People are more willing to buy from you when they understand the process, according to Jonathan Dawson.
It’s the reason the president and founder of Sellchology, an Atlanta dealership sales training firm, believes in “educational selling,” the practice of selling to customers while teaching them “what, how and why you’re doing what you’re doing for them.”
So, when credit-challenged customers understand that factors such as time on the job, ability to pay a loan and payment track record with lenders, impact lenders’ decision about whether to extend them credit, it helps break down barriers, Dawson said.
And letting customers in on what the industry already knows — that used-vehicle values are determined by vehicle condition, history, age, mileage, equipment and supply and demand in the marketplace — helps manage customer expectations and can reduce margin compression, he added.
“It’s beyond just giving them information,” said Dawson, during his presentation at Used Car Week held Nov. 11-14 in Las Vegas.
“It’s bringing them into the process; it’s peeling back the curtain, it’s taking way the mystery and the fear.”
Dawson’s presentation “Out-Experiencing Your Competition: How to Create Raving Fan Advocates Through Customer-Centric Selling,’’ kicked off Used Car Week’s first ever Dealer Training Tuesday, a day of workshops and sessions dedicated to helping dealers devise strategies to operate their businesses more efficiently and more profitably.
“Teach your team to explain to the customer how things work, why they work and what we’re doing for them,” Dawson said. “It helps the customer buy into the process. We want to move the customer through this chain until what we create every month is a series of raving fan advocate experiences.”
Here’s a sampling of the what some presenters shared during Dealer Training Tuesday.
Sourcing inventory was among the topics tackled by Robert Grill, Carfax senior partner, development manager, during his presentation: “How to Make Your Used-Car Department Efficient, High Performing and Profitable.” Carfax, a provider of vehicle history reports is located in Centreville, Va.
When ranked by return on investment, the best source of used-vehicle inventory are trade-ins, Grill said. But when ranked by condition, vehicles purchased from a dealership’s service lane are typically better, he added.
“Why are trade-ins the best source of ROI for your inventory? You’re selling a car,” he said.
“It’s a two-for-one. If you trade for more cars, it means you sell more cars, and if you’re smart, you’ll sell (the trade-in).
“No. 2 is your service lane. It’s actually a better car than your trade-in. Typically, it’s your product that’s been well maintained by your customer. Unfortunately, there aren’t enough of them to rank No. 1 on the ROI scale because trades are two-for-ones.”
Zeros have value
Jasen Rice, owner of inventory consulting company, Lotpop, said the best performing stores his company works with sell 60-70 percent of their inventory within the first 30 days of acquisition.
“But if they don’t sell until day 45 or 50 you’re not maximizing your gross,” he said during his presentation “The Importance of the First 30.” Lotpop is located in Olathe, Kan.
Rice is also an advocate of pricing a vehicle at say, $15,000 rather than $14,995 or at $20,000 rather than $19,999.
It has to do with how consumers search online for vehicles by price.
For example, when a customer searches for vehicles in the $15,000 to $20,000 range, vehicles priced at $14,999.99 will not show up in that search, he said. Though the vehicle would show up in a $10,000 to $15,000 search, it would be at the top of the searcher’s budget.
“If they can find a $13,000 one that’s similar, they’ll buy the $13,000 one,” Rice said.
“The key is the $15,000 and higher shopper. Why? Because your car is the best deal in the whole segment. That’s where the (vehicle detail page views) and calls start happening.”
Aaron Meyer, regional manager, Dealer Specialties, gave dealers insight on what to expect if they choose to handle in-house, the photography of vehicles they post online, in his presentation: “DIY Inventory? A Checklist for Operational Excellence.”
Dealer Specialties of Monroe, Ohio, is a provider of vehicle data collection, image generation, window labeling services and inventory management and marketing. It’s also a division of Dominion Dealer Solutions.
Meyer said many dealerships take photos in-house and do it well, but cautioned conference-goers there are pitfalls.
For example, finding the right photographer and/or videographer is difficult and the right person or persons, must be detail oriented and willing to work outside, he said. Conversely, dealers must be willing to pay the going rate for the position which is $18 per hour or more in most markets, he said.
Dealers should also budget for mishaps such as lost keys and vehicle damage that occur when vehicles are frequently moved and there needs to be a contingency plan for adding dealerships, increasing inventory, and training, he said, and a camera might cost about $1,000.
“Now that you have this (photography) process in-house you have to manage it and manage the individual,” Meyer said.
“I’ll tell you, if you go in thinking that you’re going to save money, which you may be able to, you’re going to give up something somewhere else. It’s either standards, quality, speed to market — something is going to suffer. If you want to be successful, you have to make sure you’re budgeting accordingly.”
Keep omni-channel pricing consistent
Eric Miltsch, co-founder and director of marketing, Dealer Teamwork, “How to Dominate Your Used-Car Market: Master Inventory Management & Used-Car Marketing to Build Your Competitive Advantage & Drive More Profits.”
Dealer Teamwork is a software-as-a-service company, based in Eden Prairie, Minn.
Miltsch said a lot of used cars are going to be sold this year, “about 40 million give or take a couple hundred of thousand” and “the problem is, the profit as a percentage of gross on those vehicles continues to drop. That is something we need to pay attention to.”
To help minimize the problem he shared numerous best practices, approaches and tips during his presentation.
One thing Miltsch pointed out is that most dealerships “miss the mark on” the concept of omni-channel marketing.
When putting a message or payment/price about a vehicle on a dealership’s website, “and you’re putting it out to a paid search, organic search, email channels, social media, it doesn’t matter what the channel is, make (the message) consistent,” he said.
“Without that, that’s how you lose the customer’s trust and that’s how you wind up lessening the value of that customer experience.”