Opinions & Advice

Evil Dealers and the Slaughter of the Innocents

Why do they WANT TO NEGOTIATE before they buy?

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)


What do you think?

"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.
  • A
  • December 4, 2010
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.
I love the video...
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    Scott Hengtgen
  • December 4, 2010
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.
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: <a href="http://www.vauto.com/company/news-resources/webinars.aspx" rel="nofollow">http://www.vauto.com/company/news-resources/webin...</a> Dale&#039;s not selling anything here and neither am I. There&#039;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 &quot;WIN&quot; without any negotiation, you&#039;ve both won.
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.

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: &quot;Buyers AREN&#039;T liars; we make them lie.&quot;

You ask why buyers feel the need to negotiate if they have all the tools and then answer your own question with: &quot;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.&quot;

&quot;Because they are programmed to...&quot; Why programmed them to be like this? Oh, that&#039;s right...we did. Not you and I necessarily but many of our predecessors who really did act like the cast of Used Cars.

&quot;Because they want to...&quot; 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&#039;s perspective they feel like someone has to get their ass kicked in a dealership transaction and they don&#039;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&#039;t beat up the clerk at Starbucks on their overpriced cappuccino do they? That&#039;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&#039;t necessarily believe we can do the same in the dealership (hence Saturn being gone) but I think you see where I&#039;m going.

Finally their &quot;task is to work the seller&quot;. I think it&#039;s less about them &#039;feeling tasked to work the seller&#039; 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&#039;t be popular but I&#039;d be less than honest if I didn&#039;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&#039;d all be selling more cars and probably have a stronger repeat and referral business.

The customer is our life&#039;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.
We have no doubt conditioned the consumer. It&#039;s why we do 40% of our business the last week of the month. it&#039;s amazing.

&quot;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.&quot; I like that Scott!

&quot;To use documentation to REPLACE negotiation.&quot; This is where it&#039;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 &quot;too much information&quot;. And to them, this documentation IS too much information. I was just having this conversation with one of the my dealers last week.

&quot;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&hellip;we&rsquo;d all be selling more cars and probably have a stronger repeat and referral business.&quot; 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.
  • T
    Tom Campbell
  • December 6, 2010
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.

I agree with your statement completely. However, I think the reason we &#039;bend over backward&#039; is because something hiccuped along the way in the process. Let&#039;s face it, if the customer likes us, they don&#039;t slaughter us in the surveys. If they slaughter us on CSI we can do one of two things:

Say &quot;what a jerk, he/she was nice in person but obviously an awful customer blah blah blah...&quot;

Or, we can get a mirror and say: &quot;How do I prevent this from happening again?&quot;

My point is this: if we take responsibility we will sell more.
  • J
    Jeff Kershner
  • December 6, 2010
Matt, as hard as it is to understand, you&#039;re totally right. Take responsibility for everything that happens. Everything. It takes a while to grasp this concept (heck, I still have remind myself) but once you do, it helps you grow not only professionally but on a personal level as well. It&#039;s what also makes for great leadership.
What a fantastic discussion! The need for accountability, as so correctly pointed out by Mat and Jeff, is not going to go away. When Scott says, &quot;The customer learned from the best&hellip;the dealership personnel,&quot; let&#039;s recognize that the past-tense nature does not mean the retail sales habits of yesterday. It means the retail habits so many people are exposed to the first time they buy a car on their own.

Young people are often so worried about getting financed they can&#039;t keep up with the ink flying on the four-square sheet. The average age among auto salespeople is considerably higher than it is at BestBuy. For many, it is the first significant transaction they ever make with a much older person. They often listen to the nice old man the way they were taught to and get lied to up one side and down the other.

The art and practice of screwing young people is alive and well. The repercussions will last long after the practice has ended. At too many stores, the end has not even begun. Knock it out of the park with great social media and demonstrations of value and honesty. That is the way to kill this beast.
Well put Dennis :) It&#039;s funny that you bring up the four-square because I kid you not I saw more than one dealer in the past two weeks that was using the same four-square worksheet that I first met in 1993.

And almost verbatim, the manager was telling this poor newbie to start high on the price, low on the trade, short term the payment....blah blah blah.

You can&#039;t ever go wrong when you&#039;re just honestly selling the value of your product.

In 1996 I worked at a Toyota dealer where we had one price used cars. No haggling period. I remember a guy walked on me over $300. I told him all the service and everything else we did to make this car nicer than any other Camry he&#039;d ever find. He left...then 2 1/2 hours later he came back and said, &quot;you stuck to your guns and were willing to let me go so I&#039;m going to trust you...but it damn well better be as nice as you say.&quot;

He bought the car and I made a really good commission, that I felt great about because I knew I was honest with the guy and the car was immaculate; like every car that we had at that particular dealership.

Value is something a customer deserves. Honesty is something a customer deserves. A well trained professional is something a customer deserves.

If a customer arrives angry it may be the last dealer&#039;s fault but if they leave angry...it&#039;s our fault.

(And I know these are things I was reminded of when I had the privilege of working with you Dennis)
  • S
    Scott Hengtgen
  • December 6, 2010
Accountability is a lost art for a lot of dealerships, from the dealer down. Selling a car is really an easy process untill you put the human equation in the mix. So many stores just go nuts when you tell them they should offer all the information a customer needs and wants. If the customer was not committed to buy he would not be at the store. I believe you should write everyone that steps foot on your lot. Don&#039;t be afraid to be different and make the buying process fun for the customer, honest and transparent with real numbers.
Professionals in sales learn to build relationships over time. They know how to under promise and over deliver even in the smallest degree. If there is no relationship building so the customer can feel confident about referring family, co -workers and friends, They feel like another number and act like one. The overall problem is car sales staff get paid for the now, leaving no reason to realize the importance of the later.
  • C
  • December 6, 2010
Dealerships do more than Sell Cars. I have personally experienced on numerous occasions Greed and Dishonesty from the SERVICE departments. Those experiences affect my perception of the dealership as a whole. To be fair however, I have experienced some truly exceptional services visits over the years. There are a few dealerships that I walk into where if I&#039;m told it&#039;s $1000+ dollar repair...I don&#039;t blink an eye. I trust them. Whenever possible I patronize &quot;reward&quot; these dealerships for their honesty and integrity over the years. When buying a vehicle I want the simple truth in the pricing. If the difference between dealer A and dealer B on even &quot;identical&quot; vehicles, I&#039;ll choose the dealer I want to continue to work with over the years...a few hundred dollars isn&#039;t going to change that...but a few thousand dollars difference....
  • A
    Alex Snyder
  • December 7, 2010
Kim - that&#039;s one of, if not the, biggest problems with things today: NOW. It is all about now.

When I was selling cars I was caught-up in the now. It wasn&#039;t until I moved into a management position that I learned to look past now. Once I began thinking about the future I started to grow. Without empowering people to think beyond now, things will never change.

NOW = Arrested Development.
They want to negotiate the price because that&#039;s what car dealers have TRAINED them to do. Since everything&#039;s all about sales and discounts the consumer always thinks that they are getting ripped off if they aren&#039;t negotiating.

The best thing manufacturers could do is just set prices and allow no negotiation. This way the consumer could get re-trained to not worry about getting ripped off and rather choose the car that&#039;s best for them. It would also allow dealers to make a bit more money.
YOU ALL ARE SO SELF-INVOLVED YOU ARE MISSING MY POINT. Roll with me, this&#039;ll be a test in creative thinking.

The universe does not revolve around the earth (even though it looks like it does). Have you ever heard of &quot;Horse-Trading&quot;?

Negotiation characterized by hard bargaining and shrewd exchange

Like dogs that circle before they lay down, we humans have been negotiating, bartering and grinding for thousands and thousands of years (and I am not exaggerating).

Here&#039;s my summary.
We are not the enemy, our CSI is way better than many many industries, buyers by nature are NOT loyal, negotiating is driven by the buyer and buyers negotiate for VERY PRACTICAL REASONS.

Don&#039;t bail on me yet, I&#039;m just getting going!

Do buyers intuitively want to negotiate?
More often than you think! I challenge you, find someone in Real Estate Sales, buy them a drink and listen to them burn your ear off about how shoppers will grind the seller even if the seller is below market. Or, see it on TV. Watch HGTV&#039;s &quot;Property Virgin&quot; (or any other real estate sales show), you&#039;ll watch the noobs AND the veterans grind the sellers.

I challenge you; Look at the video above.... AGAIN.

It was crafted by a vendor who was tired of being GRINDED by buyers. Take off your car-guy hat and think about it.

Don&#039;t get hung up on my use of the word &quot;grind&quot;. Here&#039;s my loose definition of grinding: &quot;questions and posturing coming from buyers with the aim and
purpose to move the price lower&quot; I really should use the term &quot;negotiating&quot;. You understand. Let&rsquo;s move on.

Ok, look at the video above.... YET AGAIN.

Think about how grinding techniques are &quot;out of place&quot; in many retail settings.

Can you see a pattern?
We see negotiation is linked to high dollar transactions AND it&#039;s not limited to Cars. Look a little deeper; did you notice it&#039;s &quot;discovery based&quot; negotiation? Hmmm....

I&#039;ll repeat that!!!
&quot;... did you notice it&#039;s &quot;discovery based&quot; negotiation?&quot;

&quot;...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.&quot;

See how that fits? Price discovery and confidence?

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? People grind (negotiate) for price discovery from the seller. Yes, there are market prices out there but don&#039;t think that market prices from other sellers is ONLY what the buyer is fishing for. What the buyer is looking for is reassurance that they&#039;ve found the sellers unique buy it today number, or, they are looking for that last little personal discount to consummate the deal.

Buyers have a task and that task is to work the seller AND to feel confident that they have done a good job (buying is a task!)

To defend against this BUYERS NEED to &quot;test the seller&quot;, all along the presentation, sellers need to prepare the buyer with word tracks and merchandising tools that prepare the buyer for the &quot;negotiation dead end&quot; that is coming. Remember, Negotiation and emotions are bedfellows. If you don&#039;t &quot;reward&quot; the buyer with a price drop, then expect emotions to rise as the decision point is at hand.

I love your passion which I am guessing you convey with the CAPS-LOCK on. The beauty of this dialogue is that there is room for many opinions.

While I fully agree that consumers feel the need to negotiate I disagree when you say they want to.

Dropping price isn&#039;t a &quot;reward&quot;, it&#039;s either an admission that we don&#039;t believe out product is worth the price (which isn&#039;t always bad if the market justifies a price adjustment) or it&#039;s a lazy salesperson/managers way of &#039;moving iron&#039; to get to the next deal.

Agreeing with Jeff, people want to feel good about their purchase and 90% of that happens in the earlier stages of the sales process.

One last thing, I wouldn&#039;t use Real Estate salespeople as an example of &quot;sales&quot; anything. 90% (I left room for the ones who really are good because there are some) of Real Estate &#039;Professionals&#039; are nothing more than people who list houses and come to work to wait.

If you watch the home sales shows on HGTV you&#039;ll see that most of those people are horrible at presenting a home.

Perhaps the reason we have to drop our prices so often is because we, like the folks on HGTV, have limited product knowledge and our presentation also sounds like &quot;whattya think?&quot;

Tune up the skill and service to our clients an our profits will climb. That&#039;s my 2 cents.
  • S
    Scott Hengtgen
  • December 7, 2010
Joe point will taken (and here comes the but), but research shows that the younger generation does not want to play that game anymore. They just want a fair price, no games and let me buy the car so I can get on with my life. The economy has changed, so has the consumer and the way they want to do business or better yet how they do not want to do business. Everything is changing at a very fast pace. The one&#039;s that do not want to change will feel the pain. If you really want to know what your customers are feeling just ask them. Have the dealer principal, not the management call the customer from the day before that choose not to do business with you and ask them why. Ask them how their visit was and what you can do as the owner to make the experiance better. It just might open one&#039;s eyes.
Awesome Stuff Uncle Joe!
Scott writes:
&quot;...They just want a fair price, no games and let me buy the car so I can get on with my life.&quot;

Scott, your right, but your bias is preventing you from seeing both sides.

Think about it.
Shopper makes a 20-200 mile digital search, they land on YOUR car, they stop in to see you and drive it... they like it... and to our utter surprise the shopper offers a lower price don&#039;t they?

Stop right there! This is irrefutable. Isolate that lower offer and assign responsibility! We&#039;re at this juncture where the real culprit shows up. Whom is it that begins this evil web of negotiations? I ask you, do WE EVIL DEALERS ASK FOR MORE than the advertised price, or, does the SHOPPER WANT IT FOR LESS?

Do you see who is negotiating here? The BUYER is. The dealer has posted a fair price and wants no games.

Simple isn&#039;t it.
Shoppers drive the haggle. Shoppers ask the dealer to reduce his price (profit), so, to make the sale the dealer caves. Dealer replaces the sold unit, rent is still due, taxes need to be paid, payroll needs to be met. Fixed costs are everywhere, so the dealer needs more profit to keep the beast alive. He raises his price. And guess what... if he does, what happens. THE PHONE STOPS RINGING.

The mission of this post was a challenge. A challenge to recognize that the shopper is no innocent lamb being led to slaughter.

I challenge you to GET THAT BLACK CLOUD OF GUILT OFF YOUR HEAD. Its a new internet age, the shopper has every tool needed to find and buy without ever haggling. Period.

They haggle because they want to.
  • M
    Mo Radji
  • December 8, 2010
The failure of this post occurs with the assumption that the customer engages in a one-time transaction.

Loyalty is the key driver to any successful venture.

That said it was pretty funny.
  • A
  • December 9, 2010
When I buy anything over $1000 bucks I always negotiate because I know I usually can. I&#039;m not an &quot;innocent lamb&quot; at all. In the end I would say it&#039;s the classic &quot;ME&quot; syndrome. If I am honest with myself, I know I always want the best product I can get for the cheapest I can get it with the best service I can get. Sometimes I will sacrifice one for the other depending on the relative difference. I&#039;d run if I saw me coming because I know I&#039;m a pain. I think the 10% number that is always quoted for the &quot;tough customers&quot; is increasing. Just because a person does not have a type &#039;A&#039; personality and is polite does not remove this from this so called 10% number. The &quot;nicest&quot; most unassuming person with a push over personality can now hide behind a keyboard and take on a whole new persona.
Scott writes: &quot;..research shows that the younger generation does not want to play that game anymore.&quot;

Scott, Research made in ANY decade you choose would produce the same results. My generation was unique too! We were all about love, peace, free music and give a guy your shirt. We all HATED negotiating way back in the day. Scott, EVERY young buck hates this! There is a ton of performance anxiety made worse because we don&#039;t negotiate very often, the stress can make some people go mad.

Negotiating is a &quot;rite of passage&quot; for ALL of us AND negotiating will be with our biz for as far as my eye can see. Try not to get sucked into the buyers whirlpool of self-doubt. Give them a firm hand to hold onto. Someone is going to make a profit from them, but, can anyone take care of them better than you!??! FIGHT FOR THAT SALE!

Just a lil advice from your ol Uncle Joe
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? People grind (negotiate) for price discovery from the seller. Yes, there are market prices out there but don&rsquo;t think that market prices from other sellers is ONLY what the buyer is fishing for.
  • S
    Scott Hengtgen
  • December 16, 2010
Joe I did a little research for myself. I called 200 people all over the U.S., big cities and small cities. I asked if when buying a car do they like to negotiate? 147 of the people said no. I then ased if they bought their last car at a one price store. Only 17 said they did. Of the people that did not buy from a one price store that said they do not like to negotiate I asked them why. They all said that the one thing that they disliked more then negotiating was paying to much. What I gathered from this is that the pain of paying to much is more then the pain of negotiating. If I had not done this myself I would not of believed it.
  • D
    Donald Pelton
  • December 16, 2010
When I bought my Dodge Neon, I had five thousand dollars to spend. Period. I found the dealer trying to add as much as a thousand dollars worth of extra stuff (Stereo, GPS, Etc., Etc.) to the car&#039;s price after I settled on it, and I had to keep telling him that I had FIVE THOUSAND, NO MORE THAN FIVE THOUSAND, TO SPEND ON THAT CAR. I didn&#039;t need all the additional stuff, nor could I afford all the additional stuff he wanted to add. Right now, there is a hole in the dash where the radio should go, with some wires hanging out of it.
  • C
    Car Owner
  • January 19, 2011
Six months ago I wanted to trade in my vehicle but the offer that dealers I spoke with would have had me upside down more than $3k, so I gave up. I didn&#039;t expect them to take a hit for me. Then last month I tried again, knowing it was worth even less than before. But this time I found a dealer that offered me more than I owed on it. That is a big swing. Like $4k. They also gave me an incredible price on a used vehicle. Were they taking care of me? Sure? Were they losing money on the deal? I doubt it. But there is no mystery to me that there can be a lot of wiggle room when it comes to buying a car. I don&#039;t think this video provides an apples-to-apples analogy. Automobiles, like real estate, can afford negotiation. Small retail products are not in the same class. I also believe that people&#039;s views of dealerships are different from what you suggest because dealers&#039; views of themselves and of their customers has evolved. Of course there are always exceptions, but generally speaking, things have changed, because of Al Gore.

  • J
  • January 20, 2012
Joe Web @dealerknows knocks another one over the fence with: "How to Catch an Internet Customer" http://www.youtube.com/watch?feature=player_embedded&amp;v=_xllgjrgroY