Imagine the music from the movie ‘Jaws’. That ominous threat is exactly how most salespeople feel about PRICE when it comes up in the sale. I sure wish I could talk all of you out of being so afraid of price because as important as it is, it’s actually the least of your problems when it comes to selling.
Nobody in their right mind would ever argue with you that price isn’t a major concern with virtually every customer you talk to. But price never has been and never will be their primary buying motive when they walk on the lot. Customers are price-focused, but when it actually comes down to making their purchase, 90% are budget-driven.
Even though everyone talks price and may focus on price on the phone, on the lot, and in the negotiation, in real life, whether you make the sale or miss it may be because of budget, rather than price.
There are a few reasons for this. First, value. Have you ever had a customer pay you more when you knew they could have bought it for less down the street? Sure, we all have, but why did they pay more? Is it because they liked you or your dealership better? Is the dealership closer or more convenient? Do they have a deadline on getting a new vehicle? Are they tired of shopping? The point is, you never would have got the extra money unless you did a good job, started at the top on price (where you’re supposed to), and then made them feel good enough about buying from you for them to say, “OK, we’ll take it.”
16% of the buyers pay MSRP and 30% pay what they’re asked to pay. So remember that holding gross is like playing baseball – if you never swing, you can’t possibly hit the ball. If you start low you’ll not only lose gross, you’ll also lose sales because you started your negotiations too low.
This is because just about everyone who wants a discount, wants a bigger discount than your first offer. So when you start at the bottom, you have nothing left to give. We’ve all seen people leave who were upset that they couldn’t get a better deal, even though they were walking away from the best deal on the planet.
90% of the time, it’s about budget, not the price. People like to huff and puff about the price, but if you cut the price in half and they had to make a $1,000 payment, 95% would still walk. On the other hand, if they liked the car and it was marked up $10,000 over sticker but the payment was only $100, almost everyone would take it.
If you focus on price, you lose. If you learn how to bypass price and sell the value of you, the dealership and the vehicle, you win!