A co-worker once complained to me about the dealership's pay structure. He had delivered 14 vehicles that month and had only made $2,500. I asked him about his grosses. They were mostly flat.
He asked how much I made that month. He was shocked when I said $5,000 and had only delivered 10 vehicles. Obviously, he had a negotiating problem. He also had the lowest CSI/SSI in the dealership. His customer referrals and repeat business were almost non-existent. There was a definite pattern.
Each salesperson in the chart at upper right delivers 100 vehicles per year and works at the same dealership.
Why the disparity in their numbers? Bob does not understand how to negotiate, Sue sort of does. Paul definitely understands the psychology of negotiating.
Customers who pay more tend to be your best and happiest customers for life. Sounds crazy? Let's look at why they're so happy.
There are five reasons:
- Professional service was given.
- A positive mental attitude was conveyed.
- Professional product knowledge was shared.
- A complete understanding of human emotions was shown.
- A professional knowledge of how to negotiate was demonstrated.
If you give and negotiate professionally, you will see an increase in every area of your professional and personal life.
The best sales people and top grossers use a thought-out strategy on negotiating. They're not a worry to management. How you present and start your negotiations affects the sale and your gross profit.
Higher gross profit does not mean lower CSI or SSI. It's a matter of how the customer feels about the negotiations, not how much we made.
| Bob | Sue | Paul | |
|---|---|---|---|
| Avg. gross/veh. | $800 | $1,300 | $2.000 |
| @ 100 veh./ year | $80,000 | $130,000 | $200,000 |
| @ 25% com. | $20,000/yr | $32,500/yr | $50,000/yr |
What to avoid when negotiating:
NEVER ask for an offer at the start of your negotiations.
Why? The customer will offer a ridiculous low figure if anything. Professional negotiators do not ask what you want to pay. They start by offering a small savings or no savings on the MSRP. If the customer does not agree, they professionally negotiate.
NEVER write down the first number the customer says.
Why? The customer will think you're close to a deal. Getting them to move up on their number becomes much more difficult. Keep it verbal at first. When you cannot go any further, write it down, get it initialed and talk to your manager.
NEVER ask for a deposit at the start of your negotiations!
Why? A deposit is only given when the price and payments have been agreed upon. Customers hate when a salesperson prematurely asks for a deposit.
NEVER say, “What do you have to do to earn your business today?”
Why? If you've done your job, you needn't resort to disdained industry clichés.
NEVER tell the customer, “My manager must be in a good mood.”
Why? The customer usually doesn't care, and it decreases your empowerment and credibility as a professional.
NEVER tell the customer, “Trust me.”
Why? It sounds untrustworthy.
NEVER let the customer write on your worksheet.
Why? You're letting them take control. Would you ask a doctor if you could make some notes on his or her worksheet? It's yours, not the customer's.
NEVER tell the customer, “We're not making money on the vehicle.”
Why? It sounds foolish, unbelievable, weak and unprofessional.
NEVER bring your customer into the manager's office, unless advised.
Why? This closes the door on your negotiations. You might also catch the manager unprepared.
NEVER argue with the customer when negotiating.
Why? Professionals are cool under pressure. It's all about numbers. Stay focused.
In part 2, I'll show how to negotiate, maintain gross and close effectively.
Darin B. George (1-888-681-7355/[email protected]) runs the Automotive Sales College. He conducts dealership training programs, including a series airing on ASTN.
