4 steps to overcome the price shopper
As we all are aware, the elusive price shopper is now starting to show up and call into the dealership again. They seem to always have the best price in (or out) of town and they always seem to be so overly focused on getting the “best deal.” It makes it extremely hard to converse with them unless you just drop your pants and get down to your best price immediately. Unfortunately, no matter what the MSRP is on a machine, the market price is always going to be dictated by the lowest priced dealer. For example, if a 2023 Polaris RZR XP 1000’s MSRP price is $21,899 but people can now buy them for $18,999, well that’s the new price of that machine. This is always based on product availability. It goes back to supply and demand. During Covid, we all saw how supply and demand can dictate pricing (in our favor) but as the market begins to cool and supply increases on certain models the price of these machines will always go down. This was common play pre-Covid and its starting to rear its head again now that supply has increased. Now, here is where you have a choice to make, you can either A – ignore this fact and continue to price your machines high and loose crucial business that you NEED to keep cash flow AND end up with an astronomical floor plan interest bill in 6 months. Or B – you can get on board, realize what’s going on in the marketplace and stay ahead of the curve and keep those customers coming into YOUR dealership. As frustrating as this may be to any salesperson or sales manager, there are always a few logical things you can do to combat this and overcome the price shopper.
The first thing is to be aware of what someone can buy something for in the marketplace. This means that you (or a few of you on your team) will have to start secret shopping your competitors and these dealers that keep coming up in conversation that always seem to have the best price. Be sure to get a written quote that includes all fees. During the conversation with the customer when they tell you their “best price” your immediate response should be “Wow! That is a great price, my boss tells me to never lose a deal over price and I’m going to do my best to get the best deal for you. If you could send me a written quote, we can do our best to match or beat it.” You can also tell the customer that the reason you need the written quote is to be sure they have included all taxes and fees and that you (being the expert that you are) have seen dealers give a low price just to get you in the door and that if that dealer isn’t willing to send you a written quote, then there is more than likely something fishy going on and that will not be what you pay after they add all their fees. Being aware gives you leverage during this phone call or interaction, and you can immediately snuff out whether or not the customer is being truthful with you about the price they say they have from another dealer. This is an extremely important factor when deciding what your price structure is going to be.
You don’t have to be the cheapest but you do have to be competitive, and you do have to have selling points on why they should pay a little bit more to do business with you (unless you decide you want to be the cheapest…not recommended). Whether your $500 more than the cheapest price or $1500 more, you have to be ready to justify why that customer needs to spend the extra money with you. Having at least 5 good reasons why is usually a good starting point. You can use things like “We have been in business X amount of years and have a reputation of taking care of our customers during and after the sale” or “We may not be the cheapest in town but we have a great facility and a great team on board to give you the best experience and that the competition most likely has lower over head with a not so great facility, team or experience and that’s why they can offer a lower price.” These must be unique to you and your dealership. A good starting point would be to hold a meeting with each department and come up with what makes your dealership stand out from the crowd and why someone should do business with you over the competition.
The next you are going to want to do is figure out how you can maximize profits on these particular units that are price shopped the most. One of the number one ways to do this is through add on accessories (windshields, rear panels, roofs, audio packages, wheels/tire, bumpers etc.) 90% of these units get decked out with these accessories after they leave your showroom if you do not capitalize on it beforehand. By creating a plan around these units to already have these accessories installed before they hit the showroom floor, you are able to make extra profit that you may have missed by not being aware of this. My suggestion would be to stay under the $4,000.00 mark. This alone can create an extra $1000-$1500 of extra profit on these highly price shopped units. You have access to your order shipment statements and should be well aware when a unit that is not spoken for is on its way. Once this unit is shipped (or even before) get together with your Parts and Accessories department and go ahead and pull the needed accessories for this “custom build”. You should already have your accessories picked out and pulled before the unit arrives. Once it arrives these accessories are to be installed during the build process to ensure that it DOES NOT make it on the showroom floor before being completely decked out. By doing this, you are accomplishing two things, 1- guaranteeing and maximizing profits on these price shopped units and 2- you are guaranteeing that you are selling through accessories that you’re having to stock anyway. The manufactures are making you order these accessories and have them in stock, by doing this you are merely selling through what you are having to stock and not tying up your hard-earned dollars tied up in inventory.
The second thing you can do to increase profitability on these units is to have a hardcore F&I selling process. IE extended warranties, gap, theft, GPS etc. 90-95% of these units are going to be financed in some form or fashion. By focusing on payments rather than the total price of the unit you can sell more back-end products. I suggest if you aren’t already you need to be menu selling with payments. Give them 4 options, the base package payment with just an ESC all the way up to the grand slam with all your available back-end products on it. (If you need help with this reach out to me and I’ll help you with this process.) If done correctly you can increase your profit on these units in this area by $1000-$1500. People will buy these products if presented the correct way. The customer NEEDS to buy the GAP in case it gets totaled by a roll over or collision. The customer NEEDS to buy an extended warranty to cover their machine for the duration of the loan so that they can guarantee no more out of pocket cost in the future. The customer NEEDS that GPS or Theft to cover them in case someone decides to steal their machine. You must believe that these back-end products are good for the consumer. Heck, when I buy a car, I almost always buy the GAP because I always finance with no money down. If I had an accident the day I drive off the lot I’d be upside down if I didn’t. By believing in these products and propositioning them in a way that appeals to the customer you can increase your profitability on these highly price shopped machines.
The last thing you need to do is to make a plan on how you’re going to roll these things out and educate your sales staff on how to handle this customer. There’s nothing more damaging to a sales person than not having an answer when this comes up. It will kill their ego and they will give up. You will often times hear “Well, so and so up the street is just giving stuff away” or “We can’t make any money cause so and so’s price is so cheap.” This just means they don’t have the right ammo and they don’t have the right understanding about what’s going on or how to handle it. The difference between a decent or even good salesperson and a great salesperson is one that’s well prepared and well trained. If you don’t give your soldiers the right weapons before you send them to war, they will get killed on the battlefield. You have to equip them to be able to handle this situation. By creating a plan and educating your sales staff you are equipping them with a freaking bazooka, a bullet proof vest and the confidence to go out there and win that war.
Overcoming the price shopper is hard. There’s not many people out there giving you an actual playbook on how to handle this situation. As crazy as this may sound, it’s not really all about the price. The customer thinks that by having a cheap price on hand when calling you that automatically they have the upper hand. By recognizing the problem and knowing that you need to do something about it you are already miles ahead of everyone else who will sit around and make excuses and cry about other dealers “giving stuff away.” It’s inevitable, and once you understand how to handle it you will look at it from a very different perspective. So to sum this up , you have to 1 – be aware of what units are being price shopped and what they can actually be bought for. 2 – set your pricing structure to be competitive and have AT LEAST 5 reasons why someone should purchase from you over the competition. 3- setup processes to drive profitability in other areas like P&A and F&I. And 4 – Make a plan of action and educate your soldiers. This is what I have done in the past to combat this issue and have been very successful with handling this problem and increasing sales and profit margins. If you want more info or need help creating a battle plan and educating your staff, I’d be happy to get on call and see how I can help!