There are really only two true variables in a new-car deal. The first is what the customer is prepared to pay for your car; the second is what you are prepared to pay for theirs! And the latter will ultimately determine what you will have to convince the customer to pay for yours.
I truly believe that how you handle the trade, from start to finish, has a greater impact on your closing rate and your level of customer satisfaction than anything else you do as part of the sales process.
Back in the day, when the customer was privy to little or no information, or at best misinformation, we were able to hold our cards close to our chest and require a deposit and an offer on a new vehicle prior to appraising the customer’s vehicle. In today’s market with the onslaught of information available to the consumer within a few clicks of the mouse, this is an archaic process to say the least. In an effort to create a transparent sales process for both the customer and our sales representatives, we must be prepared to create a transparent appraisal process.
Begin with the appraisal
This should begin with an offer to appraise the customer’s vehicle up front in the consultation stage of the process. Many customers come into your dealership with the objective of finding out how much they can get for their vehicle as they believe that this has a direct impact on how much they can spend on a new vehicle. And they are right!
If you are not prepared to provide customers with enough information to make informed decisions, they will simply not buy at your dealership!
You should instruct your salespeople to offer an appraisal as part of the consultation stage of the sales process, therefore collecting the ownership, keys and any pertinent information about the trade on a completed trade-in appraisal form. This should be given to the manager on duty and the customer should be informed of the appraisal process that you use at the dealership.
What better control over the showroom could you have than for the manager on duty in an office to have the registration and keys to all of the prospective customers on the lot and in the showroom all day long?
Never ask what they want for their trade
Under no circumstances should we be asking the customer what they want for their vehicle. Why would we do this? Again, back in the day of no information we were able to steal trades from unsuspecting customers quite often, but how often does that happen today? How many customers walk into your showroom without having researched the value of their trade online?
When we ask them what they want, we are asking the customers to lie to us as they know that we will want to negotiate the final trade-in allowance. They will take what they really want and add a $1500 ‘edge’ to negotiate and then when we ask the manager his opinion, he/she will leave the same? Then where are we headed in the process? We must also add in the standard $2000 retail to wholesale spread so therefore we will be $5000 away from a deal every single time we begin the negotiation process.
In order to create a transparent sales process we must learn how to present and sell a realistic trade amount to the customer. The first thing that we must realize is that we are presenting an amount that the market will bear, not the manager’s opinion of what the customer’s car is worth.
Show them the numbers
One of the best ways to eliminate this difficult negotiation point is to integrate a system similar to the Automotive Exchange Network, which allows a dealer to shop the value of a vehicle online to dealers all across the country within minutes of completing the appraisal. This is an online system that can be shown to the customer so that they see all the real market value bids coming in on their trade from dealers across the country.
It is very easy for a customer to disagree with one manager at one dealership about the value of their trade, but how can they disagree with 600 dealers from across the country and several real market-value bids within a $500 to $1000 range on their vehicle?
Have a good look at your trade appraisal process over the next few days and be sure to create a truly transparent process for your salespeople and your customers. Eliminate the mindset of trying to steal one or two trades a month by $1500 or $2000 dollars per trade. This mindset will cost you at least four or five percent on your closing ratio, which in turn, with 200 showroom clients per month, will cost you eight to 10 deals. Design your process to close more deals and make it a much more customer-friendly process and you will improve both your profits and your customer satisfaction levels!
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