The Art of the Trade-in Walkaround – Setting Realistic Expectations with Customers.

Most customers looking to trade in a car bring to the dealership unrealistic expectations about the value of their trade-in.

Experts believe the Automotive Sales Consultant is the best person at the dealership to manage the customers’ expectations of the value of their trade. And, sales consultants can best help customers arrive at a more realistic number – one fair and acceptable to both customer and dealer -- by conducting a Trade-In Walkaround.

A former colleague of mine and a nationally recognized automotive consultant, John Beagan, taught me early in my career that most customers come in for a trade-in with three numbers in mind:
• What they’re hoping to get.
• A figure they are willing to do business at.
• A number they won’t take any less than.
Customers arrive at these numbers in a couple of ways:
• From the amount they still owe on the vehicle.
• From Internet websites such as the National Automobile Dealers Association; Kelley Blue Book, Blackbook, and
• From dealership eCommerce web sites.
• From walking around dealership lots.

However, none of these sources provides all the information customers should take into account when estimating the value of their trade-in.

First, the amount they still owe the financing institution on the car is not a reliable gauge. Very often the market value of a vehicle depreciates faster than the decline in the remaining principal due on the car.

Second, when a customer gets their trade-in numbers from Internet websites such as the National Automobile Dealers Association, Kelley Blue Book, and, from dealer eCommerce sites, or from walking around dealer lots, they see a range of numbers and always pick the highest value. Depending on the condition and mileage of their own car, that number may not reflect the car’s actual value.

Third, customers often overlook the added cost of the work required by the dealership to make the car ready for the re-sale market.

They are unaware of reconditioning costs which may include: Fixing mechanical problems, or fixing body damage -- to name a few examples: bumper repair, windshield repair, paint touch up, paintless dent removal, headlight restoration, interior repair, wheel rim repair and much more.

Customers may also not take into account the expense incurred by the dealership in assuming the risk of guaranteeing the vehicle for a 30-or 90-day or one-year warranty period, once it is re-sold.

Also to be factored in is a small percentage of the overhead expense of running the dealership.

Yet it is critical to the customer and the sales consultant that they arrive at a price that is satisfactory and fair to both, so a deal on a new car can be made. Too many new car sales fall apart late in the sales process due to the fact that customers aren’t willing to accept the amount the dealership puts on their trade.

The Trade-in Walkaround is an effective way to bring customer expectation more in line with true market values and it should be introduced early on in the Sales Process.

Even before the customer enters the dealership, sales managers should make sure that their sales consultant team is well-versed in how to conduct an effective Walkaround.

In many respects, a Walkaround is similar to a real estate agent showing a prospective home buyer new property – pointing out the good points, as well as the things that need repair and leading the customer to an appreciation of the true market value.

The Best Sales Managers model how to complete a Trade-in Walkaround with their sales consultants -- including tips on what to do and say through a wide range of potential customer reactions. Handling the customers’ trade is actually similar to the new vehicle sales process, because what sales consultants essentially need to do is sell the customers’ trade-in number back to them.

Role-playing with the sales manager or other sales consultants is the single best way for sales consultants to learn how to present the customer with trade-in information and deal with customer concerns and questions.

Good Sales Managers also make sure their sales consultants know how to properly fill out a Trade-in Appraisal Form.

The Trade-in Walkaround’s should always be conducted before the dealership’s Used Car Manger does a formal appraisal and after the sales consultant knows the customer wants the new vehicle he/she has been shown. (Since accurate appraisals take time, an appraisal of the customer’s trade-in should not be used as a tool to see whether the customer is a serious buyer or not.)
First, Give the Customer an Overview
Before beginning the Walkaround with the customer, The Best sales consultant always present an overview of the Walkaround, explain its benefit to the customer, and then ask the customer’s permission to begin.

It’s important to limit the Walkaround to 10 minutes or less. Taking too long or being overly critical of the trade-in car will offend most customers.

Right away, the best sales consultant will introduce the dealership’s Appraisal Form as a tool to guide documentation of the car’s condition and repairs needed that the Sales Consultant and customer will notice during the Trade-in Walkaround.

The best sales consultant start with looking under the hood area. Comparing the customer’s vehicle to the new vehicle they’ve been shown increases the customer’s chance of buying.

If they find a defect while examining the car, sales consultants often don’t have to say anything to help set expectations for the customer. Sometimes a questioning look, a nod of the head, or doing something twice like starting and restarting the vehicle will be enough to help bring the customers’ expectations of what their vehicle is worth in line with its true market value. This is often more courteous than making a negative comment.

However, sales consultants should show the customer the items being noted on the Appraisal Form without being overly critical of the vehicle. Getting the customer’s agreement on these items that need to be corrected is important. Doing this will make the customers aware that the vehicle may not be in as great a condition or worth quite as much as they originally thought.

At most dealerships, after the sales consultant has conducted the Trade-In Walkaround, the Used Car Manager looks at the customer’s vehicle, road tests it and comes up with a formal appraisal. If the sales consultant has conducted an effective Walkaround, the Used Car Manager’s formal appraisal will not be a surprise to the customer.

Conducting a fair and efficient Trade-in Walkaround is the best way to keep more deals on track, increase sales and profitability for dealerships, and satisfy customers that they are getting the fair market value for their trade-in.

Chris Saraceno is author of The TheoryOf5 and Vice President/Partner of Kelly Auto Group and Co-Founder of dealerElite, headquartered in Emmaus PA. He began his 31-year career in the automotive industry as a sales person for Ruhe Oldsmobile in Allentown, PA. He was the founder and president of Teambuilders, Inc. an automotive consulting company, serving many corporate clients, including Saturn and Chrysler. He resides with his family in Allentown, PA, and Melbourne Florida,he is a graduate of Kutztown University.

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Comment by David Ruggles on July 13, 2015 at 10:40am

@ Steve - Excellent point! - Early on, many of us were taught to hangout in the service department in the morning, and perhaps supplement the shuttle driver when needed.  We were taught, "You'd be interested in a new one, wouldn't you, if we could get you into one for about what you're paying now?"  That's pretty compelling to someone looking at a significant repair bill.  Even if they aren't, it is significant.

Comment by steven chessin on July 11, 2015 at 8:38pm

There's something else I want to mention about placing value on a trade a few steps higher in the sales funnel.

The trade often begins when our retention manager calls one of our service or "positive equity" customers to investigate the possibility of getting them into a new car "near their current payment". And of course we have an on-line appraisal which is something most dealers can utilize far better. We have to put more attention on being pro-active rather than simply waiting for trade opportunities to magically appear.   

My dad bought a new car every year and it always began with the phone call from "Mr D" that he just got-in the special-order he knew my dad would want. "Old-school" salesmen knew their customers' needs and wants better with their Rolodexes and file-folders than we do with our CRMs. They had prospects waiting for the trade before it arrived.  

Comment by Chris Saraceno on July 10, 2015 at 11:04am

Vinnie,Russ, Rafeal, Manny,Joe,Steven,Brian and David Thank you for sharing your thoughts and opinions of the Trade Evaluation. dE appreciates All of your contribution and knowledge.
The best part of dE is our members. Keep On Sharing!

Comment by David Ruggles on July 8, 2015 at 10:48pm

Often forgotten in the Trade Evaluation is the primary objective in selling big ticket items.  That is initiating, developing, and strengthening the relationship with your prospect.  Yes, we want to notice flaws in the trade without running it down verbally.  But we are looking for golf clubs in the trunk, a spare that's never been down, a new battery, a baby seat, a baseball glove, running shoes, bowling balls, logo hats and jackets, etc. etc. Do you do your own maintenance elicits a variety of answers a sales person can do well with. 

Throw your buyer a curve ball.  Don't act like a sales person.  Go to the customers trade first.  Show interest in it. After all, chances are, you or a fellow sales person  could have a possible buyer for that trade.  Turn your customer into the sales person, and you into the "buyer."  The psychology of the situation turns in your favor quickly based on the consumer's hope for gain.  Combine your meet and greet with the Trade Evaluation.  What's the worst your customer can say?  "I'm not trading in?"  That's no disaster.  You can still show interest in it and use it as a relationship builder. 

Including the trade early makes it more difficult to withhold their trade, then "spring it" later.

Now if you really want to make this work for you, call the desk and describe the trade to your manager over the phone with your customer present.  OR, you could be brilliant and LEAVE your customer to go "conspire" with the manager.  You tell me.  Which works better?  What is the consumer's perception when their sales person leaves them.

"Will you be using your next vehicle for the same purposes as you used this one?"  This is a much more artful way of gaining valuable info than other methods.  Always make sure your buyer is with you when you do the Trade Evaluation.  Its a waste of time if they aren't.  You can't build the relationship, for starters. 

Comment by Brian Bennington on July 8, 2015 at 9:59pm

Good Afternoon Mr. Saraceno,  Before I express my admiration for this excellent post, I want to send a greeting out to a friend from our "Rock" days, Vinnie Torrente, who I'm sure remembers "Brian & Pegi with Archer-Profit."  He's not only a top-notch "car guy," he has a truly entertaining one-of-a-kind personality that neither of us have forgotten.  (Seeing an old friend is just another great benefit of a DE membership.)

Anyway Chris, as outstanding and educational as your "Art of the Trade-in Walkaround" is, it wasn't too surprising as I've learned to expect "cut-above" observations and thought-out suggestions in everything you post.  You're definitely a "must read."  As to the above, I'd think the adoption of this particular process would help to improve the reputation (and closing expertise) of every car salesperson who utilized it.   Now, if only those who could implement it were as serious about it as you.... 

Comment by steven chessin on July 8, 2015 at 7:33pm

Cris - "My car has a "little scratch". (keyed West-to-East) Some touch-up paint took care so it is hard to see .... except really up-close.That isn't going to effect the trade value too much .... will it ?" 

"being overly critical of the trade-in car will offend most customers." They are going to be excessively critical about whatever they are buying so it seems to be fair. If you brought a car to a nice restaurant you can be sure the valet would make note of every flaw. Possibly even with pictures. One ding on a high-end car and they can expect be sued for thousands. There's no such thing as a "little scratch". 

Comment by Joe Clementi on March 1, 2014 at 2:10pm

Thanks for posting this article Chris!  There have been a lot of very good idea's that have come out of the discussions. 


Comment by MANNY LUNA on November 6, 2010 at 5:58am
Comment by MANNY LUNA on November 1, 2010 at 11:40pm
Working on the Usage Value close will have it up ASAP!

The secret to the Usage Value coming tonight!
Can anyone share with us your best Idea on how to use this powerful close?
When you learn the powerful technique you should never have any problems with trade difference with a customer! . coming tonight!
Can anyone share with us your best Idea on how to use this powerful close?
When you learn the powerful technique you should never have any problems with trade difference with a customer! .
Comment by MANNY LUNA on November 1, 2010 at 8:14am
The secret to the Usage Value coming tonight!
Can anyone share with us your best Idea on how to use this powerful close?
When you learn the powerful technique you should never have any problems with trade difference with a customer!

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