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Digital Retailing

Offers are Options: Here’s How Digital Retailing Helps You Get to the Final Deal

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Article Highlights

  1. A low-ball offer is and will always be a place to start the conversation
  2. A low-ball offer usually means one of several things: they can’t afford the car, they have a different monthly payment in mind, it’s not the exact car they want, or maybe they think the dealer will make thousands on the transaction – and they just want a fair price. A good digital retailing solution can help solve these conflicts.
  3. Transparency is more powerful for dealers than you think, for a few simple reasons. First, it can help reduce bad leads. Digital retailing gives you the data to understand what customers want and what they can afford before they arrive for a test drive. For the sales team, transparency is perhaps the greatest negotiation tool since the sales manager was invented.

“Look, digital retailing and the transparency it brings is not the issue. And the ‘race to the bottom?’ That’s the reality of the car business today – sure, it started with the internet, but customers have always been willing to travel four hours to save 500 bucks on a $30,000 car. That’s not going to change.” —Digital Retailing Dealer

Welcome to the upside-down world of price and payment.

Dealers today know the drill: a shopper hits the website researching their next new car, with perhaps the most important piece of information for them being the payment. They’ve already looked at the vehicle on Autotrader and the OEM site, and now they’re at your dealership site ready to get down to details. Somewhere, somehow, they think a monthly payment of $250 is doable – when the real payment is around $500 (plus tags and taxes).

How can this be, in the age of digital accuracy and ‘know before you go?’

Some customers simply like to negotiate. In fact, they’ve been conditioned to do so, with years of experience buying a car the old-fashioned way. And in that way selling cars today isn’t much different than it always has been. It’s ultimately not necessarily about the payment, but payment options. A lowball offer is and will always be a place to start the conversation, pour the coffee and negotiate with a customer who is obviously willing to do so. That’s the bread and butter of the showroom – both online and in the store.

“Typically, the low-ball offers that we get via digital retailing are from customers have already done some shopping online at a few dealerships or third-party websites and believe those dealers – who may not have the exact car the shopper is looking for – have more aggressive offers. After a bit of discussion, we’re able to get the customer to show us the offer and agree to having us matching it and save them the trip.” – Digital Retailing Dealer

Unrealistic consumer offers really come down to where the customer is in their buying journey. A low-ball offer usually means one of several things: they can’t afford the car, they have a different monthly payment in mind, it’s not the exact car they want, or maybe they think the dealer will make thousands on the transaction – and they just want a fair price. Online, it’s all about price comparison shopping, dealer vs. dealer, a starting salvo in the inevitable tug-of-war over a few hundred dollars. Payment fantasies and confusion stem from a variety of factors, from automaker MAP restrictions to inaccurate customer financial data and an overwhelming desire by the dealer to show only one payment – or none at all.

A good digital retailing solution can help solve these conflicts. Shoppers build a deal online, figure out monthly payments based on real lender rates and terms, value their trade-in, then shop aftermarket items. They go to the dealership, where a salesperson wraps up the transaction with a test drive and finalizes paperwork. While that’s certainly the ideal digital retailing model, the reality can at times be as different as the customers who walk through your showroom doors. Offers start low, but numbers and approvals require verification and negotiation. It all sounds familiar, but with the added power of starting the process online, where information is transparent and steps to purchase happen more efficiently.

Transparency Is Friend, Not Foe

In fact, transparency is more powerful for you than the customer, for a few simple reasons. First, it means that most shoppers will get a more accurate picture of new vehicle pricing, which provides a better understanding of the narrow negotiating window you truly do have – thus eliminating the notion of lowball offer success. More importantly, it’s about understanding the shopper’s motivations and building a personalized experience from the start. Digital retailing gives you the data to understand what customers want and what they can afford before they arrive for a test drive. The information they shared online comes with them to the dealership when they do, which empowers dealership salespeople with insights. For the sales team, transparency is perhaps the greatest negotiation tool since the sales manager was invented.

Transparency Can Help Reduce Bad Leads

There’s more to that, however, and it has to do with availability of information. Gated pricing puts up false roadblocks, which really does nothing but keep sales away from the dealership. In this way, transparency helps to ensure that the customer relationship starts in the right way, with access to accurate and important information about listings. It not only improves credibility, but also generates more interest. Dealers that include a price on their listings on Autotrader get 53% more vehicle detail page (VDP) views per listing.1 They also get 65% more VDP views for listings merchandised with multiple custom photos versus stock photos.1 Here’s an example: Instead of hiding behind the MSRP ‘cloak of consumer confusion,’ digital retailing can provide current and accurate rates from financial partners, and can help determine a legitimate view of their possibilities and payments. That’s a far more accurate and effective way to start the sales conversation.

“They always start at ‘no’ to aftermarket products, but usually eventually get to ‘yes.’” – Digital Retail Dealer

Welcome to the World of the “No-ball” Offer – Aftermarket Style

Think about F&I products from car shoppers’ perspective: they often don’t know what it is, why it’s important, how much it costs, or if they’re getting a good deal. Plus, they think they’ve finally struck a deal with you and have a good understanding of the price and payment, and then here come the F&I product pitch that sounds good but then jacks up the monthly payment they thought they had agreed to and locked in. The entire experience is frustrating and shrouded in a fog of confusion. So it’s no surprise, then, that an hour spent grinding a buyer on gap insurance or tire protection might result in a sale – but might leave a mark on your CSI score.

Equipping your dealership with online F&I protection options helps to educate shoppers ahead of time, improving their experience and setting up your F&I team for additional sales. ​In fact, 63% of customers are more likely to purchase F&I products if they could learn about them on their own time.2  By educating consumers online first, your team can have an actual sales conversation about the value of packages and add-ons the customer is already familiar with – and interested in buying.

​An Offer is an Option – and a Constructive Start to the Sale

Here’s the point: 7 in 10 consumers say they are more likely to buy from a dealership if they could start the process online.3 83% say they want to do one or more steps of the purchase process online.3 And the data shows when more of the car-buying process online, digital retail leads are more likely to convert to sales.4 But consumers may use digital retailing tools in different ways. Some may treat it as the start of an order – one to be completed at the dealership. Given the industry’s culture of negotiation and conversation, many will also treat it as an opening offer – one that fits within the already-defined process at the dealership.

Ultimately, all car buyers want an experience that’s efficient, productive, and complete – from initial credit check to aftermarket products. Make sure you choose a digital solution that delivers that level of flexibility and transparency. The more information the customer shares, the more effective the sale becomes for the dealership.

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Sources:

1) Autotrader site statistics, comparison of VDPs per listing per day, 1/1/19 - 6/30/19

2) Cox Automotive Finance & Insurance Study

3) Cox Automotive Future of Digital Retail Study

4) Cox Automotive Accelerate platform Close Rate and Profit Analysis (study completed April 2019); sold leads from Digital Retailing compared to other Cox Automotive leads excludes active leads (open opportunities not lost or sold)