The phone rings. The customer asks for a set of tires, 225/65/R16. “I’m shopping around,” they say.
What commonly happens next is the service writer exchanges information with the customer, giving brand information and model along with a price. The customer politely thanks the service writer and the call ends.
Information was exchanged without commitment from either party. There is no attempt to “change the conversation.” It starts and ends with price.
Our firm has been analyzing and studying data on price shoppers for the last 16 years. The following data is based on an industry study conducted over the past year. It includes 40 stores across the country consisting of 3,144 retail tire sales opportunities.
Overall retail closing percentage averaged out at 44%; “Price Shopper” closing percentage is drastically lower with an average of only 8.33% based on 687 opportunities. Note that “Price Shopper” opportunities represented 22% of the total number of calls included in this study.
The “Price Shopper” thinks that finding the best price is the mission. Once he or she has the information they are looking for, they disengage. Any and all information exchanged after the price is given, in most cases, simply falls on deaf ears.
This is the reason why having the ability to listen to the price request from the prospect, acknowledge the request and then change the topic of the discussion is a mission-critical skill set for salespeople to develop. Moving the topic to one of value and long-term relationships is absolutely mandatory to converting a price shopper to a customer.
As you can see in the data, if the discussion remains about price alone, the closing percentages are not good. Yet price shoppers represent about 20-25% of all sales opportunities, so improving closing percentages with these consumers can greatly impact revenue growth on tire sales. In addition, it is also an opportunity to gain a new customer for ancillary services, further increasing revenue.
Changing the conversation – making declarations and exchanging commitments – can be instrumental in converting a “price shopper” into a customer for life.
Kevin Mathe is a consultant and analyst with Molloy Business Development Group. Dan Molloy founded Molloy Business Development Group in 2001 with one mission in mind: to help companies grow sales by training and aligning sales, customer service and operations team members on how to handle each opportunity based on rigorous business analysis and data. Learn more at www.molloybdg.com.