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Online draws reward applicants for submitting a response, charity drives give away freebies, and sports teams throw t-shirts and cheap giveaways into the raucous crowd. But for car dealers, free is seldom a good thing.
‘Free’ happens when mistakes are made, pure and simple. In the sales department, free items are given when the salesperson or manager doesn’t build value in the vehicle or hasn’t assessed the customer’s needs properly. The F&I office only offers freebies when they’ve quoted payments wrong or given false hope in the right financing terms. The service department is notorious for giving away free oil changes or discounts on services because something has gone wrong in the service drive, in the shop, or in between.
It might seem like giving a discount or a freebie is an easy way to fix the problem, but it can be very damaging.
• It Devalues Your Product or Service. What you’re offering has a value, and that’s the lowest price you’ll offer it for. If you are willing to give something away, it tells the recipient that it isn’t worth full retail at any time.
• Low-Quality Giveaways Are a Disappointment. Trying to fix a mistake by offering a freebie assumes you know the perceived value the customer wants. If you fall short, you risk disappointing or angering your client, driving them away. And if the giveaway you offer is a garbage product, it’s even worse.
While it would be great to just avoid giving stuff away by eliminating mistakes altogether, it’s not possible – “to err is human.” Instead, there are ways to address mistakes that change the value perception.
Rather than reducing the price of your product, offer a gift card for products and services. It might be the value of an oil change on an in-store rewards program card or a flat dollar figure for accessory purchases. By maintaining the full value on today’s invoice, you show that the product or service they received is worth the price.
Show an invoice discount, not line-item
If a discount or freebie is a must, don’t take it off the invoice. If you’re crediting the customer the cost of their next service, leave the current invoice at full cost. In the bottom total, show a ‘customer loyalty’ credit amount. When they look at the invoice, you haven’t reduced the item price, reinforcing its value.
At all costs, avoid the appearance that your offerings are worth any less than full price. Discounts and freebies might seem appealing but they devalue your product more than you know.
See the original article on Center for Performance Improvement