Book Values Matter, But…
I first want to start off by saying that I understand certain book values are a vital part of your business. Depending on what part of the country you live in, getting a loan approved on a car is not possible without having an accurate NADA or KBB book-out within the finance packet sent to the bank for funding. With that being said, dealers I’ve spoken with have become too beholden to their book value of choice and forget market pricing. Those dealers, or their responsible parties at the dealership, have decided that one specific value produced by their book of choice is gospel. I so often hear this: “We’ve used [fill in the blank with book here] for 25 years, and it hasn’t steered us wrong”…or has it?
View Your Dealership the Way a Consumer Does
Book values have their place, but for now I want you to forget everything you know about the car business, and think like a customer. The most successful dealers know how to view the world through the consumers’ eyes. Picture your consumer and how they search for a car in today’s market. At a minimum, they consult 9 different online sources for everything from “values” to “reviews” to “ratings.” So your consumer is very likely to view a book value website along their journey to the sale. It makes sense to assume they’ll look up values for their trade and the vehicle they want to buy somewhere online.
Today’s customer will almost always have a ballpark trade value of their car, and know about what they should pay for the car they want. Unfortunately for you, the values they have in mind could be from a different book than the one you believe is the best. And since none of the book values are similar to each other, you and your customer can meet one another for the first time and be $1000’s apart on pricing, depending on the brand. This is no way to start a relationship. From the start, the scene is set for distrust between dealer and customer. So there you are, trying to validate your book value, a book they’ve never heard of, and they wonder how it can be so different from the book value they have. They’ll also wonder why you use the book you do, since the website they visited and the advertising they’ve viewed claims to be “the most trusted, reliable, etc. pricing tool in the industry”.
You Want to Sell, They Want to Buy. This is good.
What happens next? Now both parties are running defense, even though all you want to do is sell a car, and they want to do is buy a car. You can’t agree on price because you own the car for too much, and the customer wants to pay less. You purchased this car based on the value in your book of choice, yet your customer wants to pay what their book of choice says they should pay. This is not good. Neither one of you is feeling warm and fuzzy. So your customer will leave and go to the dealer down the street for that. And that leaves you waiting for someone to be willing to pay the price your book of choice told you, and that might just take 6 months or so.
Don’t Lose Your Customer in the Business of Selling Cars
Does any of this sound familiar? Have you experienced a similar scenario at your dealership? Is it becoming more frequent? The market has changed, and you can change too. It really won’t be that hard.
Next week I will talk about how to overcome book value objections from customers. Later I will discuss how changing your buying process will eliminate the need for book values. But, if you’re scratching your head already and need help immediately, email me: firstname.lastname@example.org or call 826-588-2955. I get no greater professional joy than seeing dealers improve in this competitive market.
Until next week…Let’s try to not be Beholden to the Books.
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- Beholden to Book Values-PART 3 - March 30, 2017