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Mark Rikess

Mark Rikess President

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One Price Selling – What Are You Waiting For?

Most Dealers are closer to a One Price Selling sales process than they may realize. If you’re an excellent pre-owned dealer you’re basically not negotiating. You must price your cars to market to get leads. On the new car side, the customer is setting the prices. With new tools that allow prospects to literally buy the car from home, negotiating power is shifting to the consumer.

The number one reason to go to One Price is the vast majority of customers want to conduct business in a transparent manner.  Women register over 50% of vehicles and they dislike negotiations.  Gen Y now makes up almost 30% of the market and they also dislike negotiations.

Add in others who don’t like to negotiate and you have at least 80% of the market who will pay a slight premium for a fast, simple and transparent purchase experience in which they feel they are being treated fairly.  Why employ a sales process that appeals to only 20% of the market?

The second reason to adopt a One Price process is it increases your ability to attract a younger, gender diverse sales force.  How many of you did a great job of attracting salespeople in their early to mid-20s ten years ago? If you did, you’d have the majority of your sales staff in their mid-30s with a ten year book of business and a management team that looks more like your customers.

Look around your showroom floor.   Does the majority of your staff that look like your customer base? The market is rapidly getting younger while most stores sales staff are going in the opposite direction.  You’ll never attract and retain a youthful sales force with the traditional, “desking” sales model that leaves sales people un-empowered and required to haggle over every sale.

The third reason to go to One Price is to eliminate wasted time in the sales process. When a dealership is busy it takes at least three hours to buy a car plus delivery time. About half of that time the prospect is not engaged in the sales process. They are waiting while salespeople line up to talk to a manager - and then comes the T.O. which backs the process up even further.   Negotiating F/I also slows down the process. 

The traditional sales process needs an abundance of managers to handle negotiations.   The average store has one manager (including F/I, BDC and sales) for 2.5 sales people.  If you’ve got twenty salespeople you’ll have at least eight managers.  Bottom line:  In an era of margin compression this is no longer a financially sustainable sales model.

And finally number four:   Shoppers look for a dealer based on social media.   Yes, they go right to Yelp and see which dealers in their area have the highest ratings.  Like it or not, this is true. Inventory, pricing and location won’t help dealers that have less than a 4 star rating.   One Price Dealers get significantly better (and often glowing) 4+ star reviews.

Is transitioning to One Price easy?  No, it’s not.   Is it worth it?  Absolutely. 

To be successful, the store’s leader must have a very strong commitment to changing the culture to one that is centered around transparency - what most customers want.    Change is hard.   This is not for the weak or lazy.

A number of sales managers don’t have the right belief system and skill sets.    We understand.  They’ve been doing things one way for a years.  And again, change is hard.  We get that.  Still, I’m still amazed when a sales manager tells me he believes “customers like to negotiate”!  Because customers are compelled to negotiate due to an archaic sales process doesn’t mean they like it.

Sales managers will need to move from “deal managers” to developing, training and coaching their sales staff so they can be empowered to conduct the transaction without help of sales management on virtually every deal. This empowerment results in less overall managers in the Variable Department.

It’s Inevitable. You can’t defeat the internet.   It’s here to stay.  Today’s highly informed consumer has already done their homework to determine what they should pay for the commodity you sell.

Those dealers that become One Price Stores have a competitive advantage over those who are trying to improve the traditional process for a shrinking owner base. If you’d like me to conduct a short webinar for you just let me know at: markrikess@gmail.com  

Kristen Tepper

I agree @mark at least from what i've seen - this kind of change filters through the rest of the dealership and helps grow overall customer loyalty and trust. One of our top dealership in referrals utilizes the one price selling model and closes more than 75% of all of their referral leads. Whenever we discuss best practices, they agree that the one price model has helped increase customer loyalty as well as brand awareness. It's a huge part of their marketing efforts. Customers feel comfortable and confident referring their friends in, knowing they won't get "beat up". 

But to play devil's advocate, as a millennial. I know some people my age would feel weird if they didn't get to "barter" or negotiate because it's how we still perceive this industry and they'd be weary that the price is really ONE PRICE, best deal. etc. etc.

We also have clients who are not utilizing one price and excel in referrals because of the focus on the customer journey and engagement.

Brandon McNett

Interesting article and great points.  I don't know where I lie with my beliefs in this process.  How strict do dealerships adhere to the 1 price policy...if a customer is $100 apart, does the deal walk?  Is there gray area, how big is the gray area?  Does the gray area change as the vehicle ages?  

Though I agree with the fact that fair, transparent and aggressive pricing is the way to start...the days of HUGE mark ups is likely over (unless you steal a vehicle on a trade).  If you aren't priced online in an aggressive manner, your traffic and customer satisfaction will dip because you won't be viewed as "competitive".  

One of the more common complaints on our "negative" reviews is that we weren't willing to wheel and deal enough with the customer to get them the deal they wanted or could get elsewhere.  

I see the pros and the cons...I just hope I make up my mind before it's too late!

Mark Rikess

Brandon,

We have transitioned over 250 stores to One Price. They are all negotiation free on every aspect of the transaction, including trade-ins, F/I. Minneapolis, near you, has the highest concentration of One Price Dealers in the US - midwestern values...Let me know if you'd like me to do a short webinar for you to further educate you on the process. markrikess@gmail.com.

Russ Chandler

Great article Mark! This is such a critical piece of any dealerships puzzle that effects everything from lead generation to consumer reviews. 

I think a lot of dealers over interpret the 'one price' strategy into meaning a price can't change or be different from what it was originally listed. The problem with this is that it just isn't realistic for the dealer and as Brandon mentioned in the comments, some customers are even insulted by the idea. 

To practice a 'one-price' strategy generally means your utilizing a market based pricing strategy. If dealers are really being transparent with consumers, their explaining what this means as an explanation of how they determined their price. Any dealer utilizing a market based pricing tool knows that the market changes regularly. So to say there really is just one price isn't true. The market could very quickly change. 

The key difference is why you would potentially negotiate with the consumer. It's perfectly reasonable to state your a one-price dealership and explain market based pricing to the consumer. If the customer believes the market has changed or that the price doesn't match the market, I would rather go through recalculating the market based price with the consumer than let them go over a small difference in price. It just seems something like this would be more realistic than positioning your pricing in a way that says your price will never change on a vehicle when a week later you've reduced the price because the market has changed. 

Mark Rikess

We explain to the prospect that are pricing could change at any time based supply/demand, aging etc. Just like most retail stores, like grocery stores, prices are fluid.

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