Jan. 17, 2011 – Disturbing or genius? You make the call
January 17, 2011
Filed under Columns
First off, a confession.
I’m not big on change. And in all honesty, I’m just downright bad at it. When I recognize it, I try to downplay its importance to a momentary fad. Even when that fails, I’m slow to embrace it. And when I finally do, I still mock it for its uncertainty.
So keep that in mind as we venture into territory that you, the dealer principal, have probably considered, or already jumped into.
Over my holiday travels in the Midwest, I sped past a motorcycle dealership that had one immense sign attached to it that said in big, bold letters, “We will not be undersold.”
I flinched. I really did. In fact, I looked in my rearview mirror to make sure what I saw was really a motorcycle dealership and not a car dealership.
Is this where we, as an industry, have come? And if so, is this a positive step?
The Change Grinch in me says, “No way, no how can it be a positive thing.” And that really hearkens back to discussions I’ve had with officials familiar with the auto industry. These folks candidly admit the auto industry’s new unit sales are largely tied to financing deals. In other words, the 0 percent retail financing deals that began many years ago are no longer considered “specials” by consumers. They’re the expectation now.
So what was once value — the no-interest financing deal — is now akin to a wheel, a brake and a cup holder.
And that’s what makes me flinch about a “We will not be undersold” sign. Doesn’t it condition the consumer to think first about price and second about product? Not to mention the lifestyle the product stands for? Or the value the dealership brings that can go way beyond the unit price?
Now many of you are standing up and saying, “Where have you been the past two years? Nobody comes into the dealership without the price of the vehicle in their head, if not in their mobile phone!”
That may be the case. And maybe the issue of price has now surpassed anything else in terms of importance. Two dealers, longtime veterans of their trade, seemed to agree with that line of thinking when I asked them to give me their thoughts on the “We will not be undersold” sign.
“I agree with that sign 100 percent,” one dealer e-mailed me. “My motto has always been at least give me the opportunity to turn the sale down. I believe that once we ‘sell’ the customer, we can then begin to show him some value in our dealership. The problem with ‘value’ is you can’t tell a customer that you have value, you must prove it and the only way to do that is to get them as a customer. At times that attitude does hurt our margin, but typically we will get it back in the long run.”
John Lyon of Wilkins Harley-Davidson in Barre, Vt., saw it differently.
“Powersports dealers that advertise that they ‘will not be undersold’ should not be considered a real threat to their competitors for several reasons,” he wrote me in an e-mail. “One, a dealer cannot sustain this type of behavior in this type of market. Two, they are conditioning their customers to demand a discount for the future, when they are likely least able to give a discount. Three, any dealer that conducts their business this way has very little goodwill to help them for the future when they need help from other dealers.”
Another veteran dealer I quizzed, however, did give a thumbs up to the sign as well.
“I think it gives the consumer the idea that they are going to get a good deal whether they do or not. At least the dealership gets a chance at the customer before they buy elsewhere. A large majority of the customers won’t compare prices anywhere else or we wouldn’t be able to get the margins that we do. That sign will bring in the hard-core buyers, but at least we get to decide if they buy or not.”
The same dealer, however, noted there’s a potential downfall with that sign.
“The problem is the dealership can get in the giveaway mood when it isn’t necessary, if it doesn’t have a strong sales manager.”
And yet another opinion from another veteran dealer executive:
“I don’t know the dealer who had that sign up but I can guarantee you that it is solely a marketing technique and not what is practiced. Certainly the psychology behind it is genius. In order to make it work there had to be a strong GM or owner on site ... there has to be a strong GM in place to make sure it is used properly as a closing tool and not some war chant for all the salespeople to use, which can quickly diminish gross profit.”
The Change Grinch in me has another problem with the sign’s message. I can’t get over the fact that motorcycling is still a want and not a need and that the culture that it stands for and the simple pleasure it can bring is getting lost here. Thousands of people drive that highway day in and day out and when they see that sign they’re left with one idea about motorcycling and that dealer’s particular brand: It comes at a good price.
Is that what we as an industry really want to convey?
Will that get a higher percent of nonriders into the store?
I’m sorry but the Change Grinch isn’t sold on that.
See you soon
The folks behind Powersports Business, including myself, will be at the V-Twin Expo and the Dealer Expo in coming weeks. Find us at booth No. 747 at the V-Twin Expo. We look forward to catching up with you.
Neil Pascale is editor-in-chief of Powersports Business. He can be reached at email@example.com.