By all accounts, as long as a supply of eligible vehicles is available, the growth in certified pre-owned (CPO) sales numbers is predicted to follow recent growth patterns of approximately 21% per year. Consumers are becoming more aware of, and confident in, the manufacturer programs as well as the benefits in considering CPO vehicles. Manufacturers also have recognized that customer satisfaction increases the likelihood of CPO buyers coming back to purchase another vehicle, translating into brand and dealer loyalty, all of which are important in the ongoing battle for year-over-year market share. Salespeople love the idea of the higher commissionable profit margins from CPO sales compared to new vehicles, and being able to confidently represent the product knowing the customer is protected with comprehensive warranties. All of this adds up to a great potential to drive dealership profits, and gain brand and dealership loyal customers for repeat business. It also results in happier salespeople who can sell with confidence, and who are more likely to follow-up with “protected” customers and ask for referrals.
Many manufacturers are trying to do their part by widening the parameters of eligible vehicles so more can be classified, advertised and sold as “factory certified.” Comprehensive warranties have provided captive lenders peace of mind, allowing them to offer new-car competitive finance rates. Customer awareness also is being furthered by the evolving CPO segment gaining enough market representation that it has earned itself separate billing on several of the most widely used consumer research, classified listing, manufacturer and dealer web sites.
Now, dealership salespeople will need to further consumer education by providing the information needed to make an educated purchase decision. The more the customer sees, reads and hears about CPO, the higher the comfort level and curiosity to inquire about “what’s in it for me?” According to a Kelley Blue Book Market Intelligence study, consumers note the top reasons to consider a CPO vehicle. The fact that the vehicle is inspected and certified is the highest consideration factor at 68 percent, followed by the extended warranty offer (56 percent) and peace of mind (54 percent). Emphasizing these factors and tapping into the shopper’s concerns could help generate a CPO sale.
So, how can a salesperson continue to drive what has already proven itself to be a “win-win” for salespeople, dealers, manufacturers and the buying public?
First, it’s pivotal for salespeople to have an open mind and not believe everything they initially learn from the customer. Often when an inquiry, lead or purchase request on a new car is received by a salesperson, the instinctive response is to attempt to sell that particular vehicle, or something similar to the customer. This is akin to putting “the cart before the horse.” Studies and the personal experience of most salespeople have shown that very few customers actually leave with the same vehicle about which they originally inquired. As a matter of fact, it has been documented that more than 40% of customers initially submitting inquiries on new vehicles actually purchase pre-owned, and the longer a new lead goes unsold, the more likely the customer is to purchase pre-owned.
Below are some ideas to drive CPO sales at the dealer level:
- Create a section on your web site to showcase CPO vehicles. Include a short overview about the benefits of CPO cars, including warranties and special financing, along with multiple photos and personalized seller’s notes to highlight the desirable features of each vehicle.
- Since the customer’s preferred method of establishing the relationship is via e-mail response to their e-mail inquiry, be sure to include a late-model comparable CPO vehicle in addition to the originally inquired-about new model when delivering pricing information to the customer. Your e-mail pricing response should include:
-A new in-stock vehicle that most closely matches the customer’s initial inquiry
-A lesser-equipped vehicle of the same model to suggest that there is tremendous flexibility in pricing, allowing the customer to drive their model of choice while staying within budget
-A CPO vehicle similar to the original inquiry to emphasize tremendous savings. This will allow them to drive the model of their choice and satisfy the Internet customer’s inherent “desire to win” (the possibility of coming away with an even greater than expected result)
By giving the customer options, you have established yourself as a consultative salesperson and have given them a greater reason to visit your dealership.
1. In your initial conversation with the customer, introduce the idea of CPO by asking suggestive questions that will arouse curiosity… “Will you be considering any late-model pre-owned vehicles that would offer substantial savings?”
2. Follow-up for extended periods, always including a recently available CPO vehicle that relates to the customer’s initial inquiry. Knowing that the buying cycle of Internet buyers can exceed 90 days, and the longer a customer goes without purchasing the higher the likelihood they will purchase pre-owned, all means that diligence and persistence often will be rewarded.