A customer calls to inquire about a specific vehicle. He says he’s ready to buy now and only wants to visit the dealership to sign the paperwork. Do you negotiate over the phone or do you sell the appointment?
Most dealer consultants will recommend the latter, but what if the customer insists? That’s what my publisher did when he contacted a Florida dealership recently. He had a new live-in babysitter, or "au pair," as he calls it, and he wanted to lease a MINI Cooper for her. But the salesperson he talked to over the phone was giving him every reason not to buy from his store.
First, he said it was against store policy to negotiate over the phone. And when my publisher asked why, the sales rep said they don’t like to be "shopped." In other words, they didn’t want to do the deal because they didn’t want to compete for the sale. Then, frustrated that my publisher wouldn’t budge on his request, the salesperson proclaimed that only one in 10 phone-in customers are serious about making a deal. "Well, I’m that one customer," my publisher responded.
What the salesperson didn’t know was my publisher has been a loyal patron of one of the dealership’s sister stores. If he had, he would have discovered that he has purchased cars after negotiating over the phone, and he rewarded the dealership’s flexibility by buying just about everything on the F&I menu. Instead, the salesperson centered his pitch on the MINI’s cargo space, promising my publisher that he’d stuff himself into the back of the vehicle if he would please just visit the showroom.
Look, I get it. You don’t want to waste time on a customer who is price shopping you, and you sure as heck don’t want to be bidding against yourself for the business. I did make those points to my publisher, but he came back with an even better point: "For all the talk about the Internet customer, dealers still don’t get it."
So, gang, how do we deal with these types of situations? I don’t doubt the salesperson’s one-in-10 claim, but should that really stop you from realizing a potential sale? And should you even tell customers that being shopped is your reason for not doing a deal? Personally, I would have blamed the Red Flags Rule for my unwillingness to work the deal over the phone, but that’s just me.
Last month, we reported on an Internet shopper study conducted by Maritz Research. It showed that 78 percent of car shoppers used the Internet in their purchase or lease process. That high percentage, the firm said, is why more than one in 10 customers are skipping the test drive before making a purchase. Maritz also attributed those skipped test drives to a more pragmatic car buyer who is simply interested in a vehicle that gets them from point A to point B, which is what my publisher was after.
As for being shopped, Cobalt released a study that identified three types of shoppers: Internet-savvy Miss Pop Culture, The Modern Family shopper, and brand-buying Mr. Big Wheels. During her 36-day shopping journey, Miss Pop Culture looked at eight different dealerships, the study said. The Modern Family buyer looked at the same number, but took 90 days to make a selection. Mr. Big Wheels consistently went back and forth between multiple dealer sites during his 45-day run. What all three groups had in common was their vehicle and price comparisons were done between brands, not dealerships.
Look, I know the goal is to get the customer into the dealership. That’s the only way we can be certain they’re serious about buying. But there are companies like SunTrust Bank, Bank of America and CarFinance Capital that are willing to take a chance on an undecided customer. What they’ve done is create web portals aimed at capturing the shopper’s financing before they make a vehicle selection.
Even Douglas Duncan, chairman and CEO of Safe-Guard International, talked about the direct channel when I spoke with him last month about his new finance company, Global Lending Services. Duncan said his company is focused on the dealer channel, but admitted his interest in establishing a direct connection to consumers via the Internet.
Look, I’ve written that we shouldn’t allow studies on today’s Internet shopper to dictate the way we conduct business. But I’d be doing you a disservice if I didn’t tell you there are companies positioned to give Internet customers exactly what they want. Does that mean we should do the same? Not necessarily, but we better have a better reason for not doing a deal over the phone than not wanting to be shopped.