I recently had a conversation with another dealer nearby. We were talking about pre-delivery inspection (PDI) and freight charges. I asked how much he charged. It was quite a bit less than what I charged on my deals. When I asked him why, he said customers would not pay any more than that, and he often took the charges off to make a deal.
He asked me how often I have lowered or eliminated my charges. “Not once,” I said. I don’t think he believed me.
It has always seemed to me that PDI, freight and documentation charges are one of those things that should be non-negotiable. We have to pay to get the bikes to our shops. We have to pay someone to assemble them. We have to store them in the winter. The one we sell is always on the bottom in the last row, and we have to dig it out. If we have over-ordered, we have to store them for next year. Then, there’s the usurious interest that we are charged, and so on. To do a great job and keep customers happy, it takes time, which equals money.
I went over all of this with the other dealer, and his go-to argument was that his clients often refused to pay these charges. It’s all about confidence. If you say, “And the PDI is $895,” and you wince, the customer will know right away that you think that $895 is too high, so he’s going to want a deal. If your attitude is matter-of-fact, “It’s $895,” and you keep going as if $895 (or more) is the most natural thing in the world, he may note the amount, but, as it seems that’s the way it is, he will accept it.
I find if they do object, we tell them that it’s a cost everyone pays. We go through the shipping, the amount of time we have to handle it and that we always have a qualified tech build their unit — not an after-school helper. Also, we can’t just charge some people and not others. That usually handles most of those objections. For the odd person who still balks, well, that’s what a sales manager is for. Sometimes we really, really want to move a unit. If that’s the case, we try to throw something in. Perhaps a gift card. Then, they at least have to get amazed by our parts and accessories (P&A) people. A discount is the last possible situation. But if we have to, we do so.
The salespeople have to be confident. That’s the key. Management also has to back them up. If the salesperson has told a customer that you never knock off the PDI and freight charges, then the sales manager better not do so. That gives the client the false indication that he’s in charge and also encourages him to push for deals in the future.
Sometimes a salesperson wants to do whatever he can to make a sale; that’s fine, as long as he doesn’t overpromise, or outright lie. My sales manager mentioned to me that one particular salesman was bringing in offers that almost always had a $400 discount. We hung around the sales floor within hearing range of this particular fellow, and, sure enough, he often told customers that he could probably get them a $400 discount. He was taking the path of least resistance. He lacked confidence in his own abilities. We had to sit him down for more training and remind him that he was taking money out of his own pocket by doing so.
This also applies in the parts, accessories and service departments. Who do you think makes more money for the company: the one who winces or lacks confidence in his quotes, or the one who is matter-of-fact about telling the client that this tiny plastic part is $249?
As I discussed this with the other dealer, I could see I wasn’t getting anywhere; he had decided that getting PDI and freight was difficult. And therefore, it was difficult. It was a self-perpetuating vision.
I hope that you spend the time with your sales staff and lead them to the realization that confidence will make a lot of difference, because it does. Believe it.
