Auto Dealer News & Information

The Optimal Time to Sell A Vehicle

By February 12, 2014 No Comments

A recent debate is causing quite a stir in automotive retail. Manufacturers and dealers alike are weighing in, and industry trainers are certainly not without their opinions. Just what is the optimal time it should take to sell a vehicle?

A growing camp insists it takes too long to sell a vehicle and customer satisfaction is suffering for it. If this is true, real money is at stake. Many dealers make more money servicing vehicles than selling them. Losing the opportunity to get that future service business is a stiff price to pay for upsetting the customer, not to mention the prospect of future sales and the sales that could come from advocacy and referrals.

Another group argues close rates improve as the time spent with the customer increases. In their view, spending less time with the customer will cost the store in vehicle sales, and they think they have the data to back it up. According to a recent Automotive News article, famed sales trainer, Joe Verde, claims his data shows the following:

 

Time the Salesperson Spent with the Customer

Close Ratio

< 60 minute

6%

>72 minutes

37%

>100 minutes

57%

 

Those involved in the debate are good people with good reputations, and there is a lot of money riding on the answer. Nonetheless, it brings to mind the famed quote about the three levels of falsehood, “lies, damn lies, and statistics.” Not all customers arrive at the store with equal intent to buy, not all stores have the same policies, and not all salespeople have the same skill or even intentions when handling these opportunities. I’ll explore these differences and show how they twist the numbers.

Correlation is often confused with causation. Looking at those who spend less than 60 minutes with the salesperson, did so few of them close because of the amount of time spent with the customer, or was the time spent with the customer cut short because they were not going to close? Maybe the store didn’t have the right vehicle, maybe the chemistry between the salesperson and the customer was not good, or any number of things from affordability to the desire to trade cars in the first place was not in alignment. For lots of people, this gets determined in less than 60 minutes. If the salespeople could have found a way to get this same group of shoppers to stay to 100 minutes would another 51% of them have closed? No chance.

 
Of those who spent more than 100 minutes with the salesperson and bought a vehicle, how many of those bought a vehicle because of the time spent and how many of them spent the time because they deeply desired the vehicle and spending that time was the only way to get it? There is no doubt some shoppers require more than 100 minutes with the salesperson in order to make up their minds and do the deal. Trying to force everyone to buy in less than an hour would certainly cost some sales. Many of those who advocate a shorter sales process, like leading sales trainer Grant Cardone, acknowledge you must spend the extra time with those who want or need it. There is also no doubt many shoppers who buy in a long sales process would rather have done so in less time.

Cardone says he has data showing the longer the sales process the less money you make. Again, a simple correlation may be misleading. Customers who are intense negotiators may take longer on average. If that’s the case, these shoppers both add to the pool of long sales processes and reduce the average gross from that pool with skinnier deals.

In reading comments from consumers online, there is clearly a segment of shoppers who want a shorter shopping process. There is a segment of shoppers who even think the reason it takes so long is because the salespeople, managers, and F&I department are focused exclusively on grinding the customer to maximize commissions and don’t give a hoot about the satisfaction of a customer they probably won’t sell to again for years.

While this may not be the experience at your store, it remains the reality at some stores, and shoppers know it. This dissatisfaction is not just with the length of the sales process but with the process itself. There is no way to eliminate it without eliminating the cause of it, and that’s hard to do. How do you motivate based on gross profit while keeping the process short if salespeople are successful at using time as a negotiating tool? It will be tough to hold salespeople to any process if they can, or think they can, make more money by going outside the process. In my view, that is the bigger debate and the reason our industry so desperately needs training for sales and training for sales management.

A sales process that provides shorter times for shoppers who want it and lots of attention for shoppers who need it is a worthy objective. Achieving it will not be fast or easy. Clouding the issue with poorly analyzed data is not going to help the problem. I’ve yet to see any data on this subject that controls for the shopper’s pre-arrival intent, the store’s policies, and the salesperson’s process. My hypothesis: each of these variables has more influence on close rates, gross, and customer satisfaction than the variable being studied, length of sales process. Without controlling for these in the research, correlation analysis means little or nothing.

This post won’t end the debate, and I welcome comments. But I hope this independent candor regarding the data helps get the discussion back onto a fruitful path.

 

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