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Stories from the Sales Frontlines

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Comments

  • snakeweaselsnakeweasel a Certified Edmunds Poster.Posts: 15,326
    But unfortunately, I am quite positive I have run into more customers who lied, wasted MY time and "ruined their own experiences" in one afternoon then you have run into salesmen who have given you the same grief in you entire lifetime.

    My main complaint is salesmen that get to pushy, especially when I am just looking and have told them that off the bat, and those that are woefully ignorant of their product.

    2008 Sebring Ragtop, 2011 Hyundai Sonata, 2015 Honda CTX700D

  • bamaflumbamaflum Posts: 39
    Why or how has car buying become/been like this? No haggle buying is nice, but there is a huge profit in that. What about having a set price that gives the dealer enough profit but still keeps the price down for the buyer?
  • socala4socala4 Posts: 2,427
    Why or how has car buying become/been like this? No haggle buying is nice, but there is a huge profit in that. What about having a set price that gives the dealer enough profit but still keeps the price down for the buyer?

    Several reasons:

    -The salespeople are paid on commission, and work together within a highly competitive environment. This encourages the salespeople to be extremely motivated to sell you a car on the same day that you walk into the showroom, in order to keep their jobs, hit sales targets, earn high incomes (although most won't), prevent you from buying from someone else and to keep up with the peer pressure of the showroom environment. That's a function of design -- their employers want it that way.

    -Much of the profit from the sale does not come just from the sale of the car, but from the add-ons, the financing, and the trade-in, so the dealer is highly motivated to score a win for all of the profit centers. Hence the use of techniques meant to increase layers of profit (the turnover/ "TO" between salesperson and sales manager, and again between the sales manager and F&I), and to create confusion with the buyer so that resistance is minimal.

    -For many buyers, a car is a highly emotional purchase, tied to ego, a desire to exude success and other visceral motivations. This means that it is easy to segment a portion of the buying public into highly emotional players whose desires to own the car will trump financial logic, and which creates a wide range of prices that different buyers are willing to pay. The dealership's job is to figure out what kind of customer you are, and to get you to pay as much as your buying profile will allow.

    -The car market lends itself to "imperfect information," an economic term meaning that it is difficult for buyers to know what other buyers are paying, which can create wide discrepancies in actual pricing. The internet may or may not be beginning to narrow this information gap, but sellers are well positioned to take advantage of this discrepancy and to use it to their benefit, particularly because they not only know more about actual sale prices, but are able to negotiate in ways that maximize those prices.

    -Any product that is expensive lends itself to negotiation, because there is a genuine opportunity to pay less than someone else would for the very same item. Just as you negotiate to buy a house, so you would tend to haggle when you'd buy a car.

    -The fact that car deals are often multi-tiered, in that they also often include a sale (your trade-in), financing that is placed by the dealer (your dealer as a loan broker/ reseller), and additional sales (insurance, undercoating, Lo Jack, etc.) creates opportunities for additional buyer confusion and poor buyer negotiation, which creates more profit opportunities for sellers.

    The increasing availability of data creates a certain chicken-egg problem of sorts -- the more data that gets out to the public, the more the industry attempts to create confusion in order to cloud the numbers. For example, we now see that "invoice" does not equate to true dealer cost (thanks to holdback, incentives, etc.), "fees" get packed into invoices, and additional charges meant to simply increase revenues are also labeled as "fees," such as "documentation fees" that simply add money to the dealer's coffers. The confusion helps make it easier to push these revenue sources onto the customer without a fight...or at least, that's the hope...
  • seenitseenit Posts: 7
    In this case either the dealer or the buyer or both will get the short end of the stick, my bet will be on the buyer getting the short end.

    Funny, snake, but in every other retort you have provided on who I am more "loyal" too, this is the first one you have neglected to add my family as one of my masters. I guess you only use the cheap shot when needed. Who says I'm an advocate of either. You make it sound like it's a cult to work at a dealership. If I can't provide a professional service to my customers, while providing for my family, I will simply leave the dealership with you. Why do you have to put it out like a game of Risk to buy a piece of metal with wheels?

    You could be the second coming and if my perception of the sale is bad there will be no sale.

    Yawn. Your starting to bore me with the circulars. You earlier opined that my success in the car business is directly proportonal to how my dealership percieves me, and I said it had to do with how the customer perceives me. Let's go back to my Ferrari analogy. I said if I were to attempt to sell you a Ferrari for $1000 and you didn't like me (ie had a bad perception) you would not buy it...even though you would have to perceive the sale of a Ferrari for $1000 a damn good deal. And trust me, I would have to be the second coming to offer you a deal like that. I reitterate...you're DEAD wrong. I have seen more than one customer walk away from what they know, and percieve as a great deal, just because they had a personality conflict with the salesmen...usually starting with the crap attitude of the customer. On many occassions, I have also seen the same customer come crawling back a day later begging for the same deal only to have the manager throw them out for complete abuse of thier employee the day before. Many times, snake, perceptions are not grounded in reality, but reality is certainy formed by perception.
  • In Vancouver, BC, we have two electronic store chains, owned by the same parent company - Best Buy, I think. One chain is called Best Buy, and the other Future Shop. In Best Buy shops, the salesmen are on salaries. No commissions. Very laid-back atmosphere in the stores. The salesmen are there to help you choose what you need, and do not even look your way, but are available to answer your questions, if you have any. In Future Shops, the salesmen are on commission, and they are watching you like hawks when you browse along isles, bug you with "can I help you" (i.e. can you help ME make more money today?) and simply create an unpleasant shopping experience because of that.

    Methinks, the dealers should follow Saturn's example, put salesmen on salaries, and have set in stone, non-negotiable car prices. The customers would come knowing the price, ready to pay it, and would neither waste anyone's time, nor anyone's nerves.
  • socala4socala4 Posts: 2,427
    Methinks, the dealers should follow Saturn's example, put salesmen on salaries, and have set in stone, non-negotiable car prices. The customers would come knowing the price, ready to pay it, and would neither waste anyone's time, nor anyone's nerves.

    I can tell you as a customer that I certainly don't want this. With the current system, a savvy negotiator will pay far less than those less savvy or unwilling to figure out the game, so along with the dealership, I rely on those other customers to pay more than I would, which allows me to pay less. A one-price system would raise my price, why would I want that?

    In any case, a one-price model isn't very good for the dealership, either, for the reasons that I explained above. And in any case, I actually prefer Future Shop to Best Buy, at least the Future Shop guys are motivated to help you if you want the help (and it isn't hard to make them back off if you aren't interested in their assistance.)

    And again, why would you want to surrender your power to negotiate? To return to the electronics store example, when I bought my home theater, I was able to shave about 25-30% off of the price with a mere 5-10 minutes of haggling and a slight bit of research prior to my visit to the store. Paying less for a new system than what some others did for floor and demo models makes the music sound that much sweeter...
  • raybearraybear Posts: 1,795
    No haggle buying is nice, but there is a huge profit in that.

    When I deliver a quote to a customer online it's lower than we'd give in the showroom without a huge fight. The return for the dealership is an incremental sale that came as a result of a lower-cost system than traditional advertising...and I still get, "What's your best deal?....Is this the best you can do?"...etc., and have buyers walk thinking they must be getting ripped off somehow.
  • rroyce10rroyce10 Posts: 9,359
    .... **"What's your best deal?....Is this the best you can do?"...etc., and have buyers walk thinking they must be getting ripped off somehow**
    ====================

    That's been proven time and time again with thousands of dealers that have gone to "one price" shopping -- then lost Tons of $$ ...l.o.l....

    The biggest problem with those type of buyers are ... they're not shopping vehicles, they're shopping price which finally boils down to *payments* .... so they could care less about the product or the service .. til' it's too late.



    Terry.
  • This works for people who like to haggle and negotiate, and it doesn't work for the rest of us, which is the majority, I would imagine. And why would the average price be higher? The price is what it is, considering that some customers haggle well, and some roll over. If no one can negotiate because of no-haggle pricing, the price would remain the same due to the market supply and demand laws, imho.
  • graphicguygraphicguy Edmunds Poster EmeritusPosts: 11,441
    Rover....I'm not a sales person, but in your scenario, wouldn't it be just as easy to walk away from a deal that won't work? I don't know. But, if I were an auto sales person...and from the "get go", I had a customer that was $5K too low on their offer, wouldn't that just send a message that a deal won't be reached?

    Would something along the lines of stating...."Sir/Mam, I appreciate you considering us for your car purchase, but based on your numbers, we're just too far apart to make a realistic deal. Thank you for your time. If you find a reason to change your offer or your ever in the market, again....please give me a call."

    Like life, sometimes a deal (on both sides) it's best to walk away from a situation like you described.
    2018 Acura TLX 3.5 SH AWD A-SPEC
  • golicgolic Posts: 714
    In reality, every dealership has "no-haggle" pricing.

    1. You can just pay MSRP, or
    2. Ask them how much better than can do off sticker to get it done right now.

    People always talk of how great Saturn and Carmax "no-haggle" experience is. Well, truth be told, you can walk into EVERY dealer in the world and pay the sticker. *shrugs*

    My guess is there are two types of informed buyers.

    1. The one who does his research based on this site and similar sites.

    My guess is these "haggling" sessions usually work out pretty good. Either the buyers information is accurate or he will discover something he didn't account for and will buy at a good price.

    2. The one who does his research based on what his "neighbor, friend, coworker, mechanic, landscaper, mistress told him" These are the people who will roll over and die if they find out any of those people bought the car for $1 less than they did.

    My guess is these haggling sessions are ugly and someone usually leaves the table with a bad taste.
  • snakeweaselsnakeweasel a Certified Edmunds Poster.Posts: 15,326
    I guess you only use the cheap shot when needed.

    It wasn't a cheap shot, but face it will you do things that put your family at risk just to help me out? I don't think so.

    Who says I'm an advocate of either.

    The simple fact that the dealer signs your paycheck proves that you are an advocate for the dealer. Your claim that you have the customers best interest at heart is saying you are their advocate. Again you cannot be an advocate for both. Once you are on my payroll and not the dealers I will believe you when you say you have my best interests at heart.

    You make it sound like it's a cult to work at a dealership.

    Again I don't like the taste of other peoples words in my mouth so please don't put words in my mouth. In no way did I make it sound like its a cult, if you think I did you know absolutely nothing about cults. What I am saying is that you are an employee of the dealership and have a fiduciary duty to be their representative.

    If I can't provide a professional service to my customers, while providing for my family, I will simply leave the dealership with you.

    I am not saying you can't provide me with professional service, but providing professional service and having the best interest at heart are two different animals. Remember that you still have to provide professional service to the dealership. Now tell me who will reward you most with your professional service? Me who buys a car every 5 years or so and may or may not come back or the dealer who you sell several cars a week for?

    Your starting to bore me with the circulars. You earlier opined that my success in the car business is directly proportional to how my dealership perceives me, and I said it had to do with how the customer perceives me.

    No circular argument on my part. If the dealership perceives you well you will stay, sell cars and make money, if they don't you will be looking for more work. If I buy a car from you it is not because I perceive you well but because I perceive the deal as good. I can have a good perception of you but a bad perception of the deal I am going to walk. Please show me circular reasoning in that.

    Let's go back to my Ferrari analogy. I said if I were to attempt to sell you a Ferrari for $1000 and you didn't like me (ie had a bad perception) you would not buy it...

    First off thats a bad example, if anyone offered me a Ferrari for $1,000 all sorts of bells and whistle would be going off. All sorts of questions would be coming into my head such as is it stolen? Whats wrong with it? Is it radioactive? Why is this being sold at a $70K discount? In this case my perception of the deal is bad.

    Now let us say that the deal is legit and that there is nothing wrong with the car. You could be Hitler, Stalin and Pol Pot all rolled into one I wouldn't care, the deal would be taken. You see my experience with you is small only a few hours compared to the years I would have with the car.

    2008 Sebring Ragtop, 2011 Hyundai Sonata, 2015 Honda CTX700D

  • snakeweaselsnakeweasel a Certified Edmunds Poster.Posts: 15,326
    Methinks, the dealers should follow Saturn's example, put salesmen on salaries, and have set in stone, non-negotiable car prices. The customers would come knowing the price, ready to pay it, and would neither waste anyone's time, nor anyone's nerves.

    Unless everyone does it those that do will hurt in sales. There is a sizable segment of society that will not buy a car at sticker. Until they are forced to pay sticker they will search out the dealers that will haggle.

    2008 Sebring Ragtop, 2011 Hyundai Sonata, 2015 Honda CTX700D

  • snakeweaselsnakeweasel a Certified Edmunds Poster.Posts: 15,326
    The biggest problem with those type of buyers are ... they're not shopping vehicles, they're shopping price which finally boils down to *payments* .... so they could care less about the product or the service .. til' it's too late

    I am one that shops price, not payments but price. As for the product If I buy a sludgemobile I buy a sludgemobile regardless of if I buy it at Joes dealership or Sams dealership. As for service I can get warranty work done at any dealership, and all other work done at any mechanic.

    2008 Sebring Ragtop, 2011 Hyundai Sonata, 2015 Honda CTX700D

  • snakeweaselsnakeweasel a Certified Edmunds Poster.Posts: 15,326
    He didn't say the average price would be higher, just his price.

    2008 Sebring Ragtop, 2011 Hyundai Sonata, 2015 Honda CTX700D

  • travlertravler Posts: 138
    I'd hate to count the times a customer has called in to complain because no salesman jumped him when he came on the lot. It goes both ways folks.

    Mangers jump you if you don't jump the customer. Customers jump you if you do or don't jump them depending on their mood :sick:
  • snakeweaselsnakeweasel a Certified Edmunds Poster.Posts: 15,326
    I don't mind a salesman "jumping"on me when I first get there. What I hate is when I tell them I am not interested in buying now and that I am just looking they still hang onto me.

    2008 Sebring Ragtop, 2011 Hyundai Sonata, 2015 Honda CTX700D

  • travlertravler Posts: 138
    Family always comes first in any society, or even species for that matter.That's the natural order of things. No apologies for that one.
    However, if you're in the business for the long run, integrity is imparative. No single deal is worth loosing an ounce of your integrity. I have never wanted a deal so bad that I'd do or say something go get it. It's just not worth it in the long run.

    If you do the right thing for your customer, you're doing the right thing for your family.
  • travlertravler Posts: 138
    Saturn hasen't been able to make the set-price theory work.
    Also, you have the variable of the trade. I know this is a simplistic answer, but it's the tap root of the problem.
    Most of the other variables are secondary.
  • Snakeweasel, your sounding a bit oversimplifying, to lump all salespeople into your convenient one size fits all, bag. I daresay, as well, that your tone suggests you enjoy believing you are having battles of wits with unarmed people when you talk to salespeople, but the fact is, that some of us have shed other, less well paying jobs such as yours in Accounting, or my degree in Biological Sciences, to sell automobiles, because it blows many conventional jobs away in income, sad though that is.
  • travlertravler Posts: 138
    Yeh...Saturn sure is a raving success...not!
  • You know if you are a business owner, you want your employees to be energetic and outgoing, not laid back and sloughing off, and shuckin and jivin around because they make the same uninspired wage, whether they work hard or not. Result? Stores pay commission to separate the 'deadbeat' help, in his pants that drag off his rear end, and his piercings, from the young people who are on their way somewhere in life, and sell for a couple years to make more money, to pay for things requiring a higher standard of living. And it is statistical fact ,that the highest paid people in the country are salespeople. They have drive and desire, and it won't be squelched by the mediocrity of other employees who want to hang around and rap about the last concert at which he got blown away.
  • rroyce10rroyce10 Posts: 9,359
    .... I think you missed the point or perhaps I wasn't clear ...

    See, you're savvy buyer ... you know in and around what your trade is worth and you'll have a strong idea of what the market is doing - and you've narrowed down your search and you know what you're looking for - it's called research ... you've spent the time and now you know the difference between the "real and the perceived".(Big difference.!)

    This is about the person who walks into "any" store and says: "What's your best deal? .... most of these type's have looked up the Nada for their trade and think their $9,500 ABC is worth $12 grand .l.o.l.. and they usually aren't looking for a particular vehicle, they are looking for a particular "price", and they want you to meet it or exceed it .. and when the truth gets known, they are trying to hit a payment, which is fine - but they have to compare apples to apples.

    Here's a good example ... I had a guy that wanted this 05 Lexus LS430 that was on the lot, it was maxed, 7k, clean to the bone, just a beauty .... he wanted to trade me for his car and $39 (his car is worth $5,0 on a good day, maybe.!) .. we were miles apart, so we parted ways ....

    3 weeks later I see him on the golf course and he's all bragging about this great deal he got on this other 05 and how he clobbered my price, etc .... when we leave, I walk out to the parking lot and he's gotta show everyone how he saved $7,000 .... that would be fine except, this one had 38,000 miles (in one year) not 7k, this one needed new skins, it needed service and brakes and somebody painted the roof and the rear deck with a tooth brush ..... other than that, it was puuuuurfect ..l.o.l...

    Did he save $7,000...? ... actually he put himself in the bucket for $15,000 -- he was shopping price, not vehicle ... someone like yourself would have done homework and research and never put themselves in that position, that's the difference.



    Terry.
  • travlertravler Posts: 138
    There are different buyer personalities. Snake is just one type. Salesmen must adapt to the different types.
    You may have someone that has never looked at a Honda before unlike Snake who knows what he wants when he comes on the lot. Though he does state that he's "just looking."

    Seems a bit contradictory if he knows what he wants :confuse:
  • Snakeweasel is the guy who would like to push a button on a kiosk to buy a car, but wants all kinds of special attention to his needs when he has a problem with his Hyundai. Take a number snakeweasel, they're pretty busy in Hyundai service departments...
  • crj19crj19 Posts: 3
    I'm not sure where you got the idea that Saturn sales people got a salary but you are dead wrong, I worked for one of the largest Saturn dealers in the country for 2 years and we were paid straight commision. I know of no saturn dealers that pay salary.
  • socala4socala4 Posts: 2,427
    I never said that Saturn paid salaries, I was responding to another poster who made that statement. My point was that a one-price model doesn't work to my benefit as a consumer, because I prefer to negotiate.
  • sbell4sbell4 Posts: 446
    speaking as a commissioned salesman....somedays I come to work and do not make a single penney....somedays I come to work and make a few dollars....I think I will stay with the commission plan. You can keep your salary, I dont want it.

    We have one salesman here..31 years old, never even thought about a college education before and sells 35-40/month as an avg. and makes a little under 200k/year. He works a 5 day week but does stay here about 55-60 hours, two weeks paid vacation plus 3-4 other trips to Atlantis, Grand Cayman, Vegas, etc.

    I agree that this isnt the norm but even a decent commissioned salesperson will make "lawyer" or "engineer" money.

    In commission sales you make what you are worth, if you want a pay raise it is completely up to you and you alone.
  • snakeweaselsnakeweasel a Certified Edmunds Poster.Posts: 15,326
    I daresay, as well, that your tone suggests you enjoy believing you are having battles of wits with unarmed people when you talk to salespeople,

    I will say this again, I detest the taste of other peoples words so don't put yours into my mouth. I never said any such thing, nor have I implied it. All I am saying is that the salesman is an employee of the dealership and therefore will put the interest of the dealership (and his job) over my interests.

    but the fact is, that some of us have shed other, less well paying jobs such as yours in Accounting, or my degree in Biological Sciences, to sell automobiles, because it blows many conventional jobs away in income, sad though that is.

    Three things on this:

    1.) I make more in accounting than the average car salesman makes.

    2.) How many good jobs are avlaible for someone with a degree in Biological Sciences?

    3.) I have enough issues with working evenings and weekends during tax season, I don't want to do it all year round. I rather spend those times with the family.

    2008 Sebring Ragtop, 2011 Hyundai Sonata, 2015 Honda CTX700D

  • socala4socala4 Posts: 2,427
    In commission sales you make what you are worth, if you want a pay raise it is completely up to you and you alone.

    I would also assume that the more successful you are, the better the percentage/ amount of the split that you can negotiate with the dealer. That's definitely an incentive to strive for production.

    I think that it's worthwhile for consumers to put themselves in the dealer's shoes, not so that we increase our purchase prices (I always go for the lowest price that I can get), but to understand how they view the transaction, the business and their careers.

    Despite the grief that I give the sellers here, I also do respect the fact that the successful ones can work without a net (no salary) and still prosper. You have to give credit to anyone who goes to work everyday without being quite sure what s/he is going to earn that day, and you can't entirely blame him/her for going for the gold. (That being said, my purchase price is only going to award him the bronze, but I can still respect his efforts to play well for his side of the table.) But the competitiveness helps to explain a lot of what the consumer experiences, whether or not we like it.
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