January 28, 2021
Dealer’s Guide to Selecting a Trade-in Tool
Your trade-in tool directly affects your initial customer interaction, your ability to source inventory, and reliably generate leads and ROI. These foundations of a successful trade-in strategy can mean the difference between getting by and getting going.
Don’t start with a disappointed customer.
Accuracy in trade value is king. The last thing you need is a customer coming into your dealership with a book value that doesn’t match what your dealership will actually offer.
In fact, in a recent survey, dealers ranked “accuracy” as the number one reason for selecting a trade-in tool. Here are the types of questions you should ask to determine if a trade-in tool will deliver accurate values.
- What data sources do you use to determine the trade-in value? Is it book
values, auction data, or local retail prices?
- Are you using national or regional averages, or values from my local market?
- Can I adjust the costs and fees on the final offer to a customer to reflect our local market competition and buying strategy?
The valuation methodology really does matter.
What’s the ROI?
If accuracy is king, return-on-investment is queen. Would you rather spend a few hundred bucks to make thousands of dollars, or get something for free and make nothing? It seems like an obvious choice, but sometimes the enticement of “get your trade tool for free as part of a package” causes people to make weird decisions.
Every lead gen source deserves to be held accountable. Here’s what to ask to determine a trade tool’s return-on-investment.
- How many leads did we get last month from the trade tool?
- How many of those turned into appointments?
- What was the show rate of those appointments?
- What was the overall close rate?
- How much gross/net did we make from those trade-in leads
Or just ask…do you have an ROI calculator we can use?
Is it easy?
Ease of use for your customers means more leads coming to you. Your trade tool needs to not only be simple for customers to use, especially on mobile devices, but also easy to find on your website.
Here are a few questions to ask your trade-in tool provider to gauge the product’s usability:
- What are your average conversion rates on mobile and desktop? (And with this data, compare it to how your site currently converts with other lead gen tools)
- How many questions does a consumer need to answer to get their value?
- (Said another way…) How long does it take a consumer to complete the process?
- Where can consumers find the trade tool? Is it buried under the Finance menu on your website, or is it displayed prominently on our home page, SRPs, and VDPs?
Are you subsidizing the competition?
Inventory sourcing is more important than ever, and you’re competing against huge national brands for used car acquisition. When Carvana and CarMax buy up an ever-increasing share of local vehicles, you’re left with fewer potential leads. Many trade tools also routinely take people off a dealer’s site to their own website, while actively competing with dealers for trade-in leads.
Here’s what to ask to determine if your trade tool builds your brand, or theirs:
- Do you re-sell the leads from our website to our competitors?
- Do consumers stay on our website to receive their trade-in offer, or do you redirect them to your website?
- How much are you spending in our local market to acquire trade-in leads on your own?
Ask yourself if your trade-in tool checks all the boxes you need to build a strategy, or if you’re just checking a box to say you have a trade tool. There are over 30 trade tools out there today. Asking a few pointed questions upfront ensures that this seemingly small decision will have a big positive impact on your bottom line.