Give Your Customers “Change” They Can Believe In

During the 2008 Presidential race, voters were looking for two things—change and transparency. The auto retail business, at least from the consumers’ perspective, has never changed. Its lack of transparency is as frustrating as ever. Payments increase and finance terms lengthen with each successive trade-in—even for those consumers electing an essentially equivalent model. The average consumer is $4,700 upside-down according to Salespeople cannot credibly explain to their customers the principles behind market depreciation and interest penalties. In the absence of information they deem reliable, consumers simply arrive at their own conclusions: blaming dealer greed for all their woes. Sadly, most publications and blogs, taking the cheap way out, edify these beliefs by further vilifying car dealers.
Consequently, buyers Google the word “Invoice” 1.2 million times per month, “Negotiating or Negotiations” 370,000 times per month, and “Dealer Cost” 49,500 per month. Clearly, buyers believe dealers cause the lion’s share of their troubles and center most of their efforts on negotiating price and payment. They don’t trust dealers. They don’t like dealers. They didn’t even bat an eye when the government tyrannically closed thousands of stores. Yet we unabashedly ask customers to make the second-largest financial commitment of their lives every day in American showrooms.
The days of letting the consumer out the door, full of misconceptions and loaded with a below-invoice figure are gone. There simply is not enough volume to make up lost gross on the next buyer. Instead, buyers must understand that you appreciate him or her making such a large investment in your company. That you and your staff transparently break down the numbers into ACV, discount, and rebates—rather than jumble them up into one unintelligible allowance figure. That you will disclose the true negative equity figures the customer faces today and offer short-term, albeit sometimes painful, solutions to the problem. “The easiest thing for me to do, Mr. Customer, is stretch out the term of your loan, get you an affordable payment, pocket my commission, and leave you to face the financial consequences later on down the road. You can always choose to go that route again, but I want to show you some alternatives before you make your decision.” Those alternatives should include leasing, which customers Google over 4 million times per month!
For the 80% of consumers that leave the dealership on the first day without buying, offer them a handout booklet of consumer websites to research. Train your salespeople to handle lot blow offs by inviting customers to follow them inside for a free industry buying guide, giving management an opportunity to meet and log the guest. What do you have to lose? Currently, less than half of them ever return to give your dealership a second chance. You must clearly define the difference between you and the dealer across town. What transparency is your competitor providing? Usually nothing more than cash-difference or payment numbers scratched on the back of a business card and stapled to a product brochure.
Ragsdale,, authored Car Wreck; How You Got Rear-Ended, Run Over, & Crushed by the U.S. Auto Industry (Langdon Street Press, $15.95). Paperback and audio versions debut at NADA 2010 (Booth #483). More information on how Dealers are using his work at



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