Correcting My Contribution to the Battle Between Buyer and Seller
By Chip King, Partner, ZipDeal
I spent 31 years in automotive retail, in every variable role from used car salesperson to GSM, then GM, and dealer principal. For most of that time, I was a part of and supported the combative culture the car business created.
- I was a master of small print.
- I mislead in my marketing with unattainable prices and payments.
- My radio and tv ads ended with rapid-fire disclosures about the misleading promises just played.
- My sales meetings were focused on how to overcome the BS I advertised.
- We used aggressive language in describing the customer experience in the “box”— I bet you know what I mean (I am embarrassed to actually write that stuff down).
- I trained the team to “put” people in the car we wanted to sell, not necessarily the best choice for them.
- My best salespeople were rewarded for taking advantage when they could, and I paid them stupid money for creating big profits on one-time customers.
- I encouraged longer and longer finance and lease terms at immoral rates when we could “get away with it.”
- I was dedicated to aggressive pencil techniques designed to overcome the customer’s caution.
- …And, oh, by the way, it worked. We all made a lot of money in this culture.
Negotiation breeds battlegrounds…
Why did I think I had to do all this? Our customers had learned that car dealers were out to get them, so they entered the buying process with battle armor on. They were often just as aggressive in their approach to us, just as we were to them! Instead of using the opportunity to change that environment, I tried to have stronger battle armor than the customer (combatant?). When I left the media world and took my first job selling used cars in 1977, my mother actually asked me not to tell any of her friends. She would not talk about it with her friends. And by the way, in my first year, I made 10x my previous salary. I was blinded by the light.
How did all this start?
I tell the story (totally fiction) that on April 1, 1956, Joe from Joe’s Chevrolet got pissed off when Larry opened a Chevy store three miles away. Joe decided he’d welcome him by advertising $100 discounts on his cars… and Larry came back with $150 discounts, and the car sales world changed forever.
Now we live in a world that has ushered in customers’ protection services that we actually pay for! TrueCar, Cars.Com, Edmunds, CarFax, and all the rest are making billions from us to protect our customers from… us. Read that again and ponder for a moment.
I came to my senses and now believe that I owe it to my mom and the industry to help change the automotive customer experience to the culture customers are starting to demand. Sure, there are many dealers dedicated to the old way, in part because they continue in some cases to make big money. That will change, is changing, and has changed. Dealers who don’t meet the customer where they are demanding to be met are feeling the pain.
Mark Rikess in Wards Auto from 2014 called the ball early on. A few of his early points were:
- “Sales-cycle efficiency. Research has shown 70% of auto sales take more than four hours. The time it takes to sell a vehicle is a No.1 customer complaint. A one-price process typically takes two hours or less. That time reduction increases the productivity of top salespeople because they get to see more prospects. And dealers get happier customers as a result of the outstanding sales experience.”
- “Transaction costs go down. Most stores have one manager (including the finance and insurance department and business development center) for every 2.5 sales consultants. No other retail industry has this level of management. One-price stores are 1:4 or better. Moreover, traditional stores must pay a premium for managers with outstanding negotiating skills. In a one-price store, managers’ primary goals are to develop people and manage a well-defined sales process. Traditional stores have deal managers, not people developers.”
Carmax, AutoNation, the Rydell Group, and so many more have all gone down the path of allowing your grandmother and your lawyer to get the same price every time without the battle. Dealership sales teams can now provide the SME role needed to guide the customer to the best purchase for their needs. The selling environment attracts a different personality to represent you, often at much less compensation percentage and way higher customer and sales team retention.
There is the additional value of the CSI allowing you a chance to retain your customers in your service department… adding real margin and making that customer 86 times more likely to buy from you again!
Or… you could just do this because it’s the right thing to do.
About the Author
Chip King spent his career in automotive retailing from 1977 to 2006. Holding every position in variable operations, including General Manager and Dealer Principal, Chip has had a special focus on the “customer experience” throughout.