Remember the scene from Fargo where the nice midwestern couple were getting the run around on a new Oldsmobile by Mr. Gunderson? Well, we all know that happens from time to time, but how often does having to deal with “let me check with my manager” happen and how big of an impact does that make on evaluations of the purchase experience?
Data from Maritz 2012 New Vehicle Customer Study reveals answers to both. We asked over 100,000 new vehicle buyers and lessees about their vehicle buying experience between October 2011 and April 2012. Here’s what we found:
As we can see that the majority (60%) of the time new car buyers and lessees are working with a single sales person who still needs to get pricing approval from their manager. This is followed by a single sales person with pricing authority (27%). Luckily only a few (9%) had to deal with several sales people to get to a final price (although I recently had that exact experience).
Ok, so the back and forth between people is the norm in the price negotiation. Some would argue that dealers might be able to realize higher margins by playing the good-cop/bad-cop pricing game. Maybe, maybe not. But what is clear, these kind of tactics can have profound downstream consequences in the form of loyalty. What’s the impact? We can see here it’s pretty straight forward.
The more people you have to deal with, the lower the satisfaction with the experience. We also know the lower the experience rating the less likely they will come back to both the brand and the dealership. Bottom line; dealerships and OEMs that hire talented sales people and empower them to work directly with the customer will enjoy the downstream benefits of higher customer retention – and the associated higher margins and lower cost of sales associated with loyal customers. Playing pricing games may have short term benefits, but you are trading that off for much more lucrative repeat sales (not to mention service retention) downstream.