People who have only a little information about a product are happier with that product than people who have more information. Of course this is very true… when they are happy with the product and have nothing to compare it to.

When they have product / service to compare and are able to see the difference in quality and price it becomes a horse of a different color especially when they have found out they have been taken advantage of, over paid or get lousy service.

American Consumers thought they were happy when they only had American cars for the most part to choose from, they did not know any better, as the Chinese say, "Ignorance is sometimes bliss." But is it really, maybe for some who use it to their advantage. When Germany and Japan began offering alternatives and choice the consumers began to move towards the new choices in ever increasing numbers.

By the way Jeff, I failed to see the Volvo XC 90 in your selection options, comparing this vehicle with the choices, the XC90, research will show, is the choice as it is arguably the most safe and best-engineered SUV on the highway…. And in addition it is favorably priced, according the comparison charts I have reviewed.

As Jeff pointed out it is a different market today, now we have the Korean companies producing high quality vehicles today, the Chinese manufacturers are right behind them with even more choice. Information is more readily available, most of it is good, solid information, women are a greater factor in the market place and they tend to be better informed and diligent.

Many dealer who address the needs of the new consumers will enjoy the rewards while many of the rest will rely on the credit challenged, tire kickers, consumers who enjoy rolling around the dealer showroom floor all day fighting to squeeze a few more dollars out of the store, and the bottom feeders where there is little profit to be gained.

Then there is the occasional consumer that rolls in and a lucky sales professional makes a big score that he/she brags about for the next 16 years, however these types of consumers are fading fast.

I think some of that "too much choice" theory comes from when a consumer has so many choices and so much information, they find themselves overanalyzing the decision. They may even second guess the decision once they made it. I am going through that right now as I select a new CRM. After doing well over 80 hours of research, I thought I found the one, but now I'm thinking twice about it before signing the contract. There is a fine line between satisfying a customer and proving too much choice/information that you may confuse them.

By the way, not to add more choice to the list, but check out the Hyundai Veracruz. It is loaded with features, very safe, and priced right.

@Jeff
I always pictured you as a Escalade kinda guy

Choice is not always a good thing as we have learned in this business- people are simple and as we have seen over the past few years, a growing number of cases of analysis paralysis. Recently, we had a customer test drive a new vehicle, and was prepared to leave, so I asked what we could do to earn their business. They told me they had 33 other DIFFERENT VEHICLES to drive! Now that is an extreme case, but so many people fall prey to it.

It has even affected sports. Watch baseball this season and you will find out how well a hitter performs on the 3rd Thursday of a 5 week month facing a pitcher on the road in his second season.

All kidding aside, it is a problem, and I am thinking it has been a systemic problem with one of my previous stores' CSI. I am confident a customer (after they are happy and agree to terms) goes home to review all their emails, or worse, a lowball offer from another dealer since they had already bought, leaving the customer with the sense they could have gotten a better deal.

Unlike our customers, you are staying true to why you are searching- value. You won't buy from a mental midget at any price, but many will.

Dead on and dead wrong here.

People are not always really looking for the lowest price but the last place that they can feel empowered.

The auto industry has not risen to the same social-economic status with other retailing industries because some one has to be or made out to be the bad guy or diversion for other industries.

Let me tell you I have told friends and family time and time again that if they would focus, research and spend the same amount of time on many other purchases, the savings would be ten times greater.

Buying a home, jewelry, clothing, INVESTMENTS, IRA's and MUTUAL FUNDS, even carpeting to name a few.

The margins and especially commissions on some far exceed the total profit made on an avg car deal.

It is ridiculous because a home sells for 1M in comparison to 350k that it makes any sense that the commission should be higher?
Bull to any realtors that it's more work and for certain of the fact that they spent more money out of their own pocket to sell the higher priced one.

I bought a house for 500k and the realtor showed me 5 homes in one day. I bought the one I found by researching. They made and got half of a 30k commission and they sucked and had no clue of or even sincerely asked what my needs and what is important to me.

When a stock goes down or loses money it's the markets fault but when a vehicle depreciates as it is supposed to do, "that no good salesperson or store that sold it to me" is at fault.

The fact is the auto industry as a whole have spent so much time competing with each other that of the 10B+ ad dollars spent yearly on loss leaders and gimmicks that by know that they would have finally come together to positively promote and betterment of the industry.

I had mentioned in this blog briefly about why there isn't a retail automotive union and the same current mindset by dealer principles and manufacturer's applies.

Enough ramble and all the best from the Windy City.
Pete

I ran across a site a while back that had a download of a spreadsheet for buyers CarBuyingTips.com Free Spreadsheet Download Area
I think I will use something like this?
thanks for the tip ICS

Offer the spreadsheet to those who want it. I have one I'm using to evaluate the various offers and leasing options, and I use excel formulas to do the calculations. I'm at the point where when I get an offer, within a minute I can compare it to the other offers and plug the numbers into my lease calc section to know whether or not this is a good deal. Sure, the dealership can do the calcs, but I like the reassurance of knowing what the number "should" be (and I have validated it by comparing to online calculators). If a dealer has a different figure, that's fine, I just ask where they got it, and plug the numbers into my handy-dandy (you guessed it!) excel spreadsheet and calculate it their way to see whether I missed something or whether the dealership is adding. I picked up an error in sales tax calculations, and another debatable item (whether or not to charge sales tax on acquisition fees if paid up front & not capitalized) that way, neither of which was disclosed on the quotes.

For those who don't use or like excel, don't offer. It should be evident from discussions how financially and/or computer savvy a buyer is--and if you aren't sure, just ask!

@ICS
excel spreadsheet ....really, I would think that might confuse some folks. I had some folks complain about it in the past, i liked how easy the info was to format but I thought it was kind of "form"

Chris, if you asked me that question, I'd run like h*ll from you! Try a fair, honest, transparent deal with all incentives and trunk money on the table, loan rates/lease MF, residuals & fees clearly stated, calculations shown so they can be checked, and NO TRICKS. You aren't giving anything away--even a marginally savvy Internet shopper has access to all that information, and you'll save a lot of negotiating time and gain a lot of credibility besides by providing it!

Don't offer a deal unless you are prepared to honor it. Good communication at all times. The personalized emails, etc are utter BS and a waste of time, if not insulting--but pointing a customer to a legitimate INFORMATION source is a good thing.

Treat me with respect, offer me a GOOD deal that I can verify for myself (emailing me an Excel spreadsheet containing all numbers is a nice touch), follow through with promises (even a quick "I can't have those #'s till tomorrow" is fine and totally acceptable) and NO BS and I'll buy from you and send you my friends as well. BS me and instead of squeezing me for $100 more, you'll lose the sale entirely.

The Customer isn't always right, they are always the Customer. And customers want to feel they are being "HEARD"... and sometimes they have a funny way of telling us what they REALLY want, but I can sum it up in a few short phrases what I think is important to the online buyer/shopper:

Personalized emails, pictures, video.
Lowest prices on new cars - buy wholesale.
Good finance rates.
Options for down payment (200, 500, 1500, 0 down)
Highest Trade value - trade for retail.
Quick Sales process.
Clean car on delivery.
Great walk around on delivery.

One of the things I ask all my prospects is powerful and differentiates me from most others in my market:

"Mr. Customer, what is going to be the most important thing about the next vehicle you buy?"

Armed with his answer, he will tell me exactly what I need to know to sell him a vehicle.

Have a great day!

Chris
Nissan i-sales

I've been shopping for an upscale European car (I won't say brand) and the experience has been the most unpleasant one of my 30 years of car buying (as a consumer). I don't want to be sold, I already know what I want, all I want is the best price--give me the price and be done with the games please. Some won't even deal with invoice pricing ("we don't understand invoice price" "we start from sticker, not invoice"). Others have been offended and won't even negotiate when I make an offer that gives a reasonable profit, but is aggressive, rather than using it as an opportunity to negotiate. One I had a deal with over the Internet which I accepted for the bottom-line price, and which I was told was approved. Next I asked about lease rates--immediately got shunted to another sales person. Quote was acceptable, I put in my credit app (I know no problem there, checked my credit and Fico is 770+), and then I got "waiting for sales manager to approve deal". OK...four days later still nothing, so I emailed and got told that he hasn't had a chance to review it yet because it's monthend and they're busy with "current customers". I walked.

I don't get it!!

Hi Joe.

I'm not trying to peg you. While your electronic communication often comes across angry and sometimes combative, I honestly respect your view of our industry and hope you don't think I harbor any hard feelings or ill will toward you.

It should be clear to anyone that reads or contributes here at DR that you're an experienced, intelligent guy. I did read your "Winds of Change" article previously and agree that the businesses you highlighted are indeed "game changers." I consider myself a member of the "game changer" fan club and try to genuinely encourage more change.

It will not come as a surprise to anyone reading these comments that I believe in treating people the way you like to be treated yourself. Yes, it may seem simple and to some maybe even naive, but in the end all the arguments about the industry differences can be tied together based on very basic human interaction.

If someone treats me in a way I find offensive, condescending or manipulative, there's a good chance I will have trouble liking them. If I don't like them, I won't believe them, I won't care about their knowledge/confidence and I absolutely won't trust them. For me... no trust, no sale! Perhaps I'm the minority, but I doubt it.

Do you really think that we see things all that differently?

Respectfully,

Shaun

Shaun,
Just when you think you've got me pegged, check out this DR blog entry that addresses your topic, written by me:


>>>... Let’s talk about auto retailers that are busting the mold and trying to offer the shopper a fresh new "shopping game". The game is still alive and well, consumers still need and want to smell, feel and touch but they are hungry for a “new way” to buy.

Who dares to be different?
Who among us is hard at work breaking the (perception) of the auto sales business model?...

Jeff,

I think Dubis should have to pay for the shameless plug for both Carfolks and DealerSynergy.

And... my new album "Dr. Phil Wannbe" drops on April 22nd.

Please don't confuse a "Get Me Done" (GMD) with a "Regular" customer. All the GMD wants is to get into a decent car that they can drive for an extended time and a payment they can handle. They don't care about the rate. Because of their bad credit they are at the mercy of who they are getting the car from. There is no real buying experience for them except sweating the approval process. Unfortunately, this is were a lot of GMD's get abused. Inherently, secondary finance in a franchise store should be there to reestablish peoples credit. Very rarely does this happen. Independents typically hammer their GMD's and rip their heads off. I know I have seen too many coming back to us after they have been beheaded.

So, subprime is a whole different animal and doesn't count in the realm of the regular customer buying experience. That doesn't mean they should be abused or treated in a harsh manner.
However, its a one way conversation in most cases with the dealer telling them what they qualify for.

Ideally, in a fantasy world, they should be treated like everybody else. In reality they are looked at as "mutt financing". I don't necessarily agree with that mentality, but it is a reality in our industry. However, they are the ones who put themselves in a bad credit situation and they have to sleep in the bed that they made. Sorry.

WOW! This issue has a lot of passionate responses from a wide audience and judging by the length of the comments some folks seem to have too much time on their hands.

There are as many consumer types as their are car salesman types and that will probably never change. Some will always haggle and others won't mind paying retail for good service and a great experience. Consumers are starting to find out (if they haven't already) that any dealer can meet or beat any legitimate price. And if that is the case you will see more and more consumers do their price shopping and then look for a dealer who will "treat them right."

There is no accountability today and currently CSI scores are kept private by the OEM so they do not help the consumers. All that will be changing.

You gotta love this business. Here more in New Orleans at the Synergy Sessions Event. http://www.synergysessions.com

I work in the auto industry, and I've purchased two vehicles in two years. I can safely say that while I will be in the market for a vehicle in another two years, I would rather have a root canal than go through those shopping experiences again.

We were shopping for the "perfect" family vehicle, and ended up test driving every single make/model of every single SUV/Crossover ever made. It took 4 months to make a purchase, which we finally made at Carmax, because their sales staff were the only ones to didn't make every minute of our visit completely miserable.

WHY do salesmen make you wait for HOURS at their desk while they go "check on something?" Why didn't we leave that dealership, you ask? Because the jerk took our keys to do a "trade assessment" and then disappeared. We were held hostage like this time and time again. We got hip to this practice after Dealership #4. What is with that? Does this practice actually help you sell cars? Are people just so exhausted and tired by the time you get back to them that they're hypnotised into buying any car you put in front of them?

And WHY do dealers insist on the Bait & Switch? If I get to your lot, and you don't have the vehicle that I just saw on the internet - cause what? I think you're unprofessional, and I don't want you to "show me something else." Come on.... I'm hip to that game.

AND WHY do some dealers insist on listing a fake price, or a price after billions of imaginary rebates? Again.... Don't think that just because you lured me into the showroom that I'm going to fall for anything else you try to sell me. If I get all the way there, with my husband and kid in tow, I better be pleasantly surprised, or I'm leaving and you won't see me again.

I'd love to buy a new car. But I know that when that time comes, it will be the most miserable, stress inducing, painful period since the last time we bought a vehicle.

Can't Dealers just STOP all the shady practice? Be the better man/woman?

Doing SEO research, reading the uber-famous ShoeMoney.com, came across this post:


It reads:

This is why SEO’s are like used car salesman…
1) They can always sell you something.
2) They can never guarantee results.
3) They can not be held accountable.
4) They have a answer for everything.
5) All the magic happens behind the curtains - they cant tell you what they are actual doing because that would be getting to much into the secret sauce.
6) Anyone can be a SEO.

This comment is aimed right at the core of this thread. EVERYONE with a position on this thread will use this to defend their stand. We all know that Mr. Car Shopper has one hellofa bad attitude when they finally land on the lot. Does Mr GolfShith shopper have the same defensive posture with their GolfSmith commisioned rep?

Our industry has "roots and heritage" that are very negative and IMO, that only Consumers can solve. If consumers so hate the back and forth grinding, then they'll look for one price solutions like Scion and Saturn, or One Price new car dealerships.

Either way, it is clear that the New Car MSRP has dissapeared and everyone is quoting from invoice (at least the domestics are). There is only one conclusion, Dealerships must die to thin the ranks to return the balance of supply and demand. IMO, the mom & pops are at greatest risk due to lack of inventory depth. I am refering to the mom and pops where the principal is asleep at the wheel and prefers to avoid the day to day biz at all costs.

Like one of my earlier Blog Posts here, "Change is in the air...."
Joe

Nice to see how Al's and BJST's posts tie together, both talk about how personal relationships with customers bring benefits that can be counted. I agree completely, but in the end the real common denominator to sales sucess is EFFORT (read: hard work & dicipline).

Joe

There are quite a few excellent points made in this discussion. I particularly find Lao's comments very insightful. Having information obtainable in no way means that you'll be able to find and digest all of it. Information overload is very real. I've been involved in the automotive industry as a vendor, consultant and car buyer. My experiences have been all over the place with regards to professionalism, service and support when buying a car.

It disturbs me when businesses utilize questionable and misleading tactics to draw people into a business - I don't care what type of business it is. When a local appliance and electronic store advertises a special on a HD TV and I take time out of my day to go there only to find they only had a "few" of those items in stock (and they are no longer available), I make one single determination - this store will not be getting any of my electronic or appliance business! The same goes for a car dealership. And, I'm a new technology guy who will share this experience on my blog and with all my friends in an email. Bad news has already traveled fast, but today, bad news travels faster and farther than ever before.

I purchased a van for my wife in the past 12 months and the experience still sticks in my mind. Why? Because I couldn't believe the types of tactics that one dealership salesman tried on me, even after I told him that I was in the business. It was "old" car sales 101. I thought there might be a change when he had to involve his sales manager for some "insight", but the manager just reinforced and ratcheted up the tactics of the salesman. Needless to say, the event did not work out to their benefit even though we were only $500.00 apart.

Did the $500.00 mean that much to me? No. Taking time out to find the same van in another dealer's inventory with the options and color my wife wanted would take some work, and this was after a fairly exhaustive research and dealing with my wife's feelings. I was ready to end this van search, but I just resolved to not enrich the people who would act this way. And, I shared my experience with my friends. How much did this cost the dealership in question? It cost them one sale and all of the service follow-up (because we have our cars serviced where we buy them as do a number of people I know), and any potential sales to my friends.

If I had liked and trusted the salesman, the $500.00 difference would have melted away and I would have purchased the van. The price the dealership was willing to sell at was still a good price and I place more value on a relationship where I believe the dealership will support me in service and support issues.

I used to live in another city where I luckily came across a man who is the most honest car salesman I ever met. He was truthful about service issues with different models, always was easy to deal with when it came to price questions, and was there to support me whenever I had issues with my cars. Over the course of 20 years, I purchased 9 vehicles from this man. It didn't amaze me when he was alwasy busy. Everyone that dealt with him appreciated his approach and he told me that all of his business came from referrals. I think he had something!

As a consumer, and someone that works along side dealers to try and understand how to get the consumers in the door. I do believe it is stil considered and "emotional" purchase. Yes, it can be frustrating, but when you're talking the sub prime, cash car, or even BHPH customer, they are on a VERY tight budget. They are normally not going to get what they want, they get what they can get for the money.

That's where the emotion comes into it. They see the options for what they can afford and then think.... "will my family like it?" "will i look cool in this?" "will my friends like it" "is it going to run for as long as i'm paying for it?"...

That is where the consumer wants the sales person to tell them a "story" about that car. Buy painting a picture in the ad, to just telling.

The reason I bring up this "sub prime" type buyer is because it is EVERYWHERE and if the economy is bad, the smaller independent lots are going to be the ones reaping the benifits of the down swing in the economy because they CAN and WILL work w/ these types of customers. And most of them are the owner, sales person, marketing guy, gm, and secretary for their dealership... so they do care about the consumer, but at the same time, they do want their friends and family to come back. Something some franchises can teach their sales people, because the training is poor, and the management usually sucks. (that's another rant)

Than probably made no sense, so I'll summarize...

1. The purchase IS more emtional because of the down swing in the economy. So dealers need to know what their really want from the beginning.

There is only information and choices most people can absorb, maybe some more than others enjoy searching a data base of information but not many want to. The choices now available to consumers in terms of automobiles, new and pre-owned are overwhelming for some.

How to market and sell your product depends on your vision as an entrepreneur, the interests of the market, the feasibility of the product in short, it depends on many things. You look at Mercedes, Toyota, Honda, they all have their methods. The successful entrepreneur will be flexible enough to adapt to the changes in the market, strong enough to keep his original goal in mind and wise enough to know what can and can't be done. The same is true for dealers.

The Internet is a rich source of information for learning about products, comparing them and finding where they can be purchased.

Most consumers’ research products to either make themselves comfortable making a choice, make sure they are not being victimized, paying to much or to rationalize their primary choice. They need to defend it to themselves, parents, and people who matter to them.

If consumers research and choose a product, they are expressing a view about themselves. Once the purchase is made and they find out they overpaid or could have received a better product for the same money elsewhere or their Uncle told them he got the same car for a deal over at this place they will remember this the next time they make a purchase and they will never forget who took advantage of them.

The US has become a post-industrial nation. An increasingly large amount of US business is in the service sector. Is this not what a vehicle lease is? Are we selling a product or service? They sell what people do rather than deliver product and merchandise. How we service the client needs. We give them loaners when the vehicle will be tied up for 2-3 days or more, we let them have a nice vehicle, one they may want to purchase or lease the next time they are in the buying cycle, we remember their birthdays and send holiday cards, we email them pertinent information, we shuttle them to and from the dealership.

The consumers are now purchasing on line from a variety of suppliers many who are internationally based.

The dealers who learn who the new consumer is and how to work and service their needs will be in a happier place.

I highly doubt that any consumer would find a huge difference in buying from me or Joe. I think they could careless as long as they get the price they want. Their loyalty is dollar deep. Regardless of how great our CRM tool or process is.

When I'm car shopping at the retail level, I like to do everything on my own. I like to research cars online, compare pricing (actually value) between dealerships, and when I step onto the lot I want to be left alone. Nothing is more irritating than a salesperson who keeps talking to me when I don't have any questions. I'm the kind of shopper that most salespeople hate, because I tell them to stay away from me, but also the kind that salespeople love because I typically don't make them work hard for a sale. When I find a car I like I'm a bit of an impulse buyer. I've bought cars before after being on the lot for just 5 minutes. I hate the sales process because as a salesperson myself, albeit not a car salesperson, I know their every move. I never pay attention to advertisements offering cash back incentives, free gas cards, low monthly payments, or any of that garbage, because my #1 priority is getting a car that I like. I could care less whether that car is $10,000 or $10,000 plus a $1000 rebate - if I like it I'm going to buy it. I think a significant portion of the market DOES pay attention to those ads though, which is why they persist.

Me personally though, I like to be left alone to make my own decision without any "guidance" from a sales rep. I'm not afraid of pushy sales reps like a lot of people are, thinking they'll end up in a car they don't want. I just find them to be a nuisance and will head to another lot if they don't let me come to my own decisions on a purchase.

Maybe a little on my personal background is in order. I grew up in the car business, literally. My family (both sides actually) have been in the car business, quite literally, since there was a car business. My father is still a dealer, though not as an extension of his father's business (not even in the same market). I began taking an interest in marketing/merchandising as it relates to the auto industry around my sophomore year in High School. I used to sit at my father's desk (when I wasn't too busy sweeping up cigarette butts etc. on his lot) and help spec out cars, evaluate advertising opportunities, and study his interactions, as a very "hands-on" dealer, with his staff. I attended Northwood University on golf and academic scholarships, and graduated with a BBA in Automotive Marketing (an odd degree, I know...NU is the only school in the USA that offers it). I have worked in various capacities in the retail auto industry, most outside of my family's stores. I have worked for one of the largest dealer groups, as well as single points in small towns.

Point is, I don't have any "preconceptions" about the car business that just happen to conveniently fit into my side of this discussion. Any of my conceptions regarding the car business come from a lot of years of experience and formal education. The word preconceptions makes it sound as though you believe I form my opinions, then look for an argument to support them. This is simply not the case.

I feel the need to reiterate that it was you who first compared the car business to a sporting good store (think Golfsmith), by defending the practice of loss leader ads. I simply wanted to highlight what I see as a crucial difference in that comparison. I totally agree with you that they employ a quite different business model, and therefore may not be worth the comparison.

As far as your "intellectual challenge" goes, I'm in. I don't see the business as "victims and predators." Though I believe you do. Here is why: in your first post on this thread, you said "The days of old are gone. Consumers have all of the information tools needed to chart their own course, they can take control of their own fate. What of the personal responsibility to understand what rolling over negative equity means down the road? That falls into the realm of education does it not? We're here to move iron, not be mini Dr Phils." In other words, you believe in the theory of survival of the fittest. If the customers are too weak (read: stupid) to take advantage of all the tools available to them, then we should prey upon their weaknesses in order to move the iron, and they get eaten, right? You made the argument for the very definition of the predator/prey relationship.

I simply see a lot of room for improvement in the business with regard to how we "talk" to our customers. I think that we can do better by setting proper expectations...do you really still wonder why customers "beat us up" for better prices and not salespeople in other verticals?

My only point on this thread so far has been that there are better ways to market our products and services to the car buying public. We need not resort to pricing tricks, numbers juggling, and hard-sells. As Shaun's video and his post seem to suggest, our customers are asking us for better than that.

Tim

PS. I'm not mad, don't you be either. I love marketing as much as I love a lively debate!