Nobody said reselling used equipment would be a guaranteed avenue for success, and even our most valiant attempts will occasionally beckon to the auction block. But with the right preparation and mentality to sell trade-ins in a timely manner, I think dealerships can find more success than they would lead themselves to believe.
Urgency is a Virtue
In an ideal scenario, the plan to sell a trade-in should start a month or two ahead of the actual transaction occurring. If not, you’re already playing catch up and the attainable margins are deteriorating quickly.
It sounds simple enough, but you’d be amazed at the number of dealerships lacking a basic checklist for getting trade-ins sold. The list, which everybody should have a copy of, breaks down the specified objectives for getting a machine sold as quickly as possible. Sure to be included are inspection/cleanup dates, salesperson notes and technician notes, all updated on a regular basis and helping to ensure the appropriate tasks are going to the appropriate people.
Vital to the success of these checklists are submissions of inspection reports into dealership-wide database systems. In doing so, the submission doubles as a sales tool for employees to be confident about the reconditioning process, especially for multi-store operations.
Spin the Web
The amount of online postings I’ve seen with 3-4 fuzzy pictures on a $300,000 machine is alarming, yet it provides a golden opportunity for dealerships to set themselves apart by doing the exact opposite. Establishing a formidable presence online is so important nowadays that dealerships should strongly consider hiring someone strictly dedicated to web promotion and complete the following:
- A minimum of 10 pictures for all equipment, and 30 or more for larger machines. For any given machine, purchasers can expect to see 40-50 offers across the web, so going great lengths to stand out is necessary. Chief among these efforts includes visible signage in the background of each picture.
- Google keywords. The correct terms can make the difference between top listings vs. ending up on page 4 of a search.
- Facebook Postings. Social media promotions are more about generating engagement and buzz than directly selling the equipment, but it’s still vital for the initial conversation, especially with younger customers.
- 30-45 Second Videos. In an ideal scenario, the videos should feature the former owner of the trade-in to promote how well the machine is taken care of. At minimum, footage describing the machine’s key features should be included.
Don Aberle has been in Titan Machinery’s ag and construction business for 15 years in a variety of management roles. For the last 8 years, he has overseen the Titan Outlet Store, which serves as the last-chance destination to sell used equipment prior to auction. He also serves as used equipment manager for Titan Machinery, which achieved $1.37 billion in total revenue in 2016.
Aberle says dealers need to learn how to NOT send equipment to auction. “As dealers, we need to be more disciplined and aggressive on aged equipment and do our own write-downs and our own aggressive pricing on aged inventory, rather than paying auctioneers to sell our equipment at such large losses,” he says. Once Titan corrects its inventory, which Aberle says they’ve nearly achieved, his job will be to limit the need for auctions.
Be Your Customer
Not lost in the process to establish a viable online presence is the quality of your dealership’s website, from ease of navigation to the reasoning behind content placement. Put yourself in your customer’s shoes and search for every product available. Make a checklist with all of the key ingredients for a perfect website. Included are clearly defined product categories, an abundance of quality pictures and detailed descriptions of each product. When the quality of the site matches the quality of the product post, you’ve entered the right space.
In the spirit of avoiding complacency and personal bias, it never hurts to have as many people as possible run through the website checklist. It can be co-workers, trusted friends/family members or even long-time customers. You won’t receive universal praise or criticism on anything, but the trends will become definitive.
Day 30. With online promotion and prep accounted for, attention can shift back to the real-time aspects of selling the trade-in as quickly as possible. I’ve always believed a trade-in should have a very strong remarketing plan before it is purchased. There’s little shame in still having a trade-in on the lot after a month, but pretending like it’s Day 90 instead of Day 30 can kick your staff into overdrive, helping the chances of getting the machine out by the end of the second month. Vital to keeping a trade-in sale on track is making sure the preliminary steps were accounted for, especially since it’s not uncommon for machines to fall out of priority without reminders. Maintaining priority usually comes back to keeping your database system updated with inspection reports, giving the service staff concrete reconditioning deadlines and the sales staff the details they need.
Complementing inspection updates should be routine in-person reviews with the sales staff on the trade-in, addressing any up front flaws as well as reminders on key features to prove to customers that value remains.
Day 60. At this stage, most trade-ins enter damage control mode. Not only should you be re-running through the steps from Day 30, but the entire marketing and pricing plan will also need an upheaval.
Start from scratch on gauging the market for the machine, revaluating the current economy and how competitors are pricing similar equipment. Valuable research tools in this regard are the online resources like Iron Solutions, Tractor House and Machinery Pete.
Combine price review and the economy with a review of the target demographics. At this point, each sales rep should have already visited 4 or 5 researched leads a month earlier. Follow up with the original set of targets while also taking aggressive action on expanding the base. New leads can stem from customer conversations on unrelated visits, or even through the dealership’s own social media accounts.
Day 90. Trade-ins remaining on the lot for 3 months symbolize a lack of communication. Maybe the sales and service staff were sidetracked by other projects, or maybe the wrong people were targeted during the marketing process. The bottom line is the machine is still there and accountability needs to be taken. In what should be considered the “last swing”before the auction block, start by repeating the market and pricing evaluation process from Day 60.
With little to lose at this point, relocate the machine to an expo room next to other featured equipment or a more visible spot on the lot. At the same time, pay attention to details that may have seemed minuscule earlier on, from laminate on the window to rewashing after a storm.
A reconditioning checkup can make the difference as well. Perhaps a flaw in the machine was overlooked, or a previously detected problem not deemed to be worth fixing before warrants consideration now. Waiting until Day 90 to make a reconditioning investment obviously isn’t ideal, but it’s still better than going to auction. I’ve seen plenty of machines sell in the 11th hour because touch-ups were made. Another strategy is a sales team contest. Creativity is encouraged for incentives, from extra vacation days to bonuses fluctuating by quickness of the sale. Dealers can use the contest as part of the “last swing” process, but it never hurts to start these competitions from the start.
If nothing comes to fruition, reach out to brokers or jockeys that likely have connections you don’t have. The jockey will ultimately take a cut of the sale, but the remaining margin still trumps most auction transactions. If even those efforts come up short, accept defeat and send the machine to auction. Sure it sounds harsh and abrupt, but we’ve all had inventory for a year or more, and those machines don’t get any more valuable as dust accumulates.
Above all else, establish a resilient culture throughout your dealer group and transform shortcoming into future opportunity. No dealership has ever batted 1,000. Regardless of how good you think your turnover process is, there will inevitably be some duds.
Hedging Your Bets
A successful strategy that I would strongly recommend is a margin allocation program, which allows for damage control on aged equipment. Take a 1% cut from every deal made at the dealership and place it in a separate account. Since it’s a small cut, the real-time margin hit is hardly noticeable, yet eventually those increments add up to help with equipment write-downs and other compromises for aged trade-ins. At the same time, that saved money can go toward eye-popping incentives for any sales contests.
While not an option for every dealership, an outlet facility can be the true last-ditch effort before sending machines to auction. In addition to being an alternative customer buying experience, when too many of the same model are in stock or equipment just became aged, the outlet store serves as a trigger point when all else has failed in the turnover process. Whether the outlet team manages the sale or not, it at least serves as an additional resource for the primary locations. There’s little flexibility to negotiate price at that point. Yet similar to resorting to a jockey, the attainable deal will beat the auction block more often than not.