DRIVING INSIGHTS: Win more trades — Recognize your customers’ hard work
It’s well known that the used-car buying process doesn’t start when a customer shows up at your dealership’s lot. It’s likely that the customer has done hours of research beforehand and may already know exactly what they want to buy.
What about when it comes to the trade-in process?
It turns out that three out of four used-car buyers will do some form of work to prepare their car for trade-in. By acknowledging this preparation and effort, it could help the process go much more smoothly.
How customers prepare for the trade
The most common way a customer gets ready to bring their car in for a trade appraisal isn’t research at all — it’s picking up those old fast-food bags and getting out the vacuum!
Among used-car buyers, 52% will do a deep clean of their car before it reaches your lot. After that, 41% will put some thought into what price they want on the trade-in, and 18% will finally get that oil change or fix that minor scratch or dent they’ve been putting off.
How do customers decide on price?
The factor that most influences whether a customer with accept a trade-in offer is how much they think their car is worth. What are these expectations based on? Typically, it’s comparable listings that they research online. Among used-car buyers that research their expected trade-in price, nearly seven out of 10 do so by visiting their preferred listing site to find comparable vehicles.
What about customers who haven’t prepared?
If three out of four buyers prepare for the trade-in process, that means one in four buyers don’t. It may seem safe to assume that someone who prepares for the trade is more serious about transacting, but we found the opposite.
Our research shows that someone who did prepare for the trade is more likely to sell or dispose of their car some other way other than a trade.
What should you do?
Most used-car buyers will prepare for the trade-in process in some way, so ask what they did and acknowledge this work during your evaluation.
For example, if the customer has cleaned out their car, don’t bring up the need for detailing. If research into similar vehicle pricing and trade-in value was done, it’s time to collaborate with the customer.
Match their process and start with the list price, even if it’s based on a fully reconditioned car on an online listing, then walk them down to a realistic trade-in offer while explaining the reasons behind the value difference.
Remember, it’s the more prepared customers who are likely to turn down your offer, so addressing and working with a customer’s preparation is essential.
Driving Insights is an information series written by Drew Harden, who is the manager, research & insights at CARFAX Canada. This research is based on seven weeks of face-to-face interviews with dealership staff and management from coast to coast, followed by a nationwide survey of 1,000 Canadians who have bought a used car at a dealership in the past six months. If there’s a question you’d like us to address, email email@example.com and we’ll get you some answers.