By Steve Miner
Top automotive retailers focusing on Retail Performance Management (RPM) are maniacal about having deep visibility into their business. The top RPM dealers have found that focusing on Appraisal Effectiveness is often the first key element to boosting Retail Sales Efficiency.
How good enough is good enough when it comes to an appraisal closing rate? With the average consumer visiting less than 2 dealerships in person being north of 50% when it comes to an appraisal closing rate is the mark to aim for. So what are some steps to take to get there?
• Take the guest with you on the appraisal 100% of the time. In fact…insist that they ride along. While this can sometimes be painful, the benefits are worth it. It establishes a relationship and rapport with the customer and have the opportunity to explain the appraisal process. The best benefit…90% of the time they spill their guts on everything you want to know about the car you are about to buy from them.
• Have a Retail First Mentality. Don’t get me wrong…books and auction data are important and should be looked at. However, the retail-ability of the car is king when it comes to what it is worth to you. Dig deep into the current market listings, market days supply, average mileage, total number of listings, etc. to know exactly what you are competing against. Follow that up with your recent sold data to know how you perform on the car and what you sell it for. This allows you to know when you can step up on cars, or when to scale back on units that there is not high demand for.
• “Call” the car to at least 1 other person. This is the old 2 heads are better than 1, 3 heads are better than 2…. I do an exercise where I have a room full of used car managers appraise a vehicle individually, and then break into groups and appraise the same car a second time. The spread on the ACV and recon is huge when done by individuals, and shrinks to an extremely small amount when comparing groups.
• Deliver the appraisal yourself! When you are busy this can be tough, but no one knows how you arrived at the value or how to overcome the objections better than you. This coupled with the rapport you built during the ride along can be the final straw to closing the deal. Maybe this is not needed with your top sales people but definitely with newer team members or those who are underperforming.
• Deliver the Appraisal using a Professional Offer Form. Build transparency in the process and show you stand behind your offer. I often hear dealers say that they won’t do this because the customer will just walk next door to their competitor and get a better deal. What percentage of the time that a customer walks because they don’t like your deal do they come back currently? Show them you are confident in your offer and stand behind your work.