The Price Is Right?
By Todd Dearborn, VP of Sales
Our CarsDirect customer survey tells us that the #2 reason dealers don’t close an online customer is because of price (behind only the #1 reason: “The dealer never contacted me.”).
Meanwhile, there has been a steady increase in new car portals that show customers some sort of “market” price on their website. Here at CarsDirect, we’ve done it since 1999. True Car has come on the scene in the last few years, as have Edmunds, Trader, and Cars.com. This means that there is an abundance of information available for the online consumer to research, and many resources available to them to find pricing guidance. There is even guaranteed pricing if the customer wants that experience.
When it comes to pricing, it’s true that we have seen an erosion in front end margins over the years. But two things remain constant: it’s always changing, and everyone does it a little bit differently. Some friendly advice: you had better be prepared to talk about price online. If you don’t, you run a very high risk of losing that customer to someone who is.
It might sound taboo to some, but it’s crucial to break the mentality of quoting a price only when online customers are physically on the lot. You can train and trust your sales staff to be effective in this practice as well. To do so, you have to know which website the customer is coming to you from, and how that site sets its prices. Some factors to consider:
• How are incentives handled, including customer and dealer cash?
• How does the site handle doc fees and other “dealer fees,” for example in Florida where there are different interpretations of what you need to disclose in the price of the vehicle?
• How does the site’s configurator work?
• How does it price options? Does it factor trims offered in your region?
• Does the local dealer have input?
• Is there stair-step money being factored in?
• What is your competition doing in the marketplace? Have you mystery shopped them?
How you handle these questions is a major factor in whether or not the customer is going to trust you. The better you can explain what they saw and what you’re quoting, the more trust you will build. For the customer, it’s not always about the lowest price – very often it’s about “Who can I trust?”. We know that a customer’s first impression of a dealer who doesn’t offer any price without a visit to the store is the fear that the dealer might just toss the keys to their trade on the roof of the store if they don’t buy.
So be prepared to not just offer a price, but to be able to explain it as well. Because if you’re prepared, you’ll win more customers.
