Jul 19, 2024
If you’re an independent or franchise dealer looking to maximize your bottom line in today’s competitive landscape, you already know how essential used car buying and trade-ins are to your inventory strategy. In previous posts, we’ve talked about the ways Kelley Blue Book® Instant Cash OfferTM can help you source and win those used vehicles, but today we want to talk about the financial side of the equation: How can you be sure Kelley Blue Book Instant Cash Offer is profitable for your business?
Fortunately, Kelley Blue Book Instant Cash Offer is about more than maximizing the value of any particular deal: It’s about maximizing your revenue by streamlining customer acquisition and building a level of predictability into your used car pipeline. In this post, we’ll walk through what that looks like, showing you how Kelley Blue Book Instant Cash Offer helps you create great experiences for customers so you can win their business while growing your revenue.
It’s not hard to see why Kelley Blue Book Instant Cash Offers are attractive to consumers — instead of heading into a dealership blind, they’re able to get a trustworthy, reliable valuation they can use to kick off a sale or trade-in. And from the other side, it’s equally easy to see why some dealers are wary of Instant Cash Offers, since it takes some of their negotiation power away. But that’s a shortsighted viewpoint precisely because your relationships with your customers can be win-win.
Kelley Blue Book Instant Cash Offer is the number-one, most used third-party automotive site to research and shop online as well as the number-one, most used tool for consumers to dispose of their vehicles.1 That means customers are coming in with a baseline of trust for the valuation they have, which puts them at ease and makes them more likely to make a deal with you. And as we’ll see, when you’re sourcing more cars, you’re able to make more money, even if any given deal isn’t one you would have made on your own.
If you get a lot of used cars from auction, you’ve probably noticed that the average quality isn’t as high as the cars you’re able to buy from customers. Of course, you can find great cars at auction, and customer trade-ins aren’t always high-value, but the trend is clear: If you want the highest-quality cars so you can sell for the highest margin, you want to be sourcing as many as you can from your customers.
And as we touched on above, Kelley Blue Book Instant Cash Offer is one of the most powerful tools you have to capture and maintain a steady stream of customers who want to sell and trade in their vehicles with your dealership. In fact, Kelley Blue Book products and tools reach nearly eight in 10 online shoppers, and 75% of consumers who trade in their vehicles use Kelley Blue Book tools at some point during their shopping process.2 That means access to a large audience of sellers, all of whom will be primed to trust your dealership because you gave them a transparent valuation with Kelley Blue Book.
On the topic of getting the best cars directly from customers, Kelley Blue Book Instant Cash Offer gives you some great ways to turn your service lane into an endless source of profitable purchases and trade-ins. It works like this: Whenever an existing customer brings their vehicle in for servicing, your team runs that vehicle through Kelley Blue Book Instant Cash Offer, using that value and your own internal data to identify which cars would be most profitable for you to acquire. You can then approach the customer with a strong offer from a trusted source. And because Kelley Blue Book integrates seamlessly with other Cox Automotive products like Xtime, VinSolutions, and vAuto ProfitTime® GPS, it’s simple to add services that let you access more powerful data and further streamline the service-to-trade-in funnel — each new integration makes Instant Cash Offer more valuable and easier for your dealership to use.
Using Kelley Blue Book Instant Cash Offer to turn your service lanes into a used car pipeline isn’t just about sourcing cars, either — it’s also about building loyalty with customers to make them more valuable over time. Think of it this way: If a customer is using your dealership for service, they already have a high level of trust in your operation. That trust is only reinforced if you’re able to give them a good deal when they’re ready to sell. And when they need to buy or sell again? You can be confident they’ll think of you first, turning what could have been a transactional one-and-done sale into a cycle of customer loyalty to your dealership that benefits you both over years.
Dealerships that use Kelley Blue Book Instant Cash Offer have a 3.2% lower cost to market on vehicles acquired directly from consumers, translating to an average $900 in savings per vehicle.2 This is due to a number of factors, but the primary ones tie into the advantages we’ve already discussed: Because consumers trust Kelley Blue Book Instant Cash Offer valuations, deals are smoother at the outset, and because cars acquired directly from consumers tend to be of higher quality, you’re able to resell them faster and for a better price.
Those aren’t the only ways Kelley Blue Book keeps your costs down. When you start sourcing more of your cars through Instant Cash Offers, you’re cutting out some logistical headaches that come with buying at an auction — not just the money spent on transportation to your lot, but the opportunity cost that comes with owning a vehicle you can’t sell until it arrives. The cars you acquire through Kelley Blue Book Instant Cash Offer are already on your lot, ready to turn around and sell so you can see your revenue fast.
You may be thinking that this is all well and good, but what do you do when a customer comes in with a Kelley Blue Book Instant Cash Offer for a vehicle you don’t think you can retail? This might look like a bind with no good way out — you either take a car you can’t sell or turn away a customer and lose their business.
Fortunately, that’s where Kelley Blue Book® Instant Cash Offer and Upside™ come in: When you integrate Instant Cash Offer with Upside, Kelley Blue Book commits to putting any vehicle you purchase into a competitive wholesale auction where you’re guaranteed to get a minimum price,* plus the lion’s share of any profit above that. That way you can take every car that comes in without worrying whether there’s room on your floor or not, boosting revenue and improving customer satisfaction at the same time.
But what about when there’s a car you really want to get your hands on? Far from tying your hands, Kelley Blue Book Instant Cash Offer gives you tools that make it simple for you to offer those customers more, and even automate your dealership’s Instant Cash Offers to give more attractive prices to specific makes, models, years, or whatever other criteria you want.
Dealer Boost is a free integration for any dealership that already uses Kelley Blue Book Instant Cash Offer, allowing you to get competitive for the most desirable used vehicles you come across, all while giving customers a great experience that leaves them wanting to work with you again.
At the end of the day, Kelley Blue Book Instant Cash Offer is about more than just the price you can get for any given vehicle. It’s about increasing the volume of cars you have to sell in the first place, leveraging Kelley Blue Book’s consumer trust and powerful tools and integrations to get more customers to come to you when they want to get rid of their vehicles. Higher volume means more revenue, and with programs like Upside, you can be sure that you’re making the margin you need, even when you can’t sell a car yourself.
*Upside guarantee minimum price is the minimum price you receive when you sell the vehicle through the Upside marketplace. The minimum price is based on valuations, appraisal data and wholesale market conditions from Manheim and Kelley Blue Book. Plus, you review the minimum set price before you agree to sell. See full details, requirements, and any limitations at: TaketheUpside.com
SOURCES:
- 2023 Cox Automotive Car Buyer Journey Study, Cox Automotive.
- Q4 2023 Consumer Brand Tracker.
