How To Attract & Sell The Millennial Car Buyer (PART 2)
TRANSCRIPT: Why is adjusting for the connected customer so important? Why do we have to adjust for these people? “Steve, we’ve had the Internet around for a long time. In fact, heck, Autobytel’s been sending us leads since 1997. Haven’t we figured everything out by now?” No, it’s changing. It’s changing because now there’s more information out there, and people are doing most of their research, nearly all of their research, before they ever get to your lot, before they ever pick up a phone, before they ever send you a lead, a chat, a text, or message you through Facebook Messenger. We need to adjust for the connected customer.
Let’s talk about the connected customer for a minute. It’s important to understand this. Connected customers know what they want. A study by McKinsey and Company found that today’s buyers visit an average of 1.6 lots before buying. That’s down from more than 5 lots back in 2004. DME automotive says 42% of new car buyers visited just one lot before buying.
We need to treat people differently when they’re on our lot. Right? Everybody’s going to say they’re just gathering information. It’s their first stop. As we know, 42% of those people are going to buy on their first stop if they’re buyers.
The second thing about connected customers that’s important is they get better deals on used cars. See, connected customers get better deals on used cars because you’re priced to market online. Guess what you’re doing. You’re priced to market online, which is what you should do. It’s called millennial friendly pricing. We’ll talk about that later today. Your priced to market online, but you’re using old school word tracks and processes offline. You’re giving what we call a market-based pricing triple discount.
Basically this means you’ve priced your vehicles to market online. This is discount number 1. Now the prospect calls you. Right? You pick up your mobile device and they call you and they want to know your best price. What do you do? You cave. You knock $200 or $300 off. This is discount number 2.
Now they saw the price online, you already caved to them on the phone or via email, and now they show up on your lot. Where do they start negotiating? That’s right, they start negotiating at discount number 2 and they expect something below that. Guess what, you cave again, and this is discount number 3.
That’s the problem. You’re doing the millennial friendly pricing. You’re pricing your vehicles to market, which is what you should do, but you’re using old school word tracks offline, and then when they get to the dealership you’re treating it like it’s a traditional lot instead of treating it like it’s a done deal. We’ll give you the work tracks in a minute. We’ll talk about the pre-visit stuff today. In part 2, we’ll talk about how to manage them when they get to the dealership lot so that you’re not giving up that triple discount.
Now let’s talk about how to stop this triple discounting. When a prospect calls or emails for your best price, you need to always defend your pricing. Always. Because you’re either priced to market or you’re not. If you’re priced to market, there’s no reason to give another discount and you need to defend that. If you’re not priced to market, they’re going to take the price you gave them over the phone and then they’re going to take that somewhere else and start negotiating. When the prospect arrives on the lot, after you’ve defended your pricing, we’ll teach you how to do that in a minute, when they arrive on the lot, you need to have a done deal attitude.
We’re going to teach you a buying process in part 2. It’s not a road to the sale anymore. It’s a buying process. We’re going to teach you a buying process that you can get done in 30 to 45 minutes and close way more deals than you’re closing today, because you’re going to have a done deal attitude. The problem is, is when that person’s already gotten two discounts from you and they arrive on your lot, you don’t have a done deal attitude. You take them right back to square one and so they go, “Okay, so this is the game. He’s going to run back and forth to the desk.”
All right, let’s talk about how to defend your price. Someone calls and they say, “Is that your best price?” Our answer is simply this. “If you’ve been shopping online, then you know we price all of our vehicles competitively right from the beginning. We would never dream of insulting our customers by showing you our second best price, and then making you jump through a bunch of hoops to find some hidden best price. Now that Taurus is priced to sell at $16,359, and at that price it will likely not be here by the weekend. Now I do have two test drives open on that Taurus this afternoon. I have a 12:15 and a 12:45. Which one works better for you?”
All they asked is, is that your best price. See, and I defended my best price. Right? I defended the market pricing. Now I didn’t have to give another discount and I asked for the appointment right away. That is new school communication. We’ll talk about communicating with today’s connected customer today. We’ll talk about how to get them into your dealership by going for the appointment every single time, by guiding them, by being direct, by taking charge.
All right, the third thing about connected customers, the reason we need to change today, is that connected customers are killing our new car margins. Now this is an amazing, amazing chart to me. This is a chart from a ADA. It shows that our margins were falling while the market was growing. What in the world? Wait, we’re making less money as the market grows? People are more interested. People are coming into the market. They’re willing to buy huge trucks and SUVs. Right? Gas has been low. How margins have decreased. This doesn’t make any sense.
What’s going to happen this year when the market flattens, or next year if it does worse than flattening? We have got to stop giving up all the gross. The only reason this is happening is because we have connected customers and old school store tactics. That’s the problem. Those old school store tactics are giving up the gross every time because we’re taught to do that. We’re taught to negotiate.
All right, the fourth thing about connected customers, the reason we need to adjust today, is that we don’t get to tell people who our brand is anymore. See, connected customers tell us what our brand is. In the past, we were in charge of our brand and our reputation. Right?
Let’s go back to 1971. Joe’s Honda is the absolutely best place to buy a new or pre-owned vehicle. We could say that in ’71, and guess what, it resonated. People saw the commercials. The only place they can learn about us was there in the newspaper, on our radio ads. We controlled our brand. Today we do not.
Today, the connected customer knows exactly who you are because they told you who you were. Right? They went on Google and they said, “Avoid at all costs. Joe’s Honda stinks. Worst service ever.” Right? “Bunch of slimy salespeople.” I actually pulled that quote specifically from a dealer who’s actually a good dealer. The problem is, is that they’re doing old school tactics today and they’re getting bad reviews about it. We have to adjust the way that we’re reacting to connected customers both before they get in the dealership and then after they do.
Finally the reason that we have to change is that the connected customers have changed what it means to be a traditional lot. We’re going to learn today that 61% of buyers make zero contact with you before showing up at your lot, but we know they’ve all been online. They’ve all looked at 24 sources of information. They’ve all spent more than 19 hours doing research. Right? They’re all connected customers, but they walk on your lot just like a traditional lot, and they all say, “Just looking.” Right?
Let’s go back a few years. Right? Let’s go back 45 years to 1972. What did just looking mean in ’72? Right? It means, “Hey, we’re in the market for something good on gas. We want to see what you have on the lot.” These are high funnel people. They’re just starting their research, and they truly were. You can close them in ’72, but you had to work hard at it. The fact is that you had to follow a road to the sale. You had to take control. We’re going to talk about take control. The point is, is they truly were just looking in ’72. They had no idea what they were doing. All right?
By ’87, jump 15 years ahead, when they said they’re just looking, they’re really saying, “You know what, we really like the new Preludes we saw on TV and we hope you have one of them in blue.” Jump ahead 15 years, 2002 they say, why are they here today? “I’m just looking.” What they really meant is that they saw that ’98 Accord in AutoTrader, in the magazine, and we want to test drive it, and then we want to learn your actual price.
When we jump today, what just looking means. When they say “I’m just looking,” you know what they’re really saying? They’re saying, “I’m here to buy that white 2015 Civic that you have online, and by the way, this is the stock number,” because they had the stock number in their pocket or on their mobile device. They’re ready to buy today. We need to treat everyone as if they’re ready to buy. Everybody who shows up at our dealership, it’s a delivery.
Everybody who sends us a lead, it’s an order. That’s the way we need to treat the connected customer 2017 and beyond.