137: 5 Ways to Generate More End User Bidding
There are essentially only two ways to grow your business: get more transactions or get bigger transactions.
For auctioneers, there are two ways to accomplish bigger transactions: book auctions for assets with a higher intrinsic value or create more demand for the assets we already sell.
This is usually the part where a bid caller will interject that an auction inherently creates a higher demand because of the competitive nature of price realization at an auction. I’ve been to enough auctions to know that to be true. At the same time, you and I both know that even this very real dynamic sometimes isn’t enough to achieve reasonable reserves (or decent absolute auction prices). I know this, because—when auction prices don’t match their reasonable estimates—auctioneers turn around and ask me what more we could’ve done to acquire bidders.
Sometimes, the timing is off. By that I mean market conditions don’t match with the seller’s situation or the seller’s schedule. Candidly, there are times when we could have done something more or something better with the advertising budget. Other times, the terms of the auction limit who can bid—attracting the investor class’ cash buyers but not retail consumers.
Consumers outnumber investors. So, if we want more bidders at our auctions to create more demand, it makes sense to pursue end users. Here are several ideas to attract consumers that I’ve seen in the auction industry. Some require significant shifts for the auctioneer, but I’ve heard good results from those who have adopted them.
Implement a “Buy It Now” option.
eBay has been doing this for years and honing how it works. Why? Because consumers often don’t have time to wait for an auction to end. Traditional auctioneers push back against this feature because it bypasses the auction process. Could the item sell higher during the auction process? Sure. Could that purchaser also not participate in the live bidding (and push your other bidders) because their need was satiated by a more prompt option? Yes. Real estate auctioneers advertise “pre-auction offers welcomed” regularly. So, this isn’t a stretch for real estate; and eBay has proven it’s a good fit for personal property. This wouldn’t need to be an option for all items, either. Also, this would make far more sense for online-only auctions where there’s less of a halo effect than at live, on-site auctions. Obviously, special language would need to be crafted in absolute auction contracts unless this is used only in minimum bid/reserve auctions.
Allow item returns.
So much for “as is where is.” This would rock the industry more than a Buy It Now button. That said, I’ve seen it done by an auction company for whom I’ve worked. The returned items get recycled into a subsequent auction, and the consumer gains confidence in their bidding. Obviously, this isn’t for every asset category or even every item within an asset category. For those auction companies who could handle the auction terms and logistics, though, this could gain a higher price ceiling for all items on the aggregate—because consumers wouldn’t be hedging their bets.
Order & publish home inspection reports.
Real estate auction firms around the country are already doing this, but they are in the minority. Even if the terms remain “as is where is,” you can raise the price ceiling by letting the consumer know in advance what issues will need to be addressed. Consumers will compensate for the cost of remedying those issues in their bid, but that compensation will probably be smaller than the hedge on a mystery. Also, this disclosure is a good brand strategy to developing trust in the marketplace. I doubt home inspections are cheap. The question—after your own property evaluation—is whether or not it would pay for itself.
Advertise where consumers congregate.
Auctioneers tend to congregate their advertising where other auctioneers advertise. I understand the defense: “We have to be in that paper, because we don’t want people to think we’re doing less business than our competition.” But what if this contest is being held where end users don’t gather? In past auction polling, one auction company for whom I’ve worked found that the paper with the largest circulation in their market brought the fewest bidders and that an inexpensive regional paper brought a lot of bidders—with a much lower budget hit. Let the other companies waste their advertising budgets, competing in empty arenas. Use Google Analytics, Facebook Insights, auction polling, and other analytical tools to find where consumers hear about you; and spend your money there.
Write advertising copy from a consumer perspective.
The vast majority of auctioneers suck at Facebook marketing and design their print media backwards, too. Their marketing message is out of order, emphasizing what’s important to the auctioneer instead of what’s important to the buyer. Consumers are interested in assets they want, not events you’re hosting. So, don’t headline with auction information. Some of the most effective auction advertising doesn’t even use the word auction—or uses it only at the bottom of the advertisement. Why? If a consumer doesn’t want an item, they don’t care that there’s an auction event, let alone what date it is. If they do want that item, where they get it is less important for them that the attributes of the item they want.
The difference between wholesale and retail prices should be enough incentive to investigate changes to our workflow, terms, and marketing. Your path to consumer-driven prices might be on very different paths than these five options. That’s okay. What’s important is that we’re interacting with the marketplace, evaluating our processes based on the feedback we gather, and then making changes to our practices to adapt.
Feature image purchased from iStockPhoto.com. Others linked to sources.