Car Buying Articles
Confessions of a Car Salesman
Part 7: No-Haggle Selling
When I was hired at the no-haggle dealership, I was told I would be doing some phone work to build up leads. "Phone work" is a euphemism for calling people at dinnertime and harassing them. I realized I had become one of those people that I despise a telemarketer. Still, to complete this experience, I attacked it with enthusiasm.
The leads we were given were names and numbers of people who had bought cars several years ago (and presumably would be ready for a new one) or people who had recently brought their cars in for service. We were given about 20 names a day, and those people who seemed like hot prospects were then called more frequently. Other people who had responded coolly were called again in six months. All our calls were logged into a computer database.
We were given a script to follow when making our calls. To me the dialogue sounded stilted and ridiculous. But I made a point of following it word for word. For example, after we had identified ourselves, we had to ask, "Am I interrupting anything important?" This seemed like a poor strategy to me. I felt they would tell us if we were interrupting anything. Or we could tell from their tone of voice if they were busy.
Assuming we hadn't interrupted something important, we then explained why we were calling: "We have a shortage of quality used cars on our lot right now and my manager would like to offer to buy your car at above market value. We would like to invite you to come down here for a free appraisal. Is the afternoon or the evening better for you?"
The beauty of this system, the BDC manager told me, was that "they're expecting you to sell them something. But you're not! You're offering to buy their car!"
Of course, all you're really doing is offering to take their car as a trade-in. Because, when you are appraising their car, it will begin to occur to them that if they sell their car they will need another one. So they begin looking around our car lot and before you know it, you have a sale and a trade-in deal. Nice idea. But it never worked for me.
Another ploy was to call someone who had once bought a car from our dealership and leave a brief mysterious message such as, "Mr. Jones, I have some information about your 1996 (fill in make and model of car) and I need to contact you as soon as possible. Please call me at ." This method nearly always brought a return call from a customer with visions of recall information or maybe even police trouble. When they found out that we merely wanted to "buy" their car, they were often quite annoyed.
Still, I was surprised at how receptive most people were to talking with me on a cold call. They were more open than I am to people who call me at dinnertime or while I'm not "doing anything important." I was even more surprised at the loyalty customers showed toward this car manufacturer. Apparently this "no haggle, no hassle" style of selling created a feeling of good will that lasted throughout the entire ownership of the car. And it was an American car at that! I was filled with patriotic pride thinking how these cars might someday be as popular as the hot-selling Japanese models.
But still, I hadn't sold a car at this dealership. I had attended class, talked on the phone and even taken a few ups on the lot. But no one was buying. When I looked restless, the assistant sales manager, a heavy blond woman, said: "Please don't quit! I know it's slow, but wait till the weekend. You'll sell a car this weekend."
"Wait till the weekend," was a popular refrain in the car business. Everything revolved around those two days when ups were supposed to stream onto the lot. One of my other sales managers told me, "On the weekends, we have so many ups, we call it the tuna run."
"Tuna run?" I asked.
"You know so many fish it's hard to pull them all into the boat. You'll see."
The tuna run never materialized at my old job. I was anxious to see if it would come true at my new job. I made sure I arrived early Saturday morning because, I was told, salespeople took ups in the order in which they arrived for work.
At noon I was still waiting for my first up. I decided I better eat something before the tuna started running. I began walking toward my car when Al called me back, "Dude, where're you goin'?"
"McDonald's. You want something?"
"Dude, dude. You can't leave. You miss an up, that would be like a $300 burger."
Al was very persuasive. We ordered a pizza to be delivered. When it came it had the wrong topping and Al didn't have enough money for the extra charge. He was going to send it back. I made up the difference and we sat down to eat in the break room. I never saw food disappear so fast. He hunched over the pizza, I heard muffled grunting noises and it was gone. He belched a few times and headed back outside to look for ups.
One thing I discovered was that car salesmen are easy marks for anyone selling things. That's because they are always hanging around they're a captive audience. And some of them are flush from a recent sale. At the first dealership, I was in a sales cubicle one day when a guy stuck his head around the corner. "Silk ties, 10 bucks," he said, and disappeared.
Outside I found a cluster of salesmen gathering around the open trunk of a shiny black BMW. In the trunk were boxes packed with ties in protective plastic sleeves. I picked out two ties and gave him a twenty. The tie guy (as he was called) fingered the tie I was wearing and then compared it with the two I had selected. He nodded approvingly. "You've, like, got this pattern thing going. Cool."
After the tie guy visited the dealership, the salesmen would congregate in the bathroom trying on their new purchases, complimenting each other. Gold ties were the most popular. They went nicely with the watches, rings and chains the salesmen wore.
Besides the tie guy we also had the sandwich lady and an older guy who sold golf balls he had found in water hazards. The balls were neatly arranged in egg cartons in the trunk of his car. "Three bucks a dozen. Mix and match," he told me. "Lotta Titleists there." Then he dropped his voice confidentially, as if he was giving me a special deal. "Got a Callaway three iron in the backseat. Ten bucks." I imagined an irate golfer giving it a heave into a water hazard. Little did he imagine that it would be resurrected in this way.
Then there was the chicken man. You never saw the chicken man so much as smelled him. He seemed to appear on weekend nights when it got busy. You would smell fried chicken and see a figure out of the corner of your eye carrying a cardboard box on his shoulder. Then the word would spread: "The chicken man's here!"
I went into the F&I office one night and found a sales manager hunched over a chicken dinner with his tie thrown back over his shoulder to protect it from grease splatter. He was eating with great purpose, making harf, harf, harf noises.
"Is it as good as it smells?" I asked.
"No. But I was starved," he said, throwing the bones in a trash can. He wiped his mouth, picked up his contracts and moved back into the hallway to a waiting customer.
It was almost 2 o'clock that Saturday afternoon when I got my first up. I saw a man wandering among the new cars. This was the first real up I had gotten since I took my sales seminar. As I walked toward him I began rehearsing all the things I had learned.
His name was Ron and he told me his car was in the service department. He wasn't going to buy a car today but since he had a few minutes to kill he wanted to see the new family sedans we offered. The top of the line model came with a V6 engine that had been highly praised.
I took Ron to the lowest level family sedan on the lot. We had been told in the seminar that it was "easier to sell up, than down." This meant that you always started the customer at the least expensive model and let them bump themselves to the more expensive models. The reasoning was that, once they had sat on leather and felt the power of a V6, how could you get them excited about driving around in cloth and plastic, powered by a whiney little four-banger?
The strategy worked. Ron told me he liked the roominess of the car and the way it handled, but he wanted power. No problem, I told him. Then, as if the thought just occurred to me, I said, "Tell you what, while we're on the test drive, I'll have your car appraised. Then, if you decide you want to buy, I can give you an idea of what your payments will be."
He agreed, although he told me he would pay cash rather than finance or lease the car. I got all the information on his trade-in and gave it to the assistant sales manager. She began feeding the information into her computer, then pounded on the keyboard in frustration.
"Damn thing's locked up," she said. "I'll have to do it the old-fashioned way. She pulled out a small reference book and added the cost of options and the mileage allowance. She gave me a trade-in value of $4,200.
"Great news," I told Ron, who had been waiting in the showroom. Salesmen always return to their customers with what they call "great news." I told him: "We can give you $4,200 for your trade-in. Believe me, that's high. You'd never get that anywhere else."
Actually, $4,200 really did seem like a lot. But I wondered if that was just in relation to the ridiculously low figures we gave for trade-ins at the first dealership I had worked at. Ron seemed encouraged by this figure so I decided to give him a little sales pitch about leasing I had cobbled together from bits and pieces of presentations I had heard, or overheard, from other salesmen.
Leasing is very popular these days. One of the benefits, from the salesman's point of view, is that it is so complicated that the customer sits transfixed during negotiations, unable to defend themselves. Usually, the salesman hits the customer with incredibly high monthly payments on a purchase plan. Then, as if the idea just popped into their mind, the salesman will say, "You know, there might be another way to get the payments down... Have you folks ever considered leasing?"
Personally, I think leasing can be a good way to go. For one thing, leasing allows people to drive more expensive cars. But you have to be careful. Some dealers base leases on 110 percent of the vehicle's sticker price. This is called a "full pop lease" and it's what most dealerships aim for. Also, it's easy to disguise the interest rate in a lease because it is expressed as a decimal multiplier instead of a more recognizable percentage rate. For example, a 9 percent interest rate becomes .00375.
At the first dealership I worked at, a veteran sales manager rounded up all of us green peas and taught us how to present it to Mr. Customer. He said to tell customers: "In three years, you can turn your old car back in and get one that has the latest technological inventions. And what do you think cars will be able do in three years? Who knows? Fly in the air! Go across the water! Go under the water? Who knows?"
I didn't give Ron that speech. But I did tell him that if he paid only the drive off fees (about $650) and gave us his trade-in as a down payment, he would have a $257 monthly payment for 39 months. I pointed out that we offered interest rates of 4.9 percent.
"Why take your money out of a mutual fund at 16 percent when you can use our money at 4.9 percent?" I asked him. "Then, at the end of the lease, if you love the car, you can buy it at about half its current value."
I looked up and saw the assistant sales manager frantically waving me into her office. I left Ron to ponder the advantages of leasing and stepped back into the sales manager's office.
"You didn't give him the price on his trade-in did you?" she asked.
"Of course I did. Why?"
"Damn. The computer just came back up. We're offering him about a grand more than what it's worth." She thought it over. "Look. We have to stand by our offer. But tell him it's good for today only. And if I were him, I'd jump on it, big time."
I walked back out into the showroom and rejoined Ron. "You're going to like this," I said (using a variation of the "great news!" opener). I explained what had happened, then added, "You can tell all your friends how you outfoxed the car salesman."
He chuckled. If you could get people laughing it got them on your side.
Still, there was a problem. Of course, there was always a problem in every deal. Ron's problem was simple and very common: he had to talk to his wife first. He kept calling her on his cell phone. But she was out with the kids. He confided in me: they had agreed his wife would be the next one to buy a new car. He was worried that she might be upset with his purchase.
By now I had been with Ron for about two hours. It had gone from being a hot, sunny afternoon to a cool, windy evening. Ron was hungry and so was I. But after all this, I didn't want to turn him into a "be-back."
Ron had given up trying to reach his wife. He was about to go home and talk it over with her when his cell phone rang. It was his wife. I moved outside to give him some space. It might sound corny but I began visualizing that I had made the sale. This is a popular technique with salespeople. It just means that you picture the outcome you want before it happens. I pictured shaking hands with Ron and saw him signing the contracts. But life isn't that simple. When Ron was done talking to his wife his answer wasn't yes or no. He merely said, "She's coming down."
A few minutes later a van pulled up and Ron's wife stepped out. Before she could speak I said, "I'm the pushy salesman who's been holding your husband hostage all afternoon."
She laughed. And I knew I had a sale. They leased the car for three years. I even sold them a service contract.
After Ron and his wife signed the contracts, I led them outside. They transferred all the crap from their old heap to their gleaming new car cupholders, maps, cassette tapes, Kleenex, flashlights, etc. After they drove away, I pulled their trade-in to the back of the lot. The thing was a real beast. The interior had a moist, funky smell. At this very moment, I thought, Ron was driving home, inhaling new car smell. I enjoyed imagining how happy he must be.
Back inside the dealership everyone was hurrying to lock up and go home. The F&I manager came over and said, "You did a phenomenal job with that guy. I'm going to break my rule and speak to you before you've been here for six months."
So, did Ron get a good deal? Well, he drove in behind the wheel of an old heap. He paid only $650 out of pocket (drive-off fees on his lease) and he drove out in a more powerful, more reliable, safer, top-of-the line car.
Was the no-haggle method of selling better? From the salesman's point of view, it allowed me to focus on what the customer really needed. Also, the good will I built up on the test drive was preserved during the deal-making process. The only problem I could see with no-haggle selling was with my commission I made about $350 on the deal. Not bad for four hours of work. But, as it turned out, it was the only car I sold that week.