Evil Dealers and the Slaughter of the Innocents

[Guest Poster]

Why do they WANT TO NEGOTIATE before they buy?

Confession:
I am rather new to this biz (2002) and when I got an offer to become the marketing director for a local Chevy Store, I pushed back on the offer. What would I tell my friends?... What would they say? "Look at Joe, he's stepped down to working for a car dealer, the poor guy."

I was self-employed, that's cool! I was living the life, I was pretty damn good at Golf (but never as good as Jerry Thibeau . Working for a Car Dealer was never on my radar. If the offer wasn't eye-popping, I'd NEVER bring myself to "step down" into the den of wolves who devour the meek.

Wow, was I wrong!

I listen to the calls, the emails, the dialogue on the floor and at the desks. The consumer expects and wants a NEGOTIATED discount to purchase a vehicle. Many (but not all) shoppers are out for blood and will "bend the truth" (aka lie cheat and steal) to improve their position.

It didn't take me long to realize the public perception of the evil dealer and the slaughter of the innocent buyer was totally an Urban Legend. The Internet has blown that into million pixels and has arguably tipped the scales in the buyers favor.

But... the legend persists, we've see it all the time. Bloggers and journalists writing about the Evil Car Dealer and how they want to eat your children.

To all these pandering and lazy wordsmiths, I tell you all look around, this is 2011, not 1981. Information is now universal. If a shopper needs to find the lowest price all it takes is a few keystrokes and the shopper can shop every single dealership within 200 miles. Shoppers know dealer invoice. Dealer profits are compressed by the internet. A $35,000 transaction hovers between .0028% over or under invoice. If the shopper has a trade-in, they have 3 different independent valuation guides plus services that can offer them cash on the spot.

If car shoppers have all the tools needed to find the car at the best price, then why do they WANT TO NEGOTIATE before they buy?

Because they are programmed to, because they want to and lastly because they are buyers. Buyers have a task and that task is to work the seller.

Here is a video that sums it all up.

What if car shoppers used car shopper tactics when renting a movie?
(All you vendors out there will like this video too)

I am here to tell the world that BUYERS ARE NOT INNOCENT LITTLE LAMBS, THEY ARE GRINDERS.

What do you think?

 

[Jeff Kershner]

"I listen to the calls, the emails, the dialogue on the floor and at the desks. The consumer expects and wants a NEGOTIATED discount to purchase a vehicle" - Joe, I too listen to 100's of calls throughout a months time and it seems like 70% of consumers give the perception they want to negotiate the price no matter how large of a discount you might already have. Though I'm not sure that's really the case.

When I was on the floor selling, I NEVER lied to a customer but I lost count on how many times I was lied to. But that's the nature of the game I guess. After awhile I expected it.

Keep in mind - the PRICE is really the only "carrot" the customer has to use against us. It's their reflex objection. Learn to take it away from the customer, ignore it and knowing it's one of their very few defenses.

The perceived state of the economy I believe has also influenced the consumer to grind even harder.

I've always said it sure would be nice if vehicle were all one price but there are percentage of consumers that wouldn't know what to do with themselves.

"Buyers are liars" is what my old sales manager used to say...I hated hearing that.

 

[AdamR]

People want the feeling that they are getting a good deal. No matter what information they have, no matter what the price is of the car they probably won't feel like they are getting a good deal unless they haggle. Then it feels like they won.

There are some dirty dealers out there but most are honest. They are just like any other business; they want to make a profit.

What drives me nuts is when people call or email about a vehicle and want a discount before they have even seen the vehicle. Or those who have a "friend" who goes to the auctions and can get them what they want so they will only buy the vehicle you have for X amount. They are liars.

 

[Brian Pasch (blog)]

I love the video...

 

[Scott Hengtgen]

The customer learned from the best...the dealership personel. You just have to remember one thing. When the customer lies to you it is called dealing, when you lie to the customer it is called unfair business practices. Just accept it and go on.

 

[Ed Brooks]

Scott pegged it when he said "The customer learned from the best…the dealership personnel." For years the game was the same all over the country - price high and negotiate down. When the customer was good at negotiation, we made money. When the customer was a bad negotiator, we hit a home run.

So what's changed? Al Gore - Okay, SOMEBODY - invented the internet. Pricing became transparent. Everybody knows everybody's asking prices. Customers, other dealers,everybody! For dealers that continued to price high to leave lots of negotiation room, traffic dried up. For dealers that price to market, there's not much, if any, room for negotiation.

Adam said that customers want the feeling that they are getting a good deal. He's exactly right. They've been taught (by us) that negotiation is the only way to do that. We need to teach them that the world has changed.

Jeff talks about taking away the customer's reflex objection. That also removes their need to negotiate at all, or at least as much.

My boss, Dale Pollak, has been traveling around the country speaking to, and learning from dealers. There are ways to use the transparency of the online market to justify your asking price in advance of any negotiation. To use documentation to REPLACE negotiation.

Dale held a webinar in November titled: Documentation Replaces Negotiation: 4 Easy and Effective Strategies to Improving Gross Profit. The webinar was recorded and is available here: http://www.vauto.com/company/news-resources/webin... Dale's not selling anything here and neither am I. There's no pitch and nothing to buy. The strategies Dale discusses can be implemented by any dealer with the tools they already have.

When you can get a customer to feel that "WIN" without any negotiation, you've both won.

 

[Stan Sher (blog)]

This video was great. To a certain extent I agree with Joe. There is a percentage of people that are like that. It really is a small percentage (around 10% of the customers). It feels like a lot at times. We just need to know proper methods of communication.

 

[Mat Koenig (blog)]

Joe,

First off I have to say that the story was a fun read and I do agree with you...but only partially.

Customers do lie to us but I honestly have to say that I agree with Grant Cardone and something he said a LONG time ago: "Buyers AREN'T liars; we make them lie."

You ask why buyers feel the need to negotiate if they have all the tools and then answer your own question with: "Because they are programmed to, because they want to and lastly because they are buyers. Buyers have a task and that task is to work the seller."

"Because they are programmed to..." Why programmed them to be like this? Oh, that's right...we did. Not you and I necessarily but many of our predecessors who really did act like the cast of Used Cars.

"Because they want to..." I have to call BS on that one. As a whole, buyers HATE negotiating with us, they just feel like they have to. From a buyer's perspective they feel like someone has to get their ass kicked in a dealership transaction and they don't want it to be then...so they put on the gloves and prepare for a fight. Think about it for a moment. They don't beat up the clerk at Starbucks on their overpriced cappuccino do they? That's because Starbucks did a great job at convincing people their product is worth the money and that the price is the price. I don't necessarily believe we can do the same in the dealership (hence Saturn being gone) but I think you see where I'm going.

Finally their "task is to work the seller". I think it's less about them 'feeling tasked to work the seller' and more of a feeling that they need to learn negotiation skills or they feel they will be taken advantage of...by us.

Negotiation for many of us is a skill, a sport...and even an art. Heck, I have to say that I find it fun and look at it as a way to sharpen my skills personally...especially in those moments where I get my ass kicked by a customer.

For the customer though, negotiation is viewed as a necessity in order to get a good deal.

I am sure this last statement won't be popular but I'd be less than honest if I didn't share it so here goes.

If we put more focus on learning to sell the value of our products, dealership and staff and less focus on whining, complaining and being angry with the consumer for adopting our own negotiation tactics...we'd all be selling more cars and probably have a stronger repeat and referral business.

The customer is our life's blood, our income and our future. If we want more of them we just need to learn how to serve them in a way that makes them feel safe enough to stop fighting.

Hence the reason repeat and referral customers are the easiest to close and hold the most profit. If we win their trust by taking care of them right from the start, they will be willing to pay us more for great service in the future.

 

[Jeff Kershner]

We have no doubt conditioned the consumer. It's why we do 40% of our business the last week of the month. it's amazing.

"When the customer lies to you it is called dealing, when you lie to the customer it is called unfair business practices. Just accept it and go on." I like that Scott!

"To use documentation to REPLACE negotiation." This is where it's at but boy do dealers struggle with this. It amazes me as I walk into a dealership how afraid managers are to give out "too much information". And to them, this documentation IS too much information. I was just having this conversation with one of the my dealers last week.

"If we put more focus on learning to sell the value of our products, dealership and staff and less focus on whining, complaining and being angry with the consumer for adopting our own negotiation tactics…we’d all be selling more cars and probably have a stronger repeat and referral business." Nicely said Matt.

In the end people want to feel confident in their purchase. In order to help the customer feel confident, allow them to base their buying decision on facts and not emotion.

 

[Tom Campbell]

I have to disagree with Mat. The customer you do the most for and bend over backwards for is usually the one that rips you a new asscome survey time.