By now, almost everyone recognizes the importance of pricing vehicles competitively. Almost every shopper has checked the Internet before they burn their $3 per gallon gasoline and valuable time and venture out into the marketplace. Unless your dealership has a justifiable and competitive price, you are not likely to make the shopper’s short list.
If you accept this as a valid premise, then it is time to re-think the process once the customer arrives either physically or virtually at your dealership. Fewer customers are interested in browsing and, instead, they simply want to know your best price. Traditional dealership practice is often frustrated as its objective is to do anything and everything before discussing price. Conventional wisdom wants to slow down the customer in order to build a relationship, value, and ultimately control of the situation. Often such an approach results in an outright refusal to provide a price unless the shopper complies with the dealership’s process. This is where customer objectives and dealership processes clash and create frustration for both buyers and sellers.
I propose that dealers re-think conventional wisdom and practice when it comes to engaging shoppers. First, let’s recognize that the engagement process likely doesn’t occur at all unless to some extent the customer believes that the price offered by the dealership is in a realistic range. Let’s also recognize that most shoppers have multiple choices for similar if not identical vehicles under consideration. This means that when the dealership is engaged by a shopper there is a pre-disposition to purchase and little tolerance for behavior that is anything less than what the customer demands. Under such circumstances, dealership personnel need to respond to customer inquiries about price in an expeditious, transparent, and effective manner, sometimes at the expense of achieving a dealership’s process objectives. Let’s face it – the customer has greater control than ever and we are not going to wrestle it away from them by attempting to withhold the information that they are seeking.
This means that we need a new approach and new tools. I recommend that the new approach is not to run from, but rather run to your price. That’s right: be eager, not reluctant, to justify your price. After all, you had to put a price on a vehicle that was reasonable in order to have gotten you to this point. Historically, when it comes to discussing prices of used vehicles, the salesperson is the generalist and the shopper is the specialist. This is because the shopper has narrowed their focus to the particular vehicle in question while the dealership has many to consider. This has allowed shoppers to tell the dealerships with some degree of credibility what they should discount in order to be competitive. Frequently, the shopper’s assertion is exaggerated and sometimes just plain wrong. It has been difficult, however, for the sales representative to know better and therefore defend their asking price.
Today many dealerships have sophisticated live market pricing tools that provide them with greater information about the market price of any vehicle at the very moment of shopper engagement. Further, new tools allow dealership personnel to have an interactive engagement with shoppers, whether or not they are in the dealership, about the current market price of the vehicle in question. Such a tool allows a salesperson to provide a customer with a price along with documentation about competing vehicles. The credibility of the presentation is obvious and immediately removes the temptation on the part of the customer to exaggerate or make up price objections. The shopper instantly perceives that the sales representative has more and better information about the marketplace. This instantly changes the dynamic of the moment in favor of a factual and balanced discussion and sets the stage for collaboration about a fair price for the vehicle in question.
If there are vehicles, as there often will be, that are being priced lower than the one being offered by the dealership, it simply becomes the salesperson’s responsibility to identify why such vehicles are being offered for less. For example, the tool displays a list of competing vehicles along with their trim, equipment, miles, and other relevant attributes. Lower price vehicles will frequently have different equipment, higher miles, multiple previous owners, accident histories, undesirable colors and the like. This allows a dealership to justify its price without needing to forego profit to compete with lesser vehicles. Moreover, the collaborative experience of analyzing the market between the shopper and the sales representative fosters a positive and constructive relationship. The worst case scenario for the dealership is that there may be competing vehicles of similar value offered for less. Under such circumstances, the dealership would likely want to reduce their price to match true competitive offerings. Such concessions in price, whether made by the dealership or shopper in light of the facts, are non-confrontational, face-saving wins for both parties. It simply makes sense for everyone.
This new way of selling cars is very pleasing for both shoppers and salespeople. Why? Because instituting the process of replacing negotiation with documentation gives sales people greater confidence and job satisfaction. They cease believing and then anticipating that every customer interaction will be adverse. Working with customers to truly identify the “real deal” is an experience that fosters positive relationships. Sales representatives begin to recognize that their role in the process is that of facilitators rather than negotiators.