You could describe Martin Freeman as a poacher turned gamekeeper. A car and bike salesman, who has worked for some of the biggest dealer groups. BikeSocial persuaded him to talk us through some of the stuff that we, as customers never get to see. How does a dealership work, where are the opportunities for a dealer to make money and what does that mean for the customer?
How can you walk in and strike the best deal the next time you’re buying a new or used bike. What are the tricks of the trade and how we can all get the best deal?
“You judge everyone the same. Alaways. It doesn’t matter what they look like These people are in ‘leisure mode’. If that’s me it’s an Iron Maiden t-shirt and a pair of jeans and I’ve met millionaires who look exactly the same. So I treat everyone with a proper meet and greet and get to know my customer. It might be somebody turning up on a Fireblade who’s looking for a Panigale so he’s in his one-piece race leathers or a couple who are looking for a big BMW for touring. This is about the salesman sitting down and listening to what the customer wants out of their biking experience and then hopefully starting to structure a transaction that’s beneficial to the dealer but also to the customer. A smart salesman knows that this is more than just a quick sale - you want that customer to recommend you and also return in the future to buy another bike.
“We live in a world where bad news spreads easily and we Brits aren’t always as good at shouting about a good experience. You’ve only got to look at forums and social media to find the bad reports
I want to build a relationship with the customer because I want the customer to come back, not just to this dealer, but to me, personally. If I’m still at the dealership in a couple of years when they want to renew, I want them to walk through the door and say “Is Martin Freeman in? He looked after me last time.”
“People buy from people. I have several customers from cars and bikes that I’ve retained as friends and I’m proud of that relationship.”
“Nine times out of 10 you get, “I’m just browsing”, even before you’ve spoken to the customer. People are apprehensive of the hard-sell when they walk in the dealership.
“You get the Sunday crowd that like to come and have a wander because a bike dealer is a social place. Then you get the ones who want to do a deal. My advice is just be honest. Nine times out of ten we know what we want, we’ve seen it on the dealer’s website and what we want is to have a look without the pressure of a salesman. So be upfront with the salesman and say “I’ve seen x,y or z on your website, I want to have a little look at it, can you tell me where it is please? Just give me five minutes and I’ll give you a shout.”
“Buying a bike is something we do from the heart, it’s an emotional purchase, unlike a car which is more of a necessity. So it’s a kind of a different set of rules and emotions get involved through that process.
“That salesman wants to sell you a bike because that’s what pays his mortgage, so be open with him. He’s the one that will get you the best deal, so you want him on your side. If he’s worth his salt he’ll know when someone wants to talk because they make eye contact.
Don’t forget that we are usually riders too. We get it, and are as nuts about the bikes as your are.”
“New bikes sold on PCP are a very good thing. Partly because the deals are structured to move a customer up the range with every purchase. They promote brand loyalty and ensure a regular stock of good used bikes.
“Contrary to popular beliefs the margins across used bikes are very low, it’s a fiercely competitive market out there. If you’ve done your homework right and you’ve struck a decent deal on a part-exchange or been smart at an auction then you can make some money back. Most of the money comes from finance. Some people think that’s a dirty word, but you have fund your bike somehow and cash isn’t always best. Here’s why.”
“Is that cash going be from your savings or have you got a bank loan? There’s still a perception that dealer supplied finance is massively expensive. The reality can be different. There isn’t a one-size fits all (but that’s true for bank loans too whatever the advertised rate might suggest).
Any dealer will try and finance a bike because as with any financial product there’s a commission. If someone says, ‘there’s my £5k, I’ll take it now’, the dealer only has the margin in the bike, he’s missed the opportunity for extra bits.
“The good thing about dealer supplied packages is that they are invariably from either the manufacturer’s own in-house finance facility or a specialist like Black Horse. The advantage here is that, let’s say you take the PCP route, the finance company then have an interest in that bike. So if something goes wrong with the bike, you’ve got this company on your side who have a financial interest in the bike. If the dealer isn’t playing ball, the finance company will get involved and say, “hang on, we own part of that and we would like it fixed”, so you’ve got a lot more back-up than you would have than funding it through a bank loan.”
“PCP works well for those people who change their bikes often and like to have the latest spec. For those who keep their bike for 5 years or more it doesn’t work as well. In theory, providing the maths are done right (and the finance companies have clever algorithms to work this out), when you go back to trade in at the end of the term, the final agreed value is less than what the bike is actually worth and you’ve just generated your deposit to buy your next bike. The idea of a PCP all the way along is to generate good quality used stock because the dealer has just taken in your two-year old bike. He’s then got a beautiful bike to put out on his forecourt with a second chance to sell that bike to a customer with a finance package, with any add-ons and accessories. Plus, he’s giving his service department the chance to carry on servicing that bike for another customer.”
“Don’t get hung up on the part exchange offer, look at the bigger picture. What people don’t realise is what goes on behind the scenes in a dealer when a customer trades a bike in. In order for that dealer to re-sell it, the bike has to go through the workshop because you wouldn’t want to buy a used bike for £5000 that’s not been checked by a professional. It may need a service or set of tyres, all these things add up. The salesman should have taken that into account in the part-exchange price, but ultimately the service department is going to charge the sales department for service, tyres, MoT etc.
“You wouldn’t buy a used bike without some form of warranty or a guarantee (there’s a difference) so somewhere along the line that’s got to be factored in because, depending on the bike, an aftermarket warranty (essentially an insurance product) can be expensive. Then there’s the premises, business rates, water rates, heating, wages and advertising costs. So, by the time a dealer puts the bike he gave you £3000 for on sale at £5000, it’s probably cost him at least £4000. And then, of the profit you make on what’s left, the government takes 20 per cent as VAT. All the above costs means a dealer probably makes about £500-600 of that £2k price difference.
Where the dealer can claw some profit back is in those little pots of money from finance or warranty sales and some of that can be passed back to the customer.”
“GAP (Guaranteed Asset Protection) Insurance is one example. Let’s say you buy a brand new bike on finance and then write it off a month later. Your insurance will pay to put you back in the position you were in before the accident. But everyone knows a bike loses a huge chunk of money the minute you ride out of the showroom. So, one month in to a finance agreement, the payout you get might be enough to buy a replacement ‘one-month-old’ bike, but not be enough to settle the finance on the old one. If you’ve got a fairly stacked-up HP agreement this is where Guaranteed Asset Protection comes in. Not a lot of salespeople sit down and go through the pros and cons. Each product has a feature and you’ve got to explain that benefit to the customer and let them decide if they want it.
“The current Financial Conduct Authority (FCA) rules say that we have to Treat Customers Fairly (TCF) and everybody has the right to have an explanation of a product and can go away and think about it. Yes, we’re excited about a purchase that we’re trying to make and they just go yes or no. And people do say no because they just perceive it as just another add-on product, it’s another way of getting my money.
“If the products are explained properly then why wouldn’t you have it? If you’re spending £15-20k on the latest BMW, Ducati or Harley-Davidson, that’s a huge purchase. You’re then putting a finance agreement on it to fund that purchase and if something happens to that bike can you call upon your reserves to pay that off? This is where GAP kicks in. And there are many levels of GAP so you need a salesman to ensure you have the right level. Sit down and listen to what the dealer says and make your choice, don’t see it as another way of having money extracted out of your wallet.”
“Each customer is different. Tyre insurance, for instance. Bike tyres are expensive, not everybody can afford to go out and fit the latest super sticky tyres if they get a puncture. It’s about explaining it to the customer and letting the customer make their own informed choice as to whether it’s a benefit to them.
“Likewise paint protection. Bikes are a purchase from the heart and we love to polish them and clean them. But some people don’t and why wouldn’t they have paint protection. So again, is it a product that is beneficial to the customer? It’s about creating an informed choice for the customer.”
“The dealership want a bike in, out and gone in the quickest time possible. Invariably a dealer will have some form of funding plan going on behind the scenes that pays for all their used stock with an interest-free period and then charges after a certain time.
“So you can play a waiting game, the longer a bike is in stock the more the dealer is going to look at his pricing. But remember, they have to make money too. Some dealer groups price to the market, so you know the bike is the lowest like-for-like price out there. In which case there’s no argument, The dealer’s always going to say, “the only reason you’re here is because you know this is the best priced bike out there.”
“Because I’ll have done my research and I just want to buy it. My considerations are…
Do I want to do a business transaction with Joe Bloggs working out of a backstreet garage that might not be here this time next week? Or would I prefer a professional dealership that that makes me feel welcome and puts me at ease. Is the service department a good one? Check the online reviews.
“As a customer I see one salesperson but he sees hundreds of customers. Is he looking after me, is he welcoming, is his manner with me conducive to me spending my money? I’ve walked out of numerous car and bike dealers because somebody’s pounced on me and they’ve started ‘bang, bang, bang’ straight away. I’m left thinking ‘Hang on a minute, have you had a bad weekend? Have you not sold anything? Am I your last chance saloon?’
“If the dealer is pricing to a market and you know that’s their policy then it’s pointless trying to get money off a bike because they aren’t going to move. And you’ve proved to them that by walking in, and the further you’ve travelled the more you have proved to them, that you’re going to buy it anyway. So I will look for other things – can I do something on the finance, can I do something on an insurance product, can I do something on accessories? Do I want a top box fitting or heated grips? These are the things a dealer could have some movement on. Sometimes it’ll be no, but persistency will pay off.
“Remember, when that bike is sold apart from all those things we’ve discussed like warranties, services and MOTs, we’ve got to pay the salesman his wage and the dealership has got to be paid for. There’s a lot of people behind-the-scenes in the dealerships who do the admin work, who do the providence checks on that bike because you’re not going to want to buy a bike that’s not had a thorough check of its entire life. There are delivery drivers, valeters, technicians in the workshop so there’s a lot going on behind-the-scenes so when you’re only playing with very small margins in hundreds of pounds, it’s fine if you’re going out to buy a Porsche, you might have a fair chunk of money to move about but in the bike world there are some very tight margins because everyone wants a slice of that pie.”