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How to Manage Customer Conversations During the Current Auto Inventory Shortages

Image of Aaron Parsons
Aaron Parsons

The ongoing chip shortage is causing severe auto inventory constraints. This extremely limited supply is costing the industry millions in lost unit sales and billions in lost profits. However, automotive dealers are adept at managing adversity. Dealerships have done it in the past: remember the 2009 crash followed by cash for clunkers? 

The days supply of new cars for sale in the US is only 31 days, at only 1.2 units which is a slight improvement from July.  Kia, Honda and Toyota dealers have the weakest inventories with only an average 20-day supply. To make matters worse, the chip shortage could run through the remainder of 2021.

There’s a silver lining: dealers are making more gross than ever, $4,260 an increase of $2,230 from a year ago. The combination of low inventory and high prices drove consumer spending to a record $48B in July.

This situation is tough, but it’s temporary.

One of the biggest challenges right now is customer conversations when you don’t have the desired vehicle. We’re hearing that some dealerships are deciding not to respond to new inquiries or are abruptly handling these inquiries with a terse “nothing in stock.” This is a mistake. 

Remember Maya Angelou’s wise words: “People will forget what you said, people will forget what you did, but people will never forget how you made them feel.” That’s true in sales conversations, too. 

Even if you don’t have enough inventory to meet demand, it’s critical for your long-term business success that you respond to every prospective buyer with top-notch customer service. Simply not answering calls or limiting follow-up can make buyers feel unappreciated, particularly during a difficult time. That’s not a memory you want to create in your customers’ mind.

Not responding to customers is a cardinal sin in sales, because it creates the impression that you don't care about them. That customer will take their business to another dealership...will they ever come back to yours?

Here are 5 best practices for having exceptional sales conversations in a challenging time.

1. Create a plan to handle inquiries during this challenging situation.

When a situation is already challenging, the last thing you want to do is make the sales process confusing. It’s important to have an established process to handle calls and web inquiries. This includes making a great first impression and asking the right questions to cultivate trust.

The first step is a proper greeting. It’s amazing how many times the initial greeting is a disaster. Make sure to enthusiastically introduce yourself and the dealership, and offer assistance. You can make an excellent first impression on the phone - but you only have a few seconds. 

“People don’t buy cars from places, they buy cars from people. Most people only buy cars from people they like. Take the time to build a great relationship from the very first interaction and you’ll create an unforgettable experience for your prospects and customers.”

Maggie Pugesek, Partner at C&M Coaching

2. Ask Questions & Take Notes

Next, it’s time to ask the right questions! This should include:

  • What vehicle are you interested in?
  • What do you like about the vehicle? 
    • You might have another model in stock that would meet their needs, new stock coming in soon, or the ability to trade for a similar vehicle.
  • How quickly do you need the vehicle?
  • Are you aware of the inventory shortage? 
    • Research indicates that about 80% of shoppers are aware of the current situation. If they’re not, you have an opportunity to educate them and provide assistance early in the sales process.
  • How far are you in the process?
  • Have you been to our dealership before?
  • Do you live in the area? 
    • A customer that is 15 minutes away will be very interested in free lifetime oil changes, while the prospect from another state is really only interested in getting the vehicle.
  • Have you called other dealerships yet?
  • Do you have a trade?
    • The majority of customers will be trading in a vehicle. You can explain that their vehicle has a higher value now due to the inventory shortage, and they might be able to choose a higher end model. If they’re trading in, ask to see the vehicle.

Take time to find out about the prospect and let them learn about you, too. When you actively listen to and learn from the buyer, you can have a genuine conversation that builds trust. Even if you don’t win the business today, a great experience can encourage them to return in the future or tell their friends about you. 

3. Be transparent. 

With today’s inventory shortage, many vehicles are being sold at MSRP or above. This can spark questions and even concerns in prospects.

If and when a prospective buyer questions the mark-up, be transparent. Disclose the mark-up, explaining the reasons behind that. 

You can mitigate some of the concerns by explaining that the trade-in value is probably higher, which can help offset the increased price of the new vehicle. 

If the prospect has time to wait, you might explain that the inventory shortage could end soon and the mark-ups may be removed or there could be future incentives. If the customer is willing to wait, you can follow-up. This brings us to the next point.

4. Schedule follow-up with each prospect. 

Following up demonstrates a genuine interest in the needs of customers, and shows that you’re looking out for your buyers. 

Set a calendar date for a follow-up conversation. Let them know that you will be checking inventory and following up in a week or two to provide an update of what’s in stock or scheduled to be delivered that might meet their needs.

Locking in that follow-up date and showing interest in the shoppers' needs differentiates you from your competitors.

Everybody is working with the same constraints. Yes, different brands each have a unique situation, but every dealership is facing the same issue.

5. Get the right tools in place. 

Making sure that your company handles even tough conversations with grace relies on having the right systems and tools in place. 

You’ll need: 

  • A lead management tool to ensure that every inquiry gets a tracked response. Look for tools that prioritize speed of response.
  • Software to deliver messages and track communication with prospects and customers. Ideally, you’ll use one that includes phone call, text, and email

It’s critical to respond to every inquiry - the faster the better.

Rapid response software enables you to automatically engage your customers, with an Integration into your CRM to track those engagements. Take your sales to the next level with monitoring and coaching tools to improve sales performance.

The bottom line is that you need to handle every inquiry as though you have the inventory. Spend the amount of time and care that you would under normal circumstances. Just because you don’t think the opportunity doesn’t exist today doesn’t mean you should ignore the customer.

That way, you’ll make yourself and your dealership the clear choice, either later when their vehicle is in stock or even with a different unit you have in stock today.

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