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Why dealers should focus on the service, not on the sale

car salesman

The best independent dealers offer service levels comparable to or better than their franchised dealer counterparts and, on a modern forecourt, pressure sales should be a thing of the past.

While there are still undoubtedly sales targets to hit, independents are free from the pressure of hitting a specific number of sales to secure a vehicle manufacturer’s volume bonus.

Beyond discussing the actual vehicle a customer is interested in buying, a sales executive will need to go through the part-exchange appraisal process, find out if customers need finance to fund their purchase or insurance to cover them, as well as offering any additional products that may improve ownership of the vehicle and profitability for the dealer.

It’s a given that each process backing up these elements needs to be pressure-free and professional.

That approach is one used by The Car People, the fifth-biggest independent dealer in this year’s ID50. It doesn’t want customers to feel as if the sales team is trying to get them into a vehicle at any cost.

Jonathan Allbones, director of sales at the dealer group, said: “The majority of customers make contact online or with our contact centre, so it’s increasingly unlikely that the first time we speak to a customer is on the forecourt.

“As a result, the role of the sales adviser’s job when dealing with customers face-to-face has changed.”

 

Part-exchange

The accuracy of the part-ex appraisal can mean the difference between breaking even on a vehicle or making a loss when it is disposed of.

The process is currently going through a transitional period, with some of the larger independents either developing their own digital appraisal system or using a supplier-developed option to replace paper-based solutions.

The Car People has its own IT platform, which links in with the part-exchange and appraisal process. Sales executives go through a digital checklist with a tablet to make sure nothing is missed, but a price is set manually, using The Car People’s team of experts.

Allbones said: “We can give an estimate online through our website by taking some details, so when customers come in they will have a good idea of what they will be offered.

“It’s an area we’re seeing grow month-on-month, where that process is also happening online before customers come to the showroom.”

Where possible, the appraisal should also be conducted with the prospective customer alongside, to ensure they see how the value they are quoted has been calculated. It helps to create trust and avoid confrontation about their valuation.

Taking the part ex-process digital isn’t necessarily re-inventing the wheel, but it helps to make a dealer’s approach with customers consistent and openDavid Abel, Cooper Solutions

David Abel, Cooper Solutions’ business development director, said: “Taking the part ex-process digital isn’t necessarily re-inventing the wheel, but it helps to make a dealer’s approach with customers consistent and open. You can have customers present with you or even let them fill in the details of their part-ex. If they sign off on the fact that the appraisal is a fair evaluation, they’re unlikely to be unhappy with the accuracy of the price you give back to them.”

Abel said it was important for dealers to take the time needed to re-appraise stock that had been given an estimate price from an online application or if the vehicle is seen and then comes back to complete a deal a couple of weeks later.

He said: “You would be surprised by how many sales guys will run out, update the mileage and then not look to make sure everything is above board and matches the original appraisal. Mistakes can be very costly and incorrect descriptions will come straight out of the margin of the car.”

Unbeatable Car (#19 in the ID50) uses a third-party digital appraisal system that brings consistency to its process across the business. Videos and pictures are taken of the vehicle inside and out and customers are asked to volunteer any damage or details.

Mark Sopp, Unbeatable Car director, said: “If we can do the appraisal with the customer we find it’s better as they’re involved and it’s transparent. There’s no disappearing into a back room.”

Appraisers will consult price guides and use their experience to get the right price. Each price is signed off by two experts looking at the central digital system for a “two heads are better than one” approach.

If customers aren’t happy with the price Unbeatable Car quotes for their part-ex, they are given 14 days to try to sell it for more. If the customer doesn’t manage it, Unbeatable Car will honour the original quote (after a reappraisal) and the customer can come back to trade in. It gives customers the power to get a better price if they don’t feel happy with an assessment. Sopp said 90% of customers accept his appraisal team’s assessment.

“You can’t always get it right 100% of the time, but those times we don’t get a price accepted we can feed that back into the business,” he said.

“Are we underpricing too much on specific models? It can highlight areas we may need to take a second look at.”

 

Finance and insurance

The Financial Conduct Authority’s (FCA) regulation of finance and insurance products has created a solid set of principles for dealers to consider when speaking to customers. The other big change here is in customers’ ability to go online to compare finance, to find out whether they can afford a vehicle before they even head to a forecourt.

“Salespeople are well versed in financial knowledge and play a more generalist role in the sales process, selling both cars and finance”Paul Kaye, Close Brothers Motor Finance

Paul Kaye, Close Brothers Motor Finance sales and marketing director, said there was a difference in approach between the supermarket giants and single sites, with big players often having specialist F&I managers on-site to advise customers on the variety of finance options open to them.

Kaye said: “Medium to large car supermarkets can have eight or more of these specialists on their payroll.

“Within single sites, the trend seems to be that the salespeople are well versed in financial knowledge and play a more generalist role in the sales process, selling both cars and finance.”

Kaye said finance penetration was usually lower in single-site operators, compared with the supermarkets that have dedicated finance specialists. The benchmark for supermarkets can be as high as 50% penetration on finance, while the typical level for single-site independents would be 15-30%.

The Car People uses a finance broker service delivered via an online application (in partnership with Equifax) that lets customers compare offers from a number of providers in a “soft search” that will not affect their credit scores.

It means customers go into the showroom with a good idea of what sort of vehicles they can fund through finance.

The business has a 50% penetration rate on finance and 34% on GAP insurance.

Unbeatable Car is in the process of relaunching its website to feature iVendi’s Showroom Eligibility tool. This can be used with customers ahead of visiting the showroom or sitting with the customer and looking at whether they are likely to be approved by the dealer’s panel of lenders, including possible reasons for rejection.

Sopp said because of the FCA guidelines, best practice in this area was largely set into a solid structure that doesn’t vary much among dealers offering finance. Unbeatable Car uses ITC Compliance to make sure it is on the right side of FCA regulation. Sopp said: “The customer may have it in their mind that they want a used PCP, but we always show them all their options across different products so they can make an informed decision.”

“Offer every customer every add-on product every time, in a way that is appropriate to the dealership culture. Never assume they do not want it, but do not be pushy”Mike Macaulay, Auto Protect

Mike Macaulay, AutoProtect’s head of corporate sales, said: “Today’s independent dealer needs to adapt their approach to the new reality as a result of the FCA’s regulations.

“The role of the sales executive is increasingly switching from a ‘closer’ to a ‘facilitator’, an ambassador for the dealership who can reassure, guide, support and inform the customer through their car-buying journey.”

AutoProtect offers GAP, insurance and extended warranty products and Macaulay said the goal for dealers was to make it easier for customers to buy a car with services that make ownership easier.

He said: “Dealers should not be selling transactionally, they should be selling consultatively.

“Always understand the customer’s circumstances and motivations by asking questions and listening actively to the information they provide.”

Macaulay agrees with Allbones and Sopp that any add-ons beyond the actual vehicle should not be pushed.

He said: “Offer every customer every add-on product every time in a way that is appropriate to the dealership culture. Never assume they do not want it, but do not be pushy, let them buy products that meet their needs.”

Dealers offering regulated products such as GAP need to make sure their processes adhere to the FCA’s Treating Customers Fairly (TCF) initiative. Macaulay said it would be prudent to create a monitoring programme for added-value sales activity at sales executive level to help review compliance.

Macaulay believes dealers should not worry about overloading customers with add-ons as “TCF is about enabling customers to choose products that are useful to them, not assuming they will not be wanted”.

 

Add-on sales

The Car People refuses to let add-on suppliers dictate the company’s targets at the point of sale.

Allbones said: “There’s no messing around with targets. Our suppliers understand our stance, that it’s not the way we want to do things. We will go through with the customer what they might need, but we’re not chasing down a target.”

Sales advisers are on-site to help customers. There is a separate handover team and phone calls and emails are also handled by separate teams. This leaves sales staff able to really focus on the customer standing in front of them with no distractions.

The Car People offers four add-on products – extended warranty, GAP insurance, tyre/alloy insurance and paint protection.

Sales advisers are paid a high basic and a fixed per-unit bonus regardless of how much margin is in a vehicle. There are small bonuses that ratchet up for add-on sales, but Allbones said they are at a low enough level that they do not impact on customer service.

He said: “We have made some small changes to the remuneration plan, but the approach has essentially remained the same since the company launched in 2007.”

Unbeatable Car also uses a flat fee bonus structure to avoid a pressured sales atmosphere at the forecourt.

Sopp said: “It wouldn’t work if our sales guys were incentivised to favour one product over another, so the approach is to find the product that is suitable for the customer.”

Nick Gaskin, marketing and sales director at Autoglym, said the add-on sale was made easier if it was a product the dealer believed in. Its LifeShine paintwork and fabric protection product comes with a guarantee for as long as that customer owns the vehicle. As the product is not regulated by the FCA, it may be a simpler process for dealers to administer and sell.

Autoglym has a smartphone application for LifeShine, which Gaskin said can help take the pressure out of the sale.

He said: “The app provides an interactive way to demonstrate the benefits and information about the product can be sent directly to a customer’s email address if the purchase doesn’t happen in the showroom.”

Sales advisers with The Car People receive eight days of training from an in-house trainer during their induction period to show them how the business does things and one-to-one training continues after that.

Gaskin said: “During Autoglym’s training sessions for dealers, we encourage salespeople to think about asking questions to see how relevant LifeShine will be to their customer.

“For example, if the customer reveals that they often carry young children in the car, there is a greater likelihood that interior protection will be relevant to them in case of spills.”

Gaskin expects a penetration rate of between 30% and 40% on volume brands and up to 50% on premium used vehicles.

He said: “The greatest potential for increased sales of vehicle protection lies within the volume sector, particularly with family cars where buyers may be conscious of spills and stains on the interior upholstery and general wear and tear that can be expected as part of daily family life.”

Unbeatable Car does not accept an “agreed level of business” when negotiating supplier contracts as, again, this would create a negative dynamic between sales executives and customers.

Sopp said: “We’re in a fortunate position where we have no stocking loans and no outside funding.

“We can pick and choose our suppliers based on which ones we think have the best products and, ultimately, it’s our customers who decide which products suit their needs.”



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