Referral Leads and Referral Programs for Car Dealerships FAQ
Table of Content
What referral leads are?
Referral leads are potential customers. Someone they trust introduces them to a salesperson. That person could be a happy customer, an industry partner, a family member, or a friend.
Why it matters: Barra’s compensation isn't wholly contingent on the automaker's income. Rather, it tracks how the company performed against its own targets. And by those standards, 2024 was a strong year.
Why referral leads matter?
Referral leads are the best quality leads. They trust the person who sent them, which means:
- They are easier to work with
- They’re less guarded
- It’s a faster sale
- They’re way less price-sensitive
- They buy more products (i.e. reinsurance)
- They spend more (higher gross profit)
- They refer more people
How to get more referral leads
To get more referral leads, you need a formal referral program.
Without a formal referral program, a dealership could get a referral every now and then by chance. It’s great when it happens. But if it’s not consistent, structured, accountable, and transparent, it won’t deliver predictable results.
- If it happens once, it is not enough.
- If it happens, but there is no way to track it, it is not enough.
- If it happens in a different way each time, it is not effective.
A good referral program is well defined, consistent, easy to track, and everyone knows about it. Customers, salespeople, the billing team, and new hires all know about it.
When a referral program is structured, referrals stop happening by chance. They become repeatable, trackable, and predictable.
Structuring a referral program
A referral program needs clear rules and ownership. It should also have a reliable and consistent process. The rules should not vary by store, salesperson, or situation.
Everyone should understand how referrals work.
- How are referrals received and tracked?
- What makes a good referral?
- What happens after referrals are received?
- How are sales tracked?
- How often do referrers get paid?
- How do they receive their payments?
- The referral offer and its terms.
A big challenge for dealerships is manually tracking and unclear ownership. It's often unclear who owns what. When no one is in charge, tasks get ignored and forgotten. No one promotes the referral offer to past or new customers. Salespeople hardly ever talk about it with customers, friends, or family. Referrer payments get delayed. It is common for referrers to wait months to get paid. Late payments damage trust. As a result, people stop referring.
A structured referral program creates accountability. Marketing promotes the program and keeps it in the public eye. The sales leader makes sure salespeople talk about it with customers and prospects. They train new hires. They track performance. They hold salespeople accountable.
Accountability also means setting clear goals. Marketing focuses on awareness and participation. Sales focuses on referrals and following up. Leadership checks results and steps in if goals aren't met.
The program needs a simple way to track referrals. This starts with a warm introduction and goes to the final outcome. It shows what works, who needs to be paid, and when sales training is needed.
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