Price. For years, the car industry has relied on a price-driven sales strategy. Today, that’s no longer effective for two reasons. First, dealers are already pricing cars at market value, so reducing price only eats away at already thin margins. And, perhaps even more importantly, studies show consumers don’t buy cars based on price alone.
What Drives Customers
Today’s consumers are more savvy. They spend hours online researching before ever stepping foot on the lot. What they’re looking for is quality and value — at a fair price. So, dealers need to change and adapt their sales approach. They must empower salespeople to lead with value, talk about quality, and then back it up with proof points that support the price. Essentially, they need to show the customer they’re getting great value and benefits for their money.
How to Lead with Value
Rather than talking price, salespeople must make the car the star. Speak to the car’s unique features and benefits. For example, say you’re selling a three-year-old BMW 5 Series. Talk about the technology or cold-weather package. Let them know if you’re below Kelly Blue Book or the market, and have the evidence to show them.
It works. Dealers who lead with quality and value find that the drop between asking price and selling price is much smaller. For some, that is as low as two hundred dollars or less. This is well below the $500 average discount that many dealers are providing. That’s a lot of money being left unnecessarily on the table.
The Technology Hurdle
So, why do so many dealers still sell based on price? The truth is our industry is still behind the technology curve. Without information, it’s hard or nearly impossible for salespeople to be experts on every single car on their lot, let alone speak to specific features and benefits. According to a recent study, only about a third of dealers said their salespeople are completely knowledgeable about all the cars they sell.
But technology is something we must embrace. Dealers need to empower their salespeople with tools and information — information their customers already know from their hours of research — to level the playing field. Today’s customers expect it. If they’re talking with a salesperson who can’t answer questions or doesn’t know as much as they do, they are likely to get frustrated and walk away.
The Bottom Line
When salespeople have technology and support, great things happen. They can become experts on every car they sell. They can confidently speak to the quality and value, which is what customers want. And, they’re able to keep the asking price and selling price closely aligned. Bottom line: When you know more about what you’re selling, you’ll sell more at the asking price.
By Patrick McMullen, Senior Vice President of Strategy and Innovation at MAXDigital