Up-Front Pricing? Maybe Not

For the past couple of years, I've been a proponent of providing pricing up front to customers submitting purchase requests online.

The strategy I've suggested, based on what some pretty savvy Internet managers have told me, is to provide a range of pricing and options in the initial e-mail response.

Now I hear doing so may not be such a good idea — at least according to some Internet managers who participated in a Cars.com-hosted webinar that I moderated.

The managers are from stores on this year's Ward's e-Dealer 100. They are Jonah Jones, Internet sales director for five Asbury Automotive Group stores that made the Ward's list; and Mike Lavezzi, Pacific Honda's e-commerce director in San Diego.

The following exchange is intriguing. It shows how important understanding your local market is; the importance of being flexible — and perhaps, most important, it shows how little consultants and journalists such as me know about this business.

Ward's: How important is the content to your new car e-mail response?

Jones: In the old days, we used to send the price right out the door. Lately we've started changing away from that, basically because that's what everybody does now. I don't feel we were doing anything special, so we've gone back to the old days of asking a couple of questions, trying to get communication going, trying to narrow down more specifically what the customer is looking for rather than just shooting them a price — maybe even a lowball price — and then just playing games with them.

A lot of dealers around us started copying what we were doing so well — which was sending out an aggressive price and then getting the customer on the phone, getting the customer in the door; you know, doing what it takes to make the profits elsewhere. So what we did was get faster on response times, get more aggressive on just setting appointments and getting people in the door.

Lavezzi: We used to send the price immediately, and I found it to be more effective to send customers an e-mail immediately to let them know we want to touch base with them on the phone for verification, to make sure we have our facts correct.

We use that as a gateway to open up dialogue. Many times, people incorrectly click things on the Internet, and we've had instances where we make misquotes because we didn't have our facts straight.

Basically, the customers don't necessarily check the quote — they're comparing numbers with another quote they've got. We've priced ourselves out just by pricing the wrong vehicle. If we can't get the customer on the phone in the first 24 hours, we'll send an e-mail out saying, “This is what we're quoting on. Is this the correct vehicle?” and try to open dialogue that way. We try to hold back on the price as long as possible.

Jones: If you're going out there trying to deceive a customer, you're going to get smoked. The point is that we're not trying to deceive so much as we've learned from a couple of big Honda dealers around me in Dallas. Their whole game turned into: “Whatever you get from McDavid, we'll beat it.” It became more important for us to find out customers' needs and wants, get them on the phone and make a friend; actually the old sales process we've taught for 50 years — taking more of that over the Internet: creating rapport, finding out what their needs and qualifying, all that stuff.

Lavezzi: You can't go wrong with value-added selling.

Jones: Pricing does come up 70% of the time. That's fine, once we're talking to them, then we're giving pricing based on what they really need, not just on a lowball number.

Cliff Banks is editorial director of Ward's Dealer Group. He can be reached at [email protected].