Is Pricing a Strategy or just a Tactic?

[joe.pistell]

...Where the truly "Old-School" guys fail is when they refuse to realize that the "Front Door" is no longer that space 30 feet in front of their desks, and that the "meet-n-greet" is no longer that hand-shake on the lot or on the floor. I've said that before, and often.

But here's a twist: I think the "New School" guys fail when they completely discount the Old School stuff....

I totally agree JQ!

This is the "strategy" part of the discussion. This is where you bring it all together, pricing is one part of the process.


That being said, there is no one way to Fresno. Your strategy is yours. It won't work for everyone. In your case, you're the 800lb gorilla in your market. Your enormous inventory is your most important asset.

Not all dealers enjoy this awesome POWER that you have. Imagine you have a single point in a bed room community, 100 new and used, 30 miles from a metro. Everything changes. No dealer name recognition, no inventory width or depth, all you have is someone that landed on that single unit from a 3rd party/Classified site.

Intelligent pricing makes the phone ring, sales talent takes the ball and runs with it.

No intelligent pricing = No Phone Ring = dealer trapped in tiny market.

 

[john.quinn]

I totally agree JQ!


No intelligent pricing = No Phone Ring = dealer trapped in tiny market.

100% agree with Used -- we market-adjust daily -- can't see how you can't! New... still on the fence. I've played with both -- Sale Price listing and MSRP listing. But think about this: what new cars does Autotrader list at the top of the page? Most expensive right? MSRP... We like to advertise lease payments

 

[ddavis]

What if you're an old-school digital marketer, like me?

I don't think it's wrong to call "pricing" a strategy, or a tactic, a culture, a process or anything else -- just semantics. Pricing may or may not be part of your overall "scheme" (threw another one in there) to get people in your bricks-and-mortar store.

But here's a twist: I think the "New School" guys fail when they completely discount the Old School stuff.

The Meet-N-Greet and Qualification and Hood-N-Trunk and Demo Drive and Sold Line and Write-Up really boil-down to the intent to build value in 1. the product, 2. the saleperson, 3. the dealership AND the intent to create the ability to generate an offer after the 1st Pencil.

Let me further summarize: our processes are designed so that our clients will like us and our products enough so that when we hit them at sticker while rolling their trade $1000, we can peel them off the ceiling and agree to a reasonable offer.

That is still our game, folks. There's where the gross is. As long as there is negotiation as part of the process (until there is one-price selling), the stores who make the money and get good CSI are the ones who embrace THIS PROCESS.

Now WHERE and HOW and the TOOLS of this process have changed! And the ones who really get it are the ones who have been able to marry the Old with the New. An example: imagine a showroom where all of the Ups on the floor are there to meet the Sales Manager with whom they have an appointment, which was set by an Appointment Setter. They already have enough information that they are comfortable walking through that scary door. They feel "important" because they are meeting the Manager. And when introduced to the "top salesperson," they are provided with a value-ladened presentation and demonstration. How would that effect negotiations? (If you answered, "it would help," you are correct!).

In the aformentioned example, did the meet-n-greet still occur? Yes! Did it occur at the front door? No! Did we qualify the up? Yes! Did we do it on our Yellow Up Card? No! All the crucial elements for high units, gross, and CSI are still there... they're just not where they used to be.

So I hope the New guys will cut the Old guys some slack, and the Old guys are open to learning some new tricks -- because really, now more then ever, they need each other.

I graduated from High School in 1967 and sold cars for a Chevy store while attending the University across the street. I'm not only old school but old.

I'm sorry, but I don't agree with having discounted prices on the Internet and then hitting the customer at sticker. I have no issues holding on the trade but advertising one price and presenting another is unacceptable to me.

I was Internet Director for two of the largest groups in the country. My departments sold more iron and put up more gross than the floor. They had a higher CSI, more referrals, more repeat customers and a higher average gross profit (front and back). Using market based pricing on the Internet limits the areas that we can make money. We have to identify the profit centers that we still have and maximize them.

 

[john.quinn]

I graduated from High School in 1967 and sold cars for a Chevy store while attending the University across the street. I'm not only old school but old.

I agree -- you are old!! haha... LOL -- just kidding . You took my example too literally. The point is that PROCESS sells units with gross & CSI. If you've already agreed to a price, then of course you have to honor it. But there's the rub -- if you're whoring-out your cars on-line to get them through the door, then you don't have a very good process.

 

[ed.brooks]

if you're whoring-out your cars on-line to get them through the door, then you don't have a very good process.

It is most certainly a DIFFERENT process than what most dealers grew up with, but to call it a "bad process" is, respectfully, a little uniformed.

Customers are spending 18 to 19 hours researching before walking into a dealership. The number of dealerships customers actually visit is down to 1.8 (I believe is the current figure). The Saturdays spent driving from dealership to dealership are, sadly, over. This was the environment where one dealer with a better process could get the deal - price aside.

With 18+ hours of research under their belt, what are the odds that a customer will make an overpriced dealership their first stop? My firm belief is that if a customer visits your dealership today, they intend to buy from you. That is the '1' in the 1.8. Dealerships that screw up that opportunity have only themselves to blame. The customer moves on to the next store. That is the '.8' in the 1.8.

So is process important? Hell yes. Is it the same process that worked for years? I sure don't think so.

If the discount is given up front in the advertised price to help generate traffic, you can't afford to give it again in a drawn-out negotiation with the customer. But if you really have a Market Competitive price and can PROVE that to your customer, you don't have to discount heavily in the showroom to win the deal. Remember, they walked into the store after hours of research - they WANT to buy from you.

Replace NEGOTIATION with DOCUMENTATION and accomplish a win-win with your customers.

 

[ed.brooks]

Why would anyone want their fresh inventory absent for 30 days?...

If we didn’t put our units on until after 1 month, how many of those consumers using 3[SUP]rd[/SUP] party for 75% of their research at the 2mo mark might we miss that might say “wait, here is what I am looking forâ€. Why the heck would I not want our inventory in its first month on a place that people are going to 35% of the time to look for, and especially the 2 places on the web that consumers are using the most? Where is the data that says that online classifieds in 1st month lower your gross? If anything, with the competitiveness of the market today we want our units on as many reputable sites as possible to capture as many VDP’s as we can on that unit, hopefully sparking interest, leading to an email, phone call, or a walk in. Then it’s up to us to hold the gross or not.

Eley, This reminds me of one of my favorite quotes about used cars. It's from John Ionnone, CEO of Auction Direct USA, comparing cars to produce, "It’s never going to be worth as much as the day you put it out thereâ€.

 

[ddavis]

It is most certainly a DIFFERENT process than what most dealers grew up with, but to call it a "bad process" is, respectfully, a little uniformed.

Customers are spending 18 to 19 hours researching before walking into a dealership. The number of dealerships customers actually visit is down to 1.8 (I believe is the current figure). The Saturdays spent driving from dealership to dealership are, sadly, over. This was the environment where one dealer with a better process could get the deal - price aside.

With 18+ hours of research under their belt, what are the odds that a customer will make an overpriced dealership their first stop? My firm belief is that if a customer visits your dealership today, they intend to buy from you. That is the '1' in the 1.8. Dealerships that screw up that opportunity have only themselves to blame. The customer moves on to the next store. That is the '.8' in the 1.8.

So is process important? Hell yes. Is it the same process that worked for years? I sure don't think so.

If the discount is given up front in the advertised price to help generate traffic, you can't afford to give it again in a drawn-out negotiation with the customer. But if you really have a Market Competitive price and can PROVE that to your customer, you don't have to discount heavily in the showroom to win the deal. Remember, they walked into the store after hours of research - they WANT to buy from you.

Replace NEGOTIATION with DOCUMENTATION and accomplish a win-win with your customers.

Yes, I'm old but there is still some life in the chassis. I agree with replace negotiation with documentation, then hold on the trade, switch them to a lease, sell them spoilers, leather seats, wheels, curb feelers and maximize the back. Dell Computers is a real champion of the Internet. Their process involves up-selling. The customers embrace it because it is completely transparent.

 

[joe.pistell]

Car Purchases are fueled by emotions.
Puppy Purchases are fueled by emotions.

Old puppies are hard to sell.

 

[ed.brooks]

Car Purchases are fueled by emotions.
Puppy Purchases are fueled by emotions.

Old puppies are hard to sell.

Funny... and true. But Joe, I'd submit to you that, with the amount of information available to them today, customers are trying to make this more of an analytical purchase. This is evidenced by the amount of time spent researching.

In the past, we'd work hard to play up the emotional aspects of the sale - to take logic out of the equation. That's because there was no logical reason for a customer to buy THIS car from THIS dealer and buy it TODAY. Emotion had to rule the day.

Today, if the dealer has put as much attention into researching their market conditions as the customer has put attention into researching their buying decision, they have the option of supporting and reinforcing the analytical side of the equation.

Rather than fight the customer's logical side to bring more emotion into the sale, play to their ego and intelligence. "Research is very good thing. I'm glad your research led you to us. We've researched the market extensively as well, before we ever put a price on this car. We don't price our cars to play games with, like some dealers. We price our cars to sell."

Is playing to their ego and intelligence a bit of a game? Sure it is. But it's a radically DIFFERENT game than we used to play. And it's an easier game to play than moving someone set on making a cold, analytical purchase to someone willing to make a purely emotional purchase.

 

[john.quinn]

I'd submit to you that, with the amount of information available to them today, customers are trying to make this more of an analytical purchase.

That's always been the case -- any customer wants to go into any purchase as informed as they can be -- the only thing different now is the ease with which customers can arm themselves.

Until there's only 1 color and 1 make with 1 model and 1 price, emotion will NEVER be removed from the equation -- and efforts to minimize a client's potential emotional connection to a purchase are detrimental. Where talent enters the equation is that ability to assess the WHY a client researched this or that and help the client sort through the mess of research that has convoluted their decision making ability to help find the right unit for him or her.

And we do know there there's a dearth of talent on the floor. That's whay it's soooo easy to spot and recognize when we see it. And believe me, it's still there, and it's still valid, despite all the different tools and customer shields and blah-blah that has entered the picture over the last few years.