The Selling Cycle - Part IX Negotiate the Deal
When you say to your customer, “How does that sound?” you transition from product presenter to deal negotiator. As the salesperson, you negotiate to maximize your efforts and help your customer secure the unit they want for the terms they negotiate for.
What follows are 20 Rules you can use to Negotiate the Deal.
1) Establish the Deal
The dealership knows the value of their inventory and should set the retail price for every product sold or service performed. When the retailer sets the price for a product or service, the amount the customer is willing to pay for it automatically raises. For example, suppose you see a glass ornament in a store window. You decide to go into the shop and take a closer look. The sales consultant greets you and walks you over to the display case where the ornament is resting. The sales consultant begins by saying,
" The glass orb looks beautiful doesn't it? The artist learned his craft in Italy. He spent over 20 years learning the secrets of glass blowing; then spent another 5 years learning how to mix the pigments in order to capture the rich cobalt blue. The artist signs each piece and each piece is unique. What do you see when you gaze into the ornament? Do you collect items like these?”
While you were outside looking in, you most likely thought the glass ornament was about $50. However, as you listen to the salesperson describe the artist’s education and inspect the quality of craftsmanship, you are not at all surprised to learn that the value of this collectable ornament is $2,100.00. The sales consultant asks,
“How will you be paying for the item?”
When the sales consultant stated the price, he automatically increased your level of acceptance in the value of the product – in this case by $1,000.
2) Name the Negotiation
Many sales consultants believe the negotiations are always about money. In fact, most customers think our prices are fair; only 10% of Americans are true price shoppers. In the big picture that is a relatively small number. As a professional sales consultant in a “closer” role, you must identify the customer’s real issue. Is it terms? Options? Delivery date? Something else?
3) Set the Negotiation Zone
In our Rule 1 scenario, the salesperson presented the price of $2,100. The customer‘s expectation automatically went to $1,000. Therefore, the negotiation zone in this example is the $1,100 difference.
4) Make the Customer Perceive Victory
The customer must feel like the winner and will generally not be satisfied until they think they have achieved victory. In negotiation everyone gives up something so that in the end everyone wins.
5) Acknowledge and Empathize.
Use the power of acknowledgement when addressing the customer’s concerns. Listen and rephrase their concerns into a positive requirement. Say: “I understand how you feel. Many of our customers have felt the same way until they learned _______" Empathy goes a long way in creating a participative relationship with the customer.
6) Allocate Little Numbers/Big Numbers
When money is coming from the customer to the retailer, do not use the word “thousands”. Say instead: “The price of your new unit is forty three nine.” When money is flowing to the customer from the retailer, use big numbers: "We are paying two thousand dollars for your trade in."
7) Bank on Customer Recall
The customer remembers the last words spoken. When you establish a deal, you end by stating the monthly payments because that is what the customer will focus on. If the price is $43,000 what does that number mean in monthly payments for a term of 60, 84 or 120 months?
8) Talk Difference
Customers prefer to purchase their new vehicle at wholesale dollars and to receive full retail for their trade-in. The reality is that no dealership can accommodate that pricing structure and stay in business. When the customer makes a comment about the selling price and the trade-in allowance, establish the difference figure between the two items. In most states it is the difference that matters for sales tax purposes.
9) Ask for More Than You Need
If you need 2, ask for 4. It gives you room to give up, and it gives the customer room to perceive victory.
10) Use your Power to ASK
It doesn’t matter that everything else you have done in the deal is letter perfect if you forget to ask for the business! Your customers want you to ask. They expect you to earn a living. Asking is where the real selling begins.
11) Think More than $ to Negotiate
Make a list of everything the sales department has to negotiate. Do they have extended financing? lower down payments? new owner's clinics? campground stay-overs? Most dealerships have plenty of extras like ball caps or company ink pens. What do you have to offer?
12) Plant Seeds
The sales professional understands how to sow seeds that reap rewards throughout the sales process. Remember to “plant” those sound effects when you take notes about the trade-in or ask about service records, a service agreement, or protective coatings.
13) Negotiate from Strength
Don’t let the customer see you sweat. People want to do business with a winner so do not apologize for the sales price. Instead, say: “The sales price is only _________, much lower than I anticipated!”
14) Parlay the Power of Par
Know what par is for your dealership. What is attainable? What are the master ratios for the sales department? What are the individual master ratios? When you know the parameters you can set reasonable goals. Your management can monitor your progress and help you before the end of the pay period. Make your progress daily, deal by deal.
15) Use the Power of “Should Be”
The power of “should be” helps you establish the deal. If the customer says, “Wait a minute… I never pay full retail for any thing!” The professional sales consultant responds, " I understand what you said. Please allow me the courtesy of showing you what the retail figures should be; otherwise how are you going to know you get a great deal?"
16) Focus on F-A-B
Your value-added Features-Advantages-Benefits presentation validates the sales price. Review the S-P-A-C-E-D product benefits and demonstration skills we covered in Parts 6 and 7 of this series. Better F-A-B skills make a better demonstration; a better demonstration creates an easier write up; a better write up leads to an easier close.
17) Generate Before &After Images
What kind of vehicle did the customer have before they came in? Was it old and in need of repairs? What are they going to have after you complete this deal? Happy memories waiting in their driveway, ready to be put in motion in the blink of an eye. Quality family times are calling your customer's name.
18) Protect the Power of the Pen
When you write down your customer's offer, you add weight to the customer's figures. If your store engages in this practice, do your self a huge favor and halt it. DO NOT write down a customer's offer unless it is for FULL RETAIL.
19) Recognize the Power of Relativity
Whether you sell a vehicle for $3000 or $300,000 it is all relative. That is, the dollar value does not make the $3k customer different from the $300K customer. Each customer warrants your integrity, respect, and sincerity. “Grading” your customers based on your own values will affect your ability to negotiate successfully and cost your dealership business.
20) Trade on the Power of the Third Party
Leave yourself a fall back position. If the customer asks: “Will the management accept $________ for the sa