Transparency, maybe not as clear as we think...

7/12/2014

A lot has been made of the word transparency lately, especially regarding the car business. While I'm not saying customers don't want transparency it is my belief that many of us are looking at it from the wrong point of view. Many car folks hear transparency and instantly assume the customer wants to know what invoice is and attempt to use that as some type of negotiating leverage to force dealers into yet another race to the bottom of pricing. I think that consumers do want transparency however the transparency they are after is not about pricing at all but rather the process. I believe customers are willing to negotiate to a fair deal after seeing the value presented in the product but they would like a better understanding of whats going on. For instance the old 'let me go check with my manager' has been played out. Why go into a back office where the customer cant see you to get information? Why not have the sales desk out on the showroom floor where the customer can see the 'decision maker'? Hell, why not have the sales manager introduce himself at the beginning of the paper work process so they know who is going to be working on the numbers for them? With a more straight forward explanation of the process, transparency can be achieved and in a win/win for the customer and dealership. Just my thoughts as always, please let me know yours and until next time: Sell Something!

10 Comments

David Ruggles link

7/13/2014 09:06:11 am

Invoice? Many dealers LEAD with invoice. The issues isn't what consumer's want. The issue is with us in the business using the term while not providing it. We provide "relative transparency." We provide "perception of transparency." If you want to find out how transparency works for you, advertise your margin and see what kind of traffic that bring you. Transparency? Hell, our own employees don't know what the car costs us. AutoTrader had to buy AIS Rebates to even begin to figure it out.

We'll have true transparency when dealers begin being transparent with their employees, let alone their customers. After all, why should they? Who's business is it really?

Until then retail auto sales will continue to use "relative transparency" in an effort to earn the customer's trust. "Real transparency?" We don't believe and neither do consumers. Why try to redefine a word in an effort to fool customer's into thinking we really mean it. We don't. And we know it.

Consumers say they want a sales process with no negotiation. Yet, the first thing they want to do is try to beat your price. They like to take YOUR price to use it in their shopping just like they like to shop on the web where they can price shop with a click and a keystroke. They prefer an offer signed in blood by your owner. Millennials are the best/worst at this. They are ruthless even though they are typically burdened with school debt and other credit issues. Yes, they will grow out of this, but they are now pissed off if they can't buy a car like a gadget from Amazon. They want transparency to make it easier to shop you. Millennials believe any price the dealer sells a car for makes him money. They aren't concerned with it. They get all of this information from the Internet but lack the experience and knowledge to interpret it. Buying the time and gaining the credibility to accomplish that is the challenge. Sometimes disclosing the invoice works, ESPECIALLY if we have $8K in "trunk money" plus $1500 HB.

Having said this, there ARE artful ways to work with this. "Relative transparency" is the parceling out of information on a schedule that suits you as a seller while keeping the consumer satisfied with the process. Crude methods have never worked in any era.

The human nature of big ticket selling has never changed. Its not the deal that counts. Its the perception of the deal that makes things happen. Nothing except cheapest price works if there is no relationship, and that doesn't even work all the time without a relationship.

If you believe a large percentage of consumers will pay you a "fair price" ask yourself a question. How would the consumer know a fair price from one not so fair without shopping?

There are MANY dealers who consider themselves "transparent." They aren't. ALL dealers are relatively transparent. Some are more transparent than others. Some are effectively transparent while some try to be transparent for the sake of transparency, but I've not seen a deal yet make a practice of disclosing triple net and then negotiating the margin. THAT would be REAL transparency. Everything else is just another strategy. And we know how consumers feel about car dealer strategy. So why make claims that we all know not to be true?

Car Pro

7/13/2014 09:17:34 am

The point of the post is spot on. Consumers aren't looking for transparency in pricing, why would they? No one walks into a jeweler and asks what the actual cost of a ring is. Consumers have been trained by agencies like Consumer Reports and most recently TrueCar to ask these questions however the process itself is what frightening most customers, not pricing. The point made by Mike was illustrated by David who launched into a tirade about pricing, invoices and a bunch of other none sense exactly as Mike put it; when car people hear 'transparency' they immediately assume PRICE. Consumers today simply want to have a better idea of the process they are going through. Joe Verde's old saying has never been more true; "a good deal is not a number, never has been. Its a feeling." With a more clear process the customer can get that feeling easier.

Vic R

7/13/2014 09:40:35 am

Different field but similar message here: http://www.chrisbrogan.com/understanding-value/
Its funny how it doesnt matter the product, selling is always about the people.

7/13/2014 01:10:34 pm

If you don't price is an important component, start posting your margin. Be truly transparent.

No one walks into the jeweler and asks what his cost is because they expect to hear INOYFB OR a lie. No one in selling is truly transparent. So why do we use the word? Do you really think consumers think we would be transparent?

7/13/2014 01:13:29 pm

RE: "Consumers today simply want to have a better idea of the process they are going through. Joe Verde's old saying has never been more true; "a good deal is not a number, never has been."

Seems like I recently wrote: A good deal is based on perception, not the numbers. For all of these people who think they know what consumers today want, go back a hundred years. They wanted the same thing then.

7/14/2014 02:12:14 am

Exactly Mr Ruggles. Transparency is simply the latest buzzword, and its being used not by consumers but by consultants and vendors to sell their latest snake oil to dealers who are trying to keep ahead of the latest consumer trend. All the original post was saying is people want, what they've always wanted and that is to work with someone they feel is trustworthy and can take them through the process in a manner that feels comfortable and not underhanded or shady. The more things change the more they stay the same right. Outside consultants are always finding creative way to pitch dealers on how the world has changed and at the end of the day its all still sales. Be nice, show the prospect how your product best meets his needs and how much value it offers. One price or not, advertising leaders or not it really doesn't matter, what matters is how well sales people work their process, whatever it may be, and earn the customers trust.

7/14/2014 03:31:19 am

RE: "Transparency is simply the latest buzzword, and its being used not by consumers but by consultants and vendors to sell their latest snake oil to dealers who are trying to keep ahead of the latest consumer trend."

YES, and the use of the term in this context is clearly deceptive.

RE: "All the original post was saying is people want, what they've always wanted and that is to work with someone they feel is trustworthy and can take them through the process in a manner that feels comfortable and not underhanded or shady."

YES again! Your key phrase IMHO is "people want what they've always wanted." The Internet has not changed human nature or the basics of consumer behavior.

RE: "Outside consultants are always finding creative way to pitch dealers on how the world has changed and at the end of the day its all still sales."

Well said!!

RE: "One price or not, advertising leaders or not it really doesn't matter, what matters is how well sales people work their process, whatever it may be, and earn the customers trust."

Well it matters when the market is down. Frankly, I don't care if a dealer goes OnePrice/No Haggle or not, but in a debate over whether or not it is broadly viable I have a clear opinion supported by some pretty compelling history and legal opinion. These days, the new car market is on fire with record SAARs in our near term future. This, in a market with thousands fewer dealers in competition with each other. With inventory shortages and a hot market OnePrice can be made to look a LOT better than it is. Some processes are better than others. A deficient process that is followed generally works better than a brilliant process not followed.

7/15/2014 10:22:27 am

"Some processes are better than others. A deficient process that is followed generally works better than a brilliant process not followed."
Excellently put David, very well said!

7/15/2014 11:16:07 am

For the record, just because a person is not in favor of true transparency in auto retail doesn't mean they are in favor of the opposite. The fact is there is relative transparency. Those in my camp are in favor of relative transparency, which includes complete transparency according to the spirit and the letter of the law. Yes, Truth in Lending, Reg Z, Reg M, Reg Y, FTC, UDAP, DOJ, FTC, CFPB, etc. etc. Those in the "transparency camp ALSO favor relative transparency, but have adopted the word to deceive consumers that are actually really transparent, when in fact, they are only relatively transparent like the rest of us. And consumers don't believe them.

No one ever said consumers ask us for our triple net cost. Our sales people don't even know what that is. Some dealers try to convince customers that they are transparent by trotting out the invoice. That is inherently deceptive. Don't we all know invoice isn't cost?

A better discussion might be, how does one compute dealer cost?

Consumers have never had it so good. They have instant access to information. In fact, they have access to so much information they can't begin to interpret it all and come to the dealership more confused than ever. This business was far more transparent to consumers when I started in the business 44 years ago. But 44 years ago there wasn't this concerted effort by the OEMs to confuse through volume of data and needless complexity. Consumers have never had so much info, yet been so dissatisfied. There's a message in there some place.

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9/8/2015 03:37:07 am

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Transparency, maybe not as clear as we think...

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