Human vs AI Lead Management Costs in the Automotive Industry

Lead management is a crucial task that can determine the success or failure of a marketing campaign. Traditionally, this task has been handled by human teams, often facing complex and difficult-to-scale processes. However, with the advancement of artificial intelligence, more and more companies are considering switching to automated solutions to optimize their operations.

Although selling a single car might seem like a simple task, it involves a series of significant costs that vary depending on whether a human team or an artificial intelligence (AI) solution is used.

In this article, we’ll compare the costs associated with lead management by humans versus AI in the automotive industry, breaking down each aspect to provide a clear view of which strategy is more cost-effective.

Costs of Lead Management with Human Teams (SDRs)

SDRs, or Sales Development Representatives, are members of the sales team who qualify leads and secure the best opportunities for sales executives.

Before starting, let’s assume that:

• The average sale value of a vehicle is USD $25,000.
• The average cost per lead (a website visitor who fills out the form) is USD $1.
• The conversion rate from lead to showroom visit is 0.25% (i.e., 1 out of every 400 leads sits down to talk to a sales representative at the dealership).
• An SDR’s capacity is 30 leads per day (or about 600 per month, assuming 20 business days).
• The cost of the SDR (or the person who qualifies the lead) is usually around USD $460 per month, or USD $5,520 per year.
  

Assuming that 1 USD = 1 lead, then with USD $400, the first lead in the showroom would be generated (since the conversion rate is 0.25%). Additionally, the cost of the SDR to generate that lead would be USD $308 (if they can handle 600 leads per month, upon reaching 400, they’ve executed 67% of their capacity; therefore, USD $460 - salary - x capacity - 67% - = USD $308).

The final total cost to have a lead seated in the dealership would be USD $708, which consists of USD $400 for Marketing plus USD $308 for the SDR.

The total Marketing cost per unit sold in the automotive industry generally hovers around 3% ($750 USD), which is close to the cost we calculated above of $708. This would be the best-case scenario, assuming the lead that arrives makes a purchase. In reality, the conversion rate in the showroom is about 50%, meaning the total cost per unit would be double, but that’s not important for now as we’re comparing the cost per visit.

Costs of Lead Management with AI

Now let’s look at the benchmarks using artificial intelligence. These were extracted using the average for all Patagon AI clients in the automotive industry:

• The conversion rate from lead to showroom visit is typically 2% (i.e., 1 out of every 50 leads sits down to talk to a sales representative at the dealership).
• The AI’s capacity is unlimited; it is available 24 hours a day, 7 days a week.
• The lead processing cost with Patagon AI’s Enterprise plan is $0.37 USD per lead attended.
  

Since we have a 2% conversion rate, we need 50 leads to generate a visit to the showroom. The cost of 50 leads is $50 USD ($1 USD per lead). The cost to process the 50 leads is $0.37 * 50 = $18.5 USD.

The total Marketing cost to have a lead seated in the dealership with Patagon AI would be $68.5 USD!

Summary of the Cost Comparison for Selling a Car

Humans

• Qualification Rate: 0.25%
• Leads to Generate 1 Visit: 400
• SDR Cost: USD $308
• Marketing Cost (Leads x CPL): USD $400
• Final Cost: USD $708
  

Artificial Intelligence

• Qualification Rate: 2%
• Leads to Generate 1 Visit: 50
• AI Cost: USD $18.5
• Marketing Cost (Leads x CPL): USD $50
• Final Cost: USD $68.5
  

Artificial intelligence is almost 11 times more cost-effective and performs up to 8 times better when compared to a human team (Contact Center, Call Center, etc.).

Conclusion

The implications of these data are profound. Not only are you saving nearly $540 USD in marketing expenses per unit sold, but also:

• With the same monthly investment, you could bring in 6 times more leads, thanks to the better funnel conversion.
• By saving $500 USD on the sale of a car, you could earn more per vehicle or increase sales commissions. Salespeople in the industry earn an average commission of 0.4% (around $100 USD per car sold). These commissions could be increased 2-3 times and still yield a profit, allowing you to hire the best salespeople on the market.
  

The impact that AI is having on the automotive business is truly impressive. Although it still seems like a promise, many companies are already capitalizing on this technology, which is generating results that were simply impossible a few years ago.

If you’re a Marketing manager and haven’t yet evaluated AI for your sales process, it’s time to seriously consider implementing artificial intelligence solutions in your lead management strategy. Without a scalable sales process, it’s impossible to market efficiently.