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Ron Henson

Ron Henson Director, Dealership Strategy & Development

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Does not being transparent make you invisible to customers?

BUZZWORD ALERT!

TRANSPARENCY.  Love it or hate it, it is relevant and plays a big part in your Digital strategy.

Let's see if we can look at things from a customer's perspective for a moment.  

  1. Google the product you're looking for.
  2. Read through the results on pages 1-5 to narrow your search. (Yeah, right!)  More like, Read through the first 3, maybe 4 results.
  3. Visit a couple of the sites to gather information including pricing and availability.
  4. Visit 3rd party sites. (Autotrader & Cars.com)
  5. ASSUME THAT NO PRICE = HIGHEST PRICE AND MOVE ON TO NEXT DEALERSHIP.

So is #5 happening?  You better believe it is!  If you aren't pricing your inventory and pricing it "On the Money" you are out of the Internet game.  Remember, we're looking at things from a customer's perspective.  So here's the rub, some dealers dig their heels in the sand and say, "Listing prices online just costs me gross and those mooches who insist on knowing he price before they come in can go see the guys down the street."  

The work I do with dealers affords me the opportunity to review many Internet mystery shops of dealerships all over North America.  It blows me away how many times we ask for a price and get an answer like:

  1. We'll make you a great deal. When can you come in?
  2. We've never lost a deal over price.  Come on down.
  3. What monthly payment were you hoping to get?
  4. Do you have a trade?

Let me address #4 specifically.  Now remember, customer perspective.  "Hey honey, did you know the price we can get on the new Tahoe we want is affected by whether or not we have a trade-in?"  "Hmm, I'll never understand the car business so I guess we better go down to the dealership that won't give us the price online because I'm sure they will be much lower than these other 2 dealerships that have been so nice and answered our questions so thoroughly."  

NOT!

The moral of the story here is that as the business owner you certainly have the right to make the business decision to resist transparency and not post prices on your website or with 3rd party vendors.  Whether or not that is a good decision rests with you and your management team but I would like to offer a suggestion.  Look at it from a customer's perspective when making that decision.  Think about the last time you shopped online for a high ticket item like a tv or a riding mower or whatever it may have been.  Chances are you were looking online for 3 pieces of information:

  1. Product info
  2. Pricing info
  3. Businesses that offered the product

Did you consider going to businesses that didn't offer one or both of the fist two items?

The Dalai Lama said, "The lack of transparency results in distrust and a deep sense of insecurity."

Go move some metal!

 

David Ruggles
A good deal is a state of mind. It's based on perception. There is no real transparency. Its also perception. And the perception is transparency is much more important that transparency itself. Does anyone really think we are going to divulge our complete cost structure to each consumer, then negotiate the margin? We'll have true transparency about the time Dealers are transparent with their managers and sales people, and not a moment sooner.
Stuart Zalud
The word transparency is often over used, but that is because consumers have more influence and data to support their influence than in any time in auto industry history. The problem is not all data is equal, and using it in context can also be a problem. Research indicates the Gen Y buyer who will soon comprise over 40% of your consumers wants this type of validated experience. With-out this type of showroom experience they, Gen Y, purchases from a dealership willing to be "transparent" There usually is a difference between new and pre-owned gross profit, but both experiences have to be validated in a transparent way. The good news for progressive dealerships is you can become transparent in a lot of different ways and use data that works for your dealership and your consumer. I wouls strongly recommend beginning to look to address Gen Y the are different buyers and the data supports that fact.
Ron Henson
David, I couldn't agree more than transparency has to happen between dealers, managers and sales consultants as well. Truth is, dealerships that aren't are not only losing customers to competitors, but employees as well.
Ron Henson
Great comments Stuart! I believe that it's not about being the lowest price, but being in the most aggressive sample set and then letting your light shine through a process that builds value and trained & certified sales consultants. Thanks for your thoughts!
Carl Bauer
Carmax proves over and over that price is not the issue. You don't have to be the cheapest to have customers buy from you, but you do have to have a good online shopping experience. Getting instant gratification on a trade appraisal on your dealer website is very important and I would challenge you to do the research on which values are most realistic and relevant. Start a fresh or rare car a little higher price than a car that is aging and you'll make up the difference in gross.

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