360º Market Navigation: The Secret to Winning in a Down Market
You've probably heard this story: Two guys are hiking in the woods when they encounter a hungry bear. One guy starts putting on his running shoes. The other guy looks at him and says, "Why are you doing that? You'll never outrun that bear." The man replies, "I don't have to outrun the bear, I just have to outrun you."
With car sales down dramatically market wide, it's time to lace up your running shoes. To survive and thrive in this bear market you need to outrun your competition. And there's really only one way of doing that. Take business away from them. Even in this tough economy there are still people in your market buying cars and trucks. The question is: are they buying them from you?
Let's face it; no one wants to be caught by the bear.
To outrun the bear in today's pre-owned market, you must be a disciplined operator with a strong understanding of the market and how consumers shop today. Most importantly, you can't leave the fate of your dealership to "gut" or "guess work." Winning today requires decisive, "evidenced based" management.
The Challenge in the Age of the Internet: The Amateurs Know More than the Pros
In the old days, dealers knew far more than consumers, giving dealers a dramatic advantage in the transaction. The dawn of the Internet has empowered consumers with an incredible amount of market knowledge including:
- How many similar vehicles are available in the market?
- What are the advantages of one vehicle over another?
- How are your vehicles priced versus the competition?
- What is a "fair market" purchase price for this vehicle?
- What is my trade-in really worth?
With the average consumer spending an average of 6.5 hours researching on-line before they purchase (according to a recent JD Power study), consumers seem to almost always know more about the market for a car than the pros at the dealership. To win, dealers need to become "evidence based" retailers by ensuring their managers and sales teams know what a consumer knows as well as those facts that are only available to dealers.
"Evidence-based" retailing maximizes your internet ads and pricing while empowering your sales team and sales managers with the ability to effectively differentiate against the competition. As a result, you can shift from selling "price" to selling "value," thus allowing you to drive more traffic, and close more customers more profitably. Our experience is that even in today's tough market, "evidence-based" retailers can out perform the competition in three key areas:
- Retailing more cars
- Closing more appraisals
- Stocking more of the "right" cars
360º Market Navigation: Know What Others Don't, So You Can Do What Others Can't
How do you become an "evidenced-based" retailer? First, ensure your team always has the facts that provide the best evidence to make the best decision. There is no "silver bullet" piece of market data that can always give you the right facts for each decision. Having the right resource at the right time is the key. Gathering a true 360º perspective of your market empowers your team with the "intelligence" they need to outmaneuver the competition – and the facts they need to make "evidence-based" business decisions.
With 360º Market Navigation you'll have the right information available to you at the moment you need it:
- Retailing More Cars – Know what consumers know and leverage it to drive more traffic from the internet and empower your sales team to close more customers more profitably. Here's how:
- Know how your vehicle's Internet Pricing ranks against the competition. According to Cars.com, 82 percent of consumers compare prices when shopping on-line – If you are out of the ballpark you won't make the list of 5-10 "semi-finalists" that consumers evaluate in deciding which dealer they want to buy from.
- Conduct Internet Mystery Shopping to ensure that your ad effectively highlights your vehicle's advantages against the competition so that you become the dealer they choose to call, email or visit. (Note: the Cars.com study revealed that 78 percent of consumers focus on photos and your "Seller's Notes"/Vehicle description in deciding which dealership to visit). Sharing this market intelligence with your sales team will empower them to sell value instead of price.
- Know what a consumer feels is a "fair retail purchase price" for your vehicle through Kelley Blue Book or NADA's Consumers site as well as Edmunds True Market Value. Capitalize on this by advertising pricing that is "$1000 below book", which signals to consumers your vehicles are fairly priced. Your sales team will be empowered to use it your advantage when the pricing works in your favor, but will also be prepared to overcome the fatal "silent objection" when it works against you.
- Know what other dealers are selling similar vehicles for, how profitably and how quickly through real sales data from real dealerswith J.D. Power's Power Information Network .This information will tell you when to hold gross or when to cut the deal.
- Closing More Appraisals – In addition to knowing the "basics" every dealer already has access to such as wholesale book values, auction data, vehicles history reports (Carfax and Autocheck), and your store sales history, you can close more appraisals and retail more Conquest trade-ins by turning your appraisal into a "360º Appraisal." To do this, you need to:
- Know similar vehicles current Internet prices.
- Conduct Internet Mystery Shopping of similar vehicles ads to understand what you would be up against at retail if you took the trade in.
- Overcome the "silent objections" by knowing what consumers consider a "fair trade-in value" based on what they learned online at Kelley Blue Book or NADA's Consumers site as well as Edmunds True Market Value.
Obtain real sales data from real dealerswith J.D. Power's Power Information Network, to learn what other dealers in your market are selling similar vehicles for as well as their ACV.
- Stocking More of the "Right" Cars – It's always easier to drive more traffic and sell more cars when you have the cars that are "hot" with consumers. You can stock more "hot" vehicles at your dealership and in your market if you:
- Know what the fastest and most profitable sellers are for your store.
- Know what the fastest and most profitable sellers are in your market through real sales data from real dealers with J.D. Power's Power Information Network.
- Know what you are up against by knowing vehicles' Internet Market Days Supply in your market.
- Know what your customer's neighbors are buying by reviewing DMV sales records for your Core Market.
You've got the evidence…now make the decision
Of course all of the information you need is out there, the question is how do you manage it, hone it in and make it work for you. If you are not managing from a 360° view, you are at risk of being caught by the bear. This means having the right market intelligence available at the right time to make the right decision so you can close the deal, and close the deal profitably.
FirstLook's 360° Market Navigation is a unique solution for navigating the market so that dealers can know what others don't so they can do what others can't.
Pat Ryan Jr. is the co-founder and chief executive officer of First Look by INCISENT Technologies, the leader in automotive retail performance solutions, which was ranked as the #4 Fastest Growing Software Company in the United States in Inc Magazine's 2008 Inc500 as well as the #1 Fastest Growing Company in the Automotive Sector. Pat is widely followed as a thought leader and speaker and can be reached at pat@firstlook.biz.