Who's stealing your leads?

Jul 16, 2024 - Back to Blog

In today’s competitive Commercial Truck Sales industry, dealers increasingly turn to online marketplaces to expand their reach and capitalize on the growing digital economy. These platforms promise enhanced visibility, increased customer traffic, and ultimately, more sales opportunities. However, beneath this digital promise lies a disturbing practice that has been causing disquiet among dealers: The diversion of leads to finance brokers, possibly bypassing the very dealers who pay for these services.

How do you know if your dealership is being affected?

Very simple, go to any marketplace you advertise in and look at any of your listings. If there is a finance button on your listing, click on it. If the link directs a potential customer to fill out a finance application that is sent to any company other than yours, you are most likely being affected.

The Digital Shift in Heavy Equipment Sales and the Emergence of Lead Diversion

The Commercial Trucks Sales industry has witnessed a significant transformation over the past few years, with digital platforms becoming central to sales strategies. Online marketplaces offer a convenient space for dealers to list their inventory, reaching a wider audience than traditional methods allow. This digital shift has been further accelerated by changes in buyer behavior, with more customers preferring to research and initiate their purchase processes online.

Recently, some marketplaces have developed revenue models that sometimes prioritize their financial gain over the interests of equipment dealers. Dealers pay these platforms for listing their inventory and expect to receive direct inquiries from potential buyers. However, when a customer expresses interest in a piece of equipment and requests finance options, some marketplaces divert these leads to third-party lenders with whom they have financial agreements. This practice not only undermines the dealers' potential sales but also raises questions about the ethicality and transparency of such marketplaces.

When questioned, most marketplaces will claim the purpose of a financing button on a dealer's listing is to assist the dealer in selling equipment by arranging financing for potential customers. This may be the intention, however, in practice, if the customer does not reach an agreement with the original dealer, in most cases the finance company will allow the customer use the approval to buy from any seller they choose. Knowing this may make the customer willing to negotiate more aggressively when it comes down to pricing.

Marketplaces operate in a highly competitive environment and are constantly seeking new revenue streams. Partnering with lenders or brokers offers them a lucrative opportunity. However, balancing this need with the interests of their primary clients, the dealers, is critical for sustainable business practices.

The Impact on Dealers

The implications of lead diversion are far-reaching:

1. Reduced Sales and Revenue: Dealers lose potential sales as leads are channeled away from them.
2. Loss of Finance Revenue: By introducing a 3rd party broker, the revenue derived from arranging financing for the customer is either split with the finance broker or lost completely. As most dealerships have finance departments that are profit centers, this is obviously an issue.
3. Compromised Customer Relationships: The opportunity to build and maintain customer relationships is crucial in the heavy equipment industry. Lead diversion deprives dealers of this opportunity.
4. Inflated Marketing Costs: Dealers end up paying for leads that do not materialize into sales, thereby increasing their customer acquisition costs.

What is the solution?

1. Negotiate clear terms: Before entering into agreements with marketplaces, dealers should insist on clear terms regarding lead handling and diversion. Only the dealer paying for the advertising should receive any lead produced by the listings. If you are reading this article, there is a good chance you were not aware this is happening.
2. Immediately request that the link to the finance application be taken off your listings. In my experience, all but 1 of the major marketplaces will comply with this request. Unfortunately, if removed completely, this can put your listings at a disadvantage when compared to listings that provide financing. If any marketplace will not remove the finance link from your listing, INSIST that your dealership is the first point of contact for the customer.
3. Request that the marketplace uses an application that sends the leads directly to your dealership. You can choose to develop a secure, online application and provide it to the marketplace to use in place of theirs or use the application of a 3rd party, such as Equipment Funding Solutions.

Equipment Funding Solutions developed a robust F&I software platform developed specifically for Commercial Truck dealers, Deal Tracker Pro 2.0. The platform provides a compliant and secure total solution for your F&I department including a Pre-qualification module, a robust Decision Engine using AI to identify the best lenders for a particular deal, access to over 200 lenders, multiple dashboards for Sales, F&I, and Management, multiple reporting options, and FTC compliant secure document management.

The company recently introduced a lighter version of the platform called The Marketplace Solution. This is a white-labeled digital application that is integrated with almost all of the major marketplaces to allow dealers to retain their finance leads generated by the marketplace. When installed on the marketplace listings, the customer is invited to apply. Using a soft credit pull and the information from the application, the customer will be given an estimate of the down payment, payment, and term based on the equipment selected and the criteria of over 200 lenders.

The dealer is then delivered a lender ready package including the signed application, spec sheet, buyers order, and credit report that can be sent to the lender or lenders of your choice. The specifics of the deal, including the Pre-qualification results can be accessed on a secure dashboard through the EFS portal. At anytime the dealer can upgrade to the full version, Deal Tracker Pro 2.0, and have access to the full suite of features.

Conclusion

The issue of lead diversion in heavy equipment marketplaces presents a significant challenge for dealers. As the industry continues to evolve, it is crucial for dealers to remain vigilant, proactive, and adaptive. Communicate with your advertising partners to ensure any leads generated by your listings are first and foremost directed to you. Go to www.efundsolutions.com for more information.

Disclosure: The views expressed in this article are solely the opinions of the author and do not reflect the policies or practices of any specific online marketplace. The examples and issues discussed are based on general industry observations and are not directed at any particular platform.