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A “TWO-CAR deal” happens every time a dealer takes a trade, and the second deal – the sale of the trade – is often the more profitable of the two. Here’s why:

First, the dealer can usually buy the trade for a favourable price. Unlike when dealers compete with each other to buy cars at auctions, dealers only have to justify a price to the consumer when acquiring a trade.

Second, they create the opportunity of additional high-margin service revenue when they recondition the vehicle in-house to be sold on the used-car lot.

Third, a used car taken on trade with a story (about the previous owner, the service history, etc.) typically sells faster and at a greater profit than a used car secured from an auction or a third party.

Where can a dealer focus their marketing efforts to secure a steady stream of late model trade-ins? Their customer Portfolio.

In mid-April, Absolute Results conducted a study of 31,980 retail sales transactions that occurred from January 1 to March 31, 2021.

Existing portfolio customers made 32.8 per cent of these sales transactions and new customers made the other 67.2 per cent.

The average trade rate from vehicles sold to existing customers was 47.99 per cent, while the average trade rate from vehicles sold to new customers was 33.96 per cent.


Jeff Williams

This means that established portfolio clients are 29 per cent more likely to trade than new customers.

But, in spite of these numbers showing the payoff from a focus on retention, most dealers still spend 80 per cent of their marketing efforts – and dollars – on new customer acquisition.

So what simple steps can dealers take to not only grow the monthly number of sales they derive from their portfolio, but also to secure valuable trade-ins and increase customer retention?

Here are three practical strategies from the Absolute Results Appointment Culture Playbook:

  1. Run a weekly appointment blitz with your sales team focused on portfolio customers currently driving two to five-year-old cars. Develop word tracts to ask customers how their driving needs have changed, tell the “story of the used-car market,” and explain why it’s an ideal time to trade in. Have the Business Development Centre and new sales-team members reach out to orphan customers, while the long-term staff engages their previous customers. Support this blitz with an appointment bonus and a buy-in commission.
  1. Run a monthly appointment-driven event. Create and deploy a portfolio-based multi-channel marketing campaign with personalised messaging for each customer. Support this campaign with an appointment blitz, having the sales team reach out to customers with a limited-time trade-in bonus and a virtual pre-appraisal. Have sales professionals offer private appointments in which they either “go to the customer” or invite the customer to the dealership.
  1. Engage with your service customers. Every. Single. Day. Use offers created by a digital tool like Absolute Drive, which automatically generates “buy-back” or “trade-up” offers for qualifying service customers, which will start a conversation with these brand-loyal customers – 50 per cent of whom bought from a competitor.

Locally and globally, hundreds of dealers have proven that these three strategies both grow portfolio sales and secure valuable trade-ins.

Weekly appointment blitzes have been adopted as best practice by the hundreds of dealers who have engaged with Absolute Results’ Appointment-Culture training.

A recent appointment-driven event generated 33 deals – 31 of which included trade-ins! Using the Absolute Drive platform, more than 100 dealers across Canada are increasing customer retention and acquiring inventory with trade-in rates reaching as high as 64 per cent.

Closer to home here in Australia, over the past three months we have found that 60 per cent of all customers who buy a new vehicle from a confirmed appointment at one of our private sale events are trading in a vehicle.

This is in contrast to walk-in customers without a confirmed appointment who are trading in a vehicle at just over 20 per cent of the time, down from 30 per cent last year.

Dealers who are able to secure a steady supply of used-vehicle inventory are in a position to win in today’s marketplace.

Jeff Williams is the president and CEO of Absolute Results

By Jeff Williams

Kelley Blue Book