I know that's probably a bit of a naive question, but if you're pricing for what the market will bear, what help do you turn to for that? What product? What is out there besides VinSolutions? Or are you less interested in what your competitors are asking than in what you must price it at to make a profit?
Additionally, who is your competitor? Do you consider only those geographically nearby or are you starting to think about the Carvana's and Beepi's of the online auto-sales world?
This is a great discussion topic, Sharon.
Would a dealer lower his price to match a competitor on a specific vehicle? And what if he truly believes that the vehicle is worth more? Does he take a risk and hold off until he finds the customer who will pay his asking price?
What if you decide to lower your price knowing you still make a profit but you do it to gain that customer and to open up a spot for another vehicle?
From a prospective customer's point of view, are they willing to pay the dealer more for that vehicle if they believe the follow up and customer service will be noticeably better? How much does their trust in the dealer play into what they're willing to pay?
Today's and most importantly tomorrow's online shoppers aren't dependent on the dealer's posted pricing or concerned about his ability to preserve an acceptable profit margin. The internet has empowered consumers to conduct their own price comparisons with a click of their mouse and a visit to a number of third party online resources like TrueCar, Edmunds, AutoTrader etc. that either disclose MSRP, invoice and rebates or a list of comparable vehicles and local dealers including their retail and "internet" asking price.
As a result, dealers should be using technologies focused on supporting the needs of the online consumer vs. their own self serving interests. Yesterday's and even today's dealer tools of choice include your referenced VinSolutions, vAuto and other market research tools that dealers use to determine the market value of their vehicles before they purchase them and then advise on how much they should sell them for. These applications use a variety of dealer centric metrics like days in stock, average turn based on historical sales data, online pricing of comparable vehicles, wholesale book values and a number of other criteria driven by algorithms meant to provide a consistent process vs. the more laborious efforts of an experienced Used Car Manager; a dying breed that requires an alternative solution for dealers to remain competitive.
The next generation of pricing tools allow the listing dealer to provide relevant and transparent pricing information to consumers as part of their online shopping experience while visiting their inventory Vehicle Display Page, (VDP), without having to ever leave it. iDrove.IT has developed a VDP that is an easy plug-in to any dealer's website with a "Dynamic Market Pricing" tool that can best be described as an automated vAuto on steroids! It instantly adjusts the posted dealer's price to be competitive - not necessarily less - with any posted price within business guidelines established by the posting dealer. Of equal importance is the fact that it is the single source for any other competitive comparisons that the shopper may desire including CarFax, Dealer and Product Reviews, specific vehicle product and price comparisons in a geographic area and basically everything that would normally require the consumer to leave the dealer's website to gather the information they need to make a buying decision.
Simply put, technologies designed to maintain dealer control of a consumer's online shopping experience - especially through price - must allow the consumer to be in charge. Providing the information in a transparent and relevant manner specific to the consumer is the only way to earn their trust and their business and technologies that position the dealer as the source for everything they need to purchase a vehicle is the future.
Great detailed information, Phil. iDrove.it sounds like a really good response to the transparency that is driving consumers away from an interest in haggling on the showroom floor. IMO, trying to fight transparency is a bit thumb-in-the-d***. Thanks for sharing all this.
Thanks Sharon - This really is a key issue. - My actual title has evolved to VDP Specialist. I have touched many bases further down-funnel -- bdc and internet sales - but the up-funnel VDP is where most of the sales are made or lost so this is where I provide the most benefit. It is the last marketing step and the first sales step. Most, or all stores, look at me like an alien when I try to explain what it is and does. They don't see how bad their gap between the two is.
"P" means page and includes presentation and pricing. Bad presentation and bad pricing will KILL your sales ! Customers will bounce before ever becoming a lead. This is worse than a strike-out - you never got into the game. This is where there is a 2% expectation of contact success to begin with so don't play around ! This is where you gets into the game or not. So the online pricing must be both competitive and with wiggle room -- but most of all - pricing that helps not hurts conversion to contact. And If you will lower the price to beat a competitor that is a BEST PRICE GUARANTEE - which is another topic.
I work with a few dealers in Southern California and have come across several different pricing strategies. It really comes down to setting a strategy as a dealership.
Are you a low-price, high-volume dealer? Then your competitor's pricing matters a great deal since your selling point is your price. You may be more likely to lower your price to make a sale.
On the other hand, if you want a higher gross per vehicle, you will be less concerned about the competitor's price. You have other benefits that your sales people are armed with to make sales. These benefits can be things like free oil changes for a year, free car wash, great customer service, donations to charity, etc. If this is your strategy, you may not negotiate at all on price.
Think about your sales and pricing strategy first before thinking about what to price your vehicles.
As for pricing tools, most of the dealers I work with use vAuto. They like it. Also, have your sales people keep track of competing quotes they bring in from other dealers. This will give you a good idea on what other dealers are charging.
Great question Sharon, and your asking it is anything but naive. I'm confident middle managers everywhere are weighing out this pricing question every day, and will continue to do so as long as they have competitors. Reading your post's responses, Mike Elliott presents questions that elaborate just how complex pricing is, and Phillip Zelinger follows with an overview of how technology can be used as a determining factor. Then, Steven Chessin lends his extensive experience explaining how important VDPs can be creating sales opportunities.
Visiting one of my clients this past week, I noticed on their LED sales board listing last month's units and VGP, one rep had 47 units out with gross at less than $5K, and another had 16 units at $51K. Both are long term reps and good performers, and this example illustrates an important aspect of pricing. The human element. In this age of the "informed" shopper, buttressed by untalented reps who continually fall back on price as their primary sales tool, there isn't near enough effort to create a "why purchase here" story that isn't based on pricing. Haven't you ever noticed a rep with minimal product knowledge who continually gets top dollar out of the vehicles he sells. Why do you think that is?
Very good topic and good question indeed Sharon. On
Brian - I have a theory why salesmen lose gross. The "why buy here" has not been done - nor - has the "why buy this". EVERY website visitor should be informed of the broad-scope "why buy here" - and EVERY vehicle page visitor should know the narrow-scope "why buy this".
Right on Steven. The "Why buy here" and "Why buy this" are important steps that shouldn't be bypassed during the selling process. I was in a dealership awhile back and they actually had a large easy-to-read presentation board in the shape of a wheel surrounded by "Why by here" selling points that each rep could use to reinforce their presentation. Unfortunately, when I met the GM who happened to be the owner's son-in-law, he told me it had been put up by the owner and he said if he had his way, he'd take it down as he thought it was an "eyesore." (And, that wasn't the only complaint he had about his father-in-law.) Talking with him, it was obvious he'd never sold anything, except the owner's daughter a "bill-of-goods." (To me, it was just another reminder of how lucky I am to have a service that's so productive, understandable and exclusive it's kept me busy for 20 years and allows me to refuse work when I'm dealing with his type."
One question.... Who is the "Herb Chambers" in the video? My only complaint about "unloading all the ammunition" at a customer prior to a presentation is it eliminates using his selling points to address direct concerns that could be used as closing questions. Like "If you knew you could bring this vehicle back if your unhappy with it, would you take it today?" (But hey, that's just me.)
The Chambers Group is the largest in New England.
Re : "unloading all the ammunition" at a customer prior to a (showroom) presentation ".
"The needs of the many outweigh the needs of the few, or the one." Less than 1/2 of 1% of page visitors get to the showroom. So more than 99.5% will never get hit by your 'why buy here' and "why buy this" messages unless you fire as soon as they are at maximum firing range. I don't believe the web page is a front because I am trying to close the deal in the customer's mind right there and then. --- Here's a 2012 that is shown in the showroom to make the point that it is showroom nice. I coached the salesman to make the entire presentation on his own and I did not touch the camera except for his introduction at the start.
Gorgeous car, very nice presentation. How many sales people want to do their own videos and if they want to , can really do a good job at it? Is this something that typically takes training, and if so, who trains them? Are they people to turn to outside dealerships that can do a "how to do video" training class? The other thing I'm wondering is if you or anyone ever have buyers / owners / drivers do videos? Not for specific used vehicles but for say the newest model on your showroom floor? Maybe you just sold one of your newest x and you want to sell more. Might you get buyer Y to take it out for a spin and say why she or he bought it and better yet, why bought it from you? If so, how do you get them to do that?
"Gorgeous car, very nice presentation"
Yes. But here is the BIG question. You tell me. Is the presentation strong enough to increase conversion from page views by 1% ... from 2% to 3% ? Because a 1% increase at this point in the sales funnel is 50% more leads on this car. It all boils down to that. Forget everything else. Will it get one more person to CONVERT from passive viewer to ACTIVE LEAD ?!?!?!
If the answer is "Yes". In this case it's worth about ten-thousand dollars in front-end gross. So --- Mr, DP and Mr. GM --- do we go for it? And if we do go for it -- on how many cars ? One. Some. Many. Most. ALL ?
Tough decision isn't it ? Maybe nobody has ever asked you to make it before. I am asking now. Take it or leave it. 50% more leads or not. You have the cars. You have the showroom. You have the salesmen. So what's missing ? Three hundred videos like this. Are they so scary hard to do ? Look at it. You tell me. How hard does it look ? And yet, you would probably fire me for doing it ... yes you would !
Using video to sell cars is a "Kobayashi Maru Scenario". If you do it wrong and it doesn't work - you fail - and get fired. Do it right and succeed you also get fired. Like Captain Kirk proved, the scenario must be re-programmed.What Spock called "Cheating". Kirk should have been "fired" from the Academy. He very nearly was.
In 2008 there was a day when 4 of the store's 8 sales were my ebay auction splits. So that was 4 splits for me. I even provided additional effort by picking-up 2 customers in the cars they were buying at the airport. "Fly And Drive". Seems like everything went great. At the end of the day I was charged with "Helping salesmen too much", and let go. for it. Most recently, "Giving salesmen an unfair advantage".
You see Sharon, online sales video presentations are in the twilight zone - past dealership marketing but before individual salesman showroom efforts. Is it marketing or sales ? Because if it is MARKETING the sale should be generic to the store not specific to the individual salesman. Is it personal marketing ? When a salesman does a web video is it for "the needs of many salesmen or the just one ?"(himself) Why would he make a video for someone else to sell the car ? If you insist on an even playing field - it has to be ALL -- or NONE. Either you want 50% more sales - or not. Don't tell me its UNFAIR to those that won't try harder to sell 50% more cars for you. Ha ha - I am getting myself wound-up ! --- It's such a funny issue -- but the truth is dealers themselves fail to realize that if the video is 1% more effective than not having it they sell 50% more. It is what it is. Powerful. And "dissed". Only the most respected consultants in the auto world --- who don't actually fight this battle hand-to-hand --- say the same thing pretty much. But not ALL THE WAY. So here it is --- 50% more sales is just sitting on the showroom floor. Now pay me my fancy consulting fee. Two slides of NY-Style and a diet coke.
The whole point of doing "pro-ish-video" is to impress customers a pro-salesman in a pro-store with the best pro-car is waiting for them. They are supposed to see all of the "props" -- the gleaming car - the suit and tie (selected here to match the car) - the gorgeous showroom - ambiance - panache - elegance - class - style ---- none of that is by accident. This is all a staged performance. You can't take it for granted that the customer knows who we are and the value they are being asked to pay for, You must show them and prove it. As simple as the production appears to be it is deceptively not so simple. But forget production values and training until the"Kobayashi Maru Scenario" is changed from "No Win" to "Got Them In".
95% of customers make their decision where to buy online. Specifically, from the VDP
98% Do Not become leads after looking at the vehicle info.
2% Convert to leads. 1% Better conversion becomes 50% more leads - and - 50% more effective marketing dollars spent driving people to that page. All of the Why Buy Here - Why Buy This - Why Buy Now all fit so neatly into the video, you don't have. OMG what does it take ?!