Is Pricing a Strategy or just a Tactic?

[ed.brooks]

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.

John, I'm not saying that any salesman needs to minimize or remove the emotion from the sale. I'm saying that we no longer need to minimize the analytical side of the equation - if you're priced right! You only need to you remove the analytical side if you can't logically justify your price.

As for there being a "dearth of talent on the floor", it takes more talent today than ever before IF the dealership has an "Old School" pricing structure and is working "Old School" strategies and tactics. Those worked very well when customers walked in with no information. Today it takes absolutely flawless execution to run the old games, because the balance of knowledge has shifted. I'm not convinced that today's salespeople have less talent, but I am sure they are facing a much better prepared customer. And to add insult to injury, pricing high leads to fewer opportunities. So we have a situation where we don't get up to bat as often and when we do, we have to execute flawlessly.

This is why a strategy needs to be built to address today's realities. It creates less of a battle, reduced negotiation, happier customers, more volume and can be accomplished by an average salesman. I'm not saying they don't need to be trained because they most certainly do. But they need to be trained with a strategy and a set of tactics designed for today's well informed customer.

 

[joe.pistell]

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.

Ed,

This says it all:

DR Blog post 2009: Charting The Internet Car Shopper Experience | DealerRefresh

GIVE ME Mr UPSLOPE.

 

[joe.pistell]

Ed,

I am in JQ's camp AND your camp, but, here is where we differ.

All shopping is NOT the same because products are not the same.

Compare a Home Theater vs replacement wiper blades.
We have a Specialty product vs a commodity product. WHere does the product fit? Is it a "Need or a Want" product?

I need wiper blades...
I WANT a kick ass home theater system

"Want" shoppers are driven by emotion.
"Need" Shoppers are conquered by price


To continue my Example: A Flight to MCO vs Your Next Car.

MCO flyer hits "price discovery" site, enters info and finds best fit. Price dominates query. Very linear.

Car buyer hits "price discovery" site, enters info and finds best fit, then lets it sit and thinks about it. Yes, price is critical, but, unlike airline booking sites, in our biz, there are a million unanswered questions that will never be answered at AutoTrader/Cars/etc...

From the shoppers perspective, I say the process of buying a car is more like picking an exotic vacation destination than the best price to MCO. IN THAT SAME VEIN, the car shopper spends hours and hours shopping on the internet, they PASS a point where they stop learning and begin to get themselves all knotted up and they finally HIT THE WALL... "Enough of this already!!" and off they goto the dealership.

"Give me Mr. Upslope."

 

[Walt Kustra]

Originally Posted by Ed Brooks
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.

I think that the customers time spent online is less "research" than we think. While customers are extremely well educated, now so more than ever, we sometimes give them a little too much credit. When I put the shoe on the other foot and find myself online looking at golf clubs or whatever else it is that I am in the market for, I spend less time researching the product than I do slobbering on the screen once I have landed on what it is I like! Sure I take some time to narrow down what I am looking for and read some reviews about product and vendor before I finally decide what and where to purchase, but most of my time is spent looking at pictures or watching videos of some pro smashing that new driver I have been wanting.

As much as the internet has allowed us analyze our purchases, when it comes time to pull the trigger its purely emotional.

 

[ddavis]

What emotions are involved? Your customer wants to buy a car or they wouldn't be there. They are looking at a vehicle that better meets their needs or the wouldn't be considering it. Owning a nice car is part of the American dream.
Indecisive people don't last in the car business. We forget that most people find it difficult to make a decision. Fear of making a bad decision is the strongest emotion that customers are feeling. Why else would someone spend so many hours doing research.

 

[ed.brooks]

...As much as the internet has allowed us analyze our purchases, when it comes time to pull the trigger its purely emotional.

Walt, I agree, but would say that by reinforcing their decision to stop in to our dealership today, we are playing to their ego and emotion - we're just doing it differently than we used to do it.

Now back to a point made earlier; do you think today's salespeople are considerably worse than yesterday's salespeople? Or is it just that we're making them play with an outdated strategy?

 

[Alex Snyder]

Where would you guys say the balance of rationality and emotion are on the scales when someone is looking at a potential car to purchase on a computer screen?

 

[john.quinn]

Originally Posted by Ed Brooks
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.

I think that the customers time spent online is less "research" than we think. While customers are extremely well educated, now so more than ever, we sometimes give them a little too much credit. When I put the shoe on the other foot and find myself online looking at golf clubs or whatever else it is that I am in the market for, I spend less time researching the product than I do slobbering on the screen once I have landed on what it is I like! Sure I take some time to narrow down what I am looking for and read some reviews about product and vendor before I finally decide what and where to purchase, but most of my time is spent looking at pictures or watching videos of some pro smashing that new driver I have been wanting.

As much as the internet has allowed us analyze our purchases, when it comes time to pull the trigger its purely emotional.

I couldn't agree more! The reality is, as Joe has aptly pointed-out, is that every research hour spent after the last has a tendency to add as more confusion to the equation than selection narrowing. There are sooooo many more choices now, coupled with opinions from everyone and anyone with a keyboard, that people get completely lost, and need to be taken by the hand.

And ddavis is right that there is a fear component here -- which is why TALENT is more important than ever. But what emotions are involved? A good process with a talented person cuts though all that, to get to the answers that the clients REALLY want to know:

"Will I look pretty in this?"
"What will my friends think?"
"Can I get 4 bags of clubs in here?"
"Will my wife be appreciative of this purchase?"
"Does this car match my personality?"
"What does this car say about me?"

Really, the analytical vs. emotional "debate" really only has teeth as a topic in the cyber-sphere. If you've been on the floor the whole time, before and after, through the transition, it's a non-sequitur to argue that people have changed -- because they haven't. Tools have changed. Methods (tactics, strategies, schemes -- call it what you will) have had to adapt to new tools. But the core of what we do -- and we need to do -- has not, because the people -- the clients -- have not changed. And to be honest, to say that you only need more talent today because of "price" is just downright silly and reflects a bit of a disconnect with the reality of one-one-one dealings everyday on the floor.

 

[ed.brooks]

Where you guys say the balance of rationality and emotion are on the scales when someone is looking at a potential car to purchase on a computer screen?

That's a tough question since it requires us to crawl into the buyers head. My best guess is they start off intending to be very rational. At some point they reach a decision, but don't pull the trigger. At that point they start to let more emotion in. This is Walt watching videos of the pro with "his" new driver. They think they're still researching but they're really just emotionally reinforcing the decision they've already made.

When we commend and support their 'logical' decision, we're really playing to their emotion. It's like a waiter saying "Excellent choice, sir". It makes us feel good.

 

[Walt Kustra]

@Alex - No doubt the emotions don't really start to kick in until the customer is in the showroom which is a great point. When I look to buy things online I am basically at the point of sale. With cars (at least for now) you can sit back and rationally think about what you want to narrow it down to, but cant make a spur of the moment decision right there in your living room to buy. This brings us back to just how important making our websites the best they can be is. Using them to provide customers with information as well as giving us lots of opportunities to turn traffic into leads. Next ill do my selling the appointment spiel, lol

@Ed - I don't think they are better or worse, just different. I spent 5 years just selling traditionally and the last 3 doing strictly internet and can tell you that while its harder to sell a more educated customer the opportunity for customer retention is 1000 times better. More transparency = happier customers.