Addressing the customer’s trade-in before looking at a new car makes strategic sense, for a lot of reasons.
BY MARK TEWART
There is a lot of talk in our industry today about speeding up the sales process. With all the improvements the industry has made over the last few years, the average consumer still dislikes how long the current sales and transaction processes take. How do you handle a customer’s trade-in?
One change that can be made immediately to speed up the sales process and make it more transparent to the car buyer is in the way your dealership handles trade-ins.
Most customers trade in their current vehicle when they buy a new one from a dealership. Most stores address trade-ins near the end of the sales process, after the salesperson has helped the customer pick out a vehicle, and presented and demonstrated it.
However, in today’s market, most buyers will have performed research online before ever contacting you, and often will have looked up possible market values of their existing vehicle. Given that reality, I think it’s a big mistake for the salesperson to wait until the sale is nearly concluded to have a manager perform a physical appraisal. Let me explain why.
Staying In Customer’s Comfort Zone
Most people spend the majority of their lives in three places – their home, workplaces and vehicles. They are the car buyer’s comfort zones and he or she is bringing one of those zones to you! So, why would a dealership fail to utilize one of the customer’s comfort zones?
I think that in the digital age, shifting the trade-in to the front of the sales process becomes even more strategic because it conveys transparency and helps increase the customer’s trust. In such an updated sales process, once the salesperson has begun to build rapport and is asking questions intended to craft a better customer/buying profile, I suggest discussing the trade-in before even looking at a new car.
As you talk with your customer, I invite you to say the following:
“Mr. Customer, before we go take a look at the vehicle you are interested in, I want to walk over to your current vehicle, for two reasons. First, I want to verify the serial number and get a complete description of the vehicle. The reason is, our management will input the information to some web-based software that searches over several hundred miles for the most comparable vehicles for you. This will provide you with the real-time market value of your vehicle and save you a lot of time!
“Secondly, as I get the information, with your permission I would like to ask you a couple of questions. Question such as: What do you like most about the current vehicle that you will want on the new vehicle? What do you dislike about the existing vehicle that you want to avoid on your next vehicle? What may have changed since you bought your last vehicle that might influence your decision this time?
“Mr. Customer, this often gives me ideas that can save you money!”
This amounts to a trade-in evaluation, not a trade-in appraisal, at this point. The dealership might decide to share a specific trade-in value, or range of values, with the customer right now, but that is an option. Other dealerships might opt to inform the customer why they are looking at the existing vehicle, and how and why the related information will be entered into software, and leave it at that.
Why To Talk Trade-In First
Let’s take a look at why this approach represents a major improvement over the usual sales process.
* You are taking customers to their comfort zone.
* It is clear to customers that you are you are addressing their issues and fears right up front, which creates an image of proactivity and transparency.
* You are using anchoring phrases like “saving time” and “saving money.” Every customer wants to accomplish those two things, and
most dread the shopping and buying processes because they believe they take way too long.
* You will establish better rapport, which should lead to a better relationship.
* You wind up with a better profile of the customer to assist you in landing him or her on the right vehicle.
* You will slow the customer down, which in the end speeds up the sales process.
* If you have to negotiate, you will have better information with which to provide value and raise the discussion to a higher issue than money.
- You are letting customers know that whatever tool online tools they may have used to approximate trade-in value, yours compare all vehicles in the market for several hundred miles.
- You will be able to ask more questions up front before giving a more tailored presentation of the vehicle, as opposed to a one-size-fits-all description.
- You will spend more quality time with a customer at the start of the process, forging more rapport, relationship and trust.
- You are creating “cognitive disassociation,” i.e. separating yourself in the customer’s mind from other dealers and salespeople as well as their practices.
- You have a better opportunity to effectively present your specific defining proposition (SDP), or what makes you, your dealership and vehicle the unique and better choice.
- You are creating a “category of one.”
A More Ethical Strategy
As prices have become readily available online, it has taken much of the mystery out of a new car purchase. At most dealerships, this trend has squeezed gross profit at every turn.
The trade-in is a negotiable item. Your dealership is providing a service on taking the trade-in, vs. the customer having to sell the vehicle on his or her own. Because of this, it is ethical and moral – as well as good business practice – to take the trade-in at wholesale value.
If you watch the cable show “Pawn Stars,” the shop owner does a great job of explaining this to customers and he has no issues in giving it to them straight! Somehow in dealerships, we have become afraid to share with customers why they are receiving a particular trade-in value. By addressing the issue up front, you will greatly minimize what usually is a bone of contention with the customer.
Again, I want to be clear: You are addressing the issue up front, not necessarily giving customers a specific trade-in value at this point, unless that is your dealership’s choice and approach.
Transparency Is A Differentiator
Dealerships that segue to the trade-in at the beginning of the sale create a cleaner, more up-to-date and transparent-feeling process for their customers. Meanwhile, they are differentiating themselves and providing better value.
They actually have speeded up the overall sale by slowing it down at the outset. In the Internet age, people who preach about faster sales and faster buying often miss the point by trying to create a transactional process. Dealers who seek both speed and transparency should not forget their mission should be to make the shopping and buying processes transformational, not transactional.
Utilizing the trade-in discussion properly lets you modernize your process and create a “Wow!” experience for your customer. At this point, people still buy cars from people.