Best Practices

ALL customers like to NEGOTIATE, Right?

There is a great response to a post in the forums from MitchFlorida that basically says, ‘not all customers are the same.

I agree with the basic premise completely, but I’ll take it a little further…

The exact quote is…

“There are two kind of car buyers: those who like to negotiate and deal, and those who don’t. The former will rarely go to a one-price store unless he can’t find a similar vehicle elsewhere, which is rare.”

I believe that there are infinitely more than two kinds of car buyers…

I’ll submit that the number of buyers that actually like to negotiate is relatively small. The number of buyers who feel that they must negotiate is much larger. In days past, consumers thought the only way of ensuring that they got a fair deal was to negotiate. As the automotive market has become increasingly transparent, the need to negotiate to ensure a fair deal has lessened. Has it?

Mitch goes on to talk about “the less savvy and more profitable non-negotiators.” I’d submit that these buyers may not be less savvy, but rather have different priorities than the folks whose primary goal is attaining the lowest price. They may be very happy trading $12 a month for a considerably more comfortable and stress-free buying process. They may view spending $500 more on a vehicle as a decent trade-off for completing the transaction in less than an hour. On the other hand, if a customer’s priority is to ‘win’, they may be happy to spend hours, maybe even days, negotiating the lowest possible price.

Every customer has a different set of priorities; budget, time, perceived fairness (not wanting to be screwed), avoiding confrontation, LOVING confrontation, etc..

I remember when the 1994 Dodge Ram pickup truck came out. Bob Lutz said that he didn’t need to appeal to everyone. He didn’t want to produce the same truck as GM and Ford. Some folks would hate it, and some folks would love it. I think this is the calculation that one-price stores (think CarMax and Carvana) make. Some folks will hate the idea while some folks love the idea. But love and hate are two examples of passion, and passion sells cars.

I think, for most dealers, reducing and limiting negotiation is the most realistic model rather than strictly one price. Advertising an aggressive price to drive traffic, justifying that price with market data, and if they need to negotiate, doing it within a very narrow window. I think this allows dealers to capture the attention of the widest range of potential buyers. As we enter the era of Digital Retailing, this will be a prerequisite for success.

Having a good feel for the priorities and motivations of your potential customers is one thing that differentiates okay marketers from great marketers.

All opinions expressed are my own. I entered the automotive space almost 25 years ago, working in a declining sector of a decidedly old school indust...