Have you ever noticed that most customers requested value
for their trade is unrealistic? Why?
Think of the last time you met a proud parent or even
better, a grandparent. When given the opportunity to talk
about their little darling (maniac), and of course show
photos, is this what you heard, "Oh, let me show you a
picture of my little Joey. Isn't he adorable? And he's so
smart too." Meanwhile you are looking at this kid thinking,
man that's a face that could stop a train. And my neighbor
teaches your kid and he's dumber than a bag of hammers.
Then you share your candid observations with the gloating
parent, right? Of course not, instead you politely comment
how cute little Joey is and how he is destined to graduate
valedictorian of his class.
Well, your customers are no different with regards to their
trade. The idea that this car is "ours" can be very
emotional for people. Remember, they have driven this
vehicle every day for years and they have become oblivious
to that funky smell and stain in the back seat. You could
tell them what their car is actually worth, but this
probably would have the same effect as mooning them, not a
good idea.
The most effective approach to adjusting trade expectations
is to have your sales person inspect and examine the trade
for condition with the customer. The best way to maximize
the benefits of this devaluation strategy is to have the
customer join the sales person in examining their trade from
stem to stern. Sales people should open the hood, the trunk
and all the doors. Put all the windows down to insure they
will actually go back up. The idea is simply to examine the
vehicle for condition, not for its value. Anyone can have an
opinion regarding a trade-in's value, but a vehicle's
condition; well, it is what it is.
You can enhance the credibility of this process by using a
clipboard and a 3 part form. After reviewing a series of
15-20 questions on the trade evaluation form have the
customer sign acknowledging that all the information they
have provided is true and accurate.
Once the customer has signed the trade form, and before the
sales person returns to the showroom to write up the deal,
they should ask one final question. We call this the Columbo
question. Columbo, the bungling TV detective in the trench
coat, would always ask a series of questions when
interviewing a witness or suspect only to place his hand on
the door knob preparing to leave. Then as an afterthought
there was always one last question. Of course of all the
questions asked; which was the most important? the last
question. The rest were just the setup.
This approach will be similar. Ask, "Mr. /Mrs. Customer, I
was just wondering, if you were to rate your car/truck on a
scale from 1-10, 10 being ABSOLUTELY PERFECT CONDITION, I'm
talking mint showroom condition, how would you rate your
car? Note: It is critical that you ask this question as an
afterthought, do not make this a big deal. The customer does
not realize why you are asking. In the event that the
customer does inquire why, your salesperson should simply
reply, "Oh, I was just curious". This number will become
helpful later during the negotiations.
Given the structure of the question, it is very unlikely
that a customer will respond with a 10 (Absolutely Perfect
Condition, mint showroom condition). Most of the sales
people will hear 6's, 7's, or 8's the vast majority of the
time (80%).
Fast forward to the negotiations. You have offered to buy
their car for $4751 (vs. you think their trade is worth).
The customer protests and states they are looking for $6800!
Now you are faced with a $2000 gap. You could offer to split
the difference, and while common place, not necessary.
Instead instruct your sales person to respond, " Mr.
Customer, that sure does seem high to me. By the way, how
did you come up with that number?" Allow the customer to
explain and justify their reason for the amount they
requested. Their actual explanation is academic, since we
will handle all responses using the same approach.
Once the customer has so eloquently (I'm being generous)
explained why they believe their car is worth the higher
amount, your sales person should do the following. Pullout
the copy of the trade evaluation form the customer signed
earlier. The last copy of the form should have been provided
to the customer after they signed and answered the 1-10
Columbo question. Their number, in this case, 7 out of 10,
should have been marked on the top of the form.
Now review all the deficiencies (tires, cracked windshield,
stain in carpet, mileage, etc) and ask, "Was it your intent
to address or correct these items?"
Most customers will emphatically respond with a "NO, we are
not spending another dime on this car."
The sales person should then respond, "Well that is what my
manager figured. Mr./Mrs. customer there are costs
associated with correcting these items, and we have made
allowances for those expenses."
Now we will use their 1-10 number (remember people don't
argue with their own data) to close the gap on the trade
values. "Mr./Mrs. Customer, earlier when I asked you to rate
your car on a scale of 1-10,you rated your car a 7. Based on
this information and the condition of your vehicle, we will
need to make a 30% market adjustment for your vehicle's
condition. 30% of $6800 is approx $2000
(680 x 3=2040). When we subtract the $2000 from the $6800
you are requesting, what you will find, is that the $4751 we
are offering, is both fair, and it is reasonable.
While this approach may not work with every customer (hell
nothing works with everybody) it will help close the gap on
what your customer's are requesting as compared to the
amount you are offering, and reduce your tendency to revisit
the trade figures. Hope this helps. Let us know.
Good luck, and make something happen!
Kirk is the Director of Consulting for SuperSystems, a
professional member of the National Speakers Association and
the American Society of Training and Development.
Contact Kirk at 800.726.0510
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