Sales at car dealerships are like buses – don’t worry if you miss one, another will come along. During the past few years, I’ve asked a few thousand people if they believe ads that imply such and such a car sale will be the last best chance to save on a vehicle. I haven’t found anyone yet who believe the hype and it would seem that people most interested in saving money on an automotive purchase turn to the Internet. At least that’s one of the conclusions of a study cited in the Journal Of Marketing Research.
The study matched transaction data on 1500 car purchases in California with responses to a survey that asked buyers detailed questions about their Internet usage, attitudes toward information search, bargaining, and demographics.
The most important piece of information consumers learn on the Internet is the dealers’ invoice price. While Internet information does not help consumers find low-price dealerships, online buying referral services helps consumers obtain lower prices. The results show combined information and referral price effects of –1.5% or 22% of dealers’ average gross profit margin per vehicle.
Now here’s the interesting finding. Buyers who weren’t effective negotiators but researched the specific car they purchased paid 1.5% less than they would have otherwise. However, buyers who like the bargaining process did not benefit from such information. So it seems retailers not only have to deal with dyed in the wool transactional negotiators, but with nice folks armed to the teeth with data.
While the study only looked at the automotive industry it would be a fairly safe assumption that information available on the web puts downward price pressure in virtually every industry.
But it's not always about price. Here’s your homework assignment. Are you offering real value beyond price to your prospects? Are you sharing that information in your advertising and on your website, if not why not? I can help you figure it out.