Transparency is the buzzword in political discourse these days. Transparency in auto dealership sales methods has been the buzzword for more than a decade. Although it’s ignored by far too many working in sales and finance, it has taken on an increasing importance that shouldn’t be overlooked.
Because customers can control the message about your brand across the broad spectrum of social platforms. Most social apps are available on their mobile smartphones already, and the rest will be by the end of the year. Customers use them.
Because, according to Reuters’ August 2013 statistics, more than 128 million Americans visit Facebook every day, and overall mobile usage exceeds computer ad traffic (your website). Wireless Intelligence forecasts that mobile social users will grow to 4 billion within the next five years. Howard Schultz, the CEO of Starbucks, said, “Mobile can’t be an afterthought. It has to be at front of the table.”
What’s this data got to do with dealership transparency? Everything. While the vast majority of dealerships have an online presence through a website and have set up methods for providing generalized information about their products and services, too many are still mired in gamesmanship bait-and-switch schemes when it comes to actually selling a potentially valuable customer a vehicle for the price quoted online.
Hiding behind a smile and fast talking in the finance office doesn’t work on social media, where customers in increasing numbers prefer to do business. Customers let their fingers do the walking, if they suspect an insincere sales pitch. And they don’t keep their disgust to themselves. They share it. Immediately.
Jez Frampton, CEO of Interbrand, the world’s largest consultancy specializing in brand strategy and analytics, says “It’s no longer B2C; it’s now B and C.” Unless the dealership’s online team can conduct honest communication, the potential for fraudulent practices can get out of hand, all in the name of increasing profits. All it takes is one savvy customer to catch on or become burned by an overly zealous sales or finance staff member who plays the “gotcha games” of past sales maneuvers, and an angry complaint is sent out via Twitter or to a plethora of Facebook friends. The derisive comment about your dealership and staff can go viral in minutes and raise havoc. This happens every week to any sized business in every town or city nationwide.
It can happen to your dealership, if you aren’t paying attention and mandating strict adherence to transparency in sales by all staff members. It must be a priority. Failure to enforce this policy could ruin your good name quicker than you can react with an apology. Competition for sales is as close as a finger touch on a smartphone screen and the media is quick to listen and report.
Online and in-house customers won’t tolerate even a hint of bait-and-switch sales strategies. They want honesty, integrity, a respectful dialogue that focuses on their particular needs, and superior customer service. They actively seek the opinions of current or former customers, rather than relying on a dealership ad.
It no longer works to tell customers your dealership is upfront and transparent in sales procedures. Actions still speak louder than words. At a recent sales conference on transparency-selling processes, a high-volume dealer insisted that the box-closing method he’s always used was “fair and upfront.” For readers who aren’t familiar with the term, a box closing is when the customer is closed on price, and the F&I manager closes on the payment. The payment is presented to the customer through payment packing for product options, commonly undisclosed.
A car dealership group with seven stores in Dayton, Ohio, is currently dealing with 16 civil lawsuits and five other complaints alleging “unfair and deceptive business practices.” The BBB is investigating and intends to lower the dealership’s A+ rating significantly. The finance manager was either fired or retired from his position. Customers are no longer biting their lips when their expectations aren’t met in the finance department.
A couple other old favorites of “experienced” personnel in sales and finance to deceive customers into buying more than they want include four-square and trade-difference techniques.
The four-square is confusing and manipulative and designed to entice customers into paying more and not realize what’s going on until they’ve unwittingly signed a contract. The sales manager disappears just long enough to scribble a few more figures in the four boxes drawn on a paper and returns to say he’s managed to get the monthly payment down to “$260, a mere $10 more” than the customer wanted, but that was the best he could do. “Close enough, right?” he’ll add, while nodding and smiling. The customer doesn’t realize she’s just handed the dealership several hundred extra in profit, when that $10 monthly payment bump is amortized over a 5-year loan. How can this system be called transparent?
In a trade difference the customer will close on the difference between the cost of a different vehicle less his trade, but won’t understand all the numbers when they’re computed in a future monthly payment rather than a total figure. If such a payment is handled in the F&I office, it can open a dealer to potential unethical practices charges.
Compliance to federal and state regulations and business practices doesn’t begin in the F&I office; it begins in the dealership office and on the sales lot at the meet-and-greet or on the website’s communication tools. Transparency is a store-wide commitment. Menu selling brings up net profits it doesn’t have to involve breaking laws or customer trust.
Auto giants, like AutoNation, CarMax, and Group 1 enforce a full, unabridged menu selling presentation that contains all the appropriate disclosures in clear and easily-understood language. Their shops continue to outperform those of most dealers nationwide. For them, transparency buys customer trust, loyalty, return business and social media praise.
- Transparency is the driver to whether or not the dealer maintains community and customer trust or goes out of business under the blight of social media chatter.
- Transparency is about being consistent in the sales process from start to finish, with all the cards on the table. It’s about making the conscious decision to ensure every customer has an incredible buying experience, determined from a value-driven proposition.
- Transparency means customers understand all the buying numbers prior to their transaction going into finance.
If the Consumer Finance Protection Bureau (CFPB) isn’t already knocking at your door, make it your priority this week to review the law, your written sales transparency policy and actual wink-wink practices, and all-company knowledge. Then send out a stern reminder that transparency in all sales and finance transactions will be vigorously enforced. All it takes is a single unhappy customer tweeting a single message or relating an experience of unsatisfactory service on Facebook to result in citywide exposure and sales ethics discourse.
Think about this. Transparency in car sales is a choice made by individuals. “Whoever is careless with the truth in small matters cannot be trusted with important matters.” ―Albert Einstein.
Rebecca Chernek is an Up To Speed Guest Expert in the area of automotive retail F&I best practices. She’ll be conducting her “Closing Tools Mastering Menu Sales Workshop” in October. To find out more or to contact Rebecca Chernek directly, call 404-276-4026 or email her at firstname.lastname@example.org.