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Why Customers Bolt Without Buying

Why Customers Bolt Without Buying

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Published by Ralph Paglia

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Published by: Ralph Paglia on Oct 09, 2012
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11/30/2012

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Why They Bolt Without Buying
 
By Steve Finlay
 
WardsAuto.com,Aug 11 2005
What top-performing auto dealerships do right and under-performers do wrong in trying to seal thedeal.
 When customers leave a dealership without buying, 27% blame it on the way the staff treated them, while anequal percentage decide against the store’s make of vehicles, according to J.D. Power and Associates.Those two reasons top a list indicating why surveyed car shoppers say: “Thanks, but no thanks.” (Or, in somecases, say worse.)Runner-up reasons for walking: price (21%); desired vehicle not in stock (14%); and the nebulous“other” (12%), says a J.D. Power study.The number of customers who cite dealership treatment, while relatively high, should be kept in perspective,says Chris Denove, a J.D. Power partner and director of its automotive retailing and distribution research.“I’m willing to bet more than half of them came in with an attitude or an unrealistic expectation, such aswanting to buy a vehicle for $2,000 under invoice,” he says. “It’s that perception vs. reality again.”Still, some dealerships enjoy consistently high sales closing rates while others see lots of shoppers walk outand not come back.To learn why, J.D. Power in a study of Nissan dealerships in seven major markets sent inmystery shoppers, surveyed buyers and non-buyers, interviewed dealership employees andobserved showroom activity.Here is what the research found:Lack of sales pressure is the biggest differentiator between high and low closers, anddealerships that close the most get higher customer-satisfaction scores.“You would think higher pressure would have higher close rates, but that wasn’t the case,especially if a dealer wasn’t able to close from the start,” says Denove. “Low-pressure stores have higherreturns of ‘be-backs.’The second most important differentiator: Higher-closing stores are better at dealing with negative pricesituations and handling price requests.The number of no-sale shoppers citing dealership mistreatment is 48% at under-performing stores, 29% at topperformers.While sales pressure and pricing games top the turn-off list, also on it are perceived dishonesty, lack of 
Chris Denove
8/11/2005http://wardsauto.com/microsites/newsarticle.asp?mode=print&newsarticleid=2748758&releaseid=...Page 1 of 3Why They Bolt Without Buying
 
attention, rudeness and lack of product knowledge – although the latter plays less of a role than some automakers think.“The product-knowledge ratings were no different between the under-performers and top performers, yet it’swhat manufacturers spend the most time on,” says Denove. “They don’t spend enough on making dealershipstaffers better sales people.”One-price stores – another darling of some auto makers – faired poorly in the study. Those dealerships hadmany customers get a price, then use it during negotiations at another dealership, where they most likely endup buying.“A few one-price stores have high close rates, such as Jack Fitzgerald (head of Kensington, MD-basedFitzgerald Auto Malls' 12 stores and 35 franchises in three states), says Denove.“But usually the one-price stores had not-good margins and a higher percentage of people who didn’t buybecause of price. Not a good combination.”Dealer principals at the best stores “loved writing big checks to their sales performers,” says Denove. Incontrast, “dealers at the struggling stores saw their sales staff as an ‘expense.’”The study found other key differences between the two groups:
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Sales people at top-performing dealerships are employed at those stores four times longer. They earntwice as much.
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While both groups try to get customers to commit to a price, top performers are much quicker to providea price to customers who refuse to initiate an offer.
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Top performers exert far less pressure to buy, allowing customers to exit gracefully and enhancing theirchances of returning.
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Top stores complete the sales process an hour faster, partly because sales people are less likely to be“green peas,” who repeatedly consult with the sales manager on price.
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Top sales people demonstrate better raw communication skills.
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Top-performing stores spend less money on advertising ($232 vs. $425 per unit sold), relying more onrepeat business, referrals and the higher close rates. “Advertising only gets them in,” says Denove.:
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Top performers gather more customer information (i.e., types of vehicles considered, stage in theshopping process).Top performers were not deemed better across every area investigated. For example:
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Under-performers approach customers faster. But this is sometimes seen as pouncing.
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Top performers are no more likely to follow up with sales prospects than under-performers.
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The staffs at under-performing stores are more enthusiastic and slightly more likely to treat shoppers asserious buyers.Of surveyed customers who walked out because of dealership treatment, 59% ended up buying a same-brand8/11/2005http://wardsauto.com/microsites/newsarticle.asp?mode=print&newsarticleid=2748758&releaseid=...Page 2 of 3Why They Bolt Without Buying

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