Not sure - do you have an "IN" at Edmunds?Ed how do I get a list of all the participating Dealers?
Thoughts on a big-city test for no-haggle pricing?
- Thread starter ed.brooks
- Start date
- Oct 22, 2012
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- Josh
Had to comment on this.
I have converted a Sales and Management team to Negotiation Free. I must say I had never had to put so much effort into anything in my career. 12 months later I converted it back off NF and our gross went through the roof.
First of all, I was sold on One Price/ Negotiation Free. However it needs to be philosophical to start with and not a business strategy in order to really work long term.
I found that where the failure lies is with consumer ignorance towards the concept. Under One Price 80% of your business will be people that get it, love the increased value of their experience and won't sell you out over as much as $500-$800 dollars. These customers are really loyal as long as the experience remains the same or better. The other 20% of your business with be from "converted" people and people that didn't really care to begin with but thought the price and figures were good. These customer's are a very small segment of the entire consumer base though.
The problem is, your pie is missing the low cost buyer and the all the customers that "loved" their visit, but Dealership Y gave them $500 more for their trade in. The vast majority of consumers do not really get it, it is so easy for another Dealership to pinpoint individual greed factors of the customer, whether it is trade value, interest rates or price. A NF/One Price Dealership can't do this or it will break the integrity of the whole system and it'll fall apart on them.
I have gone with hybrid of this and it gives the ability to have massive value to the consumer and the ability to wiggle when I need to. I'm going to make every single deal I can!
I have converted a Sales and Management team to Negotiation Free. I must say I had never had to put so much effort into anything in my career. 12 months later I converted it back off NF and our gross went through the roof.
First of all, I was sold on One Price/ Negotiation Free. However it needs to be philosophical to start with and not a business strategy in order to really work long term.
I found that where the failure lies is with consumer ignorance towards the concept. Under One Price 80% of your business will be people that get it, love the increased value of their experience and won't sell you out over as much as $500-$800 dollars. These customers are really loyal as long as the experience remains the same or better. The other 20% of your business with be from "converted" people and people that didn't really care to begin with but thought the price and figures were good. These customer's are a very small segment of the entire consumer base though.
The problem is, your pie is missing the low cost buyer and the all the customers that "loved" their visit, but Dealership Y gave them $500 more for their trade in. The vast majority of consumers do not really get it, it is so easy for another Dealership to pinpoint individual greed factors of the customer, whether it is trade value, interest rates or price. A NF/One Price Dealership can't do this or it will break the integrity of the whole system and it'll fall apart on them.
I have gone with hybrid of this and it gives the ability to have massive value to the consumer and the ability to wiggle when I need to. I'm going to make every single deal I can!
- Apr 7, 2009
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- Joe
I'm not sure at all that "Negotiation Free" is the way to go - certainly not for most dealers. I do think radically reducing the amount of negotiation, both in terms of percentage of deals negotiated, and the size of the negotiated discounts makes perfect sense.
This does require pricing cars "to market" and not starting your negotiation at MSRP. This dealer was able to transact 70% of his new car deals at his asking price while increasing volume and PVR.
Check out the discussion at 35:25
This does require pricing cars "to market" and not starting your negotiation at MSRP. This dealer was able to transact 70% of his new car deals at his asking price while increasing volume and PVR.
Check out the discussion at 35:25
- Jan 26, 2013
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- Erik
@Ed Brooks
I am in the process of rolling out this process at my stores where there is virtually no "one price" stores or Market Pricing of "New" Cars.
(in Canada for new this isn't happening at all in my market) (for used, vauto velocity is happening)
I think that based off there being less competition the, 70% of new cars deals will be more like 85% for us and then you will still have 15% grinders/shop till' they drop people. what do you think?
My Question for you which I haven't seen much at all about is having a " lowest price guarantee"
The only thing I have seen or found on this idea is from Route 22 Honda.
http://www.route22honda.com/purepricepromise.htm
It seems like a low risk, high gain offer that customers will appreciate.
Buy from us and if you see the same car advertised or get a written quote signed with deposit (whatever the disclaimer may be within a set time period, same model, +/- 300 miles, same color, vin number shown, not including manufacturer rebates ...etc) we will match or say 110% of difference or something along those lines. basically a feel good guarantee to help gain trust.
Presented by Sales person as: " don't worry Mr. Smith, we have a lowest price guarantee! We price check the competition and then make sure that we are the lowest on average in the market, and if you do see the car for less we will ( either refund you the difference or; refund you 110% of the difference). Mr. Smith, you have nothing to worry about, We want you to feel confident in xyz Manufaturer that you are getting the best deal upfront and that we are going to treat you different from other dealers........etc
The consumer take away: " I don't have to worry because I have a price protection guarantee for the month of March" (I feel at ease that I am not going to get screwed or see the car for less tomorrow in the Newspaper)
Dealer take-away: "once someone has spent 20 hours online shopping the amount of refunds will be minimal because the last thing the customer wants to do is keeping shopping for the car" "bottom line I got the deal and I made X in the front and X in the business office and if 5% of customers comeback its Ok..."
I am in the process of rolling out this process at my stores where there is virtually no "one price" stores or Market Pricing of "New" Cars.
(in Canada for new this isn't happening at all in my market) (for used, vauto velocity is happening)
I think that based off there being less competition the, 70% of new cars deals will be more like 85% for us and then you will still have 15% grinders/shop till' they drop people. what do you think?
My Question for you which I haven't seen much at all about is having a " lowest price guarantee"
The only thing I have seen or found on this idea is from Route 22 Honda.
http://www.route22honda.com/purepricepromise.htm
It seems like a low risk, high gain offer that customers will appreciate.
Buy from us and if you see the same car advertised or get a written quote signed with deposit (whatever the disclaimer may be within a set time period, same model, +/- 300 miles, same color, vin number shown, not including manufacturer rebates ...etc) we will match or say 110% of difference or something along those lines. basically a feel good guarantee to help gain trust.
Presented by Sales person as: " don't worry Mr. Smith, we have a lowest price guarantee! We price check the competition and then make sure that we are the lowest on average in the market, and if you do see the car for less we will ( either refund you the difference or; refund you 110% of the difference). Mr. Smith, you have nothing to worry about, We want you to feel confident in xyz Manufaturer that you are getting the best deal upfront and that we are going to treat you different from other dealers........etc
The consumer take away: " I don't have to worry because I have a price protection guarantee for the month of March" (I feel at ease that I am not going to get screwed or see the car for less tomorrow in the Newspaper)
Dealer take-away: "once someone has spent 20 hours online shopping the amount of refunds will be minimal because the last thing the customer wants to do is keeping shopping for the car" "bottom line I got the deal and I made X in the front and X in the business office and if 5% of customers comeback its Ok..."
- Oct 22, 2012
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- Josh
@ErikJonker
Dealerships that have value based sales staffs that are non-commission do not sit around talking about what vehicle has the most gross, or use words like "mooch", "pounders" or "lay downs". They talk about what neat cool ways to enhance consumer experience when they contact them.
My advice is to not really worry too much about your value based propositions. Just start with some, and through communication with your staff you will improve upon them and create new one's.
Your biggest issue going One Price is to make sure you have a staff that believes in it. Starting with your sales managers. If one sales manager says one thing about "this isn't going to work", or "we would sell more cars if we negotiated" you need to fire them. Non-believers are the cancer of One Price selling and the main reason why it fails. You either are negotiation free or you're not, there isn't any wiggle room there. The first time a manager throws in a bed liner it'll start collapsing on you.
Most dealerships are one price now anyways. Depending on the make that you sell, you need to priced so competitive that there really isn't much negotiation anyways. Selling used cars priced to market should have an average move of less than $250 to make a deal.
This is why I went with a hybrid of negotiation free. It made it so I didn't need to manage the NF part and left the rest to hiring like minded people (usually with zero auto sales experience) and making sure customers experiences are differentiating with us vs the competition.
Dealerships that have value based sales staffs that are non-commission do not sit around talking about what vehicle has the most gross, or use words like "mooch", "pounders" or "lay downs". They talk about what neat cool ways to enhance consumer experience when they contact them.
My advice is to not really worry too much about your value based propositions. Just start with some, and through communication with your staff you will improve upon them and create new one's.
Your biggest issue going One Price is to make sure you have a staff that believes in it. Starting with your sales managers. If one sales manager says one thing about "this isn't going to work", or "we would sell more cars if we negotiated" you need to fire them. Non-believers are the cancer of One Price selling and the main reason why it fails. You either are negotiation free or you're not, there isn't any wiggle room there. The first time a manager throws in a bed liner it'll start collapsing on you.
Most dealerships are one price now anyways. Depending on the make that you sell, you need to priced so competitive that there really isn't much negotiation anyways. Selling used cars priced to market should have an average move of less than $250 to make a deal.
This is why I went with a hybrid of negotiation free. It made it so I didn't need to manage the NF part and left the rest to hiring like minded people (usually with zero auto sales experience) and making sure customers experiences are differentiating with us vs the competition.
- Dec 30, 2009
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- Yago
eBay didn't fail, they connected the car seller with the car buyer, what failed was the part outside eBay when a human started to talk to another human and negotiated.
That didn't happen on most other items. Cars bring the merchant negotiator out of all of us.
- Dec 30, 2009
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- Yago
I don't think is about price, negotiating, or anything close to that.
It is about feeling good about the deal that you got.
Even Amazon plays that. There are thousands of items with an inflated price, I'm talking about $59.95 items at $19.95, so they show a 73%+ discount (imaginative prices) when they were $19.95 from the get go.
It just feels good to buy a good deal.
As a vendor I experience this EVERY DAY:
Dealers: How much is the website?
Me: $800
Dealer: What about $700? (the $100 discount is not based on any scientific of fact that the price should be $700, the whole discount request is just that; I must get a discount).
So as a vendor I've always liked straight talk. This is what I charge-->this is what you get. I don't overprice things, I don't quote things based on who you are, my prices are the same for everyone unless you own 25+ stores so I can multiply things that we do for you. Here is the reality, the $100 make no-difference-to-you, but times 1,000 websites it either allow me to have a 10 people dev team or a 15 people dev team, a 10 people graphics team or a 15 people graphics team. So the difference is I grind every day with the dealers and prioritize things or I provide support on the spot. Dealers screw themselves out of headache-free support for $100/month. Every-day.
So what to do...
Dealers: How much is the website?
Me: $1500
Dealer: What about $800? (still no clue why it needs to be $800)
Me: Yes, we can do that for you because you seem like I great guy (I don't know you actually and I don't want to know you. I just want you to have the best performing website so you sell more cars and make friends around where you live).
Dealer: OK we have a deal (feels good because he got a deal)
We complain about customers buying cars and you do the same when buying anything else. Negotiate for negotiate without reason or understanding of what you get. I hate dealers that negotiate $100 and quickly sign the contract, bad long term business. I love dealers that ask every question, "what do I get for my $800?", and that they look forward with working with your team.
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- Dec 30, 2009
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- Yago
Hey Mr. Berger!
I was there with him and that it correct:
300 dealers in WA
299 negotiate
1 didn't
How do you solve that?
" If the only tool you have is a hammer, to treat everything as if it were a nail."
@yagoparamo -
You deal with dealers every day. Dealers are master negotiators, so negotiation may not be their ONLY tool, but it is their FAVORITE tool.
For many customers negotiation is torture. The only reason those customers used negotiation in the old paradigm, was to feel at least halfway good about the deal (as you state above).
Today, a smart dealer can replace much of this "torture" with documentation to prove that the price is correct and justified. The end result is a customer that feels about the deal AND dramatically reduced negotiation.
@yagoparamo -
You deal with dealers every day. Dealers are master negotiators, so negotiation may not be their ONLY tool, but it is their FAVORITE tool.
For many customers negotiation is torture. The only reason those customers used negotiation in the old paradigm, was to feel at least halfway good about the deal (as you state above).
Today, a smart dealer can replace much of this "torture" with documentation to prove that the price is correct and justified. The end result is a customer that feels about the deal AND dramatically reduced negotiation.
