A four square presentation presents four items to your customer:
* Selling Price
* Trade Allowance
* Down Payment
* Monthly Payment
When you have asked your customer for a commitment to purchase pending all terms being agreeable the items in the four square set out those terms. How you present them is almost as important as being able to effectively negotiate if they raise an objection to one of the figures.
When you present the figures to your customer you must do so with confidence. That is difficult to do if you do not understand them yourself. Be certain you do. Ask your manager if you have a question about one of them. Customers like to do business with knowledgeable people. If you appear hesitant or unsure they will perceive it negatively.
After you receive figures from the sales desk make certain you are seated before you say anything. Salespeople often make the mistake of starting the presentation of numbers while they are still moving toward the customer. This creates an uneasy feeling. Use a pen to indicate each of the figures. Speak slowly and clearly, this is not the time for lack of communication.
Your presentation of the four square should sound something like this…
[list:3kahfe2b]"Mr. Customer, this is the selling price of the vehicle you are purchasing. Based on miles, equipment and condition your trade allowance is. Our lenders generally ask for a down payment of (this will be a dollar figure or range of figures)which will set your monthly payments in the range of."[/list:u:3kahfe2b]
Short and to the point. As it is designed to do the four square presentation gets your customer to react to the figures, perhaps more than one. This reaction is what opens the door to negotiation and a successful close based on agreeable terms.
What do I say if they object to one of the figures?
Four Square Presentation – Sales Price
In your four square presentation sales price is the first figure you present. As you know the four square presentation is designed to do two primary things. The first is to get a reaction to one of the figures. The second is to focus your customer’s attention on down payment and monthly payment.
This page deals with sales price. The other figures in the four square presentation have separate pages and can be found at the following links.
* Trade Allowance
* Down Payment
* Monthly Payment
The reaction or objection to the selling price will generally fall into only a handful of responses. The customer will say "the price is too high" or "what’s the invoice" or "I have a better deal at your competition." Let’s begin with the last response.
Whether they do or not is not the question. Your answer to it will make the difference. Many salespeople have received auto dealer sales training that taught them to respond this way…
"So if I could match that deal you’d buy right now?" or a variation on that them. Do not repeat the mistakes of others.
Get the facts before you do anything else. What are the facts you need? The ones your customer will give you. If you ask the right questions during the foursquare presentation sales price may be a figure that’s not a real one.
Customers not only shop different dealerships, they shop different makes. Perhaps the price they have is for a vehicle that does not compare to the make you sell. There is a reason some vehicles are more expensive than others.
Differing traim levels and equipment packages play a huge part in selling price. You cannot by a standard model for the price of the top of the line model. Find out what equipment and trim level they received the price quote on.
* When did they get the price?
Today? Last week? 3 months ago? Things change in the car business. Perhaps the price they have includes a rebate that is no longer in effect. Find out.
* What was the condition?
Maybe they received the price on a hail damaged unit. Maybe is is a demo with lots of miles. Those affect price. Find out if this is the case.
* Did the dealer have the vehicle?
Anyone can price a vehicle that doesn’t exist.
* Was the offer made in writing?
Or was it a "low-ball" price they were given as they left? The customer goes from dealership to dealership and cannot figure out how the first guy was so much cheaper. Of course, when he goes back the story will change.
* If the dealer accepted your offer why didn’t you complete the deal?
Perhaps the price was agreeable but the payments were not acceptable. It may have been interest rate. It may have been the trade allowance they were offered. Find out what prevented them from taking delivery and do not make the same mistake.
The customer who objects to the four square presentation sales price has usually made his mind up to buy. What he fears is paying too much. Find out the facts, work with the desk and turn this customer into a delivery.
Four Square Presentation – Trade in Value
The trade in value a customer receives when purchasing a vehicle creates as much, if not more, confusion as the discussion about dealer invoice on new cars. If you will learn some important principles about what vehicles are really worth it will help you provide better answers for your customers.
First, let’s define what trade in value really means. It is the amount shown on the purchase contract that is deducted as an allowance from the price of the vehicle they are purchasing. Gosh, that’s easy to understand, right? Not always.
There is a difference between trade in allowance and what the vehicle is worth as a cash asset to the dealer. The dealership’s valuation of the vehicle is called Actual Cash Value, or ACV for short. This value is what the dealership will use as their cost when they put it on their books as inventory. During the buying process the used car manager of the dealership will evaluate the customer’s trade in. Based on valuation guides such as NADA Value, Kelly Blue Book, Black Book, Auto auction reports,etc. the dollar amount is set.
Included in the used car manager’s decision about value will be vehicle condition, mileage, optional equipment, color and market conditions for demand. My purpose here is not to educate you on how to appraise a used vehicle. Just some information about how the ACV figure is arrived at. Now it is time for some simple arithmetic.
If the used car manager sets the ACV of a vehicle at $10,000.00 and the customer receives a trade in value, or allowance, of $11,000.00 the customer has actually received a discount of $1,000.00 from the selling price of the vehicle they are purchasing. This is known as an over allowance. Any amount given to the customer as trade in allowance that is more than the ACV is an over allowance, which translates into a discount from the selling price.
Now, let’s go back to the trade in value and look at it from the perspective of your customer. First, it is their vehicle. They liked it enough to buy it. They have driven it for some time. It has been part of their family. They have even given it a name. Trading it in is an emotional experience for them. What they think it is worth has some emotional value. To the dealer their vehicle is simply a commodity. Is it any wonder that the value of the customer’s vehicle, in their mind, might be more than what it is really worth when you consider their emotional attachment to it?
Earlier I told you how the used car manager sets trade in value. Let’s examine how the majority of your customers set the value of their vehicle.
* They look in the newspaper
* They call their bank or credit union and ask for NADA value
* They saw one like it for sale somewhere
* They have a loan on it and it’s got to be worth at least that amount
As you consider each of these valuation methods think about how easy it is for a customer to arrive at a figure that may be unrealistic. Start with looking in the newspaper.
There are usually two types of vehicle for sale ads. Those placed by dealerships and those place by private sellers. Because of the cost of ads the descriptions are abbreviated and advertisers use as few words as possible. So, we look at the ad and what we do not see are generally items like mileage and condition. (An unusually low price will indicate high miles or poor condition.)Your customer will look for the highest price to set their value. Without looking at the vehicle offered for sale, driving it or assessing the mechanical condition they will assume their vehicle is the same.
Your customer may ask their lending institution to help them set the value based on blue book or NADA values. Because of their emotional attachment they think their vehicle is extra clean. In reality, very few vehicles fall into this category. Without driving the vehicle, assessing reconditioning costs or considering market conditions it is almost impossible to determine the value of a vehicle using only a book.
DO NOT use the argument so many salespeople have that offends customers.
I have heard salespeople say, "If your bank thinks it’s worth that have them write you a check." You might think this answer is cute but remember, the customer, at this point, trusts their bank more than you. Granted, the bank is not in the car business and dealers don’t tell them what interest rates to charge but if you try this tact you will alienate your customer.
Four Square Presentation – Down Payment
Down payment is another term of sale that you will negotiate with your customer. Understanding why it is important and being able to show your customer the benefit of putting cash down will help you sell more cars.
Why is it so important? There are really several reasons. First, it will make it easier for a lender to approve the loan. This is especially true if your customer has, for some reason, less than great credit.
The next benefit to the customer is saving money on finance charges. True cost of ownership isn’t always about selling price. When a customer makes a cash down payment they are also reducing the amount financed. When time comes to trade again they have reduced the chance they will have negative equity.
Does every customer have to put money down? No, people with good credit can often buy a vehicle with no cash out of pocket. Your job is not to tell a customer what to do. Your job is to show them the benefit of doing so and let them choose what is best for them.
The next benefit of a cash down payment is that by reducing the amount financed the monthly payment will be lowered. Your customers will understand this benefit if you will show them.
How do you ask for a down payment? Here is a word script to help you.
[list:3kahfe2b]"Mr. Customer, as you know down payment affects monthly payment. In order to keep your payments as close to your perfect figure as possible, how much can you put down today?"[/list:u:3kahfe2b]
This is the typical customer response…"If I put down $$$$$ what would my payments be?"
Don’t answer the customer with a dollar amount. You are locking your customer down on a figure. It usually sounds like this, "Oh, for every $1,000 you put down the payment changes by about $20-25 dollars a month."
Why not try this instead. "Mr. Customer I am not sure. I am going to ask my supervisor to refigure the payment with ($$$$$) down. While I am gone would you do me a favor and consider giving me some additonal help on down payment in order to stay closer to your perfect monthly payment? Thanks, I’ll be right back."
Four Square Presentation – Monthly Payment
In a four square presentation monthly payment, for most customers, is the bottom line. People are conditioned by advertising to ask "How much down and how much per month?" The four square presentation is designed to focus the customer on this concept. The payment is only one item you will present during your four square presentation. The other three are discussed at the following links.
* Selling Price
* Trade Allowance
* Down Payment
During a four square presentation monthly payment objections are typical. The payments are too high. Or they should be. Why? Because good sales managers know to pencil the first payment based on short term. Offering the customer a 60 or 72 month payment on the first pencil leads to lowered gross profit. Why?
If the payment is too high on an extended term the only way to lower the payment is to either get more cash down, raise the trade allowance or lower the selling price.
Unless the customer increases the down payment the other options result in a reduced selling price.
This is another place where we will take a side-step. One of the questions the four square monthly payment presentation raises is this…
What’s the interest rate?
Most salepeople fumble this question by saying too much or too little. Either one is not the right approach. One only raises additional questions and the other appears to be evasive. Answer the question and move forward by using this statement.
[list:3kahfe2b]“Mr. Customer, the rate is set by the lender based on several things. The amount you are financing, the initial down payment and how long you choose to finance your vehicle. My business office will explain the lenders guidelines to you and then the decision of what is best for you is all your’s. I know they have some great options available because nearly all my customers choose to finance here at the dealership.”[/list:u:3kahfe2b]
Don’t forget to ask for the business at this point…"So, Mr. Customer, it sounds to me as if the other figures are agreeable. Let me commit them to paper and my business office will answer your interest rate question." Now you can either prepare the paperwork or answer any other objections.
OK, back to the four square presentation monthly payment. In step 2 of the road to a sale you found out what the customer’s current payment is on their trade-in, right? Here is why it was important to find it out. Let’s use a hypothetical.
Say their current payment is $350 . The payment you showed them on your four square is $550 . As you present the number instead of saying five hundred fifty why not say…"your payment is only 5 or 6 dollars a day more than your current payment." Sounds smaller than $550, doesn’t it?
Equate the difference in payment to the smallest daily amount…"It’s only the price of a soda pop and candy bar a day more than you are paying now."