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March 31, 2008: How to appropriately handle a discount dealer in your area

March 31, 2008
Filed under Columns

It seems every market area has a discount house a few hours away that’s advertising outside of their local area to lure in customers. While it’s easy to get caught up in a price war with a discounter, keep in mind if they can sell units and lose money, you can too.
Dealership University has studied several dealerships that adamantly believed more than 50 percent of their walk-in floor traffic knew about a discounter. However, after training their sales team to follow the sales process with every opportunity, and working on the sales floor for a few days at each dealership, we realized that less than 20 percent of their incoming traffic ever mentioned a discounter.
The reason these dealerships believed so many of their customers knew about a discounter is because they only focused on those that walked in with an advertisement and wanted the best price, or the laydown customers who were ready to buy. So, hundreds of “Just Lookers” that were genuine sales opportunities were being considered tire-kickers that were wasting sales people’s time.
When conducting seminars, I often ask everyone in the room who is interested in owning an RV to raise their hand. Then, I ask those who aren’t interested to raise their hand if they would stop by an RV dealership and waste their time looking at products they’re not interested in owning. No one has ever raised their hand to the latter question. Simply put, people don’t shop for things they’re not interested in owning.
Here are a few tips to decrease the negative effects a discounter can have on your dealership:

  • Instead of assuming everyone knows about the discounter, assume everyone doesn’t know. Track every opportunity on your traffic log over a 30-day period and analyze the data. Prove to yourself and your team the majority of people walking through your door don’t mention the discounter.
  • Understand the culture of your sales team starts at the top. If you let the discounter get under your skin, it will infect your entire team. When management is constantly complaining about the local discounter, staff members begin to do it too.
  • Don’t ignore the “Just Lookers.” They are sales opportunities who are trying to decide which way they should spend their expendable income. Should they upgrade their truck, buy a bigger house or get that new motorcycle? If your dealership does a good job at building value and developing rapport, you will increase the odds of the customer choosing to buy from you. Keep in mind that parts customers, service customers and even the UPS driver who often stops to look at a bike are bonafide sales prospects.
  • Half of the hardball price shoppers are not as tough as they appear. If handled properly, they can be converted into a profitable sale. Slow down the sale and follow the sales process. Take the time to build value in yourself, the dealership and the product and many hardball customers will be reasonable and willing to pay more.
  • Never invite negotiations by pausing after saying a price, or by using terms like “We’re asking,” “We’d like to get,” or “We’ll work with you.” These terms invite negotiations. The only word that should ever go in front of price is “only.”
  • Don’t let your salespeople fall into the sympathy trap. Salespeople often feel guilty because they know about the discounter, or you’ve discounted that model before. Remind them that every unit you offer is worth the retail price because of the value your dealership offers. A price objection simply means the value of buying from you hasn’t exceeded the price. Your sales team needs to understand the value of dealing with a local dealer that has a professional staff who believes in providing service after the sale. Pick-up and delivery, your parts and accessories inventory and certified factory-trained technicians all add value to your dealership.
  • Training. Educate your sales team on the importance of following the sales process, building value and not assuming every customer is a price shopper. Also train them how to handle those who are.
    Stay positive and keep morale up. A much smaller percentage of your customers know about the discounter than you think. And take note of what Rob “Waldo” Waldman (The Wingman) said, “To survive in business, focus on your competition. To win, focus on your customers.”

    Tory Hornsby, general manager of Dealership University, was drawn to the powersports industry more than 10 years ago when he turned his passion for motorcycles into a career. Hornsby worked in nearly every position in the dealership before becoming a general manager. He welcomes your e-mail: thornsby@dealershipuniversity.com.

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