When it comes to online pricing, car dealers walk a fine line.
Price too low, and your customers will shop your prices to other dealerships. Price too high, and you won’t earn any customers in the first place.
The stakes are even higher with the spread of online research portals and market pricing data. The average shopper now spends 13 hours researching their next car online. You better believe a lot of that is price comparison on dealer websites before they visit a showroom. So, your website price may not only be your first impression, but your only impression. Make it the right one.
How to Tell If Your Online Pricing Strategy Is Killing Your Business
The customer must trust that the posted price is a real price. Does your Internet sales team use one-pricing strategy, but your showroom team use a different one? If so, this is a red flag. In today’s transparent economy, customers expect consistency between online and in-store experiences.
There’s always wiggle room for special-case discounts, but if the website price is consistently undermined by in-store staff, that confirms a customer’s suspicion that the price can’t be trusted.
When setting website pricing, the most common mistake we see dealers make is they don’t really set a price at all, but rather show MSRP and urge customers to submit contact info to “get e-price.” This strategy fails, because modern online customers expect e-price to be transparently available right now. If you withhold it, they’ll move on to the next dealership.
The second most common mistake we see is unrealistically low prices online designed to draw customers in by including conditional rebates and discounts that don’t broadly apply.
You can always show conditional rebates and discounts, but the right way to show them is to first clearly display the “universal selling price” (including universal discounts), then show a secondary, further discounted price, including clearly labelled conditional rebates.
The other nontransparent way may have worked in the past, but not in the age of online data. More often than not, its costs potential sales, especially from younger buyers. Today’s customers have more resources than ever before to research vehicles, so if you don’t show realistic pricing on your website, consumers will find it elsewhere anyways.
Here’s the Fix
What can you do to fix this and earn more customers online? The good news is that you don’t have to have the lowest price; just a good one.
Develop a pricing strategy based on market data, price within the typical market range and apply it consistently on your website and inside your store. You don’t need to be a “one-price” dealer if you don’t want to be, but remember younger buyers may assume you are, regardless.
Give shoppers a consistent, decent price they can trust, and they’ll stop focusing on that price and start focusing on the vehicle they want to buy.
And guess what? Transparent pricing can increase profit per vehicle. Dealers who list market-based pricing and transparent payments online can increase gross-profit per vehicle by $785.
Most customers care more about transparency and experience than the absolute lowest price. Once they trust the price, they’ll even upsell themselves.
“Low price and transparent or fair price are the same in the consumer’s mind,” according to a study by Cox Automotive. Customers want to feel confident they’re not overpaying.
They also don’t want to spend hours of their precious weekend negotiating at the dealership. That’s why companies that enable customers to buy online and encourage them to “skip the dealership,” such as Carvana and Vroom, have made a splash in the automotive industry.
The good news is dealers have the tools to compete with these newcomers. Dealers can win customers by enabling them to order online. The right ecommerce solution delivers a native experience that keeps customers on the dealer’s website, building trust directly between the customer and the dealer.
It’s About the Experience, Not the Price
Shoppers decide to become customers because of the overall experience. Price transparency, not price itself, is the top differentiator between dealers because transparency plays a huge role in delivering a superior customer experience. With the right online pricing strategy and ecommerce solution, that great experience will start on your website and lead to your showroom. Be ready for it.
Aaron Krane is the CEO and founder of Drive Motors, which offers dealerships e-commerce solutions and online buying tools.