I have a question I was hoping we could discuss, and it may be a little above my pay grade so to speak, but I think I can justify my asking.
I think I totally “get” what you are trying to do with the dealership business. At the end of the day, cars are not what they have always been. At one point in time the car was first a Luxury, and then a tool, but ultimately a tool that had to be sold.
As time went on though, people are sold on the idea of “Cars” and at the end of the day figure out what kind of car to buy based on the combination of which bumper they like the most and how much money they had available on credit to spend. Cars have nearly become commoditized like coffee beans did.
At one point in time, Coffee was a luxury, but over time, it became a commodity. Just cheap production of beans, if you had a better bean, you could charge a little more money, but not much. Money was made in much LARGER amounts, but in far smaller increments.
Then Starbucks came alone, and turned a 50 cent drink into a 5 dollar drink on service, experience, ambiance. What was once a “Free Refills” 50 cent upwell to a food order, became the centre of the experience with FOOD becoming the upsell.
I see this happening intensively in the car business. Luxury brands selling vehicles based on a level of service, not so much mechanical advantage. The goal is now trying to turn every customer into an equal opportunity with its commission structure as well. So it becomes an industry that succeeds on service, not price.
So the question I have is;
What is the strategy behind dealing with sites like Car Cost Canada and Unhaggle?
I am not saying these sites should go away, I am just saying it feels like we are being awfully attached to the information less world of car sales by still whacking people when we get the chance, in many cases only making up for our losses. The very automotive process assumes that price is not a factor, when we are paying sites owned by 3 or 4 nerds who are making a pretty decent living finding what our customers want and helping them get into buying mode faster than our news paper ads do.
On one hand, we are praying to god that this customer ISNT a CarCostCanada.com or Unhaggle.com customer, on the other hand, we are paying them, and FUNDING their efforts in making $25 for every person that goes through their lead generation system. So we hate them, but we fund them. We fund them to perpetuate a myth, that the car dealer is out to get them, that we are bad. They post videos and sponsor blogs to show up higher on Google, that teach people to “never take the first offer” and “know the cost of the vehicle before you go to the dealership”.
Then, and only then, after many people have searched out the Car they want, a Toyota, and how to buy a car, from a blog, then how to know what the cost is on a car, only THEN do we want to interact with the customer.
Then after we do exactly as they were taught, we send them on their way, with a cost plus $500 or Cost plus $1000 deal. Sometimes, we even take losses, why? Because they were also taught to not just buy from the dealer, because we can compete, so sometimes it becomes a
“who’s the bigger loser?” “Who wants in more?”
Race to the bottom.
Then when we get a good customer, a trusting customer, a friend or referral, we Whack them and make up for the losses we took on that one smart guy, and that mere $1000 profit we made on the CarsCost guy.
Then after all is said and done, the guy who we made nothing on, still thinks that car dealers are snakes because they negotiated to below cost, and were originally going to charge them $2000 more… which would have ACTUALLY BEEN COST!
It is the restriction of information that has LED to this problem in the first place, it is the lack of trust continues to perpetuate the losses, and whacks way of doing this.
It makes NO sense for us to Five pay a trusting “Freddy” customer to make up for the “cheap prick” that got us to go to below cost on a car.
If we are making an average of $900 or $1500 gross, and we want to make that $500 more, all we have to do is NEVER take a loss, and only sell cars at $2000 over cost or more.
Sure, the argument can be made that we will lose a large portion of our customers to those who would want to haggle. But WHY do they want to haggle? Because they feel they have to.
The ones who haggle never feel like they got a good deal unless they continuously ask others, now on FACEBOOK AND TWITTER, how much they paid, and to anyone that ever trusted a dealership, quickly tell them that they paid too much because they got it for “X” price. In many cases it may not even be apples to apples comparisons, but they still trust a car-illiterate friend, than a car dealer. Then we fund sites that “Protect” them from us, that help them “beat” the dealer!?
We fund this message?
That was like when the tanning industry funded the spray tanning industry, then ultimately funded the business that said;
“Tanning is dangerous, just paint yourself with chemicals instead!”
and helped create a large competitor for the same customer, and ultimately led to salons having to embrace both and in some cases, switch entirely over to spray tanning to stay open, and find a way to keep a uniform message on both options.
In an industry where we will fund someone, who makes us look bad, just so that we can be perceived to be “on their side” instead of our competitor being in that position, why don’t we just do it ourselves?
The process of buying a car comes so far before we even get to a dealership site.
The customer is loyal to the place where they got the most comprehensive information. That is why we have a trade calculator on our site, the problem is appraising a trade needs far more of an expert, than someone to show the car. Selling the car is easy when they trust you, so make us more trustworthy, don’t be afraid to admit we need to make money.
I don’t know, just makes sense, if the average gross on a car deal is down to $500-$1500 a car, it only make sense to starbucks the industry, commoditize the product, and sell the service.
We become the unhaggle, thats how we earned trust and brand loyalty online, rather than funding people that are perpetuating a negative stereotype of car dealers.
Just my two cents.