Now is the time to make a game plan for your pricing strategy so you are ready for the market shift.
VDP views are widely known and accepted as a key indicator of how well a vehicle is merchandised online and how quickly a vehicle will sell. While good used car managers and pricing strategists will take this into consideration, there is another measurable element that should be considered in the pricing equation: ENGAGEMENT. There are tools today that can be placed on your website SRP and VDPs to increase engagement time and easily serve this information to you directly in your CRM and IMS, without the need for additional dashboards to monitor.
For example, if you had 8 vehicles in inventory with a similar VDP view count, but you could see that 3 of those vehicles has 50x the engagement (meaning time spent watching videos, viewing the OEM window sticker, and researching the service and recon records), would you drop that unit’s price the minute it hits the next pricing “bucket” in your inventory management system? Smart managers would not – they would be able to see this as “the low hanging fruit” and take action with the customers we know are engaging. When reviewing these metrics, we must consider there are customers we can track (through the use of digital portfolios that are sending this VDP information through the dealership CRM) and customers that remain anonymous to us during their online shopping experience (customers tracked only from SRP/VDP engagement) – but both can offer valuable insight into your merchandising strategy.
Having your car shopper “view” a VDP is one thing but inspiring them to “engage” with a VDP is another. Engagement moves car shoppers naturally through the funnel from awareness to consideration, which makes them much more likely to convert to a sales opportunity. If a VDP yields 30 views within a 30-day period with an average of 10 engagements per view, this creates a 70% chance of selling within a 30-day time frame. Without compelling VDP content, your chances of selling the vehicle in the first month declines, as does your profit. VDP content is critical. You cannot expect a customer to move through the sales funnel online if you are not being transparent and providing all the information the customers need to make a buying decision. Velocity Automotive has found the most engaging content viewed by customers is pictures & video, OEM window stickers, CarFax report, and the vehicle’s service history/reconditioning work.
What do you take into consideration when repricing your inventory? Many managers only consider two things when repricing: 1. what is the age of the unit? 2. what is the market price and am I slightly below it?
There are “buckets” that can serve as a guideline for how long a vehicle is in inventory before pricing adjustments should be made, and that is very helpful. However, there should be more to your pricing strategy than just time in inventory, even with other industry-accepted and proven metrics being considered, such as Price to Market and Market Day Supply.
Post-pandemic, these strategy considerations become extremely important, but even pre-pandemic we knew that the more VDP interaction a vehicle has online, the more likely that vehicle is to sell more quickly. Today, dealers are selling more used cars than ever before, at higher profits than ever before, and faster than ever before. However, this anomaly is surely coming to an end in the not-so-distant future. Now is the time to make a game plan for your pricing strategy so you are ready for the market shift. Supply and demand complications, chip shortages, distribution bottlenecks – the world is reacting, and these problems won’t last forever.
In closing, it is also important to consider how your price changes are being relayed to your customers. When prices are dropped on vehicles, dealerships are typically relying on the salesperson to communicate the drop to their active prospects … or worse, we do nothing and hope they see the new “internet price” reduced on the website. In a fast-paced market, it is imperative to get your customer this information before they buy elsewhere. Most IMS and CRM’s do not automate this price change process, so it is important to find a partner that will automatically notify your customers when a price change has occurred on a vehicle they have engaged with recently. It is a super competitive market – be the leader.
