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To Price - or Not To Price; that is the question!
Every contributing member of ADM knows the answer - or they should; of course we need to give the customer the price. The real question is when, what and how!
One advantage that virtual showrooms have over real world showrooms is their ability to provide information - including price - more efficiently and in a more transparent manner. The problems start when we don't use that to our advantage as well as the customers who can now change the dealerships that they are "negotiating" with as fast as they used to change channels!
Low prices posted as either "loss leader specials" or competetive "one price - best price" strategies were fine in the real world when the customer used the newspaper to flip through for the best price on the car they were looking for without reading the fine print that qualified the offer to one stock number or explained the $5,000 down that existed in the disclaimer. Once they drove to the dealership the keys on the roof or the fast talking salesperson still stood a chance to sell them something today since they were tired or running out of daylight and they wanted to buy a vehicle - although "tomorrow's sale and future service" became much harder to save.
Well, tommorrow is here and our reputation has preceded us onto the Internet which is why so many customers prefer it over the real world experiences that drove them online. Unfortunately, the Internet has a completely different set of challenges when it comes to price so our own previous real world experiences have little value on our virtual showrooms.
Many dealer's first experience on the Internet was to use the same pricing policies as they did in the paper. That practice gave them the WRONG impression that you can't make money on the Internet. Their expectations were that if you don't post your lowest price then the customers will not stay on your site and they will go elsewhere.
Well, maybe - but aren't they going to do that anyway? Online relationships are just as large a part in the "buying" process as they used to be so the "best price" isn't always the lowest price. That wisdom survives onlne becasue the human nature that drives the buying decsion survives.
The solution is "TRANSPARENCY" - "HONESTY" and EFFICIENCY" in delivering a fair price on the vehicle that they are online looking for first - followed possibly by the one that they need as well as providing information on other key decision factors like trade-in value and financing with fast and easy answers - NOT MORE QUESTIONS!
There are several newly developing Internet applications that expedite the "negotiation" - or more accurately defined information - processes. Live Chat and click to call applications, online transaction tools, links to trade-in values on credible third party sites, comprehensive credit and payment calculations and legitimate online live negotiations ranging from a self serve desking tool to a fair market bidding application.
I am not limiting my suggestions to "conversion tools" that are designed to force a real world visit or a disconnect to an email or phone call to get the price and the relevant buying information - I am suggesting actual disclosure online - real time - to arrive at a fair price that will survive competitive shopping based on the RELATIONSHIP earned by a transparent negotiation on the virtual world that will transfer to the real one that will earn today's sale while preserving tomorrow's service and future sales.
Of course I don't want to limit this forum - the question or the answer - to my brief comments.
What do you think and how do you post price - OR NOT?
One advantage that virtual showrooms have over real world showrooms is their ability to provide information - including price - more efficiently and in a more transparent manner. The problems start when we don't use that to our advantage as well as the customers who can now change the dealerships that they are "negotiating" with as fast as they used to change channels!
Low prices posted as either "loss leader specials" or competetive "one price - best price" strategies were fine in the real world when the customer used the newspaper to flip through for the best price on the car they were looking for without reading the fine print that qualified the offer to one stock number or explained the $5,000 down that existed in the disclaimer. Once they drove to the dealership the keys on the roof or the fast talking salesperson still stood a chance to sell them something today since they were tired or running out of daylight and they wanted to buy a vehicle - although "tomorrow's sale and future service" became much harder to save.
Well, tommorrow is here and our reputation has preceded us onto the Internet which is why so many customers prefer it over the real world experiences that drove them online. Unfortunately, the Internet has a completely different set of challenges when it comes to price so our own previous real world experiences have little value on our virtual showrooms.
Many dealer's first experience on the Internet was to use the same pricing policies as they did in the paper. That practice gave them the WRONG impression that you can't make money on the Internet. Their expectations were that if you don't post your lowest price then the customers will not stay on your site and they will go elsewhere.
Well, maybe - but aren't they going to do that anyway? Online relationships are just as large a part in the "buying" process as they used to be so the "best price" isn't always the lowest price. That wisdom survives onlne becasue the human nature that drives the buying decsion survives.
The solution is "TRANSPARENCY" - "HONESTY" and EFFICIENCY" in delivering a fair price on the vehicle that they are online looking for first - followed possibly by the one that they need as well as providing information on other key decision factors like trade-in value and financing with fast and easy answers - NOT MORE QUESTIONS!
There are several newly developing Internet applications that expedite the "negotiation" - or more accurately defined information - processes. Live Chat and click to call applications, online transaction tools, links to trade-in values on credible third party sites, comprehensive credit and payment calculations and legitimate online live negotiations ranging from a self serve desking tool to a fair market bidding application.
I am not limiting my suggestions to "conversion tools" that are designed to force a real world visit or a disconnect to an email or phone call to get the price and the relevant buying information - I am suggesting actual disclosure online - real time - to arrive at a fair price that will survive competitive shopping based on the RELATIONSHIP earned by a transparent negotiation on the virtual world that will transfer to the real one that will earn today's sale while preserving tomorrow's service and future sales.
Of course I don't want to limit this forum - the question or the answer - to my brief comments.
What do you think and how do you post price - OR NOT?
Tags: automotive, internet, lead, management, marketing, price, process, quotes, sales
Replies to This ADM Discussion
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Permalink Reply by Ted Frazier on -
"...when a website forces me to put in my contact info to get something, I usually put in support@theirwebsiteaddress.com for an email."
HA! That does sound like a Matt Watson move. I love it!
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Permalink Reply by Matt Watson on -
Your just mad you didn't think of it first :-)
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Permalink Reply by Bruce Hartz on -
Wow! Some fun reading here but a bit off topic, Lets get back to the real world here. First let me tell you we have sold 6 to 7 hundred vehicles a year from the www for the past 4 years and rank in the top 40 for Ford eSales. I have tried 3 ways MSRP/invoice - MSRP/price - MSRP/Get Today's Best Price and can't see much difference in lead numbers or quality. You need to know your market. I just visited every Ford, Hyundai & Kia site in my market and transferred their pricing policy to a spread sheet. Here's what I've learned/believe, the few dealers who do post prices post them under invoice minus freight and rebates. Misleading prices are not what shoppers want. If we were to post the same price we quote our internet inquires we would be $1000 to high. We have a few dealers who quote used car prices without the state inspection cost! I would rather not mislead to get a lead. I truly believe a price is not the most important thing our shopper is looking for. They are looking for a good experience once they give up their personal info to us. How you handle the lead is paramount to price. Your site should have all the tools they are looking for and we all know what they are.
I think an issue far more important to conversion is not price, it’s how we present our inventory to our shoppers and I'm here to tell you it's our weak spot. I have not yet seen a really good search inventory listing page. Most are way to vague, confusing and inaccurate. Any suggestions or maybe a new forum would be helpful to us.
I visited dealmaker and registered but not sure that I agree with their thinking or their concept that>
Over 29 million tech savvy car buyers are online & getting ready to buy. They don't care who they buy from, so let us make sure they find your cars
on the Internet, and watch the deals roll in. Click here to get started
Car shoppers do care who they buy from! Our cars are not just a commodity to our customers they are an extremely important and emotional part of our American way of life! Nothing makes me feel better than to help a family who desperately needs a car to survive drive out of our store with a new or used car after they have been told by other dealers they can't help! You want commodities try Pork Belly's! LOL
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Permalink Reply by Tom White Jr. on -
I am going to try to bring this subject back to what it was originally designed to do. I am not going to expound on my vast experience, or otherwise try to dazzle you with a bunch of statistics to support my "selling proposition."
Suffice it to say that listing prices online is the ONLY way to succeed with the new (read Internet) buyer. How you price is strictly up to you. I think we sometimes forget that we, in this industry, are consumers not totally unlike the people we sell to everyday. Consider this - would you frequent a grocery store that did not post prices on the items it was selling; when you would have no idea what you were spending until you checked out? I think we would all say no.
Price is ultimately not the reason consumers buy; however, price is what gets consumers to open up a dialogue with us. If we can create a compelling reason to buy, supported by a professional atmosphere designed around individuals trained to take care of the comsumer, we can compete.
My two cents...
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Permalink Reply by Brian Ferris on -
Tom, the reason why you do not find price to be an issue is because you are probably a very good professional salemen. The professional sales executives is trained above all else to get the buyer away from the price. Sell yourself, your after sales service, etc., etc. but stay away from a price war. Its too easy to lose.
When I was in the world of bricks I never quoted anyone a price inside my dealership ever. I would use the price question as a green light to close. "I am glad you asked about price because I was about to tell you that, not only am I going to give you a very fair price, but I am going to give you the best service in town blah, blah, blah". Or "Price? I am pleased you asked me that because you obviously like the car, otherwise you wouldn't even bother to ask about the price would you? Well I tell you what, I would really like to do business with you, but I might need to get a little more than you are willing to pay. Make me an offer? What will it take to shake hands with you right now? (Then I keep absolutely quiet. I don't say a word. I dont care how long it takes, the opening offer must always come from my buyer. Once you get an offer you also get control of the negotiation and you're on your way to a deal)
Quoting price on the Internet is a double edged sword. Too high you get undercut. Too low you end up leaving money on the table. The only solution is an auto-dynamic pricing system. Software that can optimize pricing moment to moment, constantly monitoring supply and demand. Tuning your price to match supply and demand so you always get that all important opening offer from the buyer first. You are not bound to accept any old offer. You still have all the variables to play with. But from then on you take control. There is software that can help you do that. Some members of this forum have seen it.
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Permalink Reply by Brian Ferris on
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Bruce, I appreciate why you should hold your view. Most of the retail motor industry shares your position on pricing. However I have undertaken a very careful study of the fact over the past 10 years before embarking on the DealMaker project. We have spent a small fortune on survey reports etc., 9 of these surveys (and indeed the best) are absolutely free and you can get them from http://www.capgemini.com/industries/automotive/ Capgemini is a $10 billion dollar research company employing literally thousands of highly trained researchers. They serve 14 or the 15 largest OEM's. They have absolutely nothing to gain by disagreeing with popular OEM opinion. However they have found consistently over the past 9 years (with the Cars Online study) that safety and price are way ahead of anything else with the consumer. Dealer Loyalty is way down near the bottom of the list.
Automotive News reported that the nations largest auto group AutoNation conducted a survey of their customers and 2/3 said essentially that they like the idea of buying online rather than deal with a car sales person. Read report at http://www.autonews.com/apps/pbcs.dll/article?AID=/20080204/ANA04/8...
Ask yourself this: If price was not the major issue then why are margins so small in the industry. The only brands making any decent money are Porsche, Ferrari, Maserati, Lamborghini and a few other similar lines. These are about the only brands where I would concede that price is less of an issue.
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Permalink Reply by Paul Rushing on -
I read the report. Just like most any survey results they can be manipulated to suit whatever purpose you want them to. I am not saying that they are, you are pulling things out of context.
What I see it in the report that 88% of respondents said price was "Very Important or Important" and no where do I see the mention of dealer loyalty. While brand Reliability was Important to Very Important to 91% and Brand Name 81%.
These is subjective data. What would be a more interesting poll is among people that have owned a vehicle they bought at different intervals and for them to tell what they remembered most about their last car purchase. They will remember the process and whether it was painful or not. Then ask them what they paid for their car. If price is so crucial they should be able to tell you within $100. What kind of results would you get if compared to the purchase agreement in a blind test?
Also the same report say only 8 % of US respondents were "very likely" to buy online not "would buy online". Sure people presented with a form and a multiple choice questions are going to say price is important in a car transaction. A focus group with a moderator may provide completely different results.
They also stated:
"Those consumers who said they were not yet willing to buy a car over the web were asked what it would take to change their minds. The most common answer: the ability to talk to a person online or by phone during the purchase. Other key prerequisites included the ability to negotiate pricing online, having the vehicle delivered to their home or brought to a pick-up location near their home, and the ability to see photos/video of the vehicle inside and out (including the engine)."
Also nowhere did I see them define online car purchase. Is it as you describe it a complete transaction or could it be quantified more as agreeing to purchase a vehicle over the net subject to?
I asked a good friend of mine, Mike Knox, who is the creator of "Madden Football" who holds no industry affiliation what his opinion of buying a car completely online was, I would also consider him an above the fold online consumer.
He said " You know I buy groceries over the Internet and have them delivered to my home, but one thing I do not buy is fresh produce or meat I have to see them before I buy those things. I would treat a car the same way. I gotta see, touch, feel and smell one first, but I would most likely use the web in my research and have a good idea what I could buy one for and even negotiate a price. But the final test is the car itself."
Still looks like we have a long way to go before drop shipping vehicles from a complete online transaction has any marketability. Pizzas, books, and can goods yes. The car business is changing, giving price online is crucial, completely automating the actual transaction as a commodity may never be a high volume distribution channel.
Paul Rushing
912-266-1629
parulr@drivingsales.com
www.drivingsales.com
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Permalink Reply by Brian Ferris on
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First page of Executive Summary (Page 4):
"20% of consumers said that they were likely or very likely to buy a vehicle over the Internet" ".. In 2001 only 2% were willing........"
"Dealer Loyalty remain low" (Page 22)
"In a continuation of an ongoing trend dealer loyalty remains at lower levels..."
Cap Gemini have done no less that 9 such annual surveys. Each is consistent with each other and also consistent with numerous other reports and the findings of the nations largest dealer group referenced in the same comment.
You are of course entitled to your own opinion so let's be fair to others. Let them read the reports for themselves and interpret the contents however they choose.
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Permalink Reply by Ralph Paglia on -
Every time we see a conversation like this, there is a huge tendency to ignore reality right in front of our eyes... OF COURSE PEOPLE WILL BUY ONLINE!!! And we don't need CapGemini to tell us so... Just go to the ebay motors online auction... Not that mickey mouse ebay motors local edition, but the original ebay motors. OVER 3,000,000 vehicles have been sold in the last 6 years. Most of them by dealers selling to consumers. Here's what has been sold in the last few minutes:
2 minutes ago
1999 Buick : Century CustomPrice: $5,500.00
3 minutes ago
1999 BMW : Z3Price: $13,850.00
6 minutes ago
2005 Nissan : Titan SE TitanPrice: $11,988.00
7 minutes ago
2001 BMW : Z3 2.5 RoadsterPrice: $11,600.00
Now, ebay motors does not have a lock on some type of mysterious new technology... What they do have are lots of vehicles, most of which are listed by INDEPENDANT USED CAR DEALERS who have learned that complete transparency, including incredibly detailed descriptions and vehicle photos, combined with the willingness to sell the vehicle online gives them a competitive edge over franchised new vehicle dealers.
I secured a contract back in 2003 to research and write the dealer training materials for the ebay university seminar series for dealers showing them how to use ebay motors to sell cars. As part of the project I was able to visit and speak with the top selling ebay motors dealers in the USA. Without a doubt, on a universal scale these dealers recognized their competitive advantage as being full pricing and vehicle description transparency.
What I am NOT SAYING is that ebay motors is the way top sell more cars, I'll leave that to people like Don Crawford who know what ebay motors is today... What I AM SAYING IS THAT CONSUMERS WANT DISCLOSURE TRANSPARENCY, and they will give their business to dealers who deliver on what they want. That transparency can take form in several different ways, but pricing transparency is critical.
When I led a dealership sales team from 88 Internet sales a month to over 300 Internet sales a month, providing immediate and full price quotes was one aspect of what we did that was not being done previously. Does that mean we stopped negotiating? HELL NO! We were a team of wheeling and dealing maniacs!!! Does that mean we did not quote the "REAL" price? Hell No! We always quoted competitive pricing and offered multiple vehicles to choose from... And, if we were unable to set up a showroom appointment after a week... We sent them another 4-car price quote email with 4 different vehicles... And, if we did not sell a new car lead within 10 days... We sent them ANOTHER email with 4 vehicles PRICE QUOTED, only this time it was 4 USED CARS!
Anyone who thinks that playing "Hide the Weenie" as Rick Wrona would call it, will sell more cars these days, should leave the car business and go try peddling ARM Mortgage paper! Get your heads out of the 80's and 90's!!! I was there, and it was fun while it lasted, but those days are gone... People are not going to accept the "come on down and I'll give you a price... sweetie" sales attitude any more...
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Permalink Reply by Ralph Paglia on
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BTW... While I was writing the commentary above, here's what sold online with full pricing transparency:
4 minutes ago
2002 BMW : 3-Series 325xiPrice: $8,550.00
4 minutes ago
2003 Toyota : Sequoia LIMITED 4X4Price: $13,101.00
4 minutes ago
1967 Cadillac : FleetwoodPrice: $5,600.00
5 minutes ago
2008 Chevrolet : Silverado 1500 LTZPrice: $29,994.00
I better start typing faster... Cars that are priced online are selling by the minute!
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Permalink Reply by Paul Rushing on
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And they did not have to give a name or email address to the seller to place a bid. I know you have a lot of experience there Ralph any clue as the the percentage that fall out of the funnel after winning the auction?
Not reasons just an overall %? I am sure ebay does not make that public. From your dealer experiences.
Paul Rushing - Believer in All Things Possible
912-266-1629 800-357-1793
http://ismintraining.com
http://drivingsales.com
Follow Me on Twitter
paul@parushing.com
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Permalink Reply by Brian Ferris on
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And Paul hit the other key ingredient; "they did not have to give a name or email address to the seller to place a bid" ANONYMITY. That's the other vital piece of the jigsaw, which seems to be presenting a bit of a headache for some of our online friends. It can be done.
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