Digital Dealer
The 'Stealth' Shopper
By Todd Smith
A growing concern among dealerships is the trend for people to go online, complete their research, including pricing from the dealership, then walk into the store as a traditional shopper and negotiate with an entirely different salesperson. We both know what happens in this situation. One, the customer receives a better price offline that they did from the Internet department. This is a credibility killer for the dealership since the Internet is all about best price and ease of shopping for the consumer. Second, we negotiate with the customer, settle on a price, then they pull out the Internet price at the last moment. The Internet is not the only place this happens. I've also seen it happen during direct mail events when we spend hours negotiating a price and at the last minute they pull out a coupon for an extra $2000 dollars off the price for this sale only. We then try to back peddle and say we included this discount already-and we all know what happens then.
So how do you design your business to take this process into account? Here are some suggestions.
The obvious is that you have standardized offline and online pricing, which I think is probably not the best option since it could potentially reduce your front-end gross profit.
So the next question is, how do you handle a two-price selling system and then effectively communicate that to your customers and staff? After much research and analysis, I believe that up-front pricing on the Internet is the way to go since my most successful dealers all give their pricing up front. It allows them to focus more on value than causing a price-only negotiation.
A simple solution that will prevent overlapping is printing out the lead sheet of customers you are working with online and leave it at the desk daily so they can review and compare it to their deal log sheet and vice versa for the Internet department. This is a simple solution that could help prevent some overlap.
The real problem is how to unwind the customer that received a lower online price than at the dealership. To combat this, try giving prospects this pitch-You should announce to your Internet prospect that buying their vehicle through your cyber department is a different experience and the cost of doing business decreases, allowing you to pass on the cost savings to them. You need to tell them up-front when they submit the purchase request that if they do decide to walk into your physical dealership after you have quoted them the Internet price that they shouldn't expect the same price due to the increased overhead in the traditional sales process.
Disclosure seems to be the best defense against a price negotiation with Internet shoppers. I truly believe that if you are up-front and honest with the prospect, they should have no need to come into the dealership as a stealth shopper unless they feel you have not completely answered their concerns and questions. The other thing I highly suggest is that you poll the last 200 shoppers that you haven't sold online and see why they didn't buy from you. This gives invaluable insight into e-business departments and will allow you to make decisions based on facts, not gut feeling or reactions, in unique customer situations.
Building a successful system to handle this growing problem is imperative as the marketplace matures and evolves from its current position. Just being aware that prospects are shopping your dealership from multiple angles is important so you can put processes in place to capture the maximum number of prospects and convert them to sales.
Remember that since the Internet is still new to automotive shoppers, they are very hesitant to complete a deal entirely online. With this in mind, prospects will continue to merge the bricks and clicks until they become confident of making an automotive purchase sight-unseen over the Internet. As the automotive industry transitions from an analog to a digital business, your greatest challenges will be meeting the growing needs of the Internet consumer, while maintaining the profitability of the transaction without sacrificing service. Keep one thing in mind as you develop new systems to handle the changing dynamics of your customers: Things will change, and you'll need to change with them to survive.
Todd Smith is President and CEO of Target Marketing Group, the leading automotive Internet solutions provider. He is the publisher of the manual "Automotive Retailing on the Internet." TMG works with OEMs, dealership groups and individual dealerships on creating Internet strategies. Visit Target Marketing Group's Web site at www.tmg-online.com. tsmith@dealeronline.com
