- Car dealers have a notoriously bad reputation. Sometimes salespeople of all stripes experience collateral damage from their indiscretions. But earning customers’ trust is a skill that can and must be learned.
- Auto dealership sales coach and author Tim Kintz says negotiation is “a lost art” and that a “good deal” is a matter of perception.
- Tim shares “five golden rules of negotiation” that salespeople can use to face their fears, create value, earn trust, and make more deals.
There’s a classic episode of This American Life about a month in the life of a car dealership that’s trying to make quota.
“I want balloons in all the departments … I just don’t want one balloon to a car. Balloon the whole freaking place, so it looks like a circus,” says one salesman.
“Make it seem like we’re having a monster sale, and it’s a party because we’ve got to be at the big number by the 31st, midnight –– period.”
And with this, Ira Glass intones: “So everybody grabs balloons. Grown men inflate and tie and decorate. It’s a truism in their business: Balloons sell cars.”
Auto dealership sales coach Tim Kintz has a far more scientific approach. He teaches salespeople how to negotiate –– “a lost art,” he says.
“My mission is to turn these guys in dealerships into professional negotiators.”
There’s an incredible diversity of people who buy cars, with vastly different income levels, credit scores, cultural backgrounds, and practical needs. So being able to pivot from customer to customer is crucial – switching your mindset depending on the customer’s hot buttons.
But negotiating “isn’t just a car-business thing,” says Tim. “We’ve been negotiating since the beginning of man. I’m guessing they were negotiating for caves and food.”
On an episode of INSIDE Inside Sales, Tim shares his “five golden rules” of negotiation, which “apply to any industry that has to negotiate something.”
We’re guessing that means yours.
Don’t be a buzzkill
If you’ve ever shopped for a new car, you were probably pretty excited about getting the one you’ve had your eye on. You’re already thinking about paint color, trim options, and whether or not to get the sunroof.
But so often, the dealer’s first question is: How much are you looking to spend?
“They force you to become logical when you’re excited,” says Tim.
New salespeople tend to do the opposite. With a lack of training but plenty of enthusiasm, they respond to customers’ questions about monthly payments with: I don’t know, but I’ll find out. Let’s take it for a spin!
When it’s time to negotiate, the customer is already in lurve with that sweet ride (test drives are hella fun) and, as Tim puts it, “licking the paint off of the car.”
Now, on to the shiny golden rules:
1. Negotiation is optional
It’s a classic joke in the car business, says Tim: “Sticker is quicker. Just write me a check, right?”
If only every customer treated MSRP like the UPC code on their groceries. (Ever tried to haggle over a box of peanut-butter-filled pretzels? Turns out the manager at Trader Joe’s isn’t into negotiating.)
But if you build enough value and get the customer licking that paint, you have to assume your product is fairly priced.
“So often we think right out of the gate that we have to negotiate with everybody,” he says. “That tells me you don’t see the value in your product. So how the hell can you ask for all that money if you don’t?”
A “good deal” is all perception. It’s a feeling, Tim adds.
“And there’s nothing wrong with you making money when you sell a car or any product for that matter.”
2. Negotiate out of inspiration vs. desperation
In the car business, salespeople are often “more afraid of losing a car deal than we are inspired to make one,” says Tim.
“I can’t tell you how many times I hear: Yeah, but I can’t say that to a customer; it may not work. Yeah, but it might. You have no idea.”
He invokes the words of John F. Kennedy, no less: Never negotiate out of fear, but never fear to negotiate.
Tim has an acronym for fear: False Evidence Appearing Real.
Most of the fear salespeople feel can be traced back to not having the skills they need to handle objections, or from not trusting what they did early on in the sales process “because they didn’t earn the right to negotiate with this customer,” he adds.
“They didn’t build the value or earn that trust.”
3. Whoever cares least wins
That customer needs to want your product more than you want to sell it, says Tim.
“It’s not that you don’t want to sell, but when they want that product more than you care, that’s when you win.”
To be even more precise, “whoever appears to care least about the deal wins,” he adds.
“If you’re desperate, they can smell it on you.” (Ewww.)
That’s why it’s vital to negotiate from a position of strength, not weakness. Build strength through creating perceived value for the buyer.
When a customer arrives at the dealership, “they have a blank canvas,” Tim explains. “They paint their life on that canvas. And my job is to paint my car onto the canvas of their life so they can’t see themselves not owning it.”
4. Whoever starts the negotiation has the advantage
It might seem counterintuitive, but there’s one thing Tim avoids at all costs.
“I don’t ask the customer what they want to pay,” he says.
“They’re just gonna dumb me down. They’ll low-ball me, get my thinking down, and get my attitude down.”
When he’s negotiating, Tim makes it a point to be the first one to start talking numbers. If he does it, he’s in control.
“Every time I come down on my numbers, the customer wins,” he says. “But if I let them start the negotiation and I grind them up, every time I bump them, it’s a loss. If you always start the figures, you’ll win more negotiations.”
5. Leverage ‘removable objections’
The best way to manage last-minute wavering?
“Add things you can afford to take out,” says Tim.
He might offer financing for 48 months with 20% down “because I think that’s the best way to get your new vehicle,” he says. But it may not be the best way for every customer.
“I can always offer 60 months or 72 months. I can reduce it to 10% or 5% down. You can add things, and you can take them out.”
This strategy ensures “built-in victories” in the negotiation process, “so the customer feels like they’re winning.”
After all, if a customer badgers you endlessly for a sweet deal but hates your guts by the end of the transaction, “there are no wins,” he adds. “Because it was a battle.”
People tend to approach car dealers with more than a little trepidation.
“People rate buying a car in between getting sued and having a root canal. At least if they have a root canal, they get free drugs out of it,” he says.
So successful salespeople need to break that pattern, lead with empathy, and earn customers’ trust. No balloons required.
Tim puts it this way:
“We’re not in the car business; we’re in the people business.”