Up With Upselling

Patrick Corbett knows a thing or two about sales. He started his automotive career 12 years ago in that department in Michigan before becoming finance director for a large automotive group at age 26, and is now regional sales manager for Line\5, a vehicle protection plan funding provider.

And Corbett takes care to emphasize that upselling isn’t about increasing sales.

“It’s about providing value to customers and fulfilling their needs,” he said at Bobit Dealer Group’s recent Industry Summit in New Orleans, where he spoke to guests about the “art of upselling,” including the process of elevating features with finance-and-insurance product financing.

An upselling strategy should be carefully planned and executed, he said, so it aligns with a dealership’s overall business objectives.

And based on his early career experience of feeling his way along until he found a successful tack taught him that training sales staff to effectively communicate and giving them the leeway to negotiate are key to building a strong foundation for that strategy. For one, they must learn how to get their deals funded, and then they can focus on upselling for maximum effect.

Creating Loyalty

Aside from the adding of services, products and upgrades to a consumer’s vehicle purchase leading to an increase in average transaction values and dealership profitability, it can improve customer loyalty and thereby “establish a competitive edge in the marketplace,” Corbett said. Upselling, which may have a negative connotation to some ears, can actually create more customer satisfaction.

“Dealerships can cater to different preferences and needs,” he said. “When customers feel their needs and desires are understood … they’re more likely to have a positive perception of the dealership.”

Corbett said that helping customers feel like the dealership gets them is more likely to move them to return and to recommend it to others. “It plays a crucial role in long-term relationships.”

One way to start that relationship is by giving the customer complementary products or services that enhance their initial purchase, which can lead to them making a bigger purchase, he said.

But another often-overlooked way is simple: Listen to the customer. He or she may have concerns about spending more money after just agreeing to pay tens of thousands of dollars for one item, albeit a valuable one.

Then give clear answers that answer their questions and concerns to reassure them that your ideas are in their best interest, leveraging both transparency and facts because establishing trust is crucial to the upsell.

Upsell Candidates

Identifying opportunities to upsell isn’t a random process, Corbett said, but “requires a deep understanding of the dealership.” That involves analyzing transaction data and customer behaviors that identify patterns among consumers, helping to anticipate their needs, as well as looking at individual consumers’ purchase history in order to personalize offers to each.

In states like Florida, with its plentiful sunshine leading to faster vehicle paint erosion, the need for a paint-protection product is an obvious suggestion., as would any safety-related product to a customer with children.

“Customers expect a customized and tailored experience throughout their purchase journey,” Corbett said.

It also includes keeping abreast of market trends and advancements, such as new vehicle models, technologies and features. All this can lead to higher conversion rates and ultimately increase revenue.

For instance, he said, getting specific about the idea of a car being a computer on wheels can grant an edge. Even three years ago, a typical vehicle had more than 300 separate computers under its roof, he said, pointing out that citing a statistic like that is a “huge advantage” in upselling finance products and warranties.

Warranties and vehicle-protection products can be particularly valuable to consumers today because many are holding onto their cars longer after the pandemic, Corbett said. “Many are coming up to close to five years since their last purchase.” Training staff to re-emphasize the need for protection products can capitalize on that phenomenon.

Unique incentives, exclusive offers, limited-time promotions – to capitalize on FOMO, or fear or missing out – and package deals that highlight savings and convenience should be part of an upselling strategy, Corbett said, as well as cross-selling, or selling products related to the initial purchase, such as extended warranties and higher trim levels.

“Everyone loves to save money or feel like they save money.”

To succeed in upselling, he said you should proactively engage with the customer during and after their initial dealership visit.

The Question of Preloads

Corbett took questions after his summit talk, including one from an industry veteran who said finance-and-insurance sales seem to be stuck on two products per customer, meaning the vehicle service contract and GAP insurance – the first because of its big profit margin and reinsurance role, the second because the customer needs it.

“Does anybody have insight on how to move out of that to selling additional products?” he said.

Another member of the audience piped up with, “Preloads, addendums, campaigns, offers he characterized as “’70s values that we’ve lost.”

“The agents in the room want to get it back,” he said, and train managers to “let the customer make the decision.”

Yet another summit guest pointed out that dealerships have tended to shy away from preloaded products due to past experience of losing money on them or watching their vehicle sales suffer.

“There’s a different way to package it. It’s been successful for many years – we need to open that box back up.”

He said it’s agents’ job to educate dealers on the value such products present to customers. “Customers want to be informed as opposed to letting the F&I manager control, only selling insurance and contracts and leaving everything else behind.”

David Richardson, executive director of Connected Dealer Services, said after Corbett’s talk that positioning preloads differently can make a big difference.

“‘Let’s talk about enhancing your inventory,’” for instance, can make the concept attractive to a dealer, he said.

ABOUT THE AUTHOR

Hannah Mitchell is executive editor of Agent Entrepreneur. A former daily newspaper journalist, her first car was a hand-me-down Chevrolet Nova.

Originally posted on F&I and Showroom