Why letting a customer walk away is not an option for car dealerships

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One of the great things about being in the motor trade is that there is always something to moan about and consequently plenty of lively conversation and debate. During an extended break like the one we’ve just had and having cause for some extra socialising I always make a pact with my wife before going to a party or social gathering, strictly no shop talk!

If anybody even hints about taking a conversation down the motor trade route then I am to simply walk away. Anybody in the car business will tell you however that it’s just not as easy as that, we all have wobbling great egos the size of a hot air balloon and can’t resist getting involved if we think people are talking utter nonsense or lavishing praise upon a car which is clearly not worthy of it.

The downside, of course, is that you can often end up defending yourself against a wrong that someone else in a car showroom or service department has committed as you are ultimately seen as part of the problem. It doesn’t matter how hard you try to explain that, like any shop, business or sales outlet, there are good and bad, we’re all tarred with the same brush.

Of course this year hasn’t been any different except that this time I couldn’t disagree with any of the guys I was talking to at a recent party. I was feeling quite lively and smart with my new Christmas polo neck and trendy trainers on the first outing, when a couple of chaps who I probably only see once a year began discussing changing their car and asking, in general, whether it was a good time to buy. Of course practising what I preach I gave them some good old fashioned free MTI common sense advice regarding the VAT increase, expected car price rises, showroom tax etc which seemed to impress one of them so much that he then warmed to his theme by explaining that he was considering changing the dealer he had bought his last 5 cars from.

Now this did interest me and I listened intently to what became a depressingly familiar tale which was quickly backed up by many of the other guests within earshot.

He had gone to his regular dealer to enquire about a new model and what he could expect to be given for his latest car in part-exchange. Now usually, he explained to me, he just accepted what they told him and did the deal on the basis that he was a long established customer who bought lots of cars and therefore would qualify for the best deal, basically trusting them implicitly.

However being in a recession and with money being tight he decided to just get the opinion of a couple of other dealers selling the same cars, which in this case was BMW. He was quite horrified that within minutes he had established that he could get between £500 – £1,500 more for his current car and that the deal on the new one was better and this was without any negotiation whatsoever.

Understandably he was fairly upset and asked what I thought. I explained that in my opinion the situation he found himself in with his regular dealer was down to a mixture of complacency, laziness and an inability to see the bigger picture.

Unfortunately in many places sales people can only see what’s happening right in front of them and are often more interested in new business. Having a customer come back time after time was really like making easy money because they would always return.

Because of this kind of familiarity and the contempt it breeds sales managers, when valuing the part-exchange – which they probably have looked after from day one and were therefore totally confident in the potential profit opportunity when being presented with it – decided to try and ‘nick’ it as we say in the trade. And here is the nub of the problem – by giving the market value for cars at auction or through other wholesale sources it seems incredible to me that they would rather down value a loyal customers car for the sake of a short term profit and, as with this situation, lose a customer by not being totally fair in their dealings.

Of course I also balanced this by asking if this chap was happy with the service he’d received down the years to which he replied that he always got a courtesy car and was very happy with the dealer in every other way. I then explained that this is where there can be confusion, on the one hand we all want a good deal that we are happy with and can afford but we also want to be looked after in the event of problems, after-sales and servicing. So what is most important to you?

He conceded that it was a good point and that he didn’t want to compromise on the service he received for the sake of a few hundred quid saving up front, which brings us right back to the beginning.

Dealers who work hard to retain their customers need to always be aware of how fragile the trust of that relationship is and if someone comes back to spend their hard earned money time and time again, complacency is not an option as the customer will simply walk away and buy elsewhere. Oh and while there at it they’ll tell anyone who’ll listen what a terrible place the dealership is.

On this occasion I persuaded him to give them a second chance to match the deal he had found in an attempt to keep the relationship going and then, if they are unwilling or unable to come to the party, at least he knows that he has exhausted all his options and offered them the opportunity to keep him their customer.

It was interesting to note in that small group of guys we were all kind of in agreement. We don’t necessarily want to get every last tenner out of a car but, by the same token, we want to know that we are being treated properly.

This is a lesson which many retailers will need to understand fast this year if they are to keep selling cars.