NetForum - Message Replies

Forum: Idea Exchange

Topic: Dealing With Prospect's Negative Trade Equity

Posted by: Michael Hargrove (mhargrove@bluinc.com )
Organization:Bottom Line Underwriters, Inc.
Date posted: Sat Apr 24 15:11:21 EDT 1999
Subject: "Upside Down" Customers (part 1)
Message:
Thanks for the new topic, R.K.

First, let me point out the obvious. Our customer's payoff is not OUR responsibility. Unless we sold them their last vehicle, we don't control their unpaid balance. (And if we did sell them their last vehicle, perhaps now would be a good time to revisit out extended term financing strategy!) Unfortunately, most salesreps act as if they ARE responsible for the payoff and their customer is usually more than willing to relinquish the burden of it onto them.

Here are some subtle ways to remind our clients who's burden it really is. First, we can stop referring to their present vehicle as the "trade-in". If we call it a trade, then we imply that we're responsible for the dollar amount offered. Instead we can ask, "Are you going to keep your present vehicle or are we going to try and sell it to the dealership?" Now the customer is reminded that, just like we are the seller of the new one, they are the seller of the old one. It's a minor point at best, I know, but any advantage can help.

Next, stop asking for the payoff amount up-front. Again, this implies responsibility. We'll have plenty of time to find this out later in the transaction. My friend, Grant Cardone, says that whenever his friends ask him how to get a "good deal", he simply tells them to double their payoff amount when the salesrep asks what it is. Then you can just watch them chase their tails getting you "unburied".

Now when we present "hit figures", "ACV" or whatever the initial amount is for the customer's present vehicle (let's say...$4000), and the customer screams, "That's it! I knew it! I can't do business with you guys. Hell, my PAYOFF is $7000!" DO NOT respond, "Okay Mr. Jones, if I could get $7000 for your trade, would you buy today?" Because if we do, we are now taking responsibility for the $3000 difference. When we come back with $5000, who dropped the ball to the tune of $2K? We did!

Instead, we can respond this way, "Mr. Jones, what you owe on your car has no bearing whatsoever on what your car is actually worth. I mean, if you only owed $600 you wouldn't sell it for $600, would you? Of course not, you'd want $4000...because that's what your car is worth." Not only did we NOT take responsibility for their payoff amount but we also got a chance to restate the first offer of $4000. When our customer then says, "Well if I don't get $7000, then I can't buy the car." We can respond, "Okay, let me go see if my manager can be a little flexible to try and help us out." Now when we come back with $5000, we are being flexible to the tune of $1K to help out our customer with THEIR payoff.

Subject: Negative Trade Equity
Reply Posted by: Joe Boyer (jboyer@ocslink.com )Neil Norton Cadillac/Pontiac
Date Posted: Mon Oct 18 22:31:31 EDT 1999
Message:
I've seen many customers upside down because they have 60-month loans to keep their payments low, but trade every three years or so. GMAC has a great 36-month program called a SmartBuy, which is sort of a hybrid lease. We sell a heck of a lot of cars under the program by stressing three points. First, SmartBuy gets them out of their old car (which they're usually sick of); second, it keeps the payment within their budget, and last they won't have the same problem in three years. If they object that they won't own their car in three years, I calmly point out that they don't own their car now, the bank does. If you sell GM products, it's a great way to go. I'm sure other makes have similar programs.

Bottom Line Underwriters, Inc.
Toll Free: 1-888-My Success
Fax: (503) 638-0602
P.O. Box 1218
Lake Oswego, OR 97035
E-mail: editor@bluinc.com

Copyright © 1998 by Bottom Line Underwriters, Inc.