I will stop now as you have this very convaluted, as I did not write :
"but as soon as I discover what they are doing I refuse to assist them, and advise them this is unethical and refer them back to their original salesperson.") Chris said that qoute: Have a great day

Frank,

I'd be happy to clarify those two statements since they were each written with a different context as they relate to the overall purchase process...

Price, payment, and getting financed are the 3 top objections for me. Their ugly heads pop up during different stages of road to sell:

PRICE:
This battle happens before the customer enters my funnel. Customers are making decisions about whether or not they want to engage your dealership based on your displayed (or undisclosed) price. Who knows how many we gain or lose by showing or not showing a certain price. I display "List" prices and remind everyone that nobody pays the "List" price. Again, I should remind you that my market is mostly Special Finance. But most of my customers (including my prime buyers) know they don't pay "List". They want to haggle a little.

FINANCING:
I fight this battle over the phone mostly. Special finance customers want to be reassured that their time will not be wasted..again.

PAYMENT:
After winning the first two battles and getting them to show, Mr. What's My Payment shows up during the negotiations. I'm not fighting the payment fight over the phone. Mr. Price Objection may show up again, but is easier to overcome because you can shift focus to other areas of deal, like payment.

I do think your dealership's pay plan may be adversely influencing your sales process and having you do things that put up road blocks on the road to sell. (i.e. you wrote: "but as soon as I discover what they are doing I refuse to assist them, and advise them this is unethical and refer them back to their original salesperson.")

This is why I do not prefer seperate Internet departments. They seem to cause more problems then they solve. Every salesperson should be in the Internet Department.

Wayne wrote

Several of you have different opinions about pricing, and you all may be correct. There is not a single pricing strategy that works in all situations/markets.

I know firsthand that pricing strategies work different in the Special Finance Markets (a rapidly growing market BTW). These folks are more concerned about obtaining financing. Price is not their top concern, at first. Payment is more important than price in this market.

Also, are you a volume store or high gross store? Many will say, "we want both." But having it both ways is not realistic.

We prefer high gross - you can always come down in price to scoop up the prime, but you can't go up.

Then you wrote the above: you have me a little confused Wayne, Take a look at both statements they are very conflicting to say the least.

Frank,

From my experience & market, payment matters the most once the customer is in the showroom & negotiating. I agree 100%, showroom sales systems used 25 years ago still work today, but the customer has to be in the showroom.

Until we get to that point, we have to go use, as Jeff puts it, 'new marketing'.

Hello Wayne

I agree: Yes they do want to haggel, but we still need to give people a reason to shop the internet and if I can keep my gross on my internet price I sure want to do just that. You know the old term " if I could would you" still works just as good today as it did 25 years ago, and looking someone in the eye and letting them know our internet price is the best available still works also, but let me ask you does price really matter? Or is payment?

@Frank:

you wrote:
"Because internet prices are "no haggle" prices."

I, personally, stay away from claiming 'no haggle' anymore. I want to give the customer 'hope for gain'.

No haggle was good back in the early to mid 90's with Saturn because the customer was at an information disadvantage.

Definitely not anymore. Now everyone is armed with vehicle information and feeling a little dangerous...

I believe the majority of people want to haggle a little and view 'no haggle' as another way for the dealer to control the customer. I could be wrong and welcome input from others, but I hear hundreds of phone calls a month and can hear it in their voices.

Overall, the customer's confidence is up. They are not as afraid of being taken...and they know if your 'no haggle' price is a good deal or not.

Besides, with the current economic climate, people are fighting more for any kind of discount they can get. You bet some want to haggle.

Chris I do agree with you when it comes to price as you hit it right on the head. Why deal with internet when I can get the same deal by walking in? Because internet prices are "no haggle" prices. That is why there is an Internet shopper. There are many kinds of shoppers, everyone is unique. It is not just black and white.

Chris wrote:
I get people who are shopping me after seeing one of our salespeople in the showroom, then come online, but as soon as I discover what they are doing I refuse to assist them, and advise them this is unethical and refer them back to their original salesperson.

Why would you do that? As a manager you should work that deal for that salesperson on the floor. You should do what it takes to get that customer back into the dealership. You should never use a negative like unethical.

As for price, I will say it again, "price does not matter" sell yourself, sell the car, sell the dealership

Chris I agree with your statement, "A dealerships reluctance to empower their Internet salespeople with a few set prices on certain cars (ie: Invoice, $100 under or over a specific model) shows utter ignorance to reality".
However, I am curious about how your "NO HAGGLE PRICING" works in terms of customers who may come into the store and not give their information to a salesperson. In this situation they would not be in your CRM tool which would mean they could still get the internet price. Also, what about the customer that buys and then later finds out they could have gotten it on the internet for 2,000 cheaper. Do they ever walk into the showroom again. Does that turn everyone into an "internet customer"?
I think that is a great idea for your pay plan right now. But what about when the dealer figures it out as it relates to "incremental" business. Just some thoughts I wanted to throw out there. I see huge things in the future for us at the forefront and wanted to get everyone's thoughts on where we all know this thing is going. Alex touched on it in one of his earlier posts saying "they're all Internet customers"!

Our dealership has two distinct sales departments: Land Based, and Web Based. The reason the Internet Prices appear lower are because they are HAGGLE FREE, and our operation costs are lower than the showroom. You might get the internet price if you fight hard enough in the store with a regular salesperson, and haggle, but the showroom dealership reserves the right to make as much money as possible - it's not a crime. However I use this terminology to my advantage. When I advertise a sale price online or in an email, I tell them this price shows "90% OFF" retail, which is similar to what a Furniture Store does or other retail outlets.

A dealerships reluctance to empower their Internet salespeople with a few set prices on certain cars (ie: Invoice, $100 under or over a specific model) shows utter ignorance to reality.

I get people who are shopping me after seeing one of our salespeople in the showroom, then come online, but as soon as I discover what they are doing I refuse to assist them, and advise them this is unethical and refer them back to their original salesperson.

Speaking from a customers perspective I want simplicity.

I want to do a Google search for the exact vehicle I'm looking for and be presented with the same result sequence as I get when I search for a pair of new home theater speakers, etc.

Alex is dead on - the lines between off line and online are already gone. Embrace the change and run with it... what always pisses someone off and ensures a non-repeat buyer is when ignorance is preyed on to the benefit of the retail dealer (of any product) and the buyer feels taken advantage of.

In my experience offering the free prize for the shoppers that stand up and identify themselves can pay off in spades. Make your offers entice the consumer to want to do business with you first and foremost.

Work on building your brand then the brand of those that you work for with secondary.

Great comments. Great topic. I'm surprised at how dealers worry about losing gross online, yet week-in and week-out they'll put their inventory in the newspaper & weekly shopper mag at prices often thousands below their Internet prices. Shouldn't there be better coordination between the Internet Department and the Newspaper & Magazine Department?

To Alex Snyder's point, they ARE all the same customers, it's just a matter of which advertising medium they have used to see your inventory. If prices are different from one medium to another (including walking on the lot) it only reinforces the mistrust that consumers already have with car dealers. IMHO, of course.

Ok I typed that a little fast and realized I made a mistake, I meant a sense of value has to be established before a sale can occur,
pricing does not matter if someone does not see the value.
We need great photos, great descriptions and strong follow up skills.
I have been looking at houses and made a offer the other day just because "it's a buyers market" needless to say it got flat turned down.
I based my offer on whatever they were asking minus 20K, after all "it's a buyers market".
The reason I liked it was because they had already reduced it to the bare minimum price and thousands below appraised value, basically it was quite a bit of land and house for a great starting price. I thought I could still deal on it because they seemed desperate and it had been on the market for over six months. No luck, they said they would not budge a dollar. So much for being a buyers market!

OK since nobody liked my restaurant comparison how about real estate?
If one person prices a house at appraised value, one below appraisal and one above will the buyer still negotiate on all three? I would think a since of value would need to be established for a sale to occur? Is this a better comparison?

Several of you have different opinions about pricing, and you all may be correct. There is not a single pricing strategy that works in all situations/markets.

I know firsthand that pricing strategies work different in the Special Finance Markets (a rapidly growing market BTW). These folks are more concerned about obtaining financing. Price is not their top concern, at first. Payment is more important than price in this market.

Also, are you a volume store or high gross store? Many will say, "we want both." But having it both ways is not realistic.

We prefer high gross - you can always come down in price to scoop up the prime, but you can't go up.

I'm with Frank on this one. Minimizing your profit/gross is not something I've heard in any of our meetings since I've been in the car business.

In order to be competitive on the internet, you must price aggressively. If you don't, you may as well not be there. Providing an internet special for a customer viewing your inventory on the internet is not a bad thing. We give discounts to employees, clubs, groups, etc... every day.

Having said that, only a certain amount of vehicles in our online inventory are discounted from the "regular" price. Typically for us it's 40%. The rest are the same price regardless if an internet customer or a walk/drive/phone-up

Frank - you misinterpreted what I wrote. All I was saying is that if you display a price online, you should honor it on the lot and vice versa. The simple answer is to price all your online vehicles at whatever your sticker price is (new & used), and work each person making an Internet inquiry close to the same way you would someone who walks in the door. Now you're not dealing in separate pricing, and every customer is unique.

Just cannot help myself on this one.

Alex said

"no such thing as an Internet customer - they're all Internet customers....or they're all the same people who have been walking into your store forever if you prefer that definition. Creating two different customer types is just stupid,"

All customers are not the same, there are many types of shoppers and then there are some that do not shop at all the are impulse buyers that drive in and buy. So call me "just stupid" if you like but if I can sell one G6 for 12,995.00 and another for 16,995.00 I am going to do just that, but you would make sure both sell for 12,995.00? No one has created these shoppers at all, we are all creatures of our own habits. As a manager or salesman it is our job to maximize profits for the store and our family.

Just another opinion

The bigger the ticket item, the more mistrust consumers have. It's hard to compare a product at Best Buy or a meal at a restaurant to a car. They are so far apart in price.

Also, the bigger the price, the mare wary the consumer is. Face it, cars are the second highest priced items right behind homes and there will always be a level of mis-trust. The more we put the consumer at ease, the better. There are too many choices that are just a click away

Alex, I think you are right on in your first paragraph. I couldn't agree with you more! As far as your final comment, you may feel they hate your guts but be glad you aren't a mortgage broker right now...

Alex,

I agree, the Internet is where its at and heading...it might be too late for some owners out there though. This perfect storm we are in will thin the ranks of US auto dealers.

Wayne

Amanda - it is just a matter of time before it is common practice across the industry to start doing the same price online as is offered in the store. It is just a matter of time till your higher-ups realize there is no such thing as an Internet customer - they're all Internet customers....or they're all the same people who have been walking into your store forever if you prefer that definition. Creating two different customer types is just stupid, and that is what happens when you give two different prices. It is simply a failure to acknowledge change. I couldn't work for an establishment that represented something that dishonest.

You're an Internet Manager. You are the front line of the dealership, and in (arguably) the most important customer-facing role. If your bosses aren't listening to you, they're just missing it.

Why is the auto business the only industry with full disclosures of pricing (invoices) available within two mouse clicks? Why are there so many books written about all the secrets to negotiate a car deal? Why do consumers hate our guts? Double-pricing is one of the answers to those questions.

@alex wrote:

"Even if you do have "special internet pricing" I would say it's safe to say that customers are still going to use that number as the starting point of negotiation no matter what brand you sell"

I agree with this fully, I believe 95% of car buyers want to haggle at least a little. I've been thinking alot lately on how to use the Internet to facilitate the haggling process.

@Chris wrote:

"the thing that baffles me the most, is that people fill them [internet coupons] out, buy the car and never use it!"

Same for me too. Confirms to me that Internet users in general have a hard time remembering their activities as they 'shop' on the Internet.

Great post Chris, I agree with you 100% and I couldn' have said it better. I am amazed that people fill out our coupon for 500.00 and hardley ever use it, and when they do try to use it is when they deal is done, which is ok with me as it is easy to overcome. "great I have given you the discount but I need that coupon to prove you got it" They will just hand it to you, then you always have the disclaimer.

As for Price all of our new cars are priced at MSRP and the used are priced over market value, if someone is interested in a vehicle they know they can work you "price does not matter" but you do have to price them. Concentrate on converting your website visitors, all a salesman needs is a phone number and a live person on the other end. The rest of it will follow if you are a "salesman". as an Internet director which is what I see you as. You should have the power to make the decision to do what it takes to get a customer in the door, then the manager can do his job. Price your cars online, get the customer on the phone, and use your phone skills not to price the car "look bob come in and drive the truck if you like it I promise I will not miss your business over price" "Bob if you dont like the truck it wouldnt matter if I sold it for only 10,000" get back to word tracks and selling yourself and the dealership over the phone. But you should have that one last piece of power to get that 1 out of 10 customer in the door and that is price. I find it funny everyday that after you work price the next hurdle is payment " well whats my payment?" In your online ads you might try only 289.00 per month W.A.C. how much gross is in that payment with only 20% down.

Just an opinion

I truly appreciate everyone's imput on this because the way we handle it now is that everytime a customer asks for a "best price" or "botom dollar" (after at least to rebuttals, and qualifying questions) We have to call whatever manager is on at the time at the location the car is located (we have 4 dealerships)... The majority of the time they are with a customer or desking a deal and it ends up taking way too long to get a response. For some reason I am not allowed to work the price out myself ( even though I have been selling cars for 10 years now). So, what I would like to have happen is to list the prices online as I normally would, but then have a set amount that I can discount the deal such as $1500-$2000 front end without the almighty approval. I am not really looking to gain traffic from this, but to better utilize the traffic we currently have.
P.S. We have a $200 coupon on the site for contacting the Internet Department.