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Rodney Koop on HVAC Pricing: Big Shot Nissan Exec Tells All

Even the auto industry uses menu pricing. If and when a menu is presented to customers, a sale is more likely.

I recently received a flyer from our brand-new Nissan dealer here in Dalton, Georgia. It said, “Preferred customer only special sale.” You know, the one with, “Bring this letter in to see if you won the big deal-of-the-day prize.” I’m not sure why I qualified to be a “preferred customer,” but I think it’s because I have a mailbox, and that’s where I found the brightly colored flyer.

There were lots of pictures of lovely Nissan cars and trucks and even smiling salespeople just waiting to give me sweet rides in air-conditioned vehicles. Well, the thing that really caught my eye was the announcement that Nissan executives would be on site making drop-dead deals. I wasn't too desperate for a car, but I had been thinking about replacing my aging 2003 Yukon with right at 250,000 gentle miles on the odometer, and my 1998 F-150 pickup was burning out its wiring harness with little puffs of smoke under the hood every time I tried to use it. So, I guess I was a pretty good prospect. And I guess it’s fair to say I was at least looking.

In skilled trades, we are still wondering if we should install equipment that our customer purchased online. That’s why I am a close observer of car dealers. What they do today, I need to be prepared to do tomorrow.

But let me tell you why I get excited every time I see a flyer saying the “big-shot auto executives are going to be in town.” The skilled trades industries and really everyone who is working in home services need to watch closely what happens with our big automotive brothers. Recent headlines read like, “Auto dealers are finding that if they don’t provide 24/7 online sales, help, advice, inventories, sales information, that they will be left behind.” In skilled trades, we are still wondering if we should install equipment that our customer purchased online. That’s why I am a close observer of car dealers. What they do today, I need to be prepared to do tomorrow.

Having said all that, let’s get back to the big-shot executives. You can see that if they like to talk (and you know very well they do), it is a place to find out what’s going on in their kind of business. Asking questions is how I learn, and asking big-shot car executives is one of the easiest ways I know to look into the world of billion-dollar retail expertise. I saw a book once with the title, “Everything I need to know I learned in kindergarten.” Well if I write another book, I might call it, “Everything I know about selling I learned at the car dealership!”

 

The auto industry extrapolates every detail of customer response that they can find.

 

The thing about the auto industry is that they extrapolate every detail of customer response that they can find. They hire very expensive marketing experts to run surveys and tests. They analyze every component of an auto dealer, the customer, the distributer and their corporate empires to find out what works and what is keeping people from buying their cars.

So, holding my possible winning flyer in my hand, off I went to the big Nissan dealer and test-drove two vehicles, the first a Nissan Titan pickup. I couldn't figure out the sound system or the heater, so I gave up on that. Then I drove a new Nissan Armada and wow, what a great car! I fell in love with it and could have been tempted to buy it, but it was two-wheel drive. I insist on four-wheel drive.

But here's the kicker: I sat with the salesman long enough for him to turn me over to the “Big-Shot Nissan Executive here for one day only to make drop-dead deals.” That guy was worth talking to. He was ready to give me $10,000 off (I hadn't even asked for it), but we got to talking shop, and shop for me is menu pricing. I told him I was impressed that auto dealers had adopted an amazing menu pricing system in their finance and insurance departments.

Get ready for it. He told me the reason the menu (option) system was instituted in the F&I departments of all auto dealerships is because high-level, career-level, college-educated, six-figure-income-generating, F&I managers just cannot be trusted to give options on financing and insurance to every customer who buys a car.

So, they took out the sales training and printed a menu. LOL! Genius, right? And by my latest research, responsible for 27% of the dealership’s net profit. Second only to — you guessed it — the service department.

Three weeks later, I found the car of my dreams, a 2015 GMC Yukon XL with 30,000 miles on it for $41,000, located on the used car lot of a Ford dealership. I bought the car, had $10,000 to put down on it, but guess what. The F&I manager was evidently so impressed with my humorous banter that he did not even show me his menu of financing and insurance options. After the paperwork was done, I asked him why he didn’t show me the options. He said he usually does, but for some reason didn’t think I’d be interested. LOL! I guess it’s time for someone to do a ride-along with him, right?

Rodney Koop

Pricing enthusiast Rodney Koop is the founder and CEO of The New Flat Rate, a home service menu-selling system designed to put profit directly into the hands of plumbing, electrical, and HVAC contractors.

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