Price, Profit and Transparency

22 years ago, as the General Sales Manager at the dealership where I was working, we were dealing with something new. A dealer 30 miles away had come up with a strategy to sell new trucks. A customer would call, email or send in an Internet inquiry about a new vehicle and without any consultation at all, they would fax or email that vehicle's invoice and instruct the customer to take the invoice price, add $100 and that is their price. Their sales numbers begin to jump and the increase was attention-grabbing and they were getting into our market area in a major way.

They became the hero of the manufacturer. I remember inquiring with our Zone Manager about their strategy and he said that it was a new way of doing business and if we wanted to compete we would need to embrace this #transparency method of pricing.

That was my first introduction to this topic of transparency, that took our industry by storm. I have no problem with transparency, but to these 3 parties:

* manufacturers

* vendors that had a stake in this new game

* dealers that only know the business as a transactional one

This transparency was only about pricing and profit. At that point, the retail car business has been changed forever.

Unfortunately, the transparency they referred to and have encouraged across our industry has brought about more of what the customer hates instead of changing their perception of the car dealership. Customers have said for years that what causes them the most concern at the dealership is:

1. Feeling like games are being played because they don't know what is going on. They can't get their questions answered, specifically about payment, interest rate, and trade-in values.

2. They waste too much time. It takes a very long time to get all the information they want and then to take delivery takes even longer.

3. They feel out of control when they get into the finance process. It takes too long and they are presented with options very quickly and then asked to make snap decisions.

The transparency of pricing and the pressure that has put on profit has led many Sales Managers to be scared to put too much into a trade-in and hold back that information as long as possible. The pressure put on the Finance Department to make a large profit has led to nobody wanting to give up interest rate or an exact payment until the Business Manager sits down with the customer. So, when the customer asks questions about their trade value, interest rate, exact payment etc. The answer is "I don't know" or "you will need to talk to the business manager about that" and "you can't do that right now". Would you put up with that if you were in their shoes? I guarantee you I wouldn't!

So here are 3 Areas That Must Have Transparency in order for the retail automobile dealership to adapt, transform and grow in this ever-changing marketplace. There are dealerships that are doing these things and their customers and employees love it!

MAIN THING - First of all, let's keep the Main Thing the Main Thing and put THE CUSTOMER FIRST! That is the focal point of the way we must do business.

1. Transparency of Process - The 1st thing we must do is to set a rule that is non-negotiable. IF YOU LEAVE YOUR CUSTOMER FOR ANY REASON WHILE THEY ARE AT THE DEALERSHIP, YOU MUST TELL THEM EXACTLY WHERE YOU ARE GOING AND EXACTLY WHAT YOU ARE DOING AND WHY - AND WHY IT IS IN THEIR BEST INTEREST. It is 100% unacceptable for this rule to ever be broken.

What does the process of purchasing a vehicle at the dealership look like? Make sure that all of your salespeople can professionally explain this to a customer. It should have flexibility depending on how you have engaged the customer - walk-in, phone, Internet.

I know that customers do a lot of their research online, but that doesn't mean they come to the dealership and know exactly what they want.

(don't listen to those that are telling you that customers

come on the lot knowing all the answers and we

don't need to waste their time by asking questions)

Whether by phone, over the Internet or in person tell them exactly what they can expect when shopping and ultimately purchasing a vehicle from you. The qualify, product selection, the demo may take a total of 10 minutes to drive around the block for some, but it may take 30-60 minutes with others. Let them know the "why" for every step and the why is about them and not us.

2. Transparency of Information - I want to let you in on something - Whatever the question is that the customer asks you - if you don't answer it they can take their cell phone and go to the source you may have heard of, the name is "GOOGLE" and ask the question and get many answers. That includes pricing, trade values, interest rates, payments etc. So, stop the foolishness and give them all the information they need to make a decision. Get on their side and quit creating unnecessary contention during many customer interactions.

3. The last area of transparency is between Management and SalesPeople. Managers, please be transparent with your salespeople. Don't leave them in the dark with their customer. Answer the questions the customer has and if you won't - you go tell the customer why. Quit leaving the salesperson in the dark and putting them in the awkward position of needing to go back and forth and dancing for the customer.

This transparency will create confidence in the salesperson that they know the facts and it also creates integrity in the relationship between manager and salesperson that instills trust. That trust is a requirement in order for this process to work for the dealership, salesperson and most importantly the customer.

The Main Thing we have to embrace so that this transparency makes sense, is that we must put the customer first. Being transparent is important to earning trust and the transparency being focused on lowest price has led to more games being played.

Transparency must exist in the process and we start that by making sure that the customer knows what to expect and that they are always aware of what is going on.

Next, we must simply answer their questions. This is such a common sense issue and also a matter of treating them like you want to be treated.

Transparency must exist between sales manager and salesperson to create the trust necessary for the atmosphere to be one that it is possible to put the customer first.

The lesson here is that change is necessary, but if you don't focus on changing the right things you might just create a bigger problem than you had in the beginning.

Price, Profit and Transparency

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