Americans rank the traditional car buying process about equal to a dental appointment. Dealers have a tainted reputation with stereotypes abounding of the haggling “used car salesman.”
The traditional vehicle buying process is based on customers visiting a dealership. Thus begins a spirited tango purchasing dance with the salesperson, perhaps a dealership manager, the finance department, and some other players in between in an all-day exhausting event.
Vehicle history reporting is a topic usually approached from a customer’s standpoint. It makes sense when you think about a responsible car buyer, especially now that people are doing so much research online. When a consumer narrows down their choice to a couple of used cars, their decision might come down to the vehicle history.
There are a number of reasons for car dealers to care about what’s in a vehicle history report (VHR), too. In addition to considering the needs of your customer, taking full advantage of VHR can make a difference in your business and used car sales. Let’s take a moment to consider what vehicle history reporting is and why it’s so important for dealers to pay attention to it.
Use Vehicle History Reporting for Accurate Pricing and Appraisal
Every car on your lot has a Vehicle Identification Number, or VIN. A car’s VIN is like a fingerprint. It’s how we can tell two white 2009 Honda Civics apart from one another, or how you can differentiate three grey 2005 Mazda3 cars. Variety in the car market can be more limited than some brands let on, but thanks to the VIN system, we know that no two cars are truly alike.
What actually separates one car from another is its experiences. One car might be serviced twice as often as another. Another car might have three times as many miles on it even if it’s the same model year as two other cars. Some cars may have even been in an accident or considered a total loss at one point.
VINs allow us to track all of these cars across the thousands of miles they go in their lifespan, and they have enabled the creation of detailed Vehicle History Reporting. Every service visit, every instance of warranty work, every accident is tied to the VIN of each car on the road today, and any of those cars could end up at your dealership. They might appear as a trade-in, or they could be something you acquire via dealer trading or at auction.
You’ll want to check the vehicle history for every car that comes onto your lot and for every car you’re planning to sell. Doing so allows dealers to make the best trades, and when combined with industry standard pricing and appraisal tools, it can improve your profit margins by setting prices that make the most sense for a given car.
Still, you can go a step further with vehicle history reporting. The true benefits of VHR come not just from consulting it yourself, but giving your customers free access to this valuable information, too.
Give Customers the Info They Want with Vehicle History Reporting
Vehicle history reports have all the details a customer wants to know when they’re shopping for a particular used car. They include:
- Title and registration history
- Usage history (how many owners has the car had and what did they use the vehicle for)
- Samage history (water, fire, accidents, and so on)
- Salvage, junk, or lemon status
- Outstanding liens
- Mileage verification
- And more
This is the kind of information that can be a huge benefit to your used car merchandising. Customers shopping for a used car want to know just how used it is. If you can provide detailed vehicle history reporting for free on your website, that’s one more reason for a shopper to stay on your website browsing your inventory. When you’re plugged into the largest network of prospective car buyers in the country, it will also let you advertise directly to customers.
VHR Can Improve Your Reputation and Boost Your Sales
We often discuss the importance of transparency, and vehicle history reporting is yet another way you can give your customers transparent information.
One shopper might wonder why you’re asking for a certain price on the used car they’re looking at. You can point them to the car’s history to demonstrate how well taken care of it is.
Another customer might have concerns that you’re selling them a lemon. Direct them to the vehicle history report that you provided for them so they can see the car has a clean bill of health.
Giving consumers access to online vehicle history reporting for free sends the signal that you care. It’s another service that will not only improve your standing with your community but can have a positive impact on your bottom line. Give yourself an edge by looking out for your customers.
Both of the major VHR databases, AutoCheck and CARFAX, allow dealerships to partner with them to provide these services. If you haven’t already looked into it or you’re not sure how to proceed, don’t hesitate to ask someone you trust how to proceed.
Cars in the lot? Check. Catchy local advertising? Check. Vehicle pricing in place? Check.
Now, time to sit back and watch the customers roll in.
Not so fast.
Do you have the right cars on the lot? And are they the right price?
Gone are days when you can put a clever ad on local TV or radio and wait for people to wander into the dealership. When you think you have all systems in place, you should consider making absolutely sure you have an effective, modernized vehicle pricing strategy.
Assessing Your Vehicle Pricing Strategy
In order to get a vehicle pricing strategy in place, assess your current one. Ask yourself the following questions:
- What exactly is my current vehicle pricing strategy? Do I base it on hunches or data? Do I even have a vehicle pricing strategy that I can explain and defend?
- Which cars have historically sold well in my area, and how does my inventory reflect that?
- Do I consistently have certain make and models that tend to have a hard time moving off the lot? If so, what strategies am I implementing to fix this inventory turnaround issue?
- Do I have a way to reach customers on the Internet to present my inventory in an efficient way?
- What type of software or program am I currently using to manage inventory?
After you have completed your assessment of your current inventory management strategies, it’s time to do some work. If you’ve always done things the same way, it might require you to think outside the box and be open to dive into strategies that are completely new to you or those you hadn’t thought about before.
Don’t just slap the lowest price on that sticker
If you have been basing a vehicle pricing strategy more on what feels right rather than numbers, examining key data factors is a more effective approach.
A well-researched, competitive price goes much further than just offering the lowest price. Does your vehicle have an original package that your competitor’s does not? If so, that original package’s MSRP should be reflected in the vehicle’s price.
It’s important to take into consideration that every vehicle priced in the market may not have the same value propositions that your vehicle does. Doing your research and leveraging data to compare apples to apples allows you to defend your margins while still staying competitive in the marketplace.
According to a study by J.D. Power and Associates, consumers are not as concerned with getting a great deal as the auto industry may believe. In fact, the study shows that consumers would rather find value in a vehicle than get the lowest price.
Examine the data
But what’s the point of pricing a car competitively based on its value if your consumer can’t see the value in it? Today’s consumers spend an average of nearly 14 hours online researching vehicles, according to the J.D. Power 2014 New Autoshopper Study, so it is imperative that you provide the consumer the same data you had when you priced it.
Utilize your dealership VDP pages by providing the consumer relevant vehicle descriptions that include OEM packages, their original MSRP, and pricing proof points that reflect books and market averages. If you stay ahead of today’s tech-savvy shopper and offer your potential customers transparency in the way you’ve priced your vehicle, you’ll give them a seamless, pleasant shopping experience that builds value in your inventory.
Don’t ignore used cars
Studies like the Consumer Reports’ annual Car Brand Perception Study give insight into American’s perception on used cars and how likely they are to seek them out to purchase them. According to the study, two-thirds (65 percent) of respondents said that they are more likely to consider a late-model used car relative to several years ago, and 71 percent reported being likely to consider a late-model used car as an alternative to a new car.
If you were to just assume everyone is looking for a new car first, you’d be missing out on the people who go for used cars first. In fact, in 2013, certified pre-owned (CPO) models helped drive a dealer’s used vehicle profit margins to $2,361, which was nearly double what the margins were for new vehicles sold in 2012.
Choose a system designed to appraise and price inventory
When you understand both consumer trends and the importance of robust used car inventory, you’re on your way to a vehicle pricing strategy. The best way to have access to advanced analytics, cutting edge best practices, and decision making tools is with a fully integrated inventory solution.
At MAXDigital, we empower dealers with software designed to maximize opportunities for generating faster turn and higher gross profits simultaneously. Formerly known as FirstLook, MAXDigital’s Inventory Management Platform is designed to help you stock, appraise, and price the right vehicles for your area.
Let’s talk about several ways you can modernize your sales process to prepare for today’s digital consumers.
A Better Sales Process Starts with a Prepared Sales Staff
Any updates to your sales process will begin with the people who carry it out. It’s likely that you already tout your sales staff as one of your strongest assets. You tell customers that you have the most professional, the most knowledgeable, and the most personable sales team they will encounter. Your goal now is to make sure that’s the case.
There are two routes you can take when training your sales associates to handle today’s car buyers.
The first involves segmentation.
You might have one person greet people as they walk in the door, one person acting as a product and tech specialist, and another person who accompanies customers on test drives. Then you might have a person who handles all of the financing and paperwork, and finally someone who deals with delivery.
This approach could be attractive for dealerships with a large staff, and it’s important to remember that different people have different strengths. Your employees might appreciate the chance to focus on what they excel at while leaving other tasks to peers who are better suited.
The other approach is to enlist a team of super sales people.
These are people who can do it all, walking the customer through every step of your sales process. They not only know the cars you sell, but they know technology and how best to interact with a modern car shopper.
The super sales person approach likely entails a more intense training regimen and even a more intense hiring process. It will work best for smaller dealerships and premium brands with a smaller selection of vehicles.
If you’re having trouble deciding between these approaches, this article from Automotive News carries both sides of the debate, with ideas from thought leaders Grant Cardone and Joe Verde.
Regardless of what your sales team looks like, your ultimate end goal should be customer satisfaction. Make sure everyone involved in your sales process cares about the customer. Their happiness is your success.
Streamline Your Sales Process for Faster Turnaround
We’ve mentioned customer satisfaction once already, and one of the best ways to satisfy the modern car shopper is to make the most of his or her time.
Remember: online research drives the decision process for 95% of new car buyers today. They’ve already narrowed down their choice of cars, which means they’ve cut out a chunk of your sales process template for you. Instead of launching into the whole spiel about the car, ask the customer what they don’t already know. This shows you respect both their time and their initiative. You can spend less time standing or sitting around and more time on a test drive.
That brings us to the next point: Focus on the parts of the sales process a customer is likely to enjoy and clean up the steps that normally bog people down. Today’s shoppers are more likely to open up and let you get to know them if they’re already sitting behind a wheel, getting a feel for the car they’re thinking about buying. They’ll be less inclined to talk to your staff if they’re waiting 20 minutes for you to find the right key fob.
It’s also important to simplify your F&I management. You can improve the overall flow of your sales process by giving the customer more tools to use online like a payment calculator and a chance to pre-qualify for a loan.
Ultimately, the more you value a customer’s time during the sales process, the more likely they are to value your customer service. That opens them up for chances to return to your dealership for service, maintenance, parts, and, of course, their next car.
Transparent Pricing Gives Customers Confidence
This won’t be the first time we’ve talked about your customers’ needs for transparent pricing tools, but this notion is also critical to modernizing your sales process. When we talk about transparency of this kind, we mean your pricing information needs to be freely available. A customer should know why you’re asking that price for that car.
At this point, most dealers step in to say “But what about our gross profit margins?”
If that’s a concern, it might be time to consider whether or not you’re properly leveraging the data from your region and your market. The kinds of pricing and appraisal software that lets you consult that data is out there, and it’s up to you to implement it. It’s possible to set a price on new cars, used cars, and trade-ins that is the greatest benefit to you and your customers.
As the culmination of your sales process, this is one of the most important steps to get right. It’s tricky, and it might be the hardest part to adapt, but doing so will let you and your dealership reap major rewards.
Hopefully this outlines a path that you can take to start bringing your sales process into clear definition. If you have more questions about this topic, or if you would like to share some of your own experiences adapting your sales process to today’s car buyers, you know who to ask.