Breaking the Bad News: How to Give Trade Values without Getting Punched
"So what will you give me for my trade?"
The customer eyes you up with the intensity of a Turkish carpet trader at the Grand Bazaar in Istanbul. You look at his gleaming nine-year-old-just-washed ride and take in the custom paint job. It truly is a piece of work.
You've probably seen one like it before. You know the one with the airbrushed wizard fighting off a mongoose surrounded by an army of rabid squirrels on the edge of an impossible cliff. Lots of time, money, effort and a little dash of crazy went into this one.
It's a tricky spot. This person is convinced this bike is worth a million bucks, and you know you're either going to have to find the perfect wizard-loving-mongoose-hating buyer or the business end of a paint gun.
You sigh as you as you think to yourself, "This isn't going to go well."
We've all been in similar situations. The fastest way to get punched or at a minimum add ill will and negative feelings to a deal is to insult the trade. It's so common in today's dealer world that we rarely think twice about running down a laundry list of scratches, dents, ill advised accessories, bald tires and just plain bad taste when delivering a trade in value.
There are no winners at the conclusion of that conversation.
But what if we were to think unconventionally about trade value?
Building them up, not tearing them down:
What if you started low and through a series of compliments and additions added on dollars till you reached the amount you are willing to provide for the trade?
"Typically the trade in value on your bike is $4000," you say knowing what's going to happen next. The customer immediately begins his Tomahawk Cruise Missile launch sequence. And just before he achieves lift off you chime in, "But you've made some smart moves that will enable us to offer you more."
You can see the rage dissolve to pride in his eyes as he says; "Tell me more."
Here's where you can relax and enjoy talking about what's cool about the bike.
"Are these tires new? Great, we can add an additional $250 to your trade in value."
"You've kept the paint original and in great condition; we can add another $500 to your trade."
"Have you done all of the scheduled maintenances? Great, we can add dollars for that too!"
The options are almost limitless.
"Those custom wheels are incredible. Those will add $750 to your trade in appraisal".
This approach will make the customer feel like the customization and maintenance of their bike has paid off. Why start this deal off on a sour note? You really don't have to.
This concept can be used in conjunction with almost all of the other ideas listed below.
Setting expectations earlier:
When the subject of a trade comes up in the sales process don't be afraid to set some expectations. If a customer throws out an out-of-this-universe trade figure don't stop the music. Make a note of what they want and move on. But before moving on, a well placed expectations setting comment might pay big dividends later on.
"Hmmm ... $53,000 sounds like a lot of money for a 1979 Sportster. I don't think we've ever come close to offering that sort of money. Here's what I'm going to suggest. Let's find the right bike for you. Then let's look at your trade and talk about what's fair."
Previous sales history:
How do you get to that initial starting place?
Start with all the books and guides you'd like, but nothing is as relevant or strong as your own personal previous sales history. This requires data and good records. If the last black 2007 Road Glide in similar condition sold for $15,900, it's a pretty good bet that it'll bring similar but probably slightly lower money this time around.
When you are about to send that offer over you really need to have a realistic and sales history verified idea of what that trade will sell for on your floor. All the books and guides in the world will give you a starting point. Do you reconcile your sales history against book value?
If you have taken the time to crunch the numbers and know that you are selling touring bikes at 105% of average retail and V-Rod's at 93% of average retail you already know what you should offer on trade. You can also show the customer that you know exactly what his trade is worth and demonstrate why that is.
The key is to understanding what that bike, in that condition, is worth in YOUR market.
Time on Floor:
Inventory costs money. That's obvious. You have to pay for it in cash flow or you have to pay to floor plan it. Either way, that inventory sitting on your floor is gobbling cash and decreasing your real profit margin the longer it sits. If your average time on floor for Dyna models is 126 days you had better take that into consideration when coming up with the number.
(What? You have no idea of the average days it takes to sell a bike in your store? Well if you had the Ruthless Data System you would know that and more with just a click of a mouse. If you're interested in finding out more information shoot me an e-mail: Mark@PeakDealershipPerformance.com.)
What does this have to do with telling your customer what the trade is worth?
Buyers are more educated than ever, if you can statistically demonstrate how long their bike will take you to sell you have demonstrated a logical and hard to refute reason for the trade in number. Don't be afraid to build them back up from this point with some extra dollars for quality components on their trade.
Auction prices:
Another great way to build your credibility as an expert on bike values is to head to your local auction and watch the gavel fall. There is no better insight to the market then the actual market itself.
"I was at the latest auction this past Friday and a bike almost identical to yours sold for $17,300. Now because you are a great customer and have taken care of your bike; good paint, brand new tires, new brake pads and a fully documented service history, I can give you $18,000 for it."
That sounds a whole lot different than, "I'll give you 18 for it, take it or leave it."
Which would you rather hear as a customer?
Customizing to the extreme:
We've all seen bikes that have been extremely customized, like the one described earlier. And it doesn't have to be just the paint job that is unique. Case in point: have you ever seen a bike with so much fringed add-ons it looks like a wayward-dreadlock wearing Rastafarian from your last island adventure? How about one that has so many varied theme accessories that it's a mingle-mangle of jingle jangle? I'll stop now, but you get the point.
These conversations take extra care and consideration. Because people align themselves so closely with their motorcycle, to disparage their bike would be to disparage them. It's time to sit down and explain how as awesome as that paint job and those bolt-ons are that it's usually easier and quicker to sell a bone stock bike then one that has lots of ... how shall we say ... personality.
It's not that his bike isn't awesome, it is - to him. It's just that it's going to take some additional time on the floor and maybe even some reconditioning to find the right buyer.
As you know we continuously harp on the expert use of language. Here are some words and phrases which can help with these conversations.
