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Why it's so important to have a consistent and thorough used vehicle appraisal process...

Why it's so important to have a consistent and thorough used vehicle appraisal process... June 24, 2015 by Mike Henshaw

Part-exchange or trade-in vehicles are a valuable stock source and, potentially, a source of profit too. That is why it is so important to get the appraisal process right, arriving at a value that the customer is happy with and feels is fair - and that also provides you with a profit opportunity when the trade-in is re-sold.
So often I've heard stories of, and indeed experienced personally, used vehicle appraisal which is little more than a cursory look. (I once had my car appraised and valued through a window!!)
A poor appraisal can go badly wrong in one of two ways; the vehicle is overvalued, there are unnoticed dints and scratches or other problems, and you subsequently discover that it costs more to prepare for the forecourt than you anticipated. This obviously affects the Gross Profit opportunity and your personal earnings!
If it's undervalued, you run the risk of a disgruntled customer who feels you are trying to take advantage of them and may reconsider doing business with you, or worse, the customer just leaves!
But, as we always say at PEP Business School - 'it's a process', and one which you need to get your customer to buy into too.
Understand the process, practise it without fail, and used car appraisal will be the foundation for a profitable negotiation, an opportunity for extra profit in the deal.
At most dealerships in my experience, this is the way it works is this...
The Salesperson will do the initial appraisal and the Sales Manager will decide on a valuation figure they would like to offer for the car. But, and I have seen this happen, sometimes the Sales Manager will arrive at that figure without even looking at the car, basing their offer on the Salesperson's appraisal form/report.
This leaves the Salesperson in the position of both appraising the vehicle and negotiating on price.
Here's what I think should happen...
The Salesperson should do the full initial appraisal of the car.
It's really important that this is seen as a structured process, using a proper checklist, and a process that involves the customer and is transparent.
You can find a checklist to download on our blog site at http://www.pepbusinessschool.eu/admin/resources/downloads-item-documents/ccp1a-appraisal-form-sales-process.pdf
It is also vital that the customer 'buys into' your evaluation of the car so don't leave them sitting in the showroom or sales office, include them in the appraisal process.
This will enable you to establish your integrity with the customer as you jointly agree the car's condition. Let them see you checking the bodywork, measuring the tyre tread, checking the upholstery for marks etc. and, at the end of the process, have them sign the appraisal form to signify their agreement as to the car's condition.
The appraisal also provides you with an opportunity to discuss and establish the customer's likely future requirements, so by the end of the process you should have the foundation for a relationship based on trust and empathy.
What happens next can often blow all that good work away!
A professional approach allows the Sales Process to continue positively. A badly handled approach will have the customer heading for home!

  • The Salesperson takes in his/her appraisal to the Sales Manager, who indicates a value, which the Salesperson then has to go back and present  to the customer.
  • In many businesses  Salespeople present themselves to the customer as being the person responsible for the appraisal, not for valuing their car. The Sales Manager then makes an appearance, not to do a second appraisal but to give the value for the car - and to explain the reasons why.
  • This leaves the Salesperson in a 'third party' position, able to work on behalf of the customer to manage negotiations, to get the best price from the manager  and maintain a good relationship with the customer throughout.
  • We do accept that in other businesses the Salesperson is responsible for appraisal and valuation.  This may be due to choice or staff levels, but can make the valuation issue more sensitive as one person is responsible for both elements, and then informing the customer.

Whichever is your operational style, practised and applied properly the appraisal process should be fair, open and transparent, leaving the customer feeling that the amount offered has been fully and fairly considered. For the dealership, the application of a thorough process provides the opportunity to identify any points which can reduce the pre-conceived value the customer may have in their mind and potentially create extra profit in the deal by giving a little less for the part exchange.

Why not take a look at our Business School Virtual Training platform at www.pepbusinessschool.com and check out the 'Sales' programmes? We can help you to become a master of the Appraisal Process!

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