Recently, Gallup conducted a poll on what professions Americans trust the least. Car Salespeople are still towards the bottom of the list. Why? What are the reasons keeping the trust factor low? Are Car Salespeople really that bad?
No, they aren’t.
As I travel the country and work with dealerships, I meet a lot of hard working, dedicated sales consultants. People that will greet you at the door and truly want to sell you a car. They support themselves and their families. They wear their polo shirts with pride and ensure that they absorb the latest training on the new products. So why don’t Americans trust them? Because the Dealership, the media and Third-Party Lead providers continue to perpetuate both the perception and reality of a bad car-buying experience.
For example, why does a dealership still have a “Lot Price” vs. an “Internet Price”? How confusing is this for the Sales Consultant? Why punish the guy that takes the time to get up off of his couch, drives through traffic and shows up in-person at your store, versus the guy who still has his slippers on and gets the best price while belittling the Internet Manager over email? Yeah, that makes sense… Let’s “club” (I actually heard this term at a store recently) that guy who doesn’t know the Internet Price but yet knows where your store is and choses YOUR store to visit. Let’s reward the guy that doesn’t give two hoots whether he buys from your store or some other dealership??? Oh, I get it, we can “club” that guy that doesn’t know the price and get a $3,500 front end, but what happens when he checks the internet later to show his friends the car he bought and sees your Internet Price? What happens when that customer asks your Sales Consultant what the price is and he can’t answer it with confidence? You probably won’t hear from that customer ever again and he won’t be giving you a referral.
So what’s the solution?
Get rid of the Price Sheet, everyone has a smart phone now. Get rid of the “Lot Price”, price your cars within the market range, and give your sales team the tools they need to build VALUE in the car both online and on the lot. Use technology to prevent the Double Discount by showing the customer value points that proves the price of the car is valid and needs no further discount. We used to do Walk Arounds? We used to take pride in product knowledge. Let’s get back to that as an industry, let’s become experts on what we sell and change the perception of the car business. Stop supporting Third-Party Lead Providers that run commercials about not trusting hard working Sales Consultants. Reward the customer that takes the time to come to YOUR store.
Whose voice is that? It kind of sounds like me, but it’s not the voice I expected. Go ahead and record your voice. I’m sure there’s an app for that. As you talk, the sound created by your vocal cords travels not only through the air to your inner ear, but also through your bones and tissues directly to your cochlea. When you listen to your voice recorded, you only hear the over-the-air signal and lose out on all that bass from your bones. The recording gives you the awareness of what your voice actually sounds like to other people.
How you THINK you sound and how you ACTUALLY sound are rarely the same. The equivalent can be said of advertising your vehicles on the Internet.
- “I think my entire inventory is online all the time.” (Have you checked recently?)
- “My vendor comes out twice a week to photograph my cars. Of course all of my recent trades have photos online.” (Do they?)
- “I spent all morning re-pricing my aged units. Get ready for those leads!” (Did those updates appear on all of my sites?)
Following the same vehicle preparation regiment consistently will foster an environment for getting vehicles online quickly. However, it’s important not to allow for complacency to set in and sacrifice quality for the sake of speed.
Dealers spend enormous time and resources on perfecting an online presence. When a recent trade hits the lot it will be washed, photographed, priced, and a description gets written too. This is a significant amount of work for a single vehicle. As car dealers, we perform those tasks every day, every week, and every year on thousands of vehicles.
All of this work is put in with a singular goal in mind…To Sell The Car! Just as your voice sounds different to everyone else, your online ad may also be received differently than what you intended. The Internet savvy car shopper is on average spending over eleven hours online and views hundreds of ads before deciding to step foot in a dealership.
KNOW what your customers see online about your dealership. Search for your vehicles like a consumer would and see if they look like you expected.
- Is the inventory accurate?
- What does the website look like on a mobile phone?
- Is the pricing consistent among all the sites?
- How do the photos look?
- Does the vehicle description highlight the value and option packages that set this vehicle apart from the competition?
Taking the time to perform this check will ensure that your online inventory is presented with the same level of care as the vehicles on your showroom floor. Keeping a vigilant ear to the Internet train tracks will let you hear that small rumbling and give you time to make corrections before that freight train comes through.
Do you hear that clicking sound? Sounds like a sweet symphony of customers clicking on your ads!
Liars, Shady, Dishonest, Crooks! No, I’m not talking about our current political candidates; I’m talking about the perception of how customers feel about car dealerships. Now hold on, before you get angry with me, I’m just telling you one of the latest Gallup survey says 91% of people have absolutely no trust in the car buying process. People would rather have all of their wisdom teeth removed over buying the latest and greatest in the automotive industry. Think about the pleasure of having a drill, rubber mallet, and a suction hose in your mouth for about three hours or buying a car. What have we done? How have we gotten in this place?
Now sprinkle in that the number one driving force in the immediate future will be the mythical creature known as the millennial. See this creature doesn’t have enough time to brew a cup of coffee, but would rather pay five bucks for it at the local coffee shop because it’s the cool thing to do. They have no patience so companies like Amazon are now delivering things via drones so that they can get it faster. Here is the scariest part of this creature; it is highly educated and has a strong alliance with an even bigger monster named Google. Before visiting a dealership, consumers have more knowledge than most car dealers, thanks to the great Google. Once a millennial visits a dealership, they arrive in a suit of armor prepared to battle with their favorite weapon, the iPhone which is equipped with about 2,345 car apps, 17 competitor websites, and a link to the “car guy” in the family.
I am one of those millennials who researches things just to research because one day I might buy one. I’m one of those millennials that, instead of walking three feet to my thermostat, I would rather use my phone app. I think Starbucks is the best invention since the coffee bean, and I think Amazon is the answer to achieving world peace. I am an ultra-millennial!
Now I’m sure that you are reading this you’re saying who is this guy and why does he think he can say these things about the sales process. A large portion of my professional automotive experience comes from working for the largest used car automotive retailer in the United States. While there, one of the things I learned was people would rather pay more than to go elsewhere. More times than not, the vehicle was priced more than the local guy across the street, or they had a better sales team. My mind would work overtime to try and figure out why a person knowingly would spend more elsewhere?
And then I finally figured out the answer…. Because it was easy! Easy meaning it’s transparent, so I understand what it is I’m paying for.
Find a way to make it easier. Grosses aren’t eroding on their own – we are eroding them by pushing sales through discounts. Figure out how to connect with customers so they don’t feel that they are being ripped off.
One final secret about millennials – if they trust you, they will buy from you again. They want to be able to text you what they want and then just show up and sign their paperwork.
So now that I have told you the problem and given you the solution, how will you become better than my dentist?
We can do “everything” from our phone – from the ability to order food, get a cab, check the weather, monitor our health, play games, take pictures, monitor the security of our homes and so much more. So what about buying a car?
The average user spends considerable time and effort doing research before they ever set foot on a car lot. They a researching not only what vehicles they want to consider, but financing options and things that relate to price like incentives and special offers. The last thing they want to do is have to rely on a car salesperson to be their sole source of education as the profession is the second least trustworthy only to politicians.
Sources for research go beyond Original Equipment Manufacturers (OEMs) and include third party content that can be pulled from all over – from news aggregators, publications or even third party marketplaces. But dealerships are an important source too. While car salespeople may not be deemed as trustworthy, their websites are seen as more impartial and thus are considered more trustworthy.
A growing trend is “showrooming”. It’s when prospective buyers use their mobile device to look for similar vehicles. The prospective buyer is looking to see if there is something else they want – a different vehicle, dealership or price. This is the worst possible scenario for a dealership – it’s akin to walking off the lot and going elsewhere but can be done in an instant. It’s not a concept unique to the automotive industry; it’s common throughout the retail industry.
Did you know more than 3 out of 5 consumers (60%) who used a mobile device while shopping at a dealership visited a competitor within 24 hours? So what’s a dealership to do? Provide the best possible digital experience. Does this mean the ability to buy a car right from your phone? I think it does. But not everyone is ready for that; look at how long it took some people to adopt smartphones… but the interim steps of providing a mobile-friendly website, text capabilities, chat, etc. aren’t just nice to have, they are table steaks.
It’s important to slow down when it comes to the appraisal and trade process. This is a pivotal point in retaining gross profits since customers buy when the value of the vehicle exceeds its price. What are you doing at your location to stock your inventory based on the value of a trade? It’s one of the top 3 factors in any car deal, and in most cases, trade-in vehicles are the lifeline to a profitable used car department. Top dealers I work with source more than 50% of their retail inventory from trades and the profitable ones have taken the process to another level.
- Be consistent: From start to finish, each appraisal and trade experience should be the same for every customer and vehicle. Skipping steps leads to lost gross and a missed opportunity.
- Slow down and inspect your potential investment: “Buyers are liars” and they are certainly not going to tell you about the bad transmission or the repair work they had to the entire side of their vehicle. There’s a reason they are trading in. Don’t miss the bad transmission or the high repair bill in the glove box.
- Listen: You’d be amazed at what a customer will tell you about their car if you ask them. This level of engagement builds trust and value in your process and in the trade in offer.
- Sell the offer: Customers need to know you are aware of the nuggets that make their car special. Have a process in place that explains how you determine a trade in offer and what factors you consider when making that offer.
- Just buy it! Offer to buy a car from the customer whether they buy a car from you or not. Become their local expert. You’d be amazed how many friends that customer will tell about their experience and the traffic it can drive to the dealership.
We talk all the time about how 79% of customers buy on value. The trade in process is no different. Build value in your inspection process and customer offer. Spend the extra time closing more trades and selling more cars than at the auction this fall paying too much for cars that other dealers could not sell.
Without a doubt, leasing has sky rocketed since the great recession. In Q1 of 2015 the share of leases increased to 26.7% of total new-vehicle volume sales in the US versus 19.8% in Q1 of 2012. For further context, in 2009, the leasing market bottomed at a dismal 10.6%. With that said, location does become a factor. Outside of California and Florida, the Northeast dominates in lease penetration with the most, with New York, New Jersey, and Michigan having 40-48% penetration. This means that though the impact of off-lease vehicles will be greater in the Northeast it will without a doubt affect values across the country.
Given the tremendous drop in leasing during the worst days of the recession (10.6%), the overall trend for used values remained strong for years as supply of like-new pre-owned vehicles was low and demand was on the uprise. We are now entering into a pre-recession cycle of off-lease vehicles having a greater impact on the wholesale and in turn retail market. As dealers, managers, retailers and sales people in the industry, we may have forgotten the old days of used cars because the past 4 years have been ever strengthening market.
So what can be done to prepare for the inevitable impact that this leasing increase will have on our daily lives at a dealership? Don’t forget that first and foremost is to keep your pre-owned inventory moving and CLEAN UP ANY AGING NOW! Traditional smart inventory management practices that have been taught and implemented for years are now more important than ever. Second is to acknowledge that it is coming and begin to discuss it now. Whom should we talk with about this at the store? Anyone who interacts with the customer in the retail sales environment should be apprised of this information.
So let’s start with management but remember that the sales team must not be forgotten in this conversation. Management teams in every dealership
must break free of the everyday tasks that dominate life and leave at least a little room for understanding challenges, both current and potential. I would suggest that as a management team you allocate a 30 minute meeting at least once or preferably twice a month. For each meeting, assign one manager the task of researching and presenting their findings to the group (have them stay within their particular discipline within the store and give them a week or two to prepare). Anyone who takes this seriously will need to allocate some time to reading and researching for the meeting. Then make the meeting into an open discussion where ideas can flow between departments and no idea is a stupid idea. The key is to have ALL management involved so everyone can learn. Finally, each manager should go back to their respective teams and give a high level overview, and take the opportunity to dive deeper into the content that applies to the success of their team.
As an example, your pre-owned manager may already know that soon you will have a glut of off-lease vehicles hitting the lot. In some cases dealers will be required to purchase up to 85-90% of these units and in other cases there will be few to none purchasing requirements. Having this discussion with other members of management will also allow for proper planning when the units arrive so they do not clog your service department.
Next as a management team you must discuss how to create a plan that empowers your sales team with this knowledge and make it actionable in the sales process. What other techniques can be used by sales to turn the “informed customer” into an informed buyer? How do we use this knowledge in the appraisal process moving forward? How do we as a management team use this in the TO process when combatting the trade value?
In my next post, I’ll tackle these questions and give a glimpse into a few current trends in the new car market that are impacting values of similar pre-owned vehicles today.
Do you ever wonder how long it takes to get your inventory online? To export your vehicles with a photo, price and description? How much does this cost you? What you can do to expedite this process? These are questions I ask the decision makers of large groups across the United States daily. If you don’t know the amount of time this takes and or the expense, then I implore you to find out.
In a workshop that I like to administer, we explore these concepts. The key is that we take your hard numbers and put a dollar figure to this. Then we display these numbers to the individuals that thrive on competition, the UCM. What will this do for my business, you might ask? Just think about it. How are your managers paid? If they could make more money by simply expediting their inventory online, in turn selling your inventory faster, wouldn’t you want to have this metric?
I use to work for a very large retailer in the auto industry. Everything that we did had a metric applied to it. From the time the vehicle was received until the time it was sold. We had meetings after meetings on how we could trim this down. Cut the fat, expedite the process. I used to think of them as monotonous. Here we go again, another meeting. Hindsight is 20/20.
We were ahead of the times. We saw the big picture and where the industry was headed. Now ask yourself, am I doing everything possible to expedite my process? Am I scrutinizing my business to help trim the time it takes to put a photo online or a vehicle? How can I make more money without adding cost? Take the time now to train and educate your team, in turn you will see the results.
Running a successful used car department is hard. It requires a high level of execution, attention to detail, solid processes, and exceptional people working with you. Failure is not often recognized immediately and it can seem like death by a thousand cuts. I would like to share with you some daily weekly and monthly job duties I have seen successful pre-owned managers execute. They are often not glamorous and sometimes go unnoticed, but are essential to success.
Daily Job Duties
- Trade Walk – Not by yourself, bring the other managers and F&I team with you.
- Yesterday Missed Appraisal Review – Talk through all the missed appraisals with someone other than the person that appraised the unit to be sure you did not miss something.
- Traffic Check aka BDC Update – Today’s appointments / Tomorrow’s appointments setting progress.
Weekly Job Duties
- Inventory Walk – Remember when it was the only way to see your inventory? Get out of the chair and walk the lot at least once a week if not every day.
- Online Inventory Walk – Why not? Get on at least 2 websites each week and check out your inventory. Review price, photos, placement of your ads and the competition. Do a google search of your dealership. What shows up? Your job is to think and act like an online customer.
- Wholesale Review – How did you do at the sale this week? Are prices up or down? You are the used car expert, show what you know.
Monthly Job Duties
- Monthly Water Review – Take stocks of your entire inventory as the new guide books are released. Look for potential problems early and formulate a game plan.
- BDC Lead Source Review – Ask your BDC for a review of all traffic sources to the dealership and a closing rate summary. Know where your best sources of traffic are and inspect weekly.
- Expense Review – It is way more productive to see the big picture. Get involved with the review of the expenses that affect your department. Do what you can to keep costs down and maximize the tools and efforts of your people and vendors.
None of these job duties are fun. In fact, checklists remind me of when my mother always reminded me to eat my broccoli. It never really tasted that great, but the long-term effects of good habits can lead to a very healthy and in this case, profitable business.
Contact me directly for more in-depth suggestions on daily, weekly & monthly checklists from some of the top performing dealers across the country.
If you don’t know by now, Costco just became the second largest automotive retailer in the good ole US of A. With almost 400,000 vehicles sold in 2014, Costco is creeping up on No. 1 auto dealer AutoNation that sold 533,000 according to Bloomberg. How did this happen? Do they have a call center that contacts customers? Are they spending excessive amounts of money on SEO, SEM, Pay Per Click, Retargeting, Pre-Roll Video, etc., etc. to attract customers to their automotive broker service? Nope! So what’s the answer to their undeniable success? Fixed prices.
We’ve seen study after study that explains how the industry is changing. Each day it seems like a new trend or a new statistic. Yet one thing stays consistent. Consumers are adapting the way they buy cars. Shifting consumer attitudes have resulted in success for companies like Costco and CarMax while other car dealers have suffered from a diminished level of trust. No haggling policies have shown to succeed in the new consumer’s mindset, and many buyers have reported this leading to less anxiety during the process.
Consumers are looking for ways around dealing with the traditional car dealership “process” of buying a car, as seen by the rise of services like TrueCar. They just want the quickest way to the best price for the best value. By the end of last year, nearly 65% of car buyers said they used sites like TrueCar to validate a vehicle’s price in the market.
“Customers know more going in. … They don’t want to feel like they got a bad deal,” said Chris Sutton, vice president of auto retail for J.D. Power and Associates. Services such as Costco Auto Program “help provide customers with that confidence.”
What can we do?
The Costco Auto Program business model caters to the rising intelligence of the average buyer, and helps make vehicle purchases smoother for customers and dealers. To replicate this process in a dealership, two things need to happen. You need to validate the price you’ve set for your vehicle online and then continue the justification process throughout the entire sales cycle. Provide customers with an educational understanding of each vehicle’s worth and then stick to it.
“Whether it is third-party sites or buying services, at a minimum they’re providing a level of expectation or limitation on prices,” Sutton said. “I think we’ll continue to see more transparency in pricing.”
To learn how MAXDigital’s Marketing & Sales Platform is validating price for consumers in dealerships across the U.S. visit www.maxdigital.com or call (888) 841-0884.
With the birth of the internet and increased reliance of technology, people seek education more than ever. It’s no surprise that people are more apt to search to find an answer to a question from a medical issue to consumer research. Since information on the internet is crowdsourced, the accuracy of information found varies widely. But given this research behavior, everyone has access to become an “instant expert” in a short period of time.
It’s no surprise that this behavior directly translates to directly to automotive consumers. As they research, the results can be overwhelming. What are they looking for? What do they want to know? Of course customers want the best price available and they base that belief on data about other market listings. But there’s more to a sale than price. And there’s an opportunity.
As a consumer researches a vehicle they are interested in, it behooves dealerships to present their inventory and dealership in the most favorable light. How? Of course they can show a vehicle price compared to books, but what about relative to the market? What about dealership differentiators? How do you do that?!
This is the information the consumer is looking for across the web; but if a dealership gives it to them, saving them time and effort, they’re making easier on them. Check plus for the dealer. But are they trustworthy? Of course! Car dealers are nice people…. But the perception of dealerships isn’t so favorable. But maybe by showing information from elsewhere, like price versus book and market listings you’re demonstrating transparency to the consumer. And that is what consumers are looking for more than anything else. Now that means a gold star!