2 Tactics You Should Use to Create the Perception of Low Price in Your Dealership

Customers don't want to pay too much. This is true to all industries and all countries. That's why the perception of low price is more important and dramatically more profitable to your business than having the actual lowest price.

WalMart, for instance figured this out a long time ago, and is the largest retailer in the country. Amazon's also figured it out, and last year it cracked the list of the top ten largest retailers in the U.S., as both the only pure-play Internet retailer among and the fastest-growing of the top ten.

A recent research paper earlier this year revealed a key detail of Amazon's strategy of consistently featuring very low prices on popular, frequently searched items especially during high-intensity shopping periods like Black Friday and Cyber Monday; it is much less diligent about maintaining price leadership on non-peak items during non-peak shopping periods.

For example, Amazon may drop the price on a flat screen TV to $250 during Black Friday weekend, but actually raise prices on cables and other related accessories, which are less likely candidates for comparison shopping. The marquee price of $250 on the flat screen is what shoppers will remember, and anchors the perception of low price in buyers' minds.

This technique isn't just limited to retailers; I'll tell you who else has figured out how to present the perception of low price: third-party automotive lead providers. And Cars.com, TrueCar, AutoTrader, Edmunds, and all the rest have an even better trick than Amazon. They don't have to worry about juggling peak times and which cars are being most frequently searched online. They spend hundreds of millions of dollars a year on advertising to build their brand, their image, and the perception of low price for themselves. That's easy to do when you have dealers lined up to slash prices, eliminate profit, and write you a big, fat check every month for the privilege.

But dealers can start building the perception of low price for their stores and slice the lead providers a smaller piece of the pie. In this article I'm going to show you how:

• Reach consumers earlier in the buying cycle.

Over the past few years, the number of dealerships visited by the typical consumer has dropped from half a dozen or more to one or two at best. If you're not telling consumers about your ridiculously low prices before they create their shopping list of dealers, you're not going to be on it, and you'll just become increasingly dependent on third-party lead. The lead providers understand this. You can't turn on the TV without seeing their ads.

The question I get asked by more dealers is: What percentage of my ad budget should be devoted to digital advertising? I don't know what the answer is. But I do know what the answer is not: It is not 100%.

Digital marketing mostly reaches consumers who have already decided to start car shopping. But believe me it's too late for you to build your image. Beat them to the punch, drive traffic to your stores and your website, and build the perception of low price for yourself, not them.

• Use the right words.

If you want people to believe you have the lowest prices, you have to say you have the lowest prices over and over and over again. Repetition is how perception is created, try something like this: "No other dealer beats our prices. NOT A SINGLE ONE"

Offer buyers a low-price guarantee, not a price match. You have to beat your competitors' price. Make them an offer they can't refuse.

Yes, you're going to get burned on it once or twice. But the vast majority of people will never take you up on the offer, and after they're happily behind the wheel of the car of their dreams, their interest in researching and negotiating car prices drops to almost nil.

Advertise ridiculously low prices on your best-selling models. I know it runs counter to everything you learned about supply and demand in Marketing 101. But your best sellers are the models that are getting shopped and searched.

The truth is that most customers end up buying something different than what they were looking for when they walked in the door, so you'll have plenty of opportunities to make a profit. But your best sellers are your bait to get them in the door in the first place. They're how you establish your image as the low price leader.

They're simply your $250 flat screen.