Menu selling – some say they love it and some say they hate it. Some have never tried it and are dissuaded from doing so, after giving a biased ear to the naysayers. These pessimists in our industry hate change of any kind and give up too soon on any new methods of selling, even if solid proof of profitability is readily available. It is said that experience is the most demanding kind of teacher. It gives the test first and the lesson afterward. But merely dipping our toes into the waters of menu selling and then rushing back to the shoreline of our old ways is a copout. We learn nothing from such timidity. We mustn’t forget the adage: nothing ventured, nothing gained.
AutoNation and Saturn Set the Standards
Full disclosure menu selling became the hot topic of conversation in 1996, especially in high profile dealerships such as AutoNation, Sonic Automotive, Penske and Asbury. The AutoNation dealerships, for instance, were vociferous in dispelling the falsehood that full disclosure selling didn’t work. They proved that the system not only increases backend profits, without jeopardizing customer retention, but it also limits legal exposure. They opened their mega used car centers, without conventional finance offices, and declared their intention to eliminate traditional box closes and to expunge the negative connotations that defined typical car sales personnel. They directed their finance managers to meet and greet customers at a kiosk in the middle of the showroom. They instructed them to use no sales tricks, no packing, padding or concealing of any product, price or procedure, and to be upfront with every part of their sales negotiations.
How in the world could a dealership be profitable using such unheard of and unwise tactics? Within weeks of initiating their full disclosure selling method, the industry was abuzz with as many opinions as there are noses. Dealers afraid of change panned the system. Some so-called “experts” argued that it couldn’t possibly be profitable. AutoNation was simply tooting its own horn. A malfunction would occur and the company would become a has-been . . . soon. If you recall, these same experts vilified Saturn, when the company first opened its doors with a low sticker price strategy. The tactic wouldn’t work, because no one in his right mind would knowingly pay full sticker price on a vehicle. The company’s doors would close within a year! But, the system did work and the company still exists. Customers readily accepted the full sticker, when they understood the approach was honest and they weren’t being taken to the cleaners. Full disclosure menu selling works the same way. Customers are willing and eager to buy products, if they are presented by dealership personnel worthy of their trust and confidence.
Menu Selling Builds Trust
Why are some dealerships so adamant against menu selling? To realize substantial profits with menu selling, every manager must be on the same page. Former rules of thumb no longer apply. Sales and finance must synchronize and work from the same sheet of music. Menu selling and grinding no longer go hand-in-hand. If sales teams jam customers into finance in order to close on payment or price, in addition to selling optional products, menu selling won’t work. Menu selling requires that sales staff make a concerted effort to earn the trust and creditability of customers prior to presenting them with product options. If confidence in the honesty of any dealership employee or the sales deal is lost on the lot or in the showroom, it’s hard to win back.
In full disclosure menu selling, customers fully understand the cost of sale, including: sale price, trade amount, down payment, rebates, established payment, term and APR. Any dealership that expects its finance manager to close the customer on payment, when the established payment is not agreeable, will likely lose creditability. The presentation of product options will become difficult and, probably, pointless. The same holds true if the vehicle sale price wasn’t discussed prior to the transaction coming into finance. In a lease transaction, for instance, a customer is usually provided an exact payment, without the sale price and trade amount ever being disclosed. But, the finance manager is responsible for closing the sale on price, trade, or both. If the customer doesn’t agree to the terms, the finance manager is left holding the bag. These worn out sales methods not only turn customers away; they limit dealer profits through excessive charge-backs and potential litigation. Full disclosure menu selling increases dealer profits and, more importantly, customer loyalty.
Word Tracks Close Menu Selling Deals
Sales people use various questionable tactics to skirt uncomfortable customer questions regarding payment or price. They don’t want to lose sales. Finance managers quickly revert to unethical practices to avoid resistance, when they are uncomfortable with customer objections. They don’t want to lose sales either. It becomes a vicious process and no one wins. Customers may go through with the sale, but too often they go home unhappy and may go elsewhere for their next car purchase. In order to maximize profits from menu selling, the entire sales team must be thoroughly knowledgeable about the products and the sales system and have preplanned answers to anticipated questions or objections.
Contrary to popular belief, word tracks close deals. Sales personnel must continuously practice overcoming objections. A close should be memorized verbatim, until it becomes second nature. Word tracks build confidence and confidence increases sales. “Success Principals,” by Jack Canfield describes confidence building as a poker game. Assume that each player starts the game with twenty chips. Each time a player wins a play, he earns more chips. Each time he earns more chips, he gains confidence in his ability to win and takes more chances. The fewer chips he earns, the more likely he is to lose his confidence and bet fewer chips on the next play. Fewer chips spoil opportunity. Word tracks are chips in the car selling game. The more word tracks at hand, the more likely sales will be completed. The more sales that are completed using word tracks, the more confidence the sales team has in presentation skills. As in poker, practice earns greater rewards.
An Effective Interview Process is Critical
The interview process is crucial to menu selling success. There is a wealth of information finance managers must have at hand, prior to presenting the menu to a customer. First, they must build rapport by meeting the customer at the sales person’s desk. They must review the purchase information and pertinent buying numbers, learn the individual’s buying parameters, and establish common ground. Then they must review the credit information, especially if the customer has a slow pay history, and get the story from the customer, in order to obtain bank approval or justify the suggested interest rate. They must learn the customer’s driving habits, how long he plans to keep the vehicle, where she usually has her vehicle maintained, and if he has full coverage insurance. Good finance managers never assume anything. They are always in control.
Countless managers argue that the interview process slows delivery time. Actually, the opposite is true. Managers should never take a deal into their office, without knowing what they’re up against. If the information gleaned from the customer is incorrect, they will have to reprint and resign documents. Errors increase suspect and the possibility of losing creditability. Losing creditability diminishes sales. If the sale price or payment is not agreeable, the finance manager will have to close the sale. Closing a sale takes more than ten minutes. By the time the finance manager cleans up the unsatisfactory deal, there is little time remaining for the presentation of products offerings.
Ethical Menu Selling Practices Work
Upfront and ethical business practices cultivate trusting and satisfied customers – customers that literally enjoy the closing process and are open to discussing options. They are far more knowledgeable than those even five years ago. They investigate car models and sales processes on the Internet. They shop their deals and read countless articles about deceptive business practices. Perhaps they are repeat buyers and know your system. They groan and say, “Do I have to go in there?” They dread the pitch – the grind. They loathe the hassle of buying a car. They gear up to hearing that the payments are higher than those quoted by the sales person. They steal themselves for a fight. If there is no fight, no pitching, no concealing, no games . . . the finance manger will close the sale and find willing customers, open and eager to product suggestions. Greater profits are gained through the employment of ethical business standards.
Menu Selling is an Art
It is imperative that sales and finance personnel continuously review the menu to ensure that only the most important and beneficial products are made available. Too many products reduce sales opportunity. They cause confusion. They appear like a sales gimmick. Menu selling isn’t a sales pitch; it's an art. Customers hate pitches. The menu should be presented as though the customer has a right to view whatever options and products are available, and the dealership is only too happy to oblige, if they choose to take advantage of the offerings.
Product Pricing Consistency
A crucial element to menu selling is product pricing consistency. In the past, finance managers often doubled the price of the warranty product when a customer was perceived as “easy.” Product gouging is illegal. All products should be marked up to whatever profit margin is agreeable by acceptable industry standards. Negotiation of product pricing should be kept to a minimum. It not only decreases profits; it also damages creditability. Utilizing word tracks that overcome objections is the ticket to increasing sales and performance.
A Pay Plan Solves Menu Selling Issues
A pay plan that supports menu selling can cure unresolved issues regarding menu selling usage. Some pay plans sabotage menu sales efforts. Those that offer a certain percentage paid out of the department total gross profit are foolish; finance managers have absolutely zero incentive to sell products. If they can make up the income through rate, why bother with products? Keep in mind that customers who think they received a rotten deal on rate will shop around. What purpose is there in paying out total department percentage if it has to be replaced the following month in charge backs? A pay plan strategy that provides finance managers less percentage on reserve and a higher percentage for a warranty or credit life disability product doesn’t work either. Every manager I’ve met either gives up rate to sell a life policy or gouges warranty profits to overcompensate for what they weren’t paid on rate. Such pay plans are outdated and not based on performance. The best pay plan supporting menu selling is one where all products are considered without judgment. Finance managers are paid on product sales, PVR and total units delivered; those who reach their goals are rewarded handsomely by the dealership. The carrot should be huge and obtainable.
Menu selling works, but continuous training and a commitment to see it through are required. Ethical presentation of products is clearly a better way to go for everyone involved. Confidence is gained through unremitting study and practice and confidence sells cars, without the need to conceal, pad or pack the deal.
GWC Warranty has earned recognition as a best workplace from the National Association of Business Resources and the Wilkes-Barre Times Leader.