Case for No Negotiation

One of the more interesting aspects of domestic auto makers' employee discounts for everyone was the warm reception consumers gave to haggle-free sales environments. My company provides a number of dealers with training that helps them establish a negotiation-free sales (NFS) process. There is a lot to be said for this form of selling. But clearly it is not for every dealer. There is a lot more to

One of the more interesting aspects of domestic auto makers' employee discounts for everyone was the warm reception consumers gave to haggle-free sales environments.

My company provides a number of dealers with training that helps them establish a negotiation-free sales (NFS) process. There is a lot to be said for this form of selling. But clearly it is not for every dealer.

There is a lot more to implementing a true NFS process than hanging a competitive price on the window. Changing culture and firmly established sales processes is a complex and challenging task. If an auto maker were to attempt to create an across-the-board change to a NFS process, there would be more dealer losers than winners.

When dealers ask me what are the most important benefits of NFS, I share the following:

  1. Sales consultant recruiting

    By definition, negotiating dealers are seeking potential sales consultants who can negotiate. The problem is our society doesn't really breed an abundance of good negotiators. But, we do produce a number of good people. So, by eliminating negotiations, the window of sales consultant recruiting possibilities opens much wider.

  2. Problem isolation

    In a typical negotiating store, there is a lack of consistency regarding how the sales process is transacted from customer to customer. Due to this inconsistency, it is very difficult to isolate process breakdowns. In a haggle-free store, the processes have to be bullet proof. If the recommended sales processes are not delivered in a highly consistent and professional manner, a dealership will lose many more deals than it will make. After all, any dealer can beat the “one price” on the window at NFS dealers. Due to the necessity of consistency at a NFS store, it is easier to discover where and when process breakdowns occur and then fix them fast.

  3. Better use of sales management

    In a negotiating store, “desking deals” is the primary skill set that sales managers must have to optimize dealership income. In a NFS store there is no real “desking” of deals. So sales managers can spend more time managing a sales process and developing people. They also have the time to devote to other value tasks such as coaching and training sales consultants, developing vehicle pricing policies and optimizing inventory management.

It is not easy switching from a negotiating style of selling to one that is negotiation-free.

Dealers who have successfully adopted a NFS sales process understand this is a significant cultural change. There will be a high likelihood of failure without a burning desire to eliminate negotiations and set up a culture where the customer is clearly in control.

The store's leader must be completely engaged. This is one management initiative that cannot be delegated to subordinates.

Also, the transition is difficult for many sales managers. They typically reach their station in life by successfully climbing the negotiations ladder.

In a NFS environment, not only does their negotiations skill become less valuable, so does their ability to control the sales consultant and the customer. Clearing these cultural hurdles is hard. So is replacing a sales management team, which sometimes becomes necessary during a NFS transition.

A negotiation-free process in a highly competitive market is not for every dealer. There is nothing wrong with negotiations as long they are conducted in a customer-friendly manner that provides information necessary for customers to make good decisions for themselves.

The best method for determining sales styles should be left to each dealer — certainly not auto makers — based on his or her belief about how best to conduct transactions.

Mark Rikess of the Rikess Group in Burbank, CA, is a veteran automotive retailing consultant. He's at [email protected]

TAGS: Dealers Retail
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