I traveled all over the country consulting with dealerships of virtually every automotive brand. There was a scenario that was common to every one of them. I would ask the managers if they had ever experienced selling a vehicle to a customer that they made well over the average gross profit, we’ll call this person customer A, and customer A left extremely happy, referring friends and family, and giving the dealership 5-star reviews? They agreed this happened regularly. I would then ask if they, maybe on the last day of the month in order to hit a bonus, ever sold a car at a loss, and the customer, we’ll call customer B, was upset, trashing the dealership online and always wanting more and more? They uniformly agreed this was a regular occurrence as well.
These questions and answers were not unique to 1 or 2 dealerships but every dealership I visited had experienced these phenomena. Once I confirmed with the dealership management that they too had seen these scenarios, I would ask, “do you know why this occurs?” They usually admitted they did not know or gave a halfhearted attempt to explain, “some people are just that way.” I could accept that answer if it were a “one-off” situation that rarely happened. However, every dealership, in every state in the country?
There is a simple reason why this scenario happens and will continue to happen. It comes down to Value versus Cost. Think of Value and Cost on 2 different scales side by side. These are 2 vertical lines of consistently increasing and decreasing amounts. Value is associated with the buyer, and Cost is associated with the seller. Value is perception and understanding, and Cost is the payment required (money, time, inconvenience…) to capture the thing of interest. Both Cost and Value will move up and down their lines as they increase or decrease during negotiation. When they are directly across from each other on their respective lines, in other words, the Value equals the Cost, the negotiation is over, and the deal is done.
Now, think of our 2 customers in relation to the Value vs Cost scale. At the beginning of the negotiation customer A had a Value below the dealerships offered Cost. Through the sales process, the dealership was able to increase the Value side of the scale until the customers agreed the Value rose to the level of the Cost. Customer A leaves happy because he/she is convinced they have received a Value equal to or greater than the Cost they agreed to pay.
Now let’s consider customer B. This sale begins the same way as customer A. Customer B is lower on the Value scale than the identified Cost set by the dealership. This time, rather than working to increase customer B’s Value scale, the dealership lowers the Cost to meet the Value established by customer B. This leaves customer B feeling anxious and unfulfilled. They are unsure if the Value they proposed equals the Cost. They think, what do I really know of what the Cost should be? Maybe the dealership would have gone lower? Is it really worth the Value I picked? They feel trapped by the Value they set and look to add as much additional Value as possible to ease their concern. They subsequently ask for more to be included in the deal. The problem is, the more they are given the more concern they have over the relationship between the Value and the Cost.
When working as a manager of a dealership, I would have salespeople come “work me” for a better price for their customers. I would say, “If you worked half as hard building the value with your customer as you have working me for a lower price, you would already have a sale!” The natural inclination of salespeople is to allow the customer to maintain control by negotiating on the Cost side of the scale. As is proven by the commonality of the above scenarios, this method does not create a happy and loyal customer. The primary responsibility of a salesperson is to sell the value of the vehicle.
The great thing about selling value is there is no lying, trickery, or manipulation involved. It comes down to the belief that the vehicle you are selling is a vehicle of substantial value. Consider the number of separate working computers on the average new car or truck today. These computers can change the ride, handling, and braking in fractions of a second. The seats were designed by automotive specialists to fit the contours of the human body. Experts were involved in every facet of the design, engineering, mechanics, styling, and functionality of every vehicle produced. If you can’t find the value, you are in the wrong field.
Think of the things most dealerships train on and hold salespeople accountable to. We stress the need for a good walk around. Why? Because this builds value. A test drive builds value. Features and benefits equal value. The entire process, when followed, is about value. A customer who rejects the price is clearly telling you, I do not yet see the value. If we want happy, satisfied, loyal customers, we must become value selling experts.
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