When Price Meets Context: The Impact of Price Transparency

price transparency

In 2013, a survey of 2,500 Americans by the Boston Consulting Group revealed that one of the leading qualities consumers are looking for in a brand is authenticity. In the same study a couple of years prior, the group found that consumers were seeing an increasing importance in the value they received for the money they spent. We now live in a world where consumers want to know they can trust brands they purchase from, especially when it comes to price.  Businesses such as Lyft are responding with transparency about the fares each driver charges. The expectation for price transparency is especially strong with automobile shoppers, who want to know what they are paying and why in the car buying journey.  

Car Buyers Seek Honesty and Options

Many factors influence the decision to purchase a vehicle — two of the biggest being price and features. These are also two ways auto dealers can be transparent with customers. As car buyers examine a vehicle detail page (VDP), they want to know if the VDP includes features they care about. This stage in the car buying process can lead consumers to comparison shopping.

According to a Cars.com Consumer Satisfaction Survey, out of the top five activities shoppers want to do online when looking at cars for sale, 59 percent compared different vehicle prices and 42 percent compared vehicle makes, models and features.

Customers want to know if they can receive a better deal by looking at another nearby dealer or considering a similar vehicle that has a better price.

Dealers Should Reach Beyond the “What” of Price

Knowing how much consumers care about pricing, and what factors figure into a price, can help dealers reach beyond the “what” and get to the “why” behind the cost of a vehicle. For instance, consumers want to know what makes up the sticker price they are seeing, and why it is different from the invoice price to better understand the true value. Not only should dealers give shoppers answers, but shoppers should also feel confident in the answers. Are there optional advanced technologies the customer can skip, or is there another model that fits most of their requirements and is better suited for their budget? These are questions dealers need to think about as they talk about price with car buyers.

A Tool to Help Consumers Make Purchasing Decisions

Savvy dealers understand the need for price transparency. As a result, they are becoming more contextual in explaining how they arrived at a certain price. For example, Cars.com has added a new and resourceful feature to its vehicle detail pages: price badging. This tool pulls together various car features and options and combines them with data on market conditions to produce a price rating that corresponds with a customer’s geographic location. This resource provides information about why a car is priced the way it is and determines which features are in high demand to rate if a vehicle’s price is the best fit for a specific budget.

In addition to providing insight into the context of price with Cars.com’s price badging tool, dealers can build trust with consumers in many other ways:

  •    Let car buyers in on all of the factors that go into determining a price. Inform them of how the vehicle’s history, mileage, financing, and incentives from the manufacturer can affect price. This information will strengthen consumer loyalty and allow shoppers to feel they can trust the dealer.

  •    Two-thirds of all car buyers trust dealers to come to a fair price during the negotiation. Dealers can further help the pricing discussion by training salespeople to thoroughly explain factors that go into a vehicle price in a way that makes consumers feel empowered to make a decision that works for them and their budget.

  •    While offering the explanation behind pricing factors, dealers can also listen for what matters most to the car buyer. Dealers should use this consumer insight to create alternative pricing options to meet customers where they are while taking into account what they want in a vehicle. This action shows a level of care that can also increase consumer trust.

Price is much more than a number. Price is an avenue for dealers to build trust through transparency. The right tools and approaches create a foundation to build trust that leads to enduring customer relationships.