5 Ways to Compete for Car Buyers... Without Competing on Price

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Most car buyers choose a vehicle based on more than just price. Customer service, financing options, and resale value all play a role in their final decision.

Dealers know this. They see it every day. But when it comes to competing for customers, most dealers default to their go-to strategy: lowering their prices. Dealership price wars are a destructive race-to-the-bottom — a race you don’t want to win.

It’s understandable why dealers want to compete on price. Lowering your price is the fastest and most tangible way to sweeten a deal. Many salespeople still believe that consumers are motivated by rational financial factors alone, a theory that was debunked years ago.

Dealers can sell more cars and maintain their margins by competing on other variables besides price. Instead of winning the race to the bottom, let’s talk about five things that can help you focus on what matters.

1. Focus on … Driving Traffic to Your Website

Change your focus from third-party lead providers to your own website.

Third-party lead providers more often act like lead pirates. They force you to compete against thousands of other listings, hoarding customer loyalty for themselves. There’s no guarantee that your listing will result in a sale, or even a click-through to your website.

The reality is that third-party lead providers aren’t driving customers to you. Instead, they are in the driver’s seat, and they drive your leads to your competitors. That’s all wrong.

Instead of relying on third-party lead providers, take lead generation into your own hands. Many dealers are turning to programmatic ad tools that target their ideal customers and drive them back to their own website. These tools create custom display and social media ads that are several times more effective than sponsored listings on third-party sites.

Learn more: The Small Dealer’s Guide to Online Advertising

2. Focus on … Your Immediate Competition

When setting prices, look to your actual competitors, not the market as a whole.

National and regional pricing trends are useful reference points, but don’t be distracted by them. You aren’t competing against a dealer in another state; you’re competing against the guys down the block. They’re the ones you need to focus on.

Most pricing and appraisal tools tell you little about your local competitors, but VinCue is different. It tracks 40,000 dealer websites in real-time, allowing you to pinpoint individual dealerships to see their sales, trade-ins, market share, and more. You’re also able to pick and choose your competitive data. This lets you define who you’re competing against so that you have an accurate measure of success.

3. Focus on … Vehicle Superlatives

When you’re competing against thousands of other listings, you need to find a way to show how your vehicles are different than the other dealers. Pricing alone doesn’t accomplish that. Descriptions do.

Use unique superlatives to describe your vehicles.

A vehicle purchase is one of the biggest investments people make. They want to know that they’re making the right decision. Give them the information they need to be confident in their choice.

As we wrote in our e-book, 5 Zero-Cost Tactics to Turn Inventory Faster, once customers decide on a particular vehicle type, they still have to pick a specific car. Use descriptions that will convince them that your car is the perfect one for them.

Your car is the one with a special upgraded package, the low-mileage, and the leather seats that they’re looking for. You alone have the best maintenance program and customer service around. Give them a story about what it feels like to own this vehicle. Help them see themselves proudly driving it off the lot.

And make sure you carefully choose your descriptions at every level of the sale. For example, studies have shown that describing a fee as a “small cost” increased sales over a plain “cost.”

5. Focus on … Your Highest Grossing Customers

Don’t waste time and money chasing down any and every customer. Instead, focus on your highest grossing customers, and forget about the rest.

Know the type of customer that makes you the most money. Use hard data to drill down to the specifics. That means identifying where your customers are coming from—down to the ZIP code. Analyze your sales data for demographic patterns. See which promotions did, or didn’t, move the needle for these sales.

Once you’ve identified your ideal customer, go after them with everything you’ve got. Stock the vehicles those customers want to buy. Advertise in their ZIP code and don’t waste money in surrounding areas.

But don’t stop there. Keep digging to understand these customers better. Carry the brand of coffee they prefer, the doughnuts they like. If you’re specializing in family vehicles, have a play area for the kids; every salesperson should have a box of crayons and paper in their office.

Your ideal customer should know, from the first second they interact with you, that you understand their concerns and can meet their needs. Not only will this help close their sale, but they’ll also talk about you to their friends, who are probably in the same demographic you’re aiming for.

5. Focus on… Winning More Trade-Ins

Every trade-in is a double-win for your dealership. It means that you’ve moved existing inventory and you’ve gained new inventory to sell.

Set a goal to win 50% of possible trade-ins. Use tools like VinCue’s Poach Report to track your win-loss percentage and the value of each trade in. Based on this analysis, establish or improve processes to meet your new trade-in goal.

Another thing to keep in mind: Once you’ve got a more targeted customer base, trade-ins may become an even more valuable part of your business. There may be less of a mismatch between your trade-in inventory and your new vehicles. The vehicle your ideal customer already owns is probably a vehicle that another high-grossing customer would be interested in.

Focus on … the Big Picture.

In a small survey of retailers, 64% admitted they didn’t know how to measure the impact of pricing changes. In other words, these businesses cut prices without really knowing if it makes a difference.

That’s no way to run a dealership.

Competition is already tight as it is. Don’t do yourself a disservice by cutting your prices when you don’t have to. Instead, focus on more effective ways to compete than price alone.

By identifying your best customers, advertising directly to them, and meeting their needs, you will already be far ahead of the game. And you’ll be focused on expanding your business when the competition is still racing themselves to the bottom.

Ben Putano

Ben is a writer, marketer, and entrepreneur specializing in tech and automotive. His agency, Damn Gravity, helps automotive tech companies grow through content and inbound marketing.

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