1. The majority of customers dislike the negotiation’s process, especially women and Gen Y, which account for over 60% of vehicle registrations
2. Customer’s want a time sensitive process that rewards them for the homework they have done; not a sales process that begins at MSRP and ends at least 3 "pencils" later.
3. Dealerships can attract a higher caliber of sales consultant when negotiations are eliminated from the sales process
4. Customers and employees dislike the "command and control" environment that accompanies the traditional negotiations process

The Implementation Process:

• Pricing
• Compensation
• Advertising
• Inventory management
• Metrics (You can’t manage what you can’t measure.)

• Price inventory
• Evaluate trades
• Manage and evaluate sales personnel
• Identify problems and improve continuously based on customer feedback

Value Creation Selling (VCS) is a limited negotiations sales model. It eliminates negotiations for sales consultants while allowing negotiations for sales management.

Because our society doesn’t breed good negotiators, dealerships have a very difficult time attracting high caliber sales consultants. When you eliminate sales consultant negotiations, you open the recruiting window much wider. The VCS process relies on sales consultants’ presentation skills to create more conquest and incremental sales at higher grosses, eliminating the traditional method of “deal desking”.

In the VCS model, dealers put a discounted market-based-value price on every vehicle. The pricing is based on local dealer gross averages and market conditions (supply/demand). This value price has a slightly higher gross profit than your store is currently achieving. The VCS consultant’s sole mission is to create as much value as possible to the discounted price on the vehicle. Sales consultants receive a higher level of compensation if they don’t have to discount the value price. If they cannot close the deal, they turn it over to management who has one opportunity to negotiate a final figure. This process is now value-laden and fast, but still allows limited negotiations to be conducted by management. The traditional layer of desk management (and closers) is eliminated and replaced by either team leaders or sales managers, thus reducing the dealership’s selling expense.

Articles (click on):
Dealer’s Edge
Looming Sales Crisis
Value Creation Selling
Lean Times in the Sales Department

References:
Adam Simms – Toyota of Sunnyvale (Sunnyvale, CA)- 408-245-6640
Steve Lace – Royal Auto Group (Tucson, AZ) – 520-795-0760

Why Having a More Time Efficient Sales Process is so Important

An elongated sales process significantly diminishes both Customer Satisfaction and Sales Consultant productivity. The “time it takes to buy a vehicle” is the lowest score in virtually all manufacturer sales satisfaction surveys; and it is clearly a “sore point” for most Customers. It is hard for vehicle purchasers to understand why it should take as long as four-to-five hours for them to spend over $20,000! In the minds of most consumers, dealerships – like most other retail establishments – should be doing everything possible to ensure their sales processes are not only pleasurable, but also highly time-efficient. By decreasing the time it takes to sell a vehicle through an Express Sales Process, dealerships get a “double dip” improvement in two highly significant areas:

(1) Sales Consultant Productivity
(2) Customer Advocacy

Sales Consultant Productivity: TRG research indicates that it takes between 3.5 - 5 hours to sell a vehicle in most dealerships during peak business hours. Time studies have indicated that a Customer’s actual “engaged time” in the sales process is about two hours or less. This “engaged time” includes all the activities that cause a Customer to interact and communicate with a sales consultant, manager, and Financial Services Manager. Because the Sales Consultant and Customer are only engaged in working the deal for two hours or less, there is typically around two hours of wasted time in most deals. These two hours of wasted time inhibits sales consultant productivity. For example, if a deal takes four hours to transact, a Sales Consultant can only sell two vehicles a day. If it took only two hours to sell a vehicle, Sales Consultants would have the capacity to sell up to 4 vehicles a day. By taking out wasted time, dealerships can improve sales consultant productivity while also improving Customer Satisfaction.

Customer Advocacy: When the sales cycle takes two hours or less, 97% of Customers will typically utilize the selling store’s service department and refer at least one potential prospect to the dealership. When the sales cycle takes more than three and a half hours, the advocacy rate drops to 34%; when it takes over four hours, true advocacy along with referrals rarely exist.

The Bottom Line: To significantly improve sales cycle time, dealerships must develop two tactical initiatives: one for non-peak sales hours and one for peak sales hours. By having two separate strategies based on relatively predictable Customer traffic flow, dealerships can develop operational efficiencies that reward all stakeholders, and especially their Customers and sales consultants.

References:
Ken Maffia – Balise Toyota (West Springfield, MA) – 413-858-2195
Adam Simms – Sunnyvale Toyota (Sunnyvale, CA) – 408-245-6640
Steve Luebke – Toyota of Des Moines (Des Moines, IA) – 800-7796576

Click on:
Dealership ESP Proposal (PDF Viewer Required)
Sample ESP Report (PDF Viewer Required)