your dealership, it's OK because there are ways to make the system work anyways. It just needs a little tweaking on the fulfillment side of things. 

Funny story, we came up with this formula to make sure leads are easy for our Virtual BDC service to close because we are NOT subprime lead appointments takers. I understand it's an integral part of your business, but sometimes you have to humble down and focus on what you're good at. 

Challenge #2: "I'm having a hard time getting clients approved." 

You're not alone. Subprime auto leads need to be handled with caution. Lead generation is only a small part of the recipe; getting loans approved for those buyers is where it gets real.

If you need help with that, I happen to know a few options you can use to increase your loan approval rates dramatically. 

Challenge #3: I am in a tough market for credit.

The dealer group, located on the east coast of the US, is struggling with a struggling local economy. This makes it harder for people around them to purchase vehicles. 

Because of many reasons, the number of subprime prospects has risen in the past few years. 

It's a challenge many of you may have and will continue to address in the future. 

Quick tip, you might want to figure this out sooner than later

The weak link

For the last decade, I have been helping dealerships generate more sales in whatever department they wanted to boost. 

I've found there's a common denominator. 

It's hard. It's painful. But it's worth it. 

I see another recurring trend. I see the same symptoms everywhere. 

It's not because I'm incredibly smart, I just went through the lead generation planning process so many times I see patterns.

So much so, that I've been choosing who I want to work with, and I'm very quick to see if it's a great fit or not. 

The problem I'm talking about here is what I call the firehose syndrome

When I get onto discovery calls with dealers, it goes a little bit like this:

Me: "So what if we 5 X you leads next, are you going to be able to handle it?" 

Dealer: * Laughs* "Yes, that's a funny question." 

Me: "I'm concerned you won't. After all, you never did get 5 X the number of leads you have right now. What makes you think you can handle the spike?" 

Dealer: *Visible confusion*

Me: "See, we'll probably outpace your ability to deliver. Then, you're going to find yourself in a situation where you can't keep up.

You're going to cut corners, perform less than anticipated, and blame your team for it, am I right?" 

Remember when Kim Kardashian broke the internet, well, there's such a thing as breaking a dealership with too many leads. 

I know it sounds funny, but it's true nonetheless. 

For optimal digital campaign success, you have to match the input & output of customer acquisition activities purposely

Once it's achieved, you can dial up the spend/stream a few digits at a time. 

Much like a car with too much power and no traction, too many leads are useless if you don't know how to make it stick.

This is the lead generation clutch effect.

I learned subprime auto lead generation the hard way

The first few times, I was told that the leads we were sending dealers were not qualified. Car dealers would get the leads and would not be able to get a single appointment with more than 200 leads per month.

But I kept thinking, how can someone who actively searches for auto finance, clicks through an ad about car loans, lands on a site that only talks about finance, fills a multi-step opt-in form with real personal information can be "unqualified"? 

I mean, we're talking about info such as salary, housing expenses, credit score, and more...

Nobody "trips" on a landing page to be that intentional...

So what's the deal? 

Is it possible our speech does not match our customers' needs? At that point, it has to be about our message AFTER the lead came in. It's OK to look in the mirror and improve with trial & error.

So instead of making a huge mistake & play the blame game, I decided to create my own little lead generation machine. I had to experience it for myself if I wanted to help more dealer partners genuinely. 

What happened next changed my mind, and the way I run my business. 

What I had created was a funnel where people would drop from step to step. 

On a 4 step form, I'd get around 45% opt-in on the first step. Of this 45 %, I'd get 60% to opt-in on the second step, 70% on the 3rd and 60% on the 4th, which was the personal contact information.

So for every 100 subprime visitors, I'd get around 11 qualified leads that went through a multi-step form.

And so on until I was left with a very skimmed prospect list, I could use to push a more aggressive offer. 

Here's MAJOR error dealers are making today: Serving a bland "Thank You" page for converting customers, and sending the rest of the audience & "no-conversion" visitors to the trash. 

Think about it this way. What if you walked up to someone you really like, struck a little conversation, and asked them to date, and they said yes…

Would you be like: "Thank you; I'll be in touch shortly" and leave?

Well, that's exactly what we're all doing online. Do you see how crazy this sounds? 

We're investing hundreds of thousands of dollars per year in marketing only to break the cycle in its tracks on OUR END

And then we have the nerve to blame the consumer for being shifty and not coming into our store. 

What. The. Hell. 

I can tell you right now; it's probably what's going on right now on your website. 

This is precisely how I team up with dealers to increase their sales dramatically. It's easy when you know what levers to pull.

Lead generation is non-binary. It's like us marketers create a landing page with 2 outcomes: lead or no lead. 

But what do we do with the people in between?

Those users still clicked on an ad or other links that got them on the offer in the first place. Must they have a minimal interest, right?

Ok, I got sidetracked, back to our case study.

The subprime auto lead generation masterplan

In any given market, you'll always find buyers in need of finance. They exist, much like any resource in our lives, they're up for grabs. 

Good news for you, online marketing techniques in the automotive industry are 2-3 years behind most industries, maybe more. 

It's not our fault; automotive is the retail juggernaut and shifts happen slowly. 

The challenge for marketers and businesses today is not too far in front of consumer behavior.

It's like a surfer who's waiting for the right wave. Paddle too early, and it'll leave you behind, exhausted.

We needed a plan to snap these from our competitors' hands and bring them home to us.

Objective #1: Find every current or potential driver in need of specialized credit in a 25-mile radius. 

Objective #2: Reduce the cost of acquisition for new subprime auto leads

Objective #3: Create a sustainable funnel of new subprime selling opportunities every month. 

How we did it

What you see below is a screenshot of our Facebook Ads Manager. The tough part was to balance lead acquisition vs. budget. We often aim for the lowest cost per lead number, but you have to look further than the CPL is you want to truly succeed.

The reason why 90% of agencies & businesses out there don't do that is that it's hard, and takes lots of communication.

Subprime auto leads Facebook Ads report.

Over time, we were able to understand which types of leads were converting in sales and adjust our campaigns accordingly. Over time, we purposely increased our CPL by over 320% but our Cost per Sale dropped by 400% +.

It took a few minor and major tweaks to get to the cruising speed but we got there in just a few weeks. The danger here is always to overoptimize a campaign prematurely.

This is why it's so important to have the right KPIs in mind and proper communication when running online campaigns on Facebook, or anywhere else for that matter.

To help our cause, we used a 7-step strategy paired with Facebook Ads to increase awareness, warm up our audience, and close more deals.

I know a lot of you are discounting the power of Facebook when it comes to subprime car dealership lead generation, but it's probably just because the recipe is not quite right.

The number one mistake is to use a similar strategy as Google. Both media are different, so transposing strategy, tools, and tactics is a bad idea for your wallet.

The tricky part: Facebook seems to be on a war with credit entities, and I can see why. I have seen some crazy stuff in the past.

Here's a quick look at the subprime campaign structure so we could play through Facebook's rules and also shell out a significant number of qualified subprime auto leads:

Subprime auto leads acquisition funnel

Step 1: Catch our audience's attention with a strong lead magnet.

This is how we give our audience the first stride. 

We presented an offer that was so appealing to people looking for a car, but with a twist, so prospective subprime clients spotted it.

Then two things happened:

  1. We categorized those Facebook users in a unique audience 
  2. We could now contact by email or phone and start a relationship 

Important: As soon as each prospect reaches a step, we place them into different audiences & start a new sequence of emails & retargeting aimed at pushing a more relevant message for every individual.

Step 2 & 3: Value add pieces #1 and #2

To build value and warm up our audience, we must build trust with our prospective buyers. We have to remember we're trying to get car buyers in a difficult financial situation to trust car salespeople, am I right? 

It's not easy unless you establish yourself as a reference and build rapport quickly. These buyers will find other alternatives if they keep shopping, so make sure your game is tight. 

To do so, we're going to provide useful information to help our prospective clients and influence them to do business with us.

Does that make sense? 

At this point, I'm sure you're wondering how we did it.

We used a sequence of educational pieces:

  1. Sent by email or text for the ones who converted 
  2. Showed through retargeting ads to those who didn't. 

I'm not talking about anything complicated here. For example, our first piece was titled: "5 Mistakes to avoid when financing your next vehicle", a one-pager PDF people could download straight to their phone and consume right away. 

As the title said, we listed five keys to help our future customers to make the best of their buying power, whatever it is. 

We uncover some myths and things to look for when trying to finance a car without being in a strong financial position. 

The goal is to give them information that will restrain their need to contact 20 other dealers or finance entities and forget about us. 

We're not selling anything at that point, other than the fact we let them know they must look out for our next communication, where we'll show them how to buy a car and save thousands. 

Step #4: Soft Call to Action

Now that we started establishing a little trust, now is the time to go in for the sale. Here's how we did it:

"Mike, I just wanted to share a great story with you. When Brian came in the other day, he was pretty disappointed. He couldn't find the car he wanted and still get approved. He visited a handful of car dealers that tried to help him, but no luck.

But we doubled down on solutions, and within days, Brian was driving his new, red Toyota SUV. Plus, we gave him a few pointers to help him next time he wants to switch vehicles.

He was ecstatic. 

Here's what he sent me a couple of days later:

"Alex, thanks again for the help, I needed this. I love the new car, it drives amazing." 

If you find yourself in a situation like Brian, please let me know, I live to find solutions and help people hop into their brand new car. 

** Quick tip: Pick a similar name to your prospect's.

Using a story that our new prospect "Mike" can relate to is critical when trying to get the conversation going. 

You can adapt this tactic to email marketing and retargeting on your Facebook audiences. Stories and testimonials were underrated when it comes to online campaigns, but hurry because other car dealers are catching up quick.

Step 5 & 6: Value add pieces #3 & #4

Chances are the game is not won yet. Your prospect might still be shopping. It's also most likely they're opening and reading your emails or texts. 

So keep going. I never said it was easy. 

You can now use a piece of information and cover another aspect of the car buying process, the debt ratio. 

If you can deliver the information through video, more power to you. I suggest you use social media to increase awareness in auto credit so you can build a following. 

Dealers that'll find a way to tap into Instagram through posts and stories will make bank in the years to come. 

Step 7: Hard Call to Action

If you want to succeed, you need to master two critical components of marketing: Scarcity and Urgency

You must find a way to spark the FOMO (fear of missing out) in your future customer's head.

Using these two new friends, we started applying firm pressure on our prospect buyers to entice them to buy now. 

It must be clear for your client that if they don't act now, they'll miss out on huge savings through interest rates and available inventory. 

At that point, it's not that different from used car sales. But the main and critical difference is attacking the finance portion of the deal before anything else. 

Since objections are going to come from that angle, better get rid of them now under our terms vs. defending information they found somewhere else. 

The transformation

During only four months, we were able to improve KPIs (key performance indicators) reviewed earlier in significant ways. 

Take a look at the new numbers from 2019 vs 2018:

The dealer group now has a solid understanding of the blueprint they need to use to control their subprime auto lead generation and fulfillment funnels. 

The changes are forecasted to bring hundreds of thousands in increased revenue monthly, the profit per unit has gone up, and the team in place has now more stability and control over what is set to be a growing profit center for the years to come. 


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