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Aug172008

How To Grow Your Auto Dealership During A Recession

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By Jimmy Vee & Travis Miller

“The sky is falling,” so they say. Experts everywhere are screaming recession. The Auto manufactures have been hit hard and dealers are feeling the heat. What would happen to your business if the customers just…disappeared?

By definition, a recession occurs whenever our country experiences two successive quarters with a declining GPD (gross domestic product).

Monetary theorists can’t agree on what exactly causes a recession or how exactly to prevent one…but one thing is for certain: during a recession, many consumers have less cash in their pocket to spend with you.

Recently, while reading a Time Magazine article about the looming recession I picked up in a doctor’s office, I overheard a conversation between two nurses in the next room. They were chatting about pet health insurance.

“Oh…it's only $400 per year…and he's like my son. I have to take care of him.” In this nurse's mind, $400 per year was a pittance compared to the importance of “taking care” of her dog.

This illustrates a very important point—people will always find money to buy the things they want…even if they are broke. Recession or no recession, consumer spending will continue.

As a percentage, the diminished spending will probably be tiny. Historically, since 1940, recessions have been marked by decreases in real GDP ranging from .1% to .9%. But the media will freak out, and business owners everywhere will start running for the hills. And some politician somewhere (who knows, maybe in the White House) will try to convince us that the solution is to raise taxes and increase entitlements.

Nevertheless, people selling commoditized products and services are going to feel the most pain. If there's nothing that really distinguishes you from your competition, you'd better start putting some acorns away or find a way to stand out from the crowd. The me-too dealers and salespeople will find it tough to make money in the turbulent times that lie ahead.

People are going to tighten their spending. They are going to be less trustful and more questioning. People will begin to logically try to convince themselves to stop spending on products and services they can afford to live without. But they will still buy the things they want.

How To Prepare & Protect Yourself

So what can you do to prepare for and protect yourself and your business from a recession if or when it does occur?

The first part of your mission is crystal clear: in order to thrive during the downturn, you must sell to the emotions of your prospects—not to their logical brains. A decision logically made can be logically changed. But logic rarely defeats emotion.

Have you ever been in a heated argument with someone who was very passionate about the topic? Perhaps you were talking about a sports team, religion, abortion, the war, taxes or terrorism. Whenever you debate with someone who is emotionally involved and passionate about a topic, you can't win.

No matter how many facts and how much sheer logic you throw in the debate, logic can't defeat emotion. This may have something to do with the fact that the energy of passion blocks out the ability for the conscious mind to even receive, decode and absorb the logical argument. What good is a perfect argument if the other person doesn't even hear it?

Likewise with consumer purchasing. When someone is worked up about buying one thing or another, it's going to be very difficult to talk them out of it with reason.

It's like trying to convince your wife that she doesn't need another pair of shoes…or trying to convince your husband that he doesn’t need to add the sports package to the cable. Of course they don’t need it. But they WANT it, and they are going to get it.

How To Thrive During Tough Times

There's an even greater mandate that we all need to follow in order to thrive during the tough times. And that is to find ways to extract more money from every customer you do business with.

That's a powerful way to combat the negative forces of recession. You can withstand selling to fewer customers if you can make more money from each one. Not to mention, working with fewer customers is more fun, relaxing and enjoyable.

Plus, by charging more for what you offer, you will almost always wind up working with a higher-end customer. And they are least likely to be affected by a recession.

How To Earn More From Every Customer

So how can you begin charging more for what you offer? It’s actually quite simple—deliver more value. That doesn’t necessarily mean increasing quantity or even quality. You can build perceived value in many different ways; here are just a few ideas.

Improve the packaging of your dealership, making it appear more appealing, inviting or desirable

Create a more exclusive version of your dealership

Enhance the way you are perceived personally by your customers by positioning yourself as an expert and trusted advisor

Include helpful information with your existing product or service

Bundle your product or service with other related items

Increase the convenience factor of doing business with your dealership

Target your product or service to a more specific audience

Involve a celebrity

Make doing business with you more fun or enjoyable

Turn one time purchases into renewing purchases to save your customers time and energy

Determine what makes you, your product, your service or your dealership unique and incorporate that into all you do so that it makes direct comparison nearly impossible

By delivering more value you can justify charging more. The more you charge, the more you make. Interestingly, customers who pay more in exchange for greater value are more likely to do business with you again and refer others.

This word-of-mouth exchange will be critical in the times that lie ahead. And by focusing on the emotional benefits your customers will derive from your product or service rather than the logical reasons they should buy, you can shield yourself from the detrimental conditions that will afflict many around you.

Jim & Travis |

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Response: celebrities

at celebrities on October 23, 2008

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Response: מחשבון ביטוח מקיף לרכב

at מחשבון ביטוח מקיף לרכב on March 16, 2010

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Reader Comments (8)

This entry is quite incisive, relevant, educative and qualitative. I have really gained a lot from it, and my knowledge base has improved.

March 16, 2009 |

Felix A

A car dealership or vehicle local distribution is a business that sells new cars/ old cars at the retail level based on a dealership contract with an automaker. It may also provide maintenance services for cars.

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March 17, 2009 |

Used Car Dealers

Great information about auto marketing. Especially when we are passing through hard time we remain stable at any cost.

March 17, 2010 |

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June 20, 2010 |

Potter22ESSIE

Definitely good advice not only for car dealerships but for business owners in general. With the economy slowly crawling it's way back up after the recession, it's better to be smart about your managerial practices.

Darwin James
http://www.kanetix.ca/auto-insurance

July 25, 2010 |

Darwin James

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