So here are a series of steps that you can walk through one-by-one to kickstart your assessment of the options available to retailers as business eventually starts to return to normal.
- Start spending time with early cycle buyers
Most showrooms are open seven days a week, but the majority of sales activity occurs on two of those days.
We know it is not a coincidence; it is basically our choice to wait for customers rather than find them.
To start selling cars seven days a week and increase volume, get your sales manager to select 10 customers for each sales consultant. These customers have three things in common; they bought their last car three years ago, they are in your service department and they are financed with you.
With this knowledge, do a positive equity calculation; you control the trade-in value, you know who the financier will buy in this current market and start a conversation.
Remember – in these times most customers believe they can’t aspire to another vehicle or are too scared to ask.
More deals will be lost in the next 12 months to procrastination or an unasked question than through the economics of the deal.
- Remove price from the conversation
With conservatism comes a fear of price and the need for bigger discounts.
When buying a car this has always been irrelevant as 93 per cent of people borrow for cars (and seven per cent lie about it) so they are only ever repaid and replaced.
Take price away from your showrooms and also from your sales consultants; your sales managers should be the only ones knowing and controlling price. Furthermore, replace sticker prices with “repayment hangers”. $150 per week is always a lot easier to sell than $25,000.
- Create changeover candidates
Service should boom in the next 12 months as fear keeps people in cars longer and in your workshops.
Service sells the second car in every dealership, so make this a reality. Use this to your advantage and have “We want to buy your car” hangers in all 30,000km service cars.
As predicted in April, used cars are hard to get, so create your own stock by harvesting your service customer.
- Target more valuations by sales person and incentivise success
Every car bought is a car sold; value more cars and “dehorse” more customers. It worked a treat in the last recession; I can’t see why this one would be much different.
The big difference between this and the last recession is the existence of the lead generators as a means of customer disposal. In the last recession we had to buy every car, because the Trading Post couldn’t handle the traffic.
We need this same mindset today. Most sales consultants are allergic to trade-ins because they often unsettle the deal. As a result, the trade never makes it to the valuer because the salesperson tells them to sell it privately.
To stop this, the philosophy must be that every customer has a trade and we are buying it.
To promulgate this, the sales consultants should be incented to get cars valued (it’s our decision whether we buy them or not).
Go and check your valuation rates, you’d be surprised how low they are.
- Three appointments per day per sales consultant
Appointing sells cars, and if you game-plan them well beforehand the conversion ratio is over 70 per cent. The positive equity calls will help, but old owners should be continually called and appointed in this market.
Remember, fear and procrastination will kill more deals than the money in this market.
Get appointing early; make it three per weekday rostered on and game-plan each appointment with the sales manager before the customer arrives.
Also call each appointment the night before or on the day and move them by 15 minutes; this locks in their commitment and makes them realise that you are busy.
Waiting will be the end of many great sales consultants’ careers over the next couple of years.
Wayne Pearson is the head of Pearson Automotive Consulting
Wayne Pearson
By Neil Dowling
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