As dealership leaders we train and coach our sales consultants to ask a myriad of qualifying questions in order that they gain a better understanding of a customer’s needs and wants in a newer vehicle.
However, there are two questions that the majority of sales managers continually direct sales consultants to ask that create awkward confrontations and result in depleted gross profit.
Sales consultants are directed by sales managers to ask customers; “How much do you want for your car?” In fact, many sales managers insist that this question be posed before appraising a customer’s vehicle and the creation of a proposal. This question dates back to the 1970’s and may simply be a habit passed down from generation to generation of Sales Managers. However, if you really think about this question, what value does this question really have – or what harm?
When it comes to the value of their own vehicle, a customer has three numbers in mind. The first is the WANT number. This is the value that the customer truly believes their vehicle is worth based on their own independent research on retail websites such as Autotrader, Car Gurus, Kijiji, etc.
The second is the WISH number. This value is much higher than the WANT number. The customer’s attitude is, “Who knows, maybe my car is worth a lot more in the market than what I think. My car seems to be in better shape than the ones I’ve seen online. Maybe there is a big demand for my car. Maybe the dealership will offer me crazy money because I’ve heard that there are shortages of used cars. If I shoot for the stars with my number, maybe I’ll land on the moon.”
The third number is the WOULD number. The WOULD number is lower than both the WANT and WISH numbers. This is the number that (in the customer’s mind) they would take if they were highly motivated and excited to buy a newer vehicle – or had been provided a credible explanation from the sales consultant as to how the dealership appraises their trade-in and how they arrive at the final trade-in value.
The following is an example of a customer’s WISH, WANT WOULD:
WISH Number: $18,000
“What I wish I could get for my car – who knows.”
WANT Number: $16,500
“What I really want for my car.”
WOULD Number: $16,000
“What I would actually take for my car if I really want yours.”
If a sales consultant is directed to ask the customer, “How much do you want for your car”, which number is the customer going to serve up; the WISH, WANT or WOULD? The WISH number, of course. It gets worse. When the sales manager asks the sales consultant for the customer’s number, the sales manager is frustrated with the customer’s response; “Where did your customer come up with that number? That’s a retail number! Did you tell the customer that we pay wholesale, not retail? Go ask your customer where they came up with that number.” When the sales consultant now questions (or even confronts) the customer with respect to the source of their number, the customer defends their number and digs in, entrenching. Now they feel that they must vehemently defend their number and their pride – and the customer is befuddled as to why the sales consultant and sales manager seem somewhat annoyed (“If you don’t like my number, why did you ask?”). This exasperating and backwards questioning actually breaks the first rule of negotiation; He/she who puts the first number on paper wins. If a customer puts the first number on paper (because they have been asked to), the dealership is now attempting to negotiate downward from the customer’s WISH number of $18,000. This makes for tough, drawn-out and often confrontational negotiation. It significantly reduces the gross profit as the dealership struggles to appease and come close to the customer’s WISH number.
Also consider the fact that dealerships employ trained and highly experienced appraisers that are expert in establishing the value of a vehicle. Dealerships also invest tens of thousand of dollars annually on technology tools such as vAuto and CARFAX Vehicle Valuation Reports to assist appraisers in determining credible, accurate, market-researched values. This begs the question; why are dealerships (appraisal experts) asking school teachers, accountants, engineers, truck drivers, factory workers, fitness instructors, etc. what the value of their vehicle is? Customers often wonder the same; “You tell me what my vehicle is worth.”
The second question that sales consultants are directed by sales managers to ask customers is; “What would you like to offer for our car?” – most commonly asked when selling USED vehicles. Again, this puts the customer in an extremely awkward and uncomfortable position. Customers do not have intimate knowledge of NEW and USED vehicle profit margins, and of course, most people perceive the margins to be much higher than the reality. Hence, just like their trade-in, the customer has a WISH, WANT and a WOULD number with respect to how much they want to pay for the dealership’s vehicle. For example, if the price of a USED vehicle is $29,997, the customer’s thought process might be as follows;
SELLING PRICE: $29,997
“I wish I could pay $28,000 for the dealership’s car – who knows, maybe they’ll take it!”
“I really want to pay $29,000 for the dealership’s car.”
“I would actually pay $29,700,00 for the dealership’s car if I really want it.”
If a sales consultant is directed to ask the customer, “What would you like to offer for our car?”, which number is the customer going to serve up; the WISH, WANT or the WOULD?
Despite what many sales managers would like to admit, the simple practice of asking, “How much do you want for your car” and “What would you like to offer for our car?” is the norm rather than the exception – yes, still today. Eliminate this practice altogether – stop asking. If you don’t want BAD answers, then stop asking BAD questions.
Instead, offer to appraise a customer’s trade-in as early as possible within your SHOWROOM and DIGITAL sales processes – how about step #1 as part of the customer welcome; “Mr. Lee, I will arrange to have your vehicle professionally appraised. It’s FREE and there’s no obligation. If you would consider it, we would also like the opportunity to buy your car even if you don’t buy one of ours.” Come time to present a proposal (ideally following a vehicle presentation and demonstrations drive), simply present the vehicle’s SELLING PRICE, MANUFACTURER’S INCENTIVES (where applicable), TRADE-IN VALUE and 3 – 6 strategic payment options.
Instead of asking a customer how much they want for their car and to make an offer on ours, let’s MAKE THEM AN OFFER! Confidently, present a proposal (let’s get our numbers on paper first), guide the customer, reduce stress on both sides of the negotiation and retain gross profit.
Chris Schulthies is the president of Toronto-based Wye Management. Wye Management provides sales and management training (showroom and digital) for dealerships, dealer groups, OEMs and industry suppliers in Canada and the U.S.