How much time, collectively, do your dealership managers spend on Used Vehicle Price Management? Most of you won’t have any idea. Some of you will say, “I don’t understand the question.” Many of you will say, “Not enough!” Some of you might say, “My Used Vehicle Manager (UVM) spends about “xx” percent of his time on that.” And, hopefully, a few of you will say something like, “I’m trying to watch that closely, and it looks like my UVM spends about 8 hours per week on that. I don’t know whether that’s not enough or too much. How much time should we be spending?” However, I’ve never had a client-dealer or GM tell me, “My UVM spends about “x” hours per month per used retail unit sold, “My GSM spends about “y” hours per month per used retail unit sold, and I spend about “z” hours per month per used retail unit sold. All in all, we collectively spend about “x + y + z” hours per month on this important responsibility.”
So why is this so important? According to industry marketing experts, almost 90% of used vehicle buyers perform extensive Internet research prior to contacting or visiting a dealership. So…when a prospect submits his/her search criteria, your vehicle shows up on a Search Results Page (SRP), or not, depending on how closely it matches the customer’s criteria, one of which might very well be price range. Or if he/she didn’t input price into the search criteria, he/she might search the SRPs, ranking the vehicles by price, low-to-high. Our first need is to have our vehicle show up on one of the customer’s first two SRPs, and one of the driving factors is price!
However, the chances of having our vehicle make the customer’s “short list” (and giving us a shot at making the door swing or the phone ring) are slim to none unless the customer decides to click on our Vehicle Details Page (VDP). What drives his/her decision to click on our VDP? Quality of our lead photo…Number of photos/videos…Our compelling short description (if permitted by vendor)…CPO or not…Odometer reading…Color… and Price! Which of these influencers is the most important? Price!
If we’re not getting any action on a vehicle (Internet leads and inquiries, telephone inquiries, dealership visits), wouldn’t that suggest that we’re getting very few VDP hits? Doesn’t that suggest a “lack of interest” in our vehicle? How much does this “lack of interest” is a result of our price? Me thinks quite a lot! To me, that means, if we’re not getting a reasonable number of VDP hits, our price is too high, and we need to reduce it to an equilibrium point, where there is a sufficient level of interest, as measured by the number of VDP hits…regardless of our price rank or percent of market price!
So, yes, we need to find a way to accurately measure VDPs per vehicle on every web site on which we are featured. And we need to regularly and thoughtfully adjust prices down (and sometimes up), continuously attempting to identify the “sufficient level of interest.” That’s what Price Management is all about!
I know you’re waiting to hear “How Much Time” Used Vehicle Price Management (UVPM) should take. My answer, which I’m sure you won’t like, is “it depends!” On what? Your franchise (UVPM takes a lot longer in a Mercedes-Benz store that in a Honda store). Your intended Inventory Turn Velocity (ITV)…The dealer who expects to turn his used vehicle inventory 12-14 times per year will spend more time on UVPM than a like-volume dealer who is satisfied with 8-10 turns per year. Your core inventory level…The dealer with a “core to speculative” inventory ratio of 1.00 to 1.00 will need to spend less time on UVPM than a dealer with a ratio of 1:00 to 1.50. I’ll give you a general rule that I have observed with aggressive and successful used vehicle operators. But, it most certainly does not apply in every dealership circumstance. If you retail 100 used units per month, you should probably plan on a collective management UVPM time investment of 30 minutes per vehicle, which translates to 3,000 minutes per month, or 692.3 minutes per week, or most importantly, 138.5 minutes per day (2.3 hours per day) in a 5-day work week!
Does that surprise you? Do you agree, or not? As always, I’d love to receive your input.