I'M SURPRISED BY THE NUMBER OF "FLEET-TAIL" departments springing up in dealership's throughout the country. Where the heck did they come from? And, what value do they provide?
In my opinion, "fleet-tailing" is a desperate strategy. It's a hybrid sales system borne of reluctant acknowledgement that consumers have changed and a stubborn refusal to abandon the sales tactics that consumers are telling us they hate.
A SHADOW SALES DEPARTMENT Fleet-tail departments have been created to take care of knowledgeable consumers, who are quickly becoming the majority of the market.
The departments are usually staffed by experienced sales people who answer pricing and payment-option questions with ease and confidence. Pricing falls somewhere between the retail and fleet price. Sales commissions are lower, but volume makes up the difference. Traffic is generated by newspaper advertising, in-coming telephone leads, and sometimes the Internet. Low stress, low gross, low levels of supervision: a pretty cool job if you can get it.
It looks good on paper, but there are problems - most of which will surface sooner rather than later. Fleet-tailing:
* Adds a layer of cost to your organization.
* Cannibalizes your sales staff to set up a competing sales department within your organization, a competing department that can sell cars at a lower price.
* Demoralizes your showroom sales staff, including the new people you are trying to develop. How do you develop the sales person of tomorrow when they have to compete internally with individuals who can offer a better deal?
* Creates not only two classes of sales people, but also two classes of customers, which can't help but damage your credibility eventually.
Wouldn't it make more sense to adapt the sales process to give consumers - all consumers - what they want? To answer that, I suggest we start where all good strategies begin: by studying the consumer.
PRODUCT LOYALTY IS HISTORY The majority of car buyers - about 2/3rds - won't repurchase the model they are driving today. With the proliferation of new models and climbing incomes, product loyalty is in free-fall, which in turn creates a longer selection process. Not surprisingly, the process takes time. Data reveal that the typical consumer takes months to complete the purchase process.
Most consumers are still in the product selection phase the first time they visit your showroom floor. That sets up an immediate conflict. They want to talk with an individual who will be a resource while they sort out which vehicle and purchase options are most appropriate for them. The training focus at most dealerships, however, is on the art of deal-making and closing. Salespeople are coached to get the deal done today. At minimum, they are taught to "line up" the consumer on a product for a closer.
This "get the deal done today or lose it" mentality creates a self-fulfilling prophecy. If the sale is not consummated during the first visit, which in reality rarely happens, the consumer has no allegiance to the sales consultant or the organization.
What do they do? More and more, they are seeking alternatives to visiting the same showroom that left them unfulfilled. This is why we are seeing the surge in both the broker business and Internet sales - and the misguided attempt to play the game both ways with "fleet-tail" departments.
PROFIT IS NOT HISTORY Today's consumers are not anti-profit, they are "anti-getting taken." They are not nearly as price sensitive as most dealers believe. A recent study by CNW Marketing found that Internet buyers are paying more than showroom shoppers. So are consumers who buy from brokers. A growing percentage of consumers are paying a premium to avoid the showroom floor.
They are looking for a sales process that is fast, simple, fair and is conducted by a sales consultant who is knowledgeable in both the products he sells and competing products. Consumers want to deal with someone who has the authority to make decisions and adds value to the purchase process. When they find that person, purchase price becomes less important.
TIME TO GO ALL THE WAY Dealerships with fleet-tail departments have already instituted a mini-one-price department within the organization, but still cling to a parallel, antiquated system that is slow, complex and inequitable for some customers and makes recruiting good sales people almost impossible. This dual system reminds me of the 60-year-old junior executive who realized too late in his career that he couldn't steal second base with one foot on first.
By giving consumers a negotiation-free alternative you provide an enhanced experienced that is more cost-effective for both parties. The success of brokers and Internet sales demonstrate the direction the market is moving. If you have a fleet-tail department, or are considering one, why not go all the way and eliminate your traditional sales process?
You won't achieve optimum success by tinkering with the tired strategy that causes consumers to purchase vehicles anywhere but your showroom floor.
Mark Rikess is president of The Rikess Group, an automotive training and consulting firm. To read his previous Ward's Dealer Business articles on-line go to www.rikessgroup.com