Cut Through the Red Tape of Internet Pricing


Frustrated Internet Sales Manager

My heart breaks when I hear that some dealers in today’s market still oppose sending out pricing to Internet shoppers.

Thankfully, these dealers are going the way of the dodo bird as the business model known as “just get’em in” is a nail in the coffin to marketing efforts.

However, once a dealership has overcome the hurdle of giving out prices, there is still a good amount of red tape that goes along with actually getting the pricing. This internal transfer of information, from software/tool to delivering party, is still a roadblock to fast Internet replies. The Internet shopper goes online, finds a vehicle of interest, and requests a quote. What they expect is transparency and we, as dealers, have opted to give it to them.

Unfortunately, there are a few hoops to jump through in many stores to get the requested pricing. Here are a few different scenarios of how pricing is obtained by the “lead handler”.

If leads are distributed to the sales floor, with each lead the salesperson must approach the desk and ask for a price on the unit. Provided the sales manager is available, not eating, remotely interested, and not overwhelmed with five other tasks, they give the salesperson a figure to send. Usually, though, the sales manager is preoccupied and giving a price to email away is put on the backburner. The clock starts, the price request is forgotten, and the lead is marked lost three days later. Sad.

Knowing that time is of the essence, this bottleneck can cost dealerships countless sales. This same structure is what holds up countless ISMs and BDC agents from delivering valuable pricing information to customers in a timely fashion.

Want to increase your response and closing rates? Eliminate the sales manager from the equation and stop making them give out pricing every single time a new lead comes in. Instead, create a pricing matrix for the Internet department.

If a new price is given at each and every lead received by a sales manager, they will likely not be working off of any logic or historical data when handing out the price. Instead, have bi-monthly meetings where ISMs, Sales Managers, and General Manager alike review some mystery shops from other local, same-brand dealers and then determine a set price per make/model based on plus or minus invoice/ MSRP. Take the data and create a simple pricing matrix that your BDC team can refer to. This way, as each lead comes in, the ISM can calculate the pricing (provided they are given the access they deserve in the back-end tool) without involving the Sales Manager on every occasion. This will increase response times, closing ratios, and simply make it easier on your team to deliver for your potential customers. Once again, this requires the ISM/BDC Agent to have access to whatever software necessary to find information on availability, invoice, and MSRP.

An even more progressive way to cut through the red tape of pricing is to have a dedicated desk manager specifically for your BDC team. If you believe that every deal is different, and you want to deliver total transparency (invoice pricing, Internet pricing, financing/lease payments, etc) to your customers, consider placing a desk manager inside the BDC to garner the pricing info as quickly as possible.

Don’t let dealership politics or power plays get in the way of a quality showroom and Internet process. Talk to your sales, Internet, and management teams to determine the best method of pricing for your customers. Cut through the red tape, think of customers first, and find a way to deliver pricing quickly, effectively, and transparently for your Internet shoppers. Your ISMs will thank you for it.

Do you have a pricing matrix at your dealership for email price quotes?

Joe Webb

If you don't know Joe already, He's the founder of DealerKnows Consulting and has been bringing online sales success to dealerships across the country through his hands-on consulting efforts and progressive training programs. Joe dedicates his life and his livelihood to his too-good-to-be-true wife and his two little maniac sons that he lovingly nicknamed Bear and Tiger.

Please note: I reserve the right to delete comments that are offensive or off-topic.

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11 thoughts on “Cut Through the Red Tape of Internet Pricing

  1. Agreed. If your store isn’t doing a price matrix, expect HUGE results after you implement such a necessary tool. 

  2. What you are proposingb hyere is not just an every now and again Mystery Shop.  You are proposing regular, continuous Mystery Shops to use as the basis of your pricing matrix team meeting.  How do you accomplish that?

    •  @Kirk Tracey – Simple… a dedicated person focused on doing it regularly.  Without giving away all my secrets, I actually hired high school students to mystery shop the heck out of my 10 closest, same-brand competitors and calculate all pricing provided (on every make and model every month) onto a pricing matrix so we knew our difference in pricing from each store and our difference in pricing from the mean.  Short answer… it takes people.

  3. Great post Joe. This is real world struggle that most dealers have either dealt with, are dealing with are will deal with.
    So many times I have tried to implement this across many dealers. I’ve failed almost each time.
    Sales managers are OK with it until they have a month of low gross, and all of a sudden the fingers are pointed to the BDC and the Price Matrix. The sales managers are bitching due to low commissions, the GM is supportive because his people are bitching and his paycheck is also reflective of the low gross. Pooof – the price matrix goes away.
    Never mind the sales managers never getting off their ass to introduce themselves early in the stage or walking out to help present numbers. Never mind the sales people NOT being trained to offer the customer other options on inventory selection. Never mind the service walk or intro to accessories. Never mind the proper trade appraisal process to help gain gross.  Why would we do that when it’s oh so simple to point the finger at the pricing matrix.
    It all comes back to gross. One month we’re a volume dealer and the next we’re all about the gross. Not realizing there’s a medium if you work it right and you have upper management leading it.
    The pricing matrix makes total sense. Joe – maybe you or I should write an article on 5 steps on how to make the pricing matrix work for your dealership.
    Of course like anything, you need to have the buy-in from management. It’s very important to have a solid process for pricing your new inventory in the martrix. A process that again, is completely bought into.
    The pricing Matrix is NOT a candy shop. To help ease the feelings about the price matrix I’ll initially encourage the dealer to allow only designated people to have access. The reason for this is to help reinforce the sales staff or BDC personnel are following the proper steps to the appointment before referring to the pricing matrix.  I’m never against giving the customer a price but imperative for your staff to be trained on the steps leading up to handing out price. This approach is for a dealership that teeters from being a volume to gross dealership every other month.
    Joe, allow me to ask. How do you implement the pricing matrix at the dealers you consult with?

    •  @dealerrefresh Allow me to say, Jeff, that it is much easier consulting dealers to do things (and getting buy-in for their implementation) AS a consultant than as a member of the dealership body.  How do I implement pricing matrix?  Explain it to them the same way I wrote about it in the blog, I guess.  I don’t tell them how to do it, but we often help build them for our clients – or at least give them the format and excel spreadsheets.
      I’d be happy to write a blog with you about the 5 ways to build and implement a pricing matrix.  Every point you touch on regarding push-back is based on lack of understanding and fear starting at the management position.  When you say “It all comes back to gross” after your perfect explanation about the sales management’s lack of focus for their own duties, I was thinking “It all comes back to process”.Giving out upfront pricing isn’t just the answer, it is one element to the answer.  Sugar doesn’t make cake… a crapload of other perfectly measured ingredients do.  The customers want cake.  We must realize they won’t like our cake unless we put ALL the ingredients in it correctly… including sugar.

  4. I think paranoia over a steady pricing matrix might find in its source an underdeveloped sales staff.  Since it is not uncommon for customers to ultimately purchase a vehicle other than that about which they inquired the price quote can be seen as a lure of sorts.  Good rapport building, needs analysis, and value building through a focused presentation make the initial quote less important.  How many customers, having had a consultant listen to their needs and pair them with a vehicle that is for them a better match are really going to go home and calculate ratios and such to make sure they paid proportionally the same for the vehicle they ended up buying?  Weak profits should be firstly a clarion call for better sales training!

    •  @Jeff Novak – I would say that a dealership fighting a pricing matrix sees the first push-back from sales management.  The reason they wouldn’t be keen on turning over pricing to an ISM is lack of trust and understanding.  However, the reason a sales manager (rightly so) wouldn’t want to turn one over to a sales team is because they would like start deals with difficult customers at the Internet price.  Salespeople often take the path of least resistance because they don’t want to do the hard part of their job.  ISMs want a path of least resistance because it helps them do their job more effectively.

  5. Joe you know I love you, but I have to present a dissenting view on this. While response time may improve by “removing the manager from the equation”, our experience has been that your total gross and total sales will suffer when the decisions about a car deal are left in the hands of sales people and not sales managers.

    It’s the rare occasion you’ve got salespeople who don’t go to the lowest common denominator and send out quotes on a car they’re not likely to buy anyway because most people end of rolling out in something other than what they originally requested.

    The real issue involves putting yourself in a position to have to make a decision as to whether or not a quote is warranted. Most of the mystery shops we do on dealers every day shows a complete disinterest in actually making phone contact with a customer and asking for the appointment when you get two way with them. Sending out quotes to everyone who submits a request in hopes that a customer is going to rush down to buy that car is like skeet shooting blind folded.

    Keep in mind, you’re not going to sell everyone who submits a lead. The goal is to make contact with as many people as possible, and then use contact as an opportunity to find out if you have someone who is reasonable or not. Reasonable people say yes when you ask for the appointment. Lets just start there. Everyone else gets a manager live turn!

    •  @colson Hello Chris,
      Sorry that it has taken me so long to respond back to this.  While I agree with the idea that putting pricing in the hands of the sales team rather than sales managers, that isn’t what I’m suggesting.  With a pricing matrix, the sales managers are the ones making the decisions on what pricing to provide customers (speeding up the process).  Hopefully they would have conducted some research prior to determining what pricing to give out so they can make calculated decisions.
      With your suggestion that salespeople must determine if a quote is warranted, however, I must differ with.  Providing a price quote (unless it is submitted with only the most basic, vague information) is 100% necessary in 2012.  Maybe not in the year 2000, but today it is required.  A study was conducted a while back that stuck with me…it was taken from a large portion of Internet shoppers that claimed almost all were expecting a price quote (along with accurate availability information) regardless if they clicked “Request a Quote” or not.  Even if they do not ask, they want one.  If you don’t give them ANY info, you immediately appear to be holding something back…even if you use the old “I’ll gladly provide you a direct price quote…just let me know what features/options you want so I can price you correctly” BS line that they heard the first few times they bought a car online.Even if the quote doesn’t align perfectly with their desired vehicle, they recognize that you are willing to be transparent.  If you are detailed enough with the vehicle that you are quoting, they will understand that you are at least attempting to earn their business and will likely submit a corrected quote.