2 Pricing Strategies That Increase Vehicle Interest
For most shoppers, buying a car fits into the “major life events” category. The path to purchase spans over multiple months with over 900 digital touch points in the shopping process. As shoppers work their way through the car shopping journey, at some point they question “can I afford this vehicle?” Dealers can impact this part of the buying process with a price change but knowing when to make the change can be a challenge. How much of a price drop will get people to notice? Sincro’s Business Intelligence (BI) team completed a study on the impact price changes have on vehicle activity including views, clicks and more.
The BI team looked across our network and compared website activity between dealers who dropped the price of the vehicle within the first week compared to dealers who never changed the price of a vehicle. We looked at both new and used vehicles across multiple OEMs. While this data looks across the whole Sincro network, we acknowledge these changes will vary across dealers. This study was completed before the current inventory issues facing dealers.
FINDING: A Price Drop Of 8% a Week After a New Vehicle Arrives On Lot Will Attract The Most Vehicle Views.
We found many dealers were making a price reduction within the first week. While all price drops saw an increase of vehicle views, a drop of 5-7% drove the second bigger increase in vehicle views. The most effective price drops were consistent for both new and used vehicles. For the higher priced luxury vehicles, we saw increased views when the price drop was closer to 5%.
Similar trends arise when comparing new vs used vehicles. We found that used vehicles required at least a 5% decrease in price before a significant increase in views occurred. We also found the point of diminishing returns for price drops; price drops of 12% or more tended not to produce higher increases in vehicle views.
FINDING: A One-Time Price Drop Of 5% Is More Effective Than Smaller Price Drops.
We found that to gain significant increase in views, a price drop of at least 5% was needed. The first price change a dealer makes will drive the biggest increase in views and activity.
Looking across segments, we found new vehicles classified as truck or SUV experienced the biggest lift in views after price reductions. Specifically with new trucks, we found that a 5% decrease in price saw a 110% increase in vehicle views, while the 8% decrease in price saw 180% lift in vehicle views. For used vehicles, trucks garnered the biggest lift.
What Does All This Mean For Your Business?
1. There is an “impactful” range for a price drop that will get the customer’s attention.2. If you plan to reduce pricing, do it in the first week, and 5-8%for the greatest impact.3. Once you drop the price, communicate it!
Is your website provider and/or CRM notifying customers when a price change happens? You should have a system where customers can submit requests to follow changes in price or availability. Include marketing savings on the vehicles on your site by putting the total savings amount in the title of your vehicles.
Recent studies show 69% of consumers are likely to purchase a vehicle sooner than planned, for the right price. Making the change at the right time should help dealers turn vehicles at a faster rate.
At Sincro, we have dedicated team members that can hop on a call or meet to discuss how we can help your dealership accomplish all of this and more. Give us a call at 800-909-8244 or email us at email@example.com.