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Mike Gorun

Mike Gorun Managing Partner/CEO

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Stop Racing to the Bottom: Sell Value Instead of Discounts

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The other day, a friend of mine was in the market for a new tech toy. As he researched the different available brands, he noticed a huge difference in pricing - from $325 all the way up to $1800 -- but was unable to tell the difference between any of the brand offerings. The features seemed the same. They all looked the same. He read reviews, even those were similar -- consumers were generally happy, regardless of brand.

 

My friend was most interested in the premium-priced brand, because an associate had purchased and recommended it. However, this associate stated that this premium brand was probably the same as the less expensive $325 brand. In an effort to find out why the brand he wanted was priced so high, my friend turned to the brand’s Twitter account.  He found daily posts offering a discount if retweeted, so he did. Minutes later, he was messaged with a coupon code offering 10 percent off the purchase. Not swayed, he engaged the brand asking what made their product more expensive. He was given the following reasons:

 

  1. It was a better quality than the less expensive brands.
  2. The other brands were made and shipped from China. Therefore, it would be very difficult to obtain any customer service or warranty work should something happen. One the other hand, their product was made in the United States and came with a one year warranty.
  3. It offered some additional features that the other brands did not.

 

These value propositions swayed my friend and he purchased the more expensive model. So, why would someone - all things being equal - choose a more expensive brand, at more than twice the price? For him, it was these unique selling propositions. Not the discount.

 

In our industry, consumers are constantly barraged with messages about low prices, coupons for service and many other similar offers. Dealerships tend to neglect to ensure that their primary message always reinforce any unique selling propositions. In many cases, consumers are willing to pay more if they feel that the additional cost benefits them. I recall seeing a dealership that had a chalkboard in its service department that listed their service pricing as well as all of their competitors - both franchise and independent. This same chalkboard also listed the reasons why they weren’t always the lower price and the benefits of choosing them over their competitors. They weren’t always the lowest price. However, their thought process was that the information made customers feel more comfortable to make on-the-spot decisions. The customer was no longer left to “think about it,” which is really code for “let me do some research, price shop and get opinions from my friends and family.”

 

With all the information and resources available to consumers, dealers feel they are in a race to the bottom. It has certainly become more challenging.

 

Consider perhaps focusing messaging on why customers should do business with YOUR dealership - even if you aren’t the lowest price. You may well find that customers are willing to pay more if they see the benefit of doing business with you versus the competition.

 

Find your unique selling proposition and make sure that it is broadcast in all of your messaging. As a result, consumers may well get more interested in doing business with you, rather than your price. When that happens, you’ll see your customers explaining to their networks the reason they chose you -- just like my friend did to me.

Steve Tuschen
Mike, your picture says it all you have to show the value in everything you do. By being upfront and transparent in the information and why the price is different, warranty on parts and labor at any other dealership with OEM parts versus aftermarket parts. Factory trained technicians we see your vehicle and know what to watch for and are specifically trained for your vehicle. By providing the information you are keeping the customer engaged in your business, which prevents them from going somewhere else and receiving the same or better service somewhere else.
Chris K Leslie
Was it really the USP or did the model he bought for the need better? I didn't see what he needed this toy for or what he was trying to do with it? Needs assessments > USP
Gary May
This is the same conversation that a dealer in Southern California had me participate in with their OEM district sales manager on Friday. The points went back and forth between the GM/VP and the factory guy, centered around the rapidly diminishing gross for their high-land brand. Our client's points were well made and backed by 15 years with the brand and his staunch support of the "best-in"class" position he felt the badge carried. The factory guy made strong points as well including the profitability that the top volume stores had across the country as well as close to our client's immediate market. While nothing specific was resolved between the two gentlemen, what did come out, by example, was some of the poor approaches being used by salespeople, in email communication and by product specialists. We do not do the job in the way it deserves to be in representing our products to the market, one that is quite hungry for what we are selling. This, along with use of CRM, more accountable marketing and more is really a dealer and training opportunity. Customers are begging for experiences that create brands, not belie them. So, the question is what drives the ways in which value is set, explained and delivered? If you can't answer that, you can't do it...

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