How much do customers really want to negotiate today?

by dpollak on 07/02/2009 · View Comments

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Do customers really want to negotiate?

This is a fair question that comes up while talking with velocity dealers, particularly in light of what they are able to accomplish with limited negotiation (floormats and tanks of gas) when they price used vehicles fairly and can prove market value.

I discussed this question with the auto industry’s one-price pioneer, Mark Rikess of The Rikess Group. Rikess has long believed that negotiation-based selling has seen its prime. In addition, he also believes negotiation appeals only to approximately 30 percent of any dealer’s customer base, when you consider the percentages of women and Generation Y buyers. According to Rikess, neither of these groups finds hard-driving, four-square selling approaches appealing.

Let me know your thoughts.

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Tagged as: auto, Automotive, Automotive industry, Business, Business and Economy, Canada, Customer base, Generation Y

{ 2 comments }

1 Eric Miltsch 07/04/2009 at 12:08 am: Dale,

You know our thoughts on this topic; our customer base, in all three of our current markets, and beyond, validate this business model.

The consumer has spoken & we continue to listen…
2 JoePistell 07/04/2009 at 9:39 am: IMO, to successfully sell “one price”, a dealer has to have their marketing and merchandising game rocking. You’ve got to have a great story and lots of magic in the message so the shopper knows they’re in the right place… you’re selling so much more than just a car.

Most dealers, operating under the franchise flag, have never needed to deeply develop these tools. Imagine a McDonalds or Subway going belly up. Without the traffic and product, the Subway franchise owner soon discovers he is less of an owner and more of an operator inside a larger business plan.

Going “One Price” is an assault on the old school, traditional business model. The old Business model is built on The Franchise generating traffic and sales people working shoppers to create a profit. Going One Price requires the owner to divorce themselves from the old business traditions and re-invent themselves. The only way to get there is to become an entrepreneur… few can make that leap (regardless of industry).

In the end, I believe there is plenty of room for both business models.

Where there is NO negotiating is the wave of operations improvements that aggressive dealer/entrepreneurs will use to pummel their old school competitors with. I still cannot believe how all the departments inside a dealership live off of the used car department, there by handicapping it from creating a dominate product. It’s wonderfully explained in Dales post titled: How Car Dealers Help CarMax Buy Cars

http://www.dalepollak.com/2009/07/02/how-car-dealers-help-car-max-buy-cars/

Just a lil’ bit-o-rambling on a rainy afternoon.