Creating The Value Ladder For Your Dealership

June 28, 2017

 

What is a value ladder?

 

Creating a value ladder for your dealership is mandatory if you want to maximize the profits you can generate from a customer. You do this by identifying all the things you could bundle with your own products or services to create a larger, more valuable proposition for your customer over the course of the relationship. While you could still sell a single vehicle or service one time to a customer, to work towards maximizing the profits of your dealership, you must look further than that one event.  

 

The reason it is called a "ladder" is that the bottom step is where you start the relationship with your prospect. Each step from there is another step towards the most profit you can get from your interactions with the customer.

 

Often, a value ladder starts with a free product or promotional item that helps you get qualified leads. This can be done in a number of ways for each department:

 

Sales Department: since it is usually a promo or event that triggers crowds, that will be the basis of our value ladder example for sales.

 

Service Department: for service, we will use a free oil change as an example.

 

In order to be successful in making your customers ascend your value ladder, you must first decide what is the ultimate place you want to take your relationship with your customer. For your dealership, it may be ascending new buyers or service customers towards becoming “customers for life” who will refer family and friends to all your departments; and as long as they feel they were given value over the course of the sale and ownership of their vehicle, they will ascend your value ladder and recommend family and friends.

 

Sales Department Value Ladder

 

The Sales Department is focused on selling cars. However, that is not their only product.

 

Let’s say for the sake of our example, that the prospect came in to get a free cookware set. This is a lead magnet, and it is how we get the prospect to step on the first step of the ladder.

 

Once at the dealership, the prospect became interested in a base model vehicle.  If trained to upsell, the salesperson is already working on moving the prospect up to the next trim level with power equipment and a 6-way adjustable driver's seat. This is an example of a value ladder. You build value for the prospect and increase your profits as you move them up the ladder to the next model until you have reached the customer's commitment.  

 

From here, you could add more value by adding accessories to the vehicle, like floor mats or an appearance package.  Once you have run out of accessories, you move to the next rung, which might be your Financing or Service Department. Maybe, your sales staff sells oil change or service booklets.  Your F&I department sells financing, and they can add service agreements, credit life or other products to the note that increases the value for the customer and your profits.

 

These steps might already be built in your dealership’s daily activities, but clearly identifying each step of your ladder will allow you to articulate different marketing programs for people who might have stop ascending.

 

Most dealers have a marketing strategy to get people entering at the bottom of the sales value ladder or the service value ladder but don’t have any marketing built to re-ignite the ascension of a customer who is stuck on a specific rung.

 

You also want to make sure your value ladder includes a continuity program where a particular revenue model generates consistent revenue and profits, and the Service Department can help in that aspect.

 Service Department Value Ladder

 

Whether the customer comes from your Sales Department or came in triggered by outside advertising to generate service coupons, it’s important that you understand that this customer is only on the first rung of your Service Department's value ladder.

 

From there, you want to help the customer make a commitment to the care and warranty of their new vehicle. You can set them up on a plan that will coincide with the OEM’s recommended maintenance schedule. You could also have them opt-in to your email list and send them notices when it is time to do another oil change. You could finally suggest that they replace any of the wear and tear parts like brake shoes or timing belts.

 

You are creating a long-term commitment to the service of the vehicle, and you can generate the revenue by calling on customers who are close to service dates. This increases the value your customers get from you by driving a safer vehicle and owning a vehicle that will be worth more once it’s time to upgrade, while you maximize your profits and increase your chances to be the dealership the customer buys its next vehicle from.

 

Once you start to think of ways that you can generate additional income from one sale and more value for your customers, you can begin to devise value ladders for all of your departments. You can drill down as far as you want to go and ascend customers as high as you want to bring them, but a good starting point is with a basic ladder because it will be easier to implement, and closer to what you are probably doing already.

 

 

If you need help creating marketing designed for certain specific rungs of your value ladder, don’t hesitate to call the automotive marketing specialists of Turbo Marketing Solutions. We will gladly review your value ladder and help you put together communications that will help you ascend your customers.

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