Concessions

Posted by Erik Landrum on January 11, 2020 in F&I Selling Strategies, Objection Handling

Clearly, our credibility is of the utmost importance…yet so many of us toss it away, regularly! It doesn’t take too much deep introspection to realize it, either. Consider how it must sound to our Guests when we say, “if I could…would ya?” Heck, you can almost even hear it in a very unintelligent sounding voice! In the history of negotiation, of all the different methods employed, this is probably the worst and least effective. You might as well say, “sorry…I know I was just trying to charge you too much! You caught me. Now that you have discovered my bad behavior, will you still consider doing business with me if I repent and charge you less?”

Unlikely!

What got us here?

Initially, we interviewed our Guests Mary and Mike. We discovered that Mary is the lucky one getting the new vehicle, this time around, and her anticipated trade cycle will be 5-7 years. She will be driving approximately 12-15,000 miles per year. We then mistakenly specify a VSC offering of 7 years, 100,000 miles, when building our menu, and, by doing so, we have now leaned into a left hook. “You know what, I don’t think so. I might not even keep the car that long”, she says, at the conclusion of your menu presentation. Our Guest is now motivated by fear of loss, of paying for more than she’ll use, and it is we who created this anxiety, through our misdirected offering.

Damage control.

We try to make amends by now throwing a price concession at the mess.

It’s a cash deal and you respond to the objection with, “if I could sell it to you for $500 less, would you take it?” We have now tossed gasoline on the funeral pyre of our deal and, later, even receive a bad survey! Or, perhaps the deal we are working on is a 72- month finance offering. This same $500 compromise, you are attempting to make, now becomes, “I know $467 is too high. Would you do it for $459.50?”

How’d that work out for you?

These approaches almost never work because there is no value in it, for our Guests. We have also now created the added uncertainty, in our Guest’s minds, of what a fair price might be if they were possibly interested. There really isn’t much upside here.

So…what do we do?

Instead, we might consider motivating our Guests by hope for gain. Considering the same usage patterns, listed above, we’ll offer Mary a 5-year, 60,000-mile VSC. We have now removed the obvious objection to our offering, that she may not keep it that long, by aiming at the lower-end of her anticipated usage pattern. Therefore, when Mary leans back in her chair, crosses her arms, and says, “you know what, I don’t think so”…we’ll be able to respond, “is it the way it’s packaged that concerns you?” Mary will ask us to explain. We’ll continue, “you, like me, I’m sure would agree, this top piece, the full-mechanical coverage, the one everyone refers to as ‘bumper-to-bumper’, that this is the most important piece in the whole matrix. Surely you’d agree with that?!?” She nods, in agreement, but you can see it in her eyes…she still isn’t convinced there is enough value in it, for her.

It is here where we’ll make our concession, giving her even more for her investment, but we have to pique her interest. “I tell you what, Mary…I’m going to make you an offer you can’t refuse!” The power of this statement, at capturing someone’s attention, is hard to overstate. It’s like a personal challenge and likely to elicit her response (quipped while unfolding her arms and leaning closer), “oh yeah…what’s that?” We’ll now table the offer…“check this out. For the exact same investment, as what we were considering the 5 years and 60,000 miles of protection for, I’ll make it available to you to take advantage of, right now, for a full 7 years and 100,000 miles!!! Afterall…you, like me, I’m sure would agree…the likelihood of something going wrong in the first 5 years may be even less than in years 6 and 7…and in the first 60,000 miles may be even less than in 60,001 to 100,000. Certainly, that will work for you?!?”

By making a concession in this way, you are providing positive reinforcement for their decision to do business with you. Stay off the roulette wheel of price negotiation, which serves only to foster contempt and indecision.

Remember, so much of what ails us is of our own creation. Avoid the drama and self-sabotage resulting from the dreaded, ‘if I could…would ya?’

Think about it.

Good luck and good selling!

*of course the information contained, herein, is only for the consideration of those operating within states which allow price concessions. Maintain legal and ethical compliance at all times.

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