Retraining your customers... Value>Discount

[ryan.leslie]

https://jalopnik.com/here-is-why-you-shouldn-t-expect-a-big-discount-on-a-us-1823917876

There was an interesting article on Jalopnik yesterday about used car pricing and the consumer's outdated notion that pre-owned profit margins are high.

The author addresses this misconception directly:
"The problem is that so many folks have been trained to “never pay sticker price” they’ll assume they have to get a certain percentage off the asking price or they didn’t get a good deal. While that may be the case for a new car, it’s not true for pre-owned."

The author's advice to readers is ultimately that "used car shopping is more about finding the best overall value in the market rather than focusing on the largest discount off the asking price."

It seems to me that the winning dealer in this consumer mindset shift will be the one that is best prepared to talk value at every opportunity. I really like the author's suggestion of comparing MSRP of the vehicle when new to close the value gap between similarly priced units, but I believe that is not something that is easily done prior to a first pencil.

Are you seeing the consumer shift to value over discount at your store?
Are you actively retraining your sales team to accentuate value in the vehicle at the early stages of interest?
What tools and technologies are you using to reinforce value?

*Full Disclosure: This is interesting to me as my employer is actively working on this equation. I was encouraged to see the author reinforce the idea that value supersedes discount. I want dealers to avoid the price lever, hold gross, and be valued for the value they provide to their customers and their communities. I see this mindset shift as a very positive thing for dealers and a real opportunity to sit out the proverbial race to the bottom.

 

[Alex Snyder]

this topic!

It is the conundrum assaulting all dealers today: juggling personnel costs against tighter profit margins. That's what leads dealers to one-price, but most seem to forget it requires strong leadership. Moving toward a value-based selling process over a gross-based selling process requires a different breed of sales management. It is much more than how magical you are on the desk; it is more about holding sales agents accountable to product knowledge and presentation skills than just "have you brought me a deal lately."

Tangent warning...

Yesterday I bought another John Deere and couldn't help but contrast my experience to car buying. The nature of buying agricultural or construction equipment is vastly different because one cannot test drive implements or equipment where it will be used. That requires the sales person to be exceedingly knowledgable about an infinite amount of configurations. How does the 9" trenching bucket compare to the 11" general bucket on this excavator can be the difference of $4,000 for example. Or on the low end, one adds a seed spreader to the back of a small lawn tractor to spread grass seed and fertilizer in the summer thinking it can handle sand and bulk salt in the winter too for $500. If the sales agent didn't say, well, salt and sand is an entirely different animal that requires an agitator ($1,500) and a true tractor the lawn tractor owner wouldn't destroy his $500 investment in the winter and be supremely pissed at the dealer.

Car sales people are fortunate to not need this depth of knowledge and are still able to make waaaaaaay more money than the lowly tractor salesman. It pains me to think about how easy they have it and how little their management is asking of them.

....Tangent over.

Anyway, I think you're jumping into a massive topic that is the root issue of much of our industry's perception by the public. We don't sell value well.

 

[craigh]

juggling personnel costs against tighter profit margins

This is one of the biggest opportunities in software right now.
Replacing the 50-60% of expense that is human resources.
Nobody wants to be "that guy", but we're at the point where almost all other margins have been exploited.