Selling Away From Price
By Kenneth Elias
Despite all the prognostications about price transparency on new cars being available to Internet-enabled customers, cars don't get sold on price alone. Most customers have only gotten more confused about choices, options and pricing because of the 'Net. These customers, like your showroom customers, want and expect to get helped into the car that meets their needs. And that takes salesmanship, not just price giveaways on the Internet.
Let me start by saying that price, by itself, does not sell cars. It is not an Internet marketing policy that should be pursued by car dealers on the Internet as a recipe to sales success. Posted prices on the Internet allow customers to simply shop any given price to see if they can do better elsewhere. Everyday, customers visit CarsDirect.com, Greenlight.com, AutoNation.com and many individual dealer sites to establish a ceiling price for any given vehicle. With that price in hand, customers easily surmise that if no dealer, most likely the one closest to their home or work, can meet or beat that price, that's the highest price they'll have to pay.
By giving away price on the 'Net, your store has diminished itself to being one of many just another site that provides pricing and nothing more. What's worse, you have made a decision for the customer already that the car they've configured is absolutely the one they are going to buy. (And how many times have you seen customers move onto another vehicle on a whim?) All you provided the customer was one data point price in a multifaceted decision process. Suppose you have a 180-day unit that you'd sell into holdback? Did you even present this vehicle to the customer even though it has slightly different equipment than that requested by the customer? How would you know if you could sell this unit to the customer if all you gave away was price for a specific car? What's worse is that the customer doesn't know that in 10 days, to meet your sales goal, your price could go even lower for the exact car he does want but you've already given away an old price that is no longer valid. What incentive does the customer have to come back to your site now unless you informed him of a lower price? And how long would you honor that lower price (a fact that must be stated for an identifiable unit)?
Price imparts no value, in and of itself, to the customer decision process and certainly embeds no sense of value-add provided by your store. Value-add? Again, customers need help to understand how to buy a car. First, are the car customers select really the ones they want? Did they know that they can add a sunroof to the car and only pay $25 more per month on the lease? Or even though they want a Camry with no value package, that they can't get that car right away? Or that your store provides free loaner cars to its customers? Does CarsDirect provide that? Look what I have just done provided value to the customer decision process and moved the customer away from price being the only data point provided to this customer. And that's why price doesn't sell it conveys only one data point that might be important but cannot effect a purchase decision in most cases.
At priceline.com, we present information on vehicles that does not exactly match in price, options, or colors the original configuration requested. And yet, after selling thousands of cars, mostly on counter-offers, we find that customers, in their desire to acquire a new vehicle, will make trade-offs. Pricing rarely becomes the most important item to serious buyers of new vehicles as soon as the customer understands the market pricing level necessary to move the unit. So how does your Internet sales manager accomplish this without presenting prices at the start?
1. Alternative Pricing: Present vehicles that are similar, but not exactly the same, and state the price at which you would clear these alternative vehicles. Doing this frames the desired vehicle pricing as being a comparable and reasonable price. Sometimes, it will also prompt the customer to consider vehicles of higher or lower content or different color and commit sooner to a purchase. It also creates a sense of urgency for the possible scarce vehicle originally desired.
2. Prior Sale Check: When discussing a particular vehicle that the customer has expressed interest in, it may make sense to throw out a "masked" trial close question. That question requires your informing the customer that before you can commit the vehicle to that customer, a prior sale check must be performed. Actually, what you are asking is, is he willing to commit to it now, before you go to the effort to check if the vehicle has been sold previously.
3. Market Pricing: For some psychological reason, most customers would rather buy from a busy store with lots of sales success. In my opinion as an amateur "shrink," it is the affirmation principle at work if others are buying here, then it must be OK for me to buy here as well. For Internet customers, why not tell them how many similar cars your store sold in the last week? And why not suggest the "price" at which those cars got sold? It can also help to inform them of market pricing for a similar vehicle in other regions of the country. It helps the customer to understand that your deal may be better than what customers elsewhere are buying.
4. Turn-Overs: Some stores use T.O.'s on their sales floor but don't do it for Internet customers. We have found that rather than being a "hard sell" technique, some customers will move to a close upon hearing a new voice affirming prior information conveyed and/or offering new facts or issues not previously discussed. It also shows customers that your store is interested in their business it is not just a sales commission for one salesperson.
5. Monthly Payments: Many customers think only in terms of monthly payment numbers. Often, it is quite easy to forget about vehicle pricing if the monthly payment can be matched to the customer's desires.
Internet customers are no longer vastly different from your floor customers. Most are confused, uncertain and certainly fearful of buying a new car. Getting these customers over these hurdles requires sales skills, not just pricing information. Cars are sold, not bought. Your job is to sell regardless of how the customer gets to your store.
Kenneth A. Elias is a consultant, previously with priceline.com's automotive division. kelias@dealeronline.com
