How to Create the Perception of Low Price at Your Dealership

Nobody wants to pay too much. More importantly, nobody wants to feel like the sucker who paid too much. That’s why the perception of low price is more important—and dramatically more profitable—than having the actual lowest price.

WalMart figured this out a long time ago, and is the largest retailer in the country. Amazon’s also figured it out, and last year it cracked the list of the top ten largest retailers in the U.S., as both the only pure-play Internet retailer among and the fastest-growing of the top ten.

A research paper earlier this year revealed a key detail of Amazon’s strategy of consistently featuring very low prices on popular, frequently searched items especially during high-intensity shopping periods like Black Friday and Cyber Monday: It is much less diligent about maintaining price leadership on nonpeak items during nonpeak shopping periods.

For example, it might drop the price on a flat screen TV to $250 during Black Friday weekend, but actually raise prices on cables and accessories, which are less likely candidates for comparison shopping. The marquee price of $250 on the flat screen is what shoppers will remember, and anchors the perception of low price in buyers’ minds.

I’ll tell you who else has figured out how to present the perception of low price: third-party automotive lead providers. And, TrueCar, AutoTrader, Edmunds, and all the rest have an even better trick than Amazon.

They don’t have to worry about juggling peak times and which cars are being most frequently searched online. They spend hundreds of millions of dollars a year on advertising to build their brand, their image, and the perception of low price for themselves. That’s easy to do when you have dealers lined up to slash prices, eliminate profit, and write you a big, fat check every month for the privilege.

The perception is that they are the low-price leader. They get to be the hero. You get to be the goat. You do all the work. They get all the glory.

But dealers can start building the perception of low price for their stores and slice the lead providers a smaller piece of the pie. Here’s how.

Reach consumers earlier in the buying cycle

Over the past few years, the number of dealerships visited by the typical consumer has dropped from half a dozen or more to one or two at best.

If you’re not telling consumers about your ridiculously low prices before they create their shopping list of dealers, you’re not going to be on it, and you’ll just become increasingly dependent on third-party lead “crack.” The lead providers understand this. You can’t turn on the TV without seeing their ads.

The question I get asked by more dealers is: “What percentage of my ad budget should be devoted to digital advertising?” I don’t know what the answer is. But I do know what the answer is not: It is not 100%.

Digital marketing mostly reaches consumers who have already decided to start car shopping. By then it’s too late for you to build your image. Beat them to the punch, drive traffic to your stores and your website, and build the perception of low price for yourself, not them.

Use the right words

If you want people to believe you have the lowest prices, you have to say you have the lowest prices—over and over and over again. Repetition is how perception is created, using statements like: “Nobody Beats Our Prices. NOBODY!!”

Offer buyers a low-price guarantee, not a price match. You have to beat your competitors’ price. Double the difference. Triple the difference. Make them an offer they can’t refuse.

Yes, you’re going to get burned on it once or twice. But the vast majority of people will never take you up on the offer, and after they’re happily behind the wheel of the car of their dreams, their interest in researching and negotiating car prices drops to almost nil.

Advertise ridiculously low prices on your best-selling models. I know, it runs counter to everything you learned about supply and demand in Economics 101. But your best sellers are the models that are getting shopped and searched.

The truth is that most customers end up buying something different than what they were looking for when they walked in the door, so you’ll have plenty of opportunities to make a profit. But your best sellers are your bait to get them in the door in the first place. They’re how you establish your image as the low price leader.

They’re your $250 flat screen.

Terry Lancaster is the VP of Making Sh!t Happen at Instant Events Automotive Advertising, a speaker at multiple auto industry conferences, and the author of BETTER! Self Help for the Rest of Us.

Terry Lancaster


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