Faster Inventory Turn and Higher [603550]

Faster Inventory Turn and Higher
Gross Profits Are Possible
Many dealers believe that cars have become commodities in today’s Internet-
driven society: dealers are competing on price and on price alone. When all
you compete on is price, it’s tough to earn a profit. Dealers who think of their
cars as commodities can have good volume and turn but will see their profit
per vehicle drop. To avoid the race to the bottom—to turn your inventory
quickly and still generate strong gross profits—you have to evolve your
practices from Price-Based Selling to Value-Based Selling.
Value-Based Selling: a Winning Proposition
for Both Consumers and Dealers
Even with the advent of the Internet, the essentials of success require
understanding what consumers are looking for. A vehicle is one of the most
expensive and most important purchases a consumer ever makes. Whether
they’re buying a basic commuter vehicle or a Lamborghini, consumers are
looking for the same three critical factors:
1. a car that meets their needs and is
2. a good value for the money and has a
3. fair price
If you can deliver on these three elements, you have the opportunity to earn a
healthy profit, provided that you sell vehicles based on their value rather than
their price.
How Value-Based Selling Works
To practice Value-Based Selling, you have to communicate how the vehicle
meets the consumer’s needs and why your price is a “fair price.” If you know
your high and low margin products (based on consumer demand) and are
stocking, pricing, and managing your inventory accordingly (see previous
interview, Does the Internet Mean the End of Solid Gross Profits? ), your next
step is to demonstrate the value of your vehicles. The key is evidence . The
average consumer spends six and a half hours researching vehicles online
www.ConsumerOptimization.com 1From an interview with Pat Ryan, Jr., CEO and Co-Founder of INCISENT Technologies.
Price-Based Selling
vs. Value-Based Selling
To view a short video of Pat Ryan
discussing price-based vs. value-
based selling, visit
www.ConsumerOptimization.comAchieving the Profit Potential of each vehicle requires
dealers to move from Price-Based Selling to Value-
Based Selling.
Pat Ryan, Jr. is the Chief Executive
Officer and Co-Founder of INCISENT
Technologies , maker of FirstLook
Inventory Management Systems and
MAX Internet Advertising and Marketing
Systems. The Company was ranked
as the #4 Fastest Growing Software
Company in the United States in Inc
Magazine’s Top 500 List as well as the
#1 Fastest Growing Company in the
Automotive Sector.
Pat is widely followed as a thought
leader and speaker and can be
reached at [anonimizat].combefore he or she makes a purchase. They’ve read the reviews, looked at the
pictures, and comparison shopped your inventory against other dealers in the
area. They are armed with a great deal of evidence to evaluate your vehicle and
your price.
The result: the “amateur” (the consumer) knows more than the “pro” in your
dealership.
A customer with encyclopedic knowledge can seem like a scary prospect.
But it shouldn’t be, if your team is armed with the same evidence. To practice
Value-Based Selling, you have to find the same evidence your consumers
gathered online and use it in every step of the sales process. Build credibility,
inspire confidence, and demonstrate the value of your vehicle. A consumer
who buys a car every two to three years shouldn’t be more of an expert than
the professionals at your dealership; with the right tools and a focus on Value-
Based Selling, you can level the playing field.
The Evidence That Illustrates Value
What evidence should you use to support the value of your vehicle? The same
evidence you’d highlight in a vehicle ad: most searched equipment, expert
reviews, awards, and any other facts and figures that will ease the decision-
making process. Talk about the car’s JD Power Ratings; they provide consumers
with a level of comfort because they reveal how current owners feel about the
same car. Look up the car’s vehicle history and share any compelling evidence
of value with your consumer. Is it a One-Owner? Has it ever been in an
accident? By discussing relevant evidence, you make yourself the consumer’s
advocate rather than an adversary, and you’ll elevate your customers’
confidence in doing business with you.
Selling the Value of the Car in the Closing Process
Communicating the value of your vehicles is important in every stage of the
car buying experience. But it’s essential during the closing process. Why?
Traditional closing methods, like the traditional “four square,” can work—but
just as often, they can intimidate the customer and devolve into haggling. A
confused, annoyed customer is significantly less likely to agree on a mutually-
beneficial price (if he or she buys your car at all). As bargaining increases, your
Profit Potential can actually decrease.
To maximize profit, you need to approach closing as you do the rest of your
Value-Based Selling process. Consumers are looking for a vehicle that fits their
needs at a fair price. Their biggest fear is being taken advantage of. If you
introduce third-party evidence from the Web to support your vehicle’s value
and the fairness of its price into the closing process, you’ll increase their level
of trust. Demonstrate the value you’re selling, and consumers will let you earn a
profit.
The Internet has provided consumers with a new degree of expertise and
influence. At the same time, a more knowledgeable consumer doesn’t mean
you have to resign yourself to being a commodity seller. Practice the principles
of Value-Based Selling, and you’ll be able to increase your CSI, profit and
closing rate while delivering value to your consumers and meeting their needs
for a mutual “Win-Win.”
2Price-Based Selling vs. Value-Based Selling