The following is adapted from Frictionless.
Throughout my career as a car salesperson and sales coach, Iโd often tell my students, โThe number one rule of negotiation isโฆโ
By the end of the event there would be five or six number one rules written up on the whiteboard. Eventually, I stopped trying to find that magic button and admitted that there are a set of rules that good negotiations follow.
The guidelines listed below can be used with any car customer and will help you navigate a win/win negotiation with your customers so everyone walks away from the lot satisfied with the deal.
Rule #1: Negotiating Is Optional
Stickerโs quicker, as the old saying goes. If you go into every sale thinking that you have to negotiate, youโll never hold maximum gross profit. While many of your deals will turn into second- and third-pencil negotiations, it doesnโt mean every one has to.
There are a lot of things that we buy without negotiating. Why canโt car sales be the same?
When we approach the end of a deal so excited for the customer and the value that weโve built for them, it changes our mindset. Weโre thinking about how much weโve connected with them and how much they love their car, and asking for sticker price feels like a steal compared to what the car means to them.
No one hopes they miss the putt once before sinking it, or hopes they brick the free throw. If you do, youโll definitely miss. So donโt hope or expect that the deal will take multiple pencils. Hope for the sticker price. Hope that they agree to the first pencil and the negotiation wonโt be necessary.
You might only ever find a couple of people who will pay sticker, but that doesnโt matter. Believe that you have a great product, that itโs fairly priced, and that you can show people how they canโt afford to pass it up. The value far exceeds the price, so thereโs no reason to believe negotiating will be necessary.
Rule #2: Negotiate Out of Inspiration, Not Desperation
Stop being afraid to negotiate. Turn that fear into fun. JFK said it this way: โLet us never negotiate out of fear, but never fear to negotiate.โ
Negotiating is about knowing what you want, going after it, and respecting the customer in the process. The whole point is to get to a win/win outcome, which means you need to look out for yourself while being willing to give a little in order to satisfy both parties. Itโs building a relationship rather than burning bridges.
When you have kept the customer top of mind through the whole process, by now theyโre starting to trust you. This is where it can all pay off, not just for them but for you as well. If youโve helped them see themselves in that vehicle, now itโs time to help fit it into their budget. With all of your closes and tools ready and internalized, youโre able to ease their mind and find solutions for whatever problem brought them to the lot that day.
Rule #3: Whoever Cares Least about a Deal Wins
Technically, this is โwhoever appears to care least.โ The customer needs to want to get the car more than it seems like we want to sell it. The customer needs to want that car so badly that theyโll do whatever it takes to make that happenโthat emotion is what will make them more flexible throughout the negotiation.
At the start of the sales process, youโll have learned about the customerโs wants, needs, compelling reasons, challenges, and desires, and then given them a solution for each of those concerns in the perfect vehicle for them. Youโve painted that vehicle into their life so well that they canโt imagine any other vehicle helping them more than this one. Youโve got them licking the paint off the car, so to speakโฆand none of it should appear to matter to you personally.
Convey so much confidence in the deal with your tone and body language that it looks like youโre willing to get up and walk away. Youโre not begging. Youโre negotiating. There should absolutely be a difference.
Rule #4: Whoever Starts the Negotiation Has the Advantage
Anytime we start talking numbers, the negotiation has begun. When we find out how much theyโre โlooking to spend,โ what their credit looks like, what kind of down they have, what they oweโall of that is related to the negotiation. Usually, because our sales process made that the focus and weโve conditioned the customers to bring these things up early on.
In these cases, either theyโre starting the negotiation and will have the advantage, or weโre initiating the price conversation way too early and will give our advantage away.
As the old saying goes, the biggest bump youโll ever get is the one you never hear. If we ask the customer where they want to be and find out itโll be $300 a month with zero down, the first pencil being $6,700 down and $876 a month will look like a Grand Canyonโsized gap.
But if we never find out those numbers at all, then the first pencil will pull out their top numbers instead of the unrealistic numbers we often get. By being the first person to throw out numbers, we cover a ton of ground from the very beginning without having to pull them there.
Rule #5: Build in Removable Objections
This step is simple but effective: put things into the negotiation that you can afford to take out. From the very first pencil, give yourself plenty of room to adapt. For example, that $6,700 down at forty-eight months is not there to get the customer real or peel them off the ceiling. Those are all removable objections that will shape the rest of the negotiation.
When we drop from $6,700 to $5,000, then finally settle on $2,500, how does the customer feel about that transaction? They feel like theyโve won. For some of them, getting multiple wins matters even more than the size of the wins themselves. Itโs the victory that makes the difference.
Think about it this way: if you were to go into a casino and the house offered you $50,000 to gamble with, would you use that or your own cash? Itโs the same thing here. As salespeople, we should be negotiating with the customerโs money. Pull the concessions from the down and payments, but hang on to the price and trade as long as possible. Every time you discount the car or give more for the trade, youโre giving your own money away.
Stick to the Golden Rules
Remember that each of these rules is meant to create a repeatable process. Follow the steps over and over, regardless of the outcome. Football coaches donโt motivate their players in their pregame speech by saying, โWeโre going to win 28โ14 today; now get out there and kick their ass!โ That wouldnโt do a thing. Instead, they make sure the first seven plays are scripted out, remind everyone to do their job on each play, and execute every step as planned. When that happens, the touchdowns take care of themselves.
Follow the Golden Rules, stick to the process, and keep the buyer at the center of the deal, and like touchdowns, the wins will follow.
For more advice on succeeding in car sales, you can find Frictionless on Amazon.
Tim Kintz is the president of The Kintz Group, the automotive industryโs premier sales and management training company. Tim started The Kintz Group after re-entering the retail side of the business as a general manager and seeing the need for up-to-date training. A graduate of the NADA Dealer Academy, Tim has worked in just about every position in the dealership and can still be found on the showroom floor working deals alongside salespeople and managers. Tim has delivered hands-on coaching, workshops, and presentations in large cities and rural communities alike. His strategies are relevant and proven to work everywhere cars are sold.