Cost of Ownership Part 1
The ability to explain the concept of cost of ownership is a skill that every successful sales consultant needs. It has been often said that people buy with emotion but pay with logic. Helping a client make a positive buying decision means that we sometimes need to walk them through a logical cost of ownership discussion to:
- Resolve a price objection
- Make them comfortable paying more for a better product or
- Help the procrastinator make a decision to buy now
Let's look at the first one: resolve a price objection. Many times the price objection comes down to discomfort with the difference between the new vehicle and the trade value. We always start with the usual trade value justification. Just to review, those first steps are:
- Review the appraisal with your customer and discuss every re-conditioning item one by one. Get agreement on each item as a necessary repair to make the vehicle suitable for retail sale.
- Remind them that your manager is a professional; he/she does this every day. He/she is very aware of the market value of pre-owned vehicles and it's his/her job to be in tune with the market trends.
- The market sets the price. People just like you determine the market value of vehicles by the prices they are willing to pay for a used vehicle. Supply and demand determines the value.
- Build credibility by reviewing how it would have been impossible to have become one of the fastest growing/highest CSI/highest volume dealerships in the region if we didn't pay enough for trades.
Even after this justification and they grudgingly come to the conclusion that your appraisal process has produced a realistic value they still might not be able to say yes. The cost of ownership approach to overcoming this objection helps the client to see that their current vehicle will never be worth more than it is right now and that the new vehicle will not likely cost less than it does right now. The conclusion has to be that the minimum cost of ownership is achieved through a decision to purchase today.
It helps many customers if you draw a simple graph showing a downward trending line for the trade value and an upward one for the new vehicle. Everyone understands that their used vehicle is worth less every day/week/month that goes by. Each day that goes by the chances of further major repairs or maintenance expense goes up. Everyone also has the experience of prices on new items rising over time. The increasing gap between the two lines shows the increasing cost of changing vehicles in the future. The conclusion? The best time to switch is now.
Their emotions tell them they want to say yes... use the logic of cost of ownership to remove that last roadblock.
Next month we'll look at the cost of ownership approach to helping your client feel comfortable paying more for a better product.
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