DETROIT – Stair-step incentive programs damage brands by eroding customer trust.
That was the message delivered by National Automobile Dealers Association Chairman Mark Scarpelli during a recent presentation to the Automotive Press Association.
"Any dealer who's had to deal with these programs can tell you that they are not only trust killers, but they're brand killers, too," Scarpelli. "Not being able to offer two customers the same price on the exact same equipped vehicle, just because they came into the dealership on different days of the month, destroys consumer confidence."
Stair-step incentives vary between dealerships, creating confusing about pricing.
"In a world where customers rightfully expect fairness and transparency in price, why do so many manufactures still deploy unfair marketing strategies that produce huge discrepancies in price between various customers – discrepancies that aren't transparent, that can't be explained rationally, and that run afoul of everything our customers really care about?" Scarpelli said.
"Shoppers of brands that use stair-step incentive programs see large discrepancies in price for the same or similar vehicles across different dealers. Or, worse, at the same dealer, but at different points in time. Or, even worse still, a discount applied to a vehicle they don't want, but that can't be applied to a vehicle they do want."
Scarpelli said the lack of consistency, transparency, and explanation is leading directly to a lack of trust in both the individual dealer and the industry as a whole.
"Over time, the consumer's lack of loyalty to the brand will lead to less consumer demand for that brand,” he said.
The 2017 NADA Chairman added that he hopes to continue having constructive conversations with manufacturers about this issue.
"America's dealers and manufacturers have the same exact goal – selling our inventory in large volume and at competitive prices. But we believe that goal should be achieved in the right way: Meaning in a way that enhances customer experience, and that maintains the integrity of the brand," Scarpelli said.
"Ours is a symbiotic relationship that has stood the test of time, and that is ready to take on the next 100 years of making and selling cars and trucks – if we let it. And so to our manufacturer partners, I say: Let us be entrepreneurs. We're pretty good at it."