Without a plan to negotiate price during a motorcycle purchase, you’ve as much chance of success as Kim Kardashian does of passing the bar exam — which is to say, none.
“What’s your best price?” “Is this the best you can do?” “The other guy has it for less, what will you do for me?”
You know you’re going to hear these questions, so here’s a radical idea. You should have a well thought-out, executable plan, like adding the fuel/air mixture to the combustion chamber before the bang. Let’s talk about first things, first.
Negotiating Myth Number One: It’s All About the Dollars
At one end of the consumer spectrum, price is the dominant driving purchasing force. You know these people — they relish in the hunt for the lowest price like a day trader looking for the next Google. And it doesn’t matter how many times you explain or what sort of logic you use, they will still drive 150 miles to save $75.
At the other end of the spectrum, there are customers who will pay a premium price to receive premium service. They want to be taken care of; they love the red carpet and the VIP backstage experience.
Thankfully, most customers fall somewhere between these two extremes. Far too many sales people go into the exchange thinking that all customers are the same, and it’s just about the money. It isn’t, and they shouldn’t think that way.
Negotiating Myth Number Two: Mark It Up To Take It Down
Artificially inflating price is the essence of negotiating in bad faith. No one believes this anymore; it’s right up there with, “I’ve just left a sales meeting, and my manager says we need vehicles like yours on trade.”
Great customer relationships — the ones that span years and multiple bike purchases — are built on trust. Trust is the honest to goodness belief that the other person has the customer’s best interests at heart. Taking them up to take them down is a terrible way to start.
Negotiating Myth Number Three: Lose It on the Front, Whack It on the Back
This is the idea that you should give away whatever you have to on the price of the bike and make it up in exorbitant product prices and hidden fees in the finance office. This is the practice that earned underhanded car salespeople their No. 1 ranking on Gallop’s Least Ethical Professions list for so many years. Customers are familiar with this practice, and so are the Financial Consumer Protection Bureau and the Federal Trade Commission.
Keep in mind the phrase “the front end is forever.” Dealers who play the Russian roulette game described above sometimes see their profits go down the drain. Refinancing and product cancellations can result in knee buckling chargebacks. The profit you earn on the front end is yours after the deal is transacted and is not subject to chargebacks — hence the wisdom of the phrase, “the front end is forever.”
Successful Thinking: Understand What Really Constitutes a “Good Deal”
A good deal is when the other person feels well taken care of, and you feel well compensated. If either of those sides is out of balance, you will not build long-term customers.
This notion found support recently in an article in USA Today. Jared Rowe, president of Kelley Blue Book, which operates KBB.com, says, “Overwhelmingly, our research shows that consumers ultimately don’t want the best price.”
Larry Dominique, VP at TrueCar.com, echoes those sentiments. “We have data to support exactly what he said. We do post-purchase surveys of 100 percent of our consumers, and the ones who paid the least for their cars are the most dissatisfied with their cars; the ones who paid average or above average are actually the more satisfied.”
Customers want a good deal but value being treated well, and that often has very little to do with price.
If your price is high and your experience is not so great, customers will become wrathful, meaning they will seek revenge and tell the world about it. If your price is low and the experience you provide is not so great, your customers’ relationship with you will be disposable. They will have no loyalty to you. If you provide an exceptional experience, but try to do so at rock bottom prices, you will be a martyr. George Aide said, “Don’t feel bad for martyrs; they love the work.” However, they aren’t around very long!
The quadrant you should seek — I believe — is premium price and premium experience. This is where the magic happens. You take care of customers, are compensated fairly and provide a great reciprocal relationship between you and your customers that lasts for years.
You Have To Be Willing to Walk!
Everyone says they understand this, but too few have the courage to actually let the customer walk. What gives you the courage to do this? Outstanding prospecting and referral work. You want to have so much new stuff going on that you don’t have to be held hostage.
You can’t afford to do business with the customer who grinds you on price. And I don’t mean financially. I mean mentally. This person is now going to grind you forever. Why? You taught him to. I don’t want all the business. I want the best business. A poor prospect rarely transforms into a great customer. Put your energy into great prospecting and referral efforts, and your price negotiation pressure will be significantly
Don’t Be Desperate
This is really an offshoot of above, but whether you’re negotiating on your house, a boat or the sale of a motorcycle, the other person can pick up your vibes. They’re called micro-expressions, which give away your mental state. Your pupils do weird things, you have funky facial expressions, and the crazy thing is that the only way to control them is to control your thoughts … so be confident.
We had a contractor bidding on some concrete work in our basement. “So is that the best you can do?” I said in my pontificating Homer Simpson voice. He replied succinctly, “Yep.”
I probed further, “So there’s no room to negotiate price?” Silence was his reply. “But don’t you want the work?” I prompted. In an almost John Wayne-like drawl he said, “Won’t get rich with it; won’t go broke without it.”
We gave him the job. Success in the art of negotiation is not to let the other guy think he’s got all the cards. He doesn’t.
Stupid Is As Stupid Does
I once heard a dealer growl, “I’ll give my inventory away before I let my competitor across town get the sale.”
That has got to be one of the dumbest things I’ve ever heard in my life.
This won’t get you great customers. This won’t help you build your business (unless you’re “gaming” some allocation system, and even then it’s a questionable strategy). This won’t enable you to attract talented employees. This won’t enable you to contribute to your community.
Stay tuned because next month, we’re going to give you rock solid approaches that will give you the skills to be a smarter negotiator.
An award-winning author, top-rated trainer and founder of Peak Dealership Performance, Mark Rodgers holds a master’s degree in adult education and the National Speakers Association Certified Speaking Professional designation — only 500 people in the world have this coveted recognition. Contact [email protected] to improve your performance.