One-Price Philosophy

I have a dealer friend who is determined to implement a "One-Price" philosophy into his organization. He is in a major market and has Mazda, VW, Audi and Buick-GMC. Has anyone out there had any experience going from a typical desking sales process to a one-price system; new and used.

This dealer had Saturn and that is the catalyst for his strategy. With Saturn he had the advantage of the one-price philosophy being a part of the culture. Creating that culture in his other franchises is definitely a challenge but un-creating the existing culture is going to be his biggest obstacle I am afraid.

Thoughts? How would you start? What are the upsides and the downsides?

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Permalink Reply by Steve Richards on September 21, 2010 at 9:16pm

Good topic. The primary issue with the one-price philosophy whether it’s Saturn’s, Land Rover’s, or any retailer’s efforts isn’t “one-price.” It’s the complete absence of “selling” as regards the rest of the finances involved in the transaction. Just because a dealer’s adopted a one-price philosophy doesn’t mean the “other” numbers don’t have to justified, defended, or negotiated; pick the term that makes the most sense to you. Too many people see one-price as an end all be all. It’s not, but it is a GIANT step in the right direction.

The necessary cultural change is actually a very easy transition; if one knows how to demonstrate a culture that is less offensive (to the consumer), less expensive (to the dealer), more efficient (for the sales team and the customer), and more enjoyable for all parties. Who is going to resist that type of cultural change? Answer: the “desk” managers who will no longer be the central figure in the sales process. Making one-price work requires the sales team to hold intelligent conversation with the prospective buyer, intelligent, honest, logical, and mathematically correct conversations, especially during the closing sequences. Most management personnel can’t carry on an intelligent (as previously defined) conversation much less teach it. NOT because they aren’t talented, smart, or ambitious, but because no one has trained them how. Most managers attained their positions via personality or ambition driven sales success. They can’t transfer either one of those traits. And few dealers provide their managers any modern sales process training much less modern sales strategies or tactics. Ergo, managers manage the way they were managed. And one-price was NOT the process that provided them their success environment.

Making one-price work hinges on communication that takes place during the first twenty minutes of the transaction and the last twenty minutes. The “in-between” is show and tell and with the increased product communication coming directly from the factory to the consumer, even that part of the sales process is losing its importance. The one-price “whiz kids’ have about 25% of the formula figured out and that 25% is the first ten minutes of the prospect/sales person interaction. The other 75% of the communication taught, in most cases, is nothing more than “warmed-over” traditional automobile sales rhetoric.

In those rare instances where one price works well; meaning the buyer has a pleasant experience and the dealership makes an above average profit, it is almost always due to the extraordinary people involved, not the process and certainly not the training.

So, in closing, tell your dealer friend that he (or she) is on the right track. He or she is should seek help outside the boundaries of the conventional wisdom based industry experts.

And plan on investing heavily in the management team or getting rid of the management team. There is no middle ground.