One Major Secret To A Higher Closing Ratio

Things HAVE changed! Customer buying habits have changed. The entire world has changed the way we do business and buy just about everything.

ONE of the most significant things I've reinforced that's made a dramatic impact on sales is to discuss a customer's budget, NOT PRICE ON THE LOT, but MORE emphasis discussing budget during fact finding. Some dealers are very emphatic NOT to discuss it (just show the customer a car they want and spend 1-2 hrs in a closing marathon which usually results in more lost sales or very low gross profits) while others are realizing that showing a vehicle within a budget (start low and let the customer raise themselves on price & equipment) usually results in higher gross profits, less negotiating time, happier customers, and much higher CSI scores. (if you examine all your lost deals, outside of the things you can't always control- severe negative equity, bad credit, etc, the next major reason is we lose the deal is simply because the customer just can't afford the payment and this CAN be controlled)

DETERMINE the need, FILL the need, WITHIN THE BUDGET and your closing ratio will begin to increase immediately.

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Comment by Pat Kirley on December 1, 2012 at 4:44pm: I agree, you need to discuss budget and show vehicles around that price bearing in mind most customers will spend 10-15% over their declared budget. Showing much more expensive stock is futile.

Comment by Ashley Poag on November 26, 2012 at 2:20pm: A qualifying card is a good idea. Tools like this are especially important for those sales people who do not know how to obtain information from a customer. It's important to do more consulting..based on the customer's needs rather than selling. Also, we recommend based on the customers needs, offering accessories rather than a more expensive base model. The customer gets what they need within budget and the dealership still increases in profit through the sell of accessories.

Comment by Bob Carmack on November 26, 2012 at 9:40am: Thanks Doug, TOTALLY AGREE. It's also the "experienced" sales people as well. Most know to do the fact finding but are guilty of consistently NOT doing so. They walk the lot (or ride in a golf cart) and show the customer 5,10,15+ vehicles and ultimately show the customer a vehicle that DOES NOT fit anywhere close to their budget (meaning $100 - $100's over the budget) and end up in a marathon closing session that results in not selling the car. (a reminder to everyone, most vehicles of the same model today have anywhere from $10,000 - $25,000 difference in equipment- the price difference in a radio package alone can be upwards of $4000+ or about $100 a month. It doesn't take much to quickly be "out of budget" so GOOD fact finding in more crucial than ever for new or experienced sales people. To save face, the customer often then buys the "right" car from another dealership (the car they could afford). I've seen it happen a million times.

One of my clients, from last Saturday to this past Saturday (17th - 24th), really focused on the budget question during fact finding and sold over 250 vehicles for the week. I reviewed the "lost deals" this morning and they didn't miss too many customers over price/payment. Much better job as their closing ratio almost doubled!

Comment by Doug Davis on November 26, 2012 at 8:50am: I've seen more deals blown by inexperienced salespeople taking customers to what they like instead of what the customer can afford. Most of the stores, that I visit, use a guest sheet to help qualify customers. They sit the customers down and go through the guest sheet before going on the lot.

Comment by Marsh Buice on November 25, 2012 at 6:41am: We walk a fine line in our business- as a sp you don't want to insinuate a customer can't afford a certain product, yet we don't want to ruin our chances by spending all of our time netting a blown deal. Most cust are creachers of habit- I like to look at the trade in order to gain some intell as to which direction they want to go in. Asking what they like/don't like in their trade gives me a platform in which to build. If they drive up in a hatchback and want a diesel, something has changed in their need. I say most deals are blown bc the sales person has failed to ask focused, qualifying questions. Often, we as sp hear what a cust wants to look at and then make a beeline toward their wish. Take a few minutes to discover the who, what, why, how they will be using their nxt vehicle, then consult your way to a sale. Most customers are able to pay more but dont want to. They will pay more for what they want than less for what they don't want. Nice job Bob~