I never saw the mass merchandiser as a big threat. Obviously they sold a lot of equipment, but in I was always happy to take it in to my shop and service it. The mass merchant is not typically the biggest enemy of the dealer. It is other dealerships that don’t know how to properly sell that kills the whole marketplace.
These dealers are so focused on just getting rid of equipment no matter what it does to their margins. Some of this is the manufacturer's problem. They are so intent on growing market share; they put dealers on top of each other more and more. It makes it a lot more difficult for dealers.
It's important to remember, people buy people. They don’t buy products and services. When shopping for equipment, 25% of people buy based on brand and 75% buy based on the dealership. Customers are walking into your dealership for a reason. You should be able to make good margins knowing they chose you. Here are some ways to maintain your margins and get the sale.
Be a better negotiator
Selling is a process. Negotiation is not separate from it; it is a part of it. Every time you are working with someone who is going to buy something from you, you have to assume they are going to want to negotiate with you.
Set yourself up in the beginning, knowing you are going to need to negotiate in the end. Talk about the equipment and other value-added things that you as a dealership can bring to that sale.
To be a better negotiator, you need to be a better qualifier. Too many times dealers don’t qualify the customer and find out what their pain points are. When a customer comes in, ask them what they have now and if they could change anything about it, what it would be. Now you know what their pain is. During negotiating you can bring up that pain point and use it as leverage.
The price objection
When a customer comes in and is looking at a mower and mentions the dealer down the street is selling it at a lower price, remember that if they didn’t already buy it from that dealer, they didn't want to. The first thing you have to understand is that they want to buy from you. Let's say it is a $5,000 mower and the other dealer is selling it for $300 cheaper. We know that they have already bought $4,700 worth of your mower in their mind. All you have to do is sell them on the other $300.
I tell all of my salespeople to start by asking the question: "I understand we are $300 apart here. Assuming I can make that $300 disappear, are you telling me you are in a position to make a decision on this piece of equipment right now?"
In most cases the person is going to say they aren’t ready to buy that day. Well then the $300 is not the problem. So they really aren’t sold on who they should buy it from. Then share with them why they should buy from your dealership.
Attaching value to benefits
Explain the service department's capabilities, the parts department and what's in stock. Explain to them the services that are built into a purchase from you and what that $300 is worth.
Never give away money, but offer a discount on service and parts, things the customer is going to need in the life of the mower. Show them you have things to negotiate with, parts packages, service packages, pickup and delivery. Use things that don’t cost you 100% of their value to negotiate. Attach value to these benefits and discounts that add up to near the $300 more they are paying at your dealership.
Make sure the customer doesn't get that full $300 back. If the customer gets it all, they walk away feeling like they could have gotten even more. You want to make the customer fight for anything you choose to give them in the negotiation. Negotiation is a give and take. Take your margins back and give the customer value.