Using Guerrilla Tactics to Combat Declining Vehicle Sales Gross Profit

By: Alan Ram

Recently I saw a study that said that one of a dealer’s biggest concerns moving forward was declining gross profit per unit sold. As this question is debated at automotive dealerships and 20 groups across the country, we always seem to arrive at the same solution: Sell the value of the vehicle, don’t shortcut the presentation process, don’t discuss price on the lot, and any of the other things we’ve heard time and time again.

Here’s the problem with those solutions―most of the customers that we spend the majority of our day focused on have already been shopping. In many cases they’ve been shopping for days and weeks, both online and in person. So while the customer that has shopped will probably appreciate your salesperson’s thorough demonstration and the demo drive between Detroit and Cleveland, the bottom line is that no matter how much value you collectively sell, you’ll still hear, “We know how much we can buy this vehicle for because we’ve been shopping.” I don’t care how strong your salesperson is or how wonderful a closer your manager might be, if this customer has been shopping for any period of time, there might not be much gross left on the table. So what’s the answer? How do you dramatically increase your gross per unit? The answer is to get to the customers before they get to you. What I refer to as “ambush opportunities.”

When I was in the Marine Corps, one of the first things they taught us was that it’s better to be in the offensive position than in the defensive position. In other words, contacting the target before they contact you definitely puts you at an advantage. In our case, we want to contact customers before they’ve had the opportunity to shop 15 of our competitors.

Who are these customers and where do we find them? In your sold client base and in your service database of customers with three and four-year-old vehicles. What I’m talking about is drawing customers into the market before they’re even thinking about it. Giving them a reason to come see you before they normally would have. All some people are looking for is an excuse to do something sooner rather than later. It’s our job to help them with that excuse, that justification. In most cases, not only will you sell that customer a vehicle, but you’ll also have an opportunity to build your used car inventory.

If you’d like more information as well as a real game plan for how this can be accomplished at your dealership, please call for information regarding one of my future “Management by Fire!” events (480) 659-4035!

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Comment by steven chessin on July 14, 2014 at 7:05pm: "... drawing customers into the market before they’re even thinking about it. Giving them a reason to come see you before they normally would have. All some people are looking for is an excuse to do something sooner rather than later"

This is a cornerstone source. Why would any dealer not already be doing this ?

Comment by steven chessin on July 14, 2014 at 6:58am: Thank you Brian and Alan - such interesting perspectives !!

I know you will like my perspective. As a media pro productions are usually from many angles. Everything goes into the mix. So I look at things from many angles --- visual --- audio ---- script. This is, however, a single perspective scene.I also understand the military perspective. My dad was a Navy doctor..

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Here's the set-up :

I need an internet rep. Our cars are fast. I need my rep to ....."represent"

A few weeks ago I was shopping casually in Walmart maintaining the appropriate speed in my lane pushing one of their nice smooth riding red carts. I think it was brand new. In the opposite lane a woman goes-by doing the shopping equivalent of 160 mph ! It took me half-way around the track to catch her and if it weren't for checkout traffic I wouldn't have ever caught-up with her. . http://covideo.com/p.php?s=46797d4465

Comment by Brian Bennington on July 13, 2014 at 11:23pm: Whoa, Alan! Your a little too "hardcore" for me on a Sunday afternoon. I received your blog on the 8th, and because it was from you, set it aside until I had time to considerate it. As to the first paragraph, it does an excellent job of stating management's view of the sales process. And, you must admit, strengthening the basics you listed to "shake a little more fruit out of the tree" makes solid, yet terribly uncreative, sense. That's unfortunate, as people who see no further than these "basics" have what might be described as a two-dimensional understanding of selling. Many look at it exclusively as a regimented struggle and never see the coming-together "courtship" it can become. A true win-win situation and the beginning of, if thoughtfully and consistently followed-up, a lasting and profitable buyer-seller relationship.

As to your Military-style techniques, I'd suggest another well-tested one for you. Camouflage. Let's hide those terms. You're "Marine is showing," and I say that with the deepest respect, as a retired Marine good friend has often said that, "When your a Marine, it's for the rest of your life." Terms like "Guerrilla tactics" and "Ambush opportunities" don't sound like they bode well for the customer. The strategy is sound, but the descriptions need to be softened. I'm sure you'd agree that most reps would do better if they concentrated more on learning about their prospect (enough so that the can express a believable understanding of their prospects' "plight") rather than maneuvering towards a, what is often premature, close. After all, most strategists say that the best victory is one where a shot is never fired, meaning no one is hurt or, in selling, feeling rushed, unsure, unsatisfied, etc. In most selling situations, the advantage goes to the rep who is the friendliest, most sincere, most complementary best listener. "The best way to get them to buy at your price is to get them to love you."

Of course, everything your blog states about getting to customers before they're looking, and chasing down service customers in the drive, is valid and profitable. Although, I'd approach this "early contact" with caution. Unless there's been a dramatic change in say, the last five minutes, people absolutely do not like unsolicited sales calls. And, disappearing emails are only a delete button away. (Yeah, I know you can "overcome" this rejection if you give away enough profit, but that's so "new school"!) I'm just saying that the initial "re-connect" should appear as sincere as possible. A lifetime of sales experience long ago convinced me that the more consistency, consideration and forethought you put into your "ambush opportunities," the less casualties (profit dollars) you'll lose. Hey, Alan, a great blog that really got me thinking!

Comment by steven chessin on July 8, 2014 at 9:08pm: Existing customer database is a good source. I have found that properly trained rep can get about one sale per day by working that list. Nobody would ever deny that. There are many ways to do it.Your last line ---

"you’ll also have an opportunity to build your used car inventory". Right there is the # 1 reason to reach-out. We do prefer to offer used cars we have serviced. Sooner or later every car needs a major owner investment - even if it is just a fresh set of tires. Is your service department going to alert the sales department that a customer might be in a position to buy car instead of a repair ?!?!?! They are looking-out for their profit center - without thinking that the tires will be needed anyway even if we take the car in trade.

Comment by Kevin "Friend Me" Bradberry on July 8, 2014 at 5:01pm: Excellent point. I provide new talent infusion and Alan is talking about new customer infusion. They are one in the same. It's about access to eyeballs whether you are talking about new employees or new customers. Good article!

Comment by David Ruggles on July 8, 2014 at 4:38pm: This is really good stuff. Of course, there is still the risk they will go online AFTER they bought and perhaps determine they might have saved some money had they shopped more. However, I think this is a risk worth taking. Selling off of the service drive is something some dealers have done successfully, especially a couple of big Honda stores.

Sales people should learn the most powerful prospecting line in our business, taught to me by Ernie Tex Prichard decades ago: "You'd be interested in a new one, wouldn't you, if we could get you into one for about what you're paying now?" With leasing, balloon financing, extended term, sometimes some cash or rebate down, it is usually possible. Focus on the leasing and balloon financing to shorten term. Rebates and cash down lower the payment more on short term leases and balloons than on extended term.

Comment by Ricardo Rondinelli on July 8, 2014 at 4:22pm: Very good point, thanks for the info.

Comment by Scott Wilson on July 8, 2014 at 4:11pm: I know this works first hand. When I was at a Acura dealership we used Xtream Service and sold our previous customers. The gross profit was great.