The Lexus salesperson (I'll call him Fred) called Thursday and made his annual trade-in offer. I took advantage of it last December but this year he called to see if my wife would like to trade her 2005 GX470 for the brand new 2008 GX470 for the same monthly payment. A no-brainer, he said. I pointed out that it wasn't exactly the same payment since he wanted $3,600 down. He quickly lowered the down payment by $1,700 and moved that money into the monthly payments. I pointed out that now, the monthly payments were higher so he extended them to 42 months. I pointed out that I would still be paying more money since I'd have to make 6 additional payments. Then he backed it down to 36 months.
OK. Now the offer was pretty close to giving back the old GX, taking a brand new one, and doing it for the same money. I told him it would be up to my wife since it was her car and she didn't like giving her cars up. She bought her Mercedes SL500 in 1997 and still has it!
I went home, discussed the opportunity with her, explained that she could have a new GX, but she was unmoved. She said things like, "I like my car" and "There's no worse time of the year" and "At least in the spring a new car will continue to look new" and "Why would I want my new car to look filthy the very next day?" She simply had no compelling reason to make this deal.
I told Fred that she wasn't interested and he offered to reduce the monthly payment by $5 a month. I told him that we were Lexus customers and $5 was somewhat meaningless. Then Fred offered to reduce the monthly payment by $20. Once again I made the "we're Lexus customers" comment and reminded him that it wasn't about the money, it was about her not wanting a dirty new car.
I'll interrupt the story by emphasizing the point - my wife had no compelling reason to get a new car. Neither did I. Fred just didn't get it and continued to reduce the price. When he finally called back yesterday, I told him she said 'no'. He couldn't believe it. He actually asked, "why in the world would someone not want the newer model for less money?" I told him, "she doesn't want a new car that would look dirty the very next day!"
Fred called back again and this time he had yet another price - he reduced the down payment by $1000 and the monthly payment by another $50. Now, the standing offer was to trade the two and a half year old SUV in for the brand new model and reduce the monthly payment by $50. The down payment was simply nothing more than the first monthly payment.
At this point, my wife said yes. It was a no-brainer.
But because she didn't have a compelling reason to get a new car, he used price as a negotiating strategy. The problem with this is that while he probably got his commission, the dealership didn't make any money on this car.
When you can identify the compelling reasons why someone would buy, price won't be a barrier. When you can't, as in this case, you have to give it away to get someone to buy from you.
Could Fred have found a compelling reason that would have caused her to say 'yes' instead of having to discount the car? Of course. What would those compelling reasons have been?
He could have asked if there were any nagging issues with the car and he would have learned that we need four new tires, the rear door won't stay open, one of the wheels was mangled and needed replacement, the rear carpets were stained with chocolate milk, the side mirrors didn't work the way they were supposed to and the third row seating was stuck. That's a lot of stuff that needed to be fixed!
He could have asked, "rather than trying to fix all of that, how about if we just give you a new car - same payment?"
That would have been a no-brainer!
When You Don't Find Compelling Reasons to Buy - To learn more about this author, visit Dave Kurlan's Website.
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Anne Barr
Anne Barr has over 26 years experience in sales and marketing, six years as a franchisee. She has assisted over 367 business owners and purchasers to achieve their goals in career change, transition and exit strategy. She holds the designation of Certified Franchise Executive from the International Franchise Association, Certified Business Intermediary from the International Business Brokers Association and Board Certified Broker from the Texas Association of Business Brokers. Anne is active in professional organizations,
networking groups and volunteers for non-profit entities. As owner/operator of four successful businesses, Anne has proven people skills and enjoys helping clients find the right "fit" in business
ownership. Visit www.FranchiseOpportunitySpecialist.com for more information about me and my company. - Visit Anne Barr's Website |
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Dave Kurlan
(Visit Dave's Website)
Dave Kurlan is the founder and CEO of
Objective Management Group, Inc., the
industry leader in sales assessments and
sales force evaluations, and the CEO of
David Kurlan & Associates, Inc., a
consulting firm specializing in sales
force development.
Dave has been a top rated speaker at Inc.
Magazine's Conference on Growing the
Company, the Sales & Marketing Management
Conference and the Gazelles Sales &
Marketing Summit.
He has been featured on radio and TV,
including World Business Review with
General Norman Schwarzkopf, in Inc.
Magazine, Selling Power Magazine, Sales &
Marketing Management Magazine and
Incentive Magazine.
He is the author of Mindless Selling and
Baseline Selling – How to Become a Sales
Superstar by Using What You Already Know
about the Game of Baseball.
He created and wrote STAR, a proprietary
recruiting process for hiring great
salespeople, and he writes Understanding
the Sales Force, a popular business Blog
and is a contributing author to The Death
of 20th Century Selling and 101 Great Ways
to Improve Your Life, Volume 2.
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Understanding the Sales Force - Objective Management Group, Inc. is the pioneer and industry leader in sales force evaluations and sales candidate screening. Spearheaded by leading sales industry expert, Dave Kurlan, Objective Management Group, Inc. can help you measure sales effectiveness, execution and potential.
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