The following is an excerpt of what I wrote as a comment a discussion about discount pricing. Please leave your comments below and vote whether or not you like it, hate it, whatever. Tell me whether I should turn it into a column. Thanks in advance.
Tim is living in the real world; a word most consultants never see. Scott used a very specific word, "compete". Notice there's a big difference between the word "compete" and the word "competitive". For definition's sake, the verb "to compete" is proactive and indicates that there is a process for doing so. On the other hand, being "competitive" can only be executed as policy NOT process. A discount pricing policy is passive and passive won't keep the doors open in this market.
There must be a willingness and a capacity to effectively negotiate on price, or in essence, to compete.
For most dealers, building value is the best mechanism they have for making the sale when price is an issue. While it should indeed be the first response, it shouldn't be the only available solution. Dealers living in the real world, like Tim, must accommodate the price shopper if they’re going to survive. (Remember, it really is a small minority of the people we view as price shoppers, a mere 16%, that make their buying decision based on price alone.) But if you can't engage price shoppers, you have no way to accommodate customers that buy elsewhere but might have bought from us had we simply engaged in a negotiation and given them an opportunity to adjust both their thinking and ours.
Make no mistake about this; I am by no means advocating being a discount dealer. I'm against discounting as a policy. What I'm advocating, what we teach, is a process designed to allow us to have substantive conversations with customers who are perceived as price shoppers so as to allow us consistent opportunities to earn the business of those customers; possibly by adjusting our pricing on a case by case basis. Policy will rarely even allow those conversations to take place, and it's the conversations that make the sale when prices need to be adjusted.
And there endeth today's rant! Thanks for putting up with me, folks.
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It would take some convincing for me to believe that 16% figure. I believe that 16% of shoppers BELIEVE they are price shoppers. (I'm assuming this figure comes from a poll of consumers who are self-proclaimed price shoppers.)
ReplyDeleteESPECIALLY when it comes to powersports vehicles. A motorcycle, in most cases, is NOT an essential item - like food, air, water, and internet acces. It's a luxury item and therefore some sort of PASSION inspired the want for two wheels and the open road. Shame on ANY so-called salesman for forgetting such a fundamental and not capitalizing on the opportunity to throw a little gas on someone's passion fire! A salesman that relys soley on price is not a salesman, he/she's a cashier! Grocery stores are always hiring - go work there.
Furthermore the sale isn't about the bike - at least not solely. It's about the dream. It's about the value of the bike. It's about the dealership and the value it represents to the customer. It's about the salesman and the value he/she represents to the customer. It's about the whole dealership experience. It's about the dream. And make no mistake, the microsecond that buyer walks into a dealership the REM-sleep and the dream begins. The job of the salesman can go three differnt ways that I know of in regards to that dream: 1.) It's a forgettable, ho-hum dream that'll be out of his/her mind by the time they walk out of the dealership. 2.) It's a nightmare. 3.) It's a wetdream.
Which one would YOU pay more for? READ: Which one can you NEGOTIATE more out of?
I reiterate - I'm not sure there's any such thing as a price shopper.
Hope this addresses the issue. Thanks for the opp Otis.
CB