Correcting My Contribution to the Battle Between Buyer and Seller

I spent 31 years in automotive retail, in every variable role from used car salesperson to GSM, then GM and Dealer Principal.

For most of that time, I was a part of and supported the combative culture the car business created.

• - I was a master of small print.
• - I mislead in my marketing with unattainable prices and payments.
• - My radio and tv ads ended with rapid-fire disclosures about the misleading promises just played.
• - My sales meetings were focused on how to overcome the BS I advertised.
• - We used aggressive language in describing the customer experience in the “box”— I bet you know what I mean (I am embarrassed to actually write that stuff down).
• - I trained the team to “put” people in the car we wanted to sell, not necessarily the best choice for them.
• - My best salespeople were rewarded for taking advantage when they could, and I paid them stupid money for creating big profits on one-time customers.
• - I encouraged longer and longer finance and lease terms at immoral rates when we could “get away with it.”
• - I was dedicated to aggressive pencil techniques designed to overcome the customer’s caution.
• - ….and, oh, by the way, it worked. We all made a lot of money in this culture.

Negotiation breeds battlegrounds…

Why did I think I had to do all this? Our customers had learned that car dealers were out to get them, and entered the buying process with battle armor on. They were often just as aggressive in their approach to us, as we were to them! Instead of using the opportunity to change that environment, I tried to have stronger battle armor than the customer (combatant?).  When I left the media world and took my first job selling used cars in 1977, my mother actually asked me not to tell any of her friends. She would not talk about it with her friends. And by the way, my first year I made 10x my previous salary. I was blinded by the light.

How did all this start?

I tell the story (totally fiction) that on April 1, 1956, Joe from Joe’s Chevrolet got pissed off when Larry opened a Chevy store 3 miles away. Joe decided he’d welcome him by advertising $100 discounts on his cars….and Larry came back with $150 discounts and the car sales world changed forever.

Now we live in a world that has ushered in customers’ protection services that we actually pay for!! True Car, Cars.Com, Edmunds, CarFax, and all the rest are making billions from us to protect our customers from……...us. Read that again and ponder for a moment.

I came to my senses and now believe that I owe it to my mom and the industry to help change the automotive customer experience to the culture customers are starting to demand. Sure, there are many dealers dedicated to the old way, in part because they continue in some cases to make big money. That will change, is changing, and has changed. Dealers who don’t meet the customer where they are demanding to be met are feeling the pain.

Mark Rikess in Wards Auto from 2014 called the ball early on. A few of his early points were:

“Sales-cycle efficiency. Research has shown 70% of auto sales take more than four hours. The time it takes to sell a vehicle is a No.1 customer complaint. A one-price process typically takes two hours or less. That time reduction increases the productivity of top salespeople because they get to see more prospects. And dealers get happier customers as a result of the outstanding sales experience."

“Transaction costs go down. Most stores have one manager (including the finance and insurance department and business development center) for every 2.5 sales consultants.  No other retail industry has this level of management. One-price stores are 1:4 or better.  Moreover, traditional stores must pay a premium for managers with outstanding negotiating skills. In a one-price store, managers’ primary goals are to develop people and manage a well-defined sales process. Traditional stores have deal managers, not people developers.”

So, as Carmax, AutoNation, the Rydell Group and so many more have all gone down the path of allowing your grandmother and your lawyer to get the same price every time without the battle. Dealership’s sales teams can now provide the SME role needed to guide the customer to the best purchase for their needs. The selling environment attracts a different personality to represent you, often at much less compensation percentage and way higher customer and sales team retention.

There is the additional value of the CSI allowing you a chance to retain your customers in your service department…adding real margin and making that customer literally 86 times more likely to buy from you again!  

Or…. you could just do this because it’s the right thing to do.

A great article in CBT News cites that almost half of customers who state they are loyal to the selling dealer go elsewhere to service their vehicle. Only one-third of all vehicle services are performed at automotive dealerships. And we know brand loyalty and dealership loyalty measurements are fleeting and hard to rely on.

Now---really think about this for a minute---it’s kind of overwhelming: According to DMEautomotive, customers that service their vehicles at your dealership are 86 times more likely to buy their cars (plural) from you! Keep in mind that new customers cost up to 25 times as much as retaining existing customers!!

Driving retention is not a new idea for anyone. You have likely spent boatloads of money training your team in the service introduction, offering significant discounts and coupons, post-sale communication techniques, fleets of loaner cars……all key ingredients to retention success.

You can always do more. There are two basic steps we must achieve…first, get the customer in for their first service visit, and second make that visit a great experience for the customer so you set the next appointment and start the long-term relationship.

Some considerations you may want to take in this process you already have could look like this:

 - Lose the discussion about the first oil change—that is often 10,000 miles away! Consider language like "Remember your first service appointment is super important! This is your vehicle's break-in period where you get to know it, and it gets to know you. We will want to make sure everything is working as it should be.”

 - Set the appointment 3 months out with the customer at delivery (in your CRM or service system) and assure the customer that your team will call the week ahead to confirm or reschedule.

 - Offer to pick up the vehicle and leave a loaner when possible, and at the very least, offer a loaner. This is a 1-hour service so many will be happy to wait, but it never hurts to show how far you will go to make their lives easier and earn their business.

 - Be sure the selling sales representative as well as the service team are expecting the customer’s arrival. Greet them by name. Acknowledge how great it is to see them again. Ask how they are enjoying the vehicle.

 - Set the next service with them in the same manner when they are there. Avoid yes or no questions like “Can we set up your next appointment?” Instead try, “Based on your average mileage we have set an appointment for you on Jan 4th at the same time you set for today. Of course, we will call the week ahead to confirm or reset and we will arrange transportation for you then.”

Be creative---there is no more important road to success in this market than super customer retention. Take these considerations into account and keep what’s yours; don’t donate customers to your competition!

Happy customers, happy sales teams, happy dealers

I will keep this brief, (I hear ya sayin …”YEAH RIGHT!”) in fact I will likely struggle to get in 3 or 4 paragraphs…the idea is super simple, but could be very impactful for most dealers.

As you know, margins continue to shrink in new car sales, and we struggle to keep our once high-income sales teams from rapid turn-over. Add to that the fact that the cost of used cars in the market has skyrocketed, while availability has dramatically dropped. According to AutoList, the average length of ownership is now about 6 years, around the same as the average loan.

It’s time to fine tune every opportunity to add income, and to add it transparently, from willing and happy customers! Like all successful processes, this one must be applied 100% of the time for maximum impact

Here we go---every time there is a trade involved in a new or used car sale, make this a required process to be executed by your sales representatives. You may already have a question list regarding the trade with the more traditional questions that help with settlement and reduced CIT issues like:

• Do you have your title with you today? 

Is the trade titled in your name?
Any other names on the title?
Do you have your registration with you? 
What state is your trade titled in?
Is there an open loan on your trade?

Now comes the critical 5 questions that will foreshadow your additional sales opportunities when the customer goes to the business office for settlement:

• Did you purchase an Extended Warranty when you bought your trade?
• Did you service your vehicle at the selling dealer?
  • Do you have any of the service records?
• Did you purchase an Environmental Protection Package (Paint Sealant and Interior Protection)?
• Did you purchase Tire and Wheel Protection?
• Do you have a Dent Protection package?

When the customer says “yes” to any of these questions, it’s helpful to let them know that it positively impacts the value of the trade.  You may want to consider presenting a trade increase coupon at that time?

Your customer now has an incentive to consider protecting their new vehicle when the opportunity is presented. He or she may also be more likely to set their first service appointment with you, and give you the chance to earn their ongoing service business. Do not forget to share the revenue to keep the process in motion and to keep a focused sales team!

By the way, I cannot tell you how it kills me when I hear a dealer say “It’s a great idea, but I can’t get my team to follow my current processes.” Don’t say that…fix it!

Ok… that was about 8 paragraphs… but if you add these procedures or a custom version fitting your store’s M.O., you will likely experience a PVR increase of several hundred dollars and increase your service and sales retention. It’s the super simple idea that works.

Chip King explains why making your inbound phone processes can cost you sales if you don’t change your phone process.