Many times people say they don’t like to negotiate; yet, they still shop around and never pay full MSRP. Most people act in their own best interest. And most people who say they don’t like negotiating, actually still want to.
There are three things you should always listen to in this business:
1. What people say.
2. What people are trying to say.
3. What they really mean.
Often, what people are saying is they ‘hate’ to negotiate. What people are trying to say is they could do without the way auto dealers negotiate and what they really mean is they don’t want to make a mistake.
When people say they don’t like to negotiate, they are trying to say they don’t like the feelings of manipulation that occur when auto dealers overuse the ‘higher authority principle’ of negotiating. In other words, they dislike an improperly used desk system. You can still use a desk system, but you can decrease the back and forth, and keep the customer from feeling manipulated.
The first step is to have a written process that everyone understands. The second step is to make the process the same for each manager and each deal every time. The third step is to train your sales people how to negotiate, handle objections and assist the buyer to finalize a buying decision.
A written, detailed negotiating process that all sales people and managers understand is essential. Many dealerships seem to operate by the seat of their pants when dealing with the negotiating process. All proposals should be started in the same fashion. Although each deal can vary differently as you begin to negotiate, they should all start the same way to eliminate emotional, bad decisions. Having a precise, written and clearly understood process can eliminate different managers from working proposals in completely different directions that confuse sales people. Sales people should know how to handle any and all objections, verbally and written, without having to think or blink.
Sales people often give a proposal and when a customer objects, their first reply is, “Mr. Customer, what figures where you thinking?” Unfortunately, it may be the worst thing that could be said to a customer. Asking a customer what they are thinking without verifying and validating why you asked for what you proposed, will bring an uneasy feeling to the buyer and usually result in one of two answers, both of which aren’t good. The buyer will usually respond with a low-ball offer or say, “You’re the sales person, you tell me.” In this example, a sales person has violated simple rules of negotiating by asking the customer to set the bottom parameter of the negotiations. This usually will create a shopper from a potential buyer, because they can no longer have confidence that they have reached their best and lowest possible deal. Confidence creates the feeling of ‘hope for gain’ and eliminates the emotional fear of making a mistake.
When a customer asks for a lower price, the sales person must validate the MSRP by explaining the value pricing policy. “Mr. Customer, the vehicles are value priced today, which means they have a much smaller and more reasonable markup than in the past, to eliminate the back and forth and bring a more realistic pricing value to the customer.” If the customer persists for discounts, you can offer the potential of an additional percentage discount on the optional equipment of the vehicle. This validates your MSRP proposal and allows the customer to have feelings of victory by gaining a concession while establishing the bottom parameter of negotiations.
All customers are looking to satisfy certain emotions. Knowing how to professionally negotiate can satisfy all the emotions a customer desires and eliminate the negative feelings of manipulation that are prevalent when many customers leave a dealership after a negotiating process.