Price is not the only factor
Over the past decade or so, the world of vehicle sales has changed in ways that have greatly concerned traditional retailers. The rise of the Internet has brought with it a new flock of sellers, new consumer expectations, and new methods for the public to research vehicle features and benefits, and compare prices.
You don’t need me to tell you this has struck fear into the hearts of many traditional retailers. Online upstarts have different business models and can engage with consumers in new and innovative ways. Some traditional retailers might even despair (and I’ve heard it myself): “What consumer would ever want to do business with a traditional retailer now that they can go online, find the vehicle they want, and buy it without needing to step foot into a brick and mortar dealership—at any time of day or night with just a few clicks?” But while they do have a point, there’s a bigger picture they might be missing.
Price is just one factor
Having worked with some of the most successful dealerships in the nation, it’s my business to help them stay competitive. Let me share with you some of the most compelling research I’ve seen recently: 21% of consumers are definitely considering price. But here’s where the numbers take an unexpected turn: the same research shows that a much larger percentage—a solid 79% of consumers—are looking beyond price at the bigger picture of value.
We’re all familiar with the old adage, “You get what you pay for,” and we’ve all been stung by it at one point or another. Hopefully, it’s been over small and relatively insignificant purchases. But for most consumers, a vehicle constitutes a major purchase—which is why they want to be especially sure that adage doesn’t come back to bite them again.
Competing on value
Consumers instinctively recognize that the lowest priced vehicles, such as those sold through some online sources, may come with the greater risk. Value, on the other hand, takes into account more than just price: it considers what the consumer receives in return for the money invested.
Consumers can receive value from a traditional brick-and-mortar vehicle retailer in a number of ways, including:
- Reassurance that the seller isn’t a fly-by-night operator who will disappear after the deal is done.
- Peace of mind that the seller stands behind the quality of its vehicles.
- Appreciation that the seller has expert knowledge about its vehicles, and can help determine which one best suits the consumer’s specific needs.
- Comfort that the seller prices its vehicles fairly.
- Satisfaction with customer care that goes beyond the sale, to keep the vehicle running smoothly and the consumer feeling special.
In light of these factors, getting the lowest price is less important to most consumers than getting a purchase package that provides strong overall value. That’s where traditional dealerships can really give the online retailers a run for their money.
This doesn’t mean, of course, that traditional retailers should ignore the internet: consumers still spend an average of 12 hours online researching their vehicle purchase. Traditional retailers definitely need to be out there, where consumers can find their inventory and follow the digital trail to their lots. What happens next, though, is of prime importance.
Communicating through your team
Once a consumer arrives at a traditional dealership, that’s when it becomes critical to communicate the value message. And not just through one or two people at the top, but through the entire team. So, as a retailer, how do you get everybody on the team to communicate value? Here are three ways.
- Train your team to understand the business you’re in. While others may be in the lowest-price business, emphasize that you’re in the greatest-value business. If a consumer begins a conversation focusing on price, train your team to clearly articulate the consumer benefits of value—the space in which you can compete and win.
- Turn every team member into an expert. As explained above, consumers are spending a lot of time researching their vehicle purchases. So they expect everybody on your team to know as much as they do, about every one of your vehicles. With a plethora of information at our fingertips, harness the collective knowledge of your team to be as knowledgeable as every consumer that steps foot onto your lot.
- Make fairness easy to see. According to a recent Harris Poll survey, 61% of consumers feel they’re being taken advantage of at least some of the time when shopping at vehicle dealerships. But if your team can prove your dealership is trustworthy, that’s a key part of the value you provide.
Your consumer probably has a ballpark idea of the price for the vehicle they’ve come to see your team about. But what if your team could show that consumer exactly how your price compares with those posted by other dealers for comparable vehicles within your market? Or what if there was a fast and easy way to demonstrate the retail book value, or the original OEM packages on the vehicle? You couldn’t help but inspire trust.
Getting everybody on board
Let your team members know that communicating value benefits not only the dealership, but them as well. By being seen as more trustworthy because of pricing transparency, they’ll increase their positive interactions with the public and build better relationships.
Then there’s one additional bonus that’s good for everyone: when consumers can see the value you provide and how fairly your sales team is treating them on price, they’re less inclined to haggle! That completely changes the dynamics of retail vehicle sales—which translates into bigger margins for you, greater job satisfaction for your sales team, and happier, more loyal customers for the long term.
Author: Patrick McMullen
Patrick McMullen is Senior Vice President of Strategy and Innovation at MAXDigital, which provides end-to-end technology solutions that enable dealerships to acquire, price, merchandise, and sell inventory with greater efficiency and profitability.