Gross is a state of mind. The first time I heard this I thought you know that guy might be on to something. The perceived value of anything is what someone is willing to pay. If you or your sales professional doesn’t believe the value of what he or she is selling then you will continue to have low gross. Here is a simple technique to help the low grosser on the team to hold the margin.
Desk Manager Process:
- Ask the 8 essential questions:
- Did you test drive the vehicle?
- Does your customer have a trade?
- Do you have an exact payoff?
- Is your customer financing or paying cash?
- What budget does the customer have?
- How much are they putting down?
- How are they going to pay for the taxes?
- Where’s your commitment to buy?
If the salesperson cannot answer any of these questions send the salesperson back in to get the questions answered, or turn the salesperson. Call me old school, but your job is to save the customer time and make money. If you’re not asking these questions, you’re prolonging the customers time and costing yourself a lot of money.
When the salesperson comes back with the answers start with the Ackerman model of negotiating. Be sure to have an arsenal of closing techniques to help load the sales professional’s lips. The Ackerman model suggests that customers do a 65%, 85%, 95% and then 100% of their offer. Using the same model as the one trying to hold the margin use this example. (note: before countering any offer ensure that you have a written commitment to buy 100% of the time.)
- Start your number at 100%. Justify your number and load the salespersons lips with enough 3rd party data to close the sale.
- If it doesn’t work then go to 95% of the difference of the customers offer. For example: your number is $30,000, they are at $25,000 or a $5,000 difference. The counter should be $250 off of your price. This can be accomplished by giving them Floor Mats, Window tint, etc. Stressing to them that you have a very tight margin.
- If that doesn’t work and assuming they have come up on their offer go to 85% of the difference of their new offer. For example: if they go to $27,000 and you’re at $29,750 or a difference of $2,750 your new counter should be $412.5 off or $29,337.50.
- If that doesn’t work and assuming they have come up again and their final number is $28,000 a difference of $1337.50 then your counter and final number should be 65% of the difference for $468.12 off or $28,869.38.
I generally don’t recommend going to 4 pencil negotiations, however for the tougher customers you have to. Ideally you want a seasoned sales professional or closer in on the deal sooner than later to flush out any unknown objections. A lot of times you’ll find it’s not about price and are wasting each other’s time. Clarifying the deal early on flushes out a lot of the real objections. Early Management Involvement is key.
As margin compression continues, you’ll have to get better at your craft. “I fear not the man who practices 10,000 kicks once, but I fear the man who has practiced 1 kick 10,000 times.” Bruce Lee. If you want to win in the game of cars you must get better.
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