The common thread here is that the Costco leads are not being handled properly.
Yes, you will all say that you follow the people up, and call them, and e-mail them, etc. But you are ignoring the biggest "hook" of the program, and that is exclusivity. I will bet any money that each of you, when you contact the Costco customer, gives them a price over the phone. Because of this, to show the Costco program is better than anything they can do, you absolutely whore out your vehicles, and then cannot figure out why you have no ROI.
My store gets 125 Costco leads monthly for new vehicles. We close and deliver more than 60%, with a positive front end of nearly $1k per copy. How? We don't price these customers by e-mail or phone. We tell them that to protect the veracity of our Costco pricing, they need to bring proof of their Costco membership in to the store, before they can receive Costco pricing.
Yes, 10% of these customers will not come in without pricing and you have to be willing to let them go. "I understand your feelings Mr. Customer, and if you feel that you need to spend more money elsewhere then I respect that decision." It's one of our word tracks. But I would rather lose that 10% of my total than the 50% I lose giving them a price to be run up and down the road (and I have 5 same-brand competitors within 6 miles of my location).
We dictate how the program works very clearly (you come in, verify your Costco membership, select the vehicle you will be taking home [notice that I trial close right then], and we then present the Costco pricing sheet), and if they do not want to follow that program then we cannot help them.
It takes conviction, strength, and salesmanship, but the results if done right are incredible. Costco has been absolutely wonderful to us because we do not sell the price but instead sell the experience and our people here at the dealersip, while giving the customer what they feel is a great number on the vehicle. And if we need to drop the price to meet a competitor's offer, we are in place to do that too.
Our Costco show rate is 70%, of which we close 3 out of 4. It's been so good to us that we just took on the used vehicle portfolio for this area.
But you cannot budge for ANY reason from how you run the program. First, Costco monitors such things and will let you do it your way if every customer is treated in the same fashion, which means if someone from 50 miles away comes in on the program, you just can't fire off a price owing to their proximity. Besides, they know when contacting you how far away you are, and if it was too far they wouldn't have contacted you in the first place. And be honest with them, "it's not our job or goal to give your local dealer information on what their pricing should be."
But if worked right, Costco is a very solid provider with good profit potential.
