Consumers hate any form of friction, and the No.1 pain point found in many dealerships is the traditional price-negotiation sales model.
Companies today need to remove friction, not add to it, by simplifying customers’ lives.
In general, salespeople don’t negotiate. They either are a conduit for desk managers’ “pencils” or they tee up their first price quote with enough gross to allow a manager room to negotiate a little and try to close a deal.
Few salespeople today, especially new ones, have competent negotiating skills. This reliance on sales management is expensive. Most traditional dealerships have at least one sales manager for every four sales associates.
This lack of sales-associate empowerment is a costly proposition and an unnecessary critical point of friction. Customers dislike the back and forth sales people do between them and the desk. It negates the authority of the salesperson because, at this juncture, it’s clear to customers they aren’t dealing with a decision maker.
There is no other shopping environment where they encounter this type of experience.
Bottom line, this is a very expensive and redundant model. Well-paid managers are really super sales people. Their real job should be to hire, manage and train their sales staff to handle the entire transaction.
But why would they do that? An empowered sales staff needs fewer managers.
It may seem counterintuitive, but grosses are higher when negotiations are eliminated.
When you add value to a transaction you can charge more. By providing a fast, fun, and transparent experience through a knowledgeable sales associate a dealership can charge a small premium. Happy customers equal higher referrals, more positive online reviews and repeat business.
Most of us have bought products from Amazon. We take for granted, the hassle-free experience. Amazon works hard to eliminate points of friction. Auto dealerships must do the same.
The average auto buyer spends more than 10 hours on research before ever contacting a store. When they are ready to buy, most know what they want to purchase.
At that point, friction in the form of a lengthy process and multiple back-and-forth buying steps creates doubt, frustration and anger that can lead to lost sales.
Everyone knows of the growing trend of consumers buying everything from the comfort of their homes. That includes buying automobiles. It is estimated 28% of car buyers would buy “remotely” if given a simple, secure, friction-free method. New technology tools allow consumers to complete an entire transaction without coming to the dealership. Recent pre-owned-vehicle retailers such as Carvana, Vroom and CarMax have proven they can sell used cars without a test drive. They are all negotiation free.
Apple has Genius Bars where consumers are served by salespeople who are friendly, patient and smart, and possess high levels of technical knowledge.
Automotive salespeople also must be product geniuses so they can keep up with today’s educated shoppers.
Consumers don’t want an aggressive, high-energy closer focused on wheeling and dealing. They want a highly knowledgeable adviser focused on product features, value, financing and what’s best for them. They want to deal with a true professional.
Most dealerships don’t offer a differentiated shopping experience than that of same-brand competition. If the shopping experience is similar from store to store, what drives most customers’ final purchase decisions? Price. It is time to create a frictionless experience that leads to more vehicle sales, higher grosses and positive reviews.
Why do so many dealers operate under a negotiation-based sales model, with all the extra time, expense, complication and customer and employee dissatisfaction that come with it?
It’s simply because that’s the way it’s always been done. It may require a leap of faith, even a small one, but it’s time to think differently.
Former dealer Mark Rikess is founder of The Rikess Group, a consulting and training firm. He is one of the original advocates of one-price selling. He is [email protected] and 916-715-8129.