Buying a Car, Truck, Van or SUV?
Here is an expert walk through of what the salesperson will do, and how you should handle it.
Before I joined the Army, I spent a number of years successfully working for high volume, high profit, corporate car dealerships. I spent those years in both New and Pre-Owned sales, as a "Floor Guy", an Assistant Sales Manager, and as an Internet Sales Manager. Throughout my career, one thing was always stressed... "The Steps to the Sell."Credit: from Victor1558 via Flickr Creative Commons
The Steps, as it is referred to (yes, purposely spoken of as a singular, to teach that it should be considered one act that can not be done in pieces), is a tried and true method used for decades throughout the industry to give the salesperson control, and to help guide the buyer through the process quickly, maximize profit, and generate future business. Most dealerships have laminated, business card sized handouts that the sales people are required to keep on them at all times. I was given "spiffs" (small on-the-spot bonuses) 15 or 16 times as a floor guy just for keeping the card in my wallet. Following The Steps is a reliable way to be successful in the industry, and most new hires that wash out, simply do not follow The Steps.
The salesperson's worst nightmare is an educated buyer, but there are plenty of places to find quality ratings for vehicles and good pricing. This article is going to do something that is not as easy to find. It will explain a common version of The Steps, both why they work for the dealership, and how you can successfully navigate the steps, and use them to your advantage.
Pay close attention to what he said up there. Those are common phrases that a trainer would tell a new hire at a dealership. After you are done reading the article, go back and watch the video again, and notice the subtle ways he inserts a few of The Steps into his helpful hints.
Step 1 - Meet & Greet
The meet and greet is the first thing that happens when a customer drives up and gets out of the car. This is when you feel bombarded by guys in suits with big fake smiles, and they say something like this:
"Hi! Welcome to NJD Auto, My name is ____, and yours is? _____. That's a great name, and I don't want to forget it, so I'm going to write that down. I am so glad you decided to stop by today, where'd you folks come from today? _____ Oh neat! I live (or my aunt, grandma, sister, brother or best friend lives) near there. Well, I'll tell you what, to save you time, because I know how valuable that is to you, I'm going to talk with you for a minute, find out what your wants and needs are, and I will definitely help you folks out. Follow me!"
Before you know it, you are inside, moving on to the next step. Even if your true intention was to just stop by and ask to use the restroom, you are involved in the car buying process.
WHY THEY DO IT -
Offers a positive, professional appearance.
It begins getting you comfortable with giving the salesperson information.
It begins establishing rapport.
It eliminates objections.
Most buyers would rather start by saying, "we are just looking right now." Notice this; the example above does not allow you the opportunity to say much at all, including an objection. (You will notice overcoming objections before they come up will be a common theme.)
It establishes control.
The hardest job a salesperson has is keeping control of the deal. When it comes down to it, you, the buyer always has control, because you can stand up and walk out at anytime. It is the salesperson's job to make you feel like he is in control, and will lead you to the promised land, if only you will do what he says.
HOW YOU SHOULD HANDLE IT - Go with it. Really, unless you are a glutton for punishment, you probably do not want to be at a car dealership all day. If you begin objecting now, one of two things will happen. Either you will not get the help you really do need, or you will frustrate the salesperson, and he will immediately begin questioning the viability of the car deal, and will get pushy. Neither of which leads to a positive buying experience for you. There is really nothing wrong with giving the salesperson your name, and why walk around a car lot when you have someone willing to do all the leg work and bring a car to you?Credit: from CB and GK via Flickr Creative Commons
Step 2 - Initial Interview
The initial interview is when you sit down in the middle of the showroom, among all the showroom models, and discuss everything from your name, address and phone number, to your trade, how many kids you have, your desired model, your favorite sports teams, your desired monthly payment, the weather, your down payment, to your commitment to buy, not today, not tonight, but now. You might feel like I didn't group the topics well, but that is exactly how a well-trained sales person will lead the conversation.
WHY THEY DO IT -
To slow you down.
To take control.
To establish rapport.
To get you excited about buying a car.
To find out what vehicle you are shopping for, and all the things that you want and need in a new car.
To get your budget.
To get an immediate "self-bump". Here's how that works.
Salesperson: "So what sort of monthly investment were you aiming for?"
You: "Well, really I don't want to pay anything more than $450 a month."
Salesperson: "$450 up to.... $465 $470 or so?"
You: "Yeah, that'd be alright"
And without even looking at a car, you have given the salesperson an extra $20 per month as a starting point.
HOW YOU SHOULD HANDLE IT - This is where your acting game should start. Act antsy. When the salesperson leads you to a table, stand, don't sit. If he walks away, you should to. Go look around the showroom, grab a cup of coffee, look at the pamphlets, and make the salesperson come find you. Don't be difficult, be "excited". You are selling him too. If he thinks you are excited, then he will get excited. This will pay off in the end, when he gets disappointed thinking he is about to lose a deal. Also, this is your first chance to tell the salesperson that you are not interested in negotiating on payment. Use the line,
"I hadn't really given thought on payment. If the final price works out, then the payments will work out."
It is a big hurdle for the salesperson, but he's not likely to try to overcome it now.Credit: from || UggBoyâ™¥UggGirl || PHOTO ||... via Flickr Creative Commons
Step 3 - Selection and Demonstration
On step 3, the salesperson will tell you, "hang out here while I go get a vehicle for you, and pull it up. I think I have the perfect car for you." He will go to the sales office, brief the manager on what is going on, and depending on your salesperson's experience level, will get a key, or be told what key to grab, and will go get a vehicle for you. You can count on the vehicle he pulls up to not have everything you are looking for. Expect for it to be the same model you want, but a trim level or two down from what you said you wanted. For instance, if you want a Honda Accord EX-L V6, he'll probably bring you an Accord EX-L, or if he's really gutsy, bring you an EX. If you want a base Accord LX, he'll might bring you a Civic EX. When you point out that it isn't what you asked for, he'll say something like:
"Well, based on the financial parameters you gave me, this is the car that we have the best opportunity to make work. Now, if you don't mind paying a little more, we can look at that EX-L V6 you mentioned. Which way do you want to go?"
After that discussion, the salesperson should drive you off the lot, and explain all the fun features, why it is a good feature, and the benefit of having the feature. Those are referred to as the FABs; Feature, Advantage, Benefit. Then, he'll pull into some empty lot near by, do a walk-around of the car with you, do more FAB, then, he'll get you all excited and let you drive. While you are driving, he's going to talk to you about a lot of personal things. He'll talk about his family, ask you about yours. He'll ask what your favorite radio stations are, and turn the radio to one of them. After a short drive, he'll get you to pull up into the "sold line, because I don't want anyone to try to buy your car out from under you."
WHY THEY DO IT -
To build excitement.
To build value in the product.
To establish rapport.
To get you familiar with the vehicle.
To get you committed.
HOW YOU SHOULD HANDLE IT - When the salesperson brings you a vehicle, make sure it is the color and trim level you want. If it is not, send it back. If you ordered a Steak with a baked potato at your favorite restaurant, and they gave you fried chicken with peas and carrots, you would send it back. That meal only costs a few bucks. This car costs a lot more, so make sure its something you like. If you settle for less, you will suffer from buyer's remorse, and have no way out. Pay attention when he starts explaining things. If it is something you don't like, mention it. If you don't want a sunroof, but all Accord EX-L V6 have a sunroof from Honda, make sure he knows you are settling. He's trying to build value in his product, so you have to strip that value. Stay neutral. Don't fall in love with the car, but don't hate it either. A good salesperson will sniff out your dislike of a car, and will spend time trying to find one you do like. If you don't like it, OF COURSE, tell him. Again, don't settle for less than what you expect. Most dealerships don't have a "sold line". So when you drive back in, and he asks you to park it in the sold line, say you're not quite ready for that. Put your deal in doubt. When he asks what's holding you back, re-mention the things you found during the test-drive, and of course, always mention that it comes down to the final price.
SIDE NOTE - I laughed with a customer when, after I told him to park it in the sold line, he said, "well, is there a maybe line?" I liked having fun with my customers, so I gave a short answer that I shouldn't post publicly, and made him laugh back. I ended up selling him that car, and a few days later sold his wife a car that was the exact same. They had matching Hyundai Tuscons, but to give her the upper hand, I went to our parts department, bought her a set of fuzzy dice and had them hanging from the mirror when she took delivery. I was able to have all that happen based on the rapport and trust I built from the time I met him when he drove up. He obviously did not read this article.Credit: from landrovermena via Flickr Creative Commons
Step 4 - Trade Talks
Whoever wins trade talks wins the whole shebang. That can be one of the easiest ways for you to lose money, and hopefully you will have done some research before going in, and you can know what to expect. What will happen is this. Your salesperson will now sit you down, and go over some information on your trade. The roles are reversed from the demo on the new car. He will ask you about what is wrong, it is your job to tell him what is great. After he gets some basic information from you, he'll ask you to go out and take a look at it. He's going to do what is called a silent walk-around. He'll do a slow circle around your car touching scratches, putting his fingers in the tread of the tires, honk the horn, and some other things. He is not the trade appraiser. What he's doing, is hoping to devalue your trade, and he's silently trying to get you to blurt something out, like "Oh I was hoping you didn't notice how old those tires are." He's hoping you will acknowledge deficiencies in your trade so that when they try to low-ball the offer later, he can refer to what you have already acknowledged is wrong with the car.
WHY THEY DO IT - To de-value your trade in your mind
HOW YOU SHOULD HANDLE IT - Don't acknowledge any deficiencies in your trade, instead, focus on the new oil, new belt, upgraded stereo, new spare tire, and anything and everything else you may have added to, maintained or repaired on the vehicle. If you've been in an accident, don't offer that information. They have the resources available to find that out, but there's no reason to do their job for them. Just like he was trying to build value in his new car, you need to build value in your trade.Credit: from MelvinSchlubman via Flickr Creative Commons
Step 5 - The Negotiation
The next step is what salespeople live for, and most buyers hate. Sales people spend countless hours practicing and role-playing the negotiations. They are pros. You, the buyer, do this once every few years. It would be akin to a guy like me, who plays tennis once every few years playing against Andy Murray. It is not a fair fight. UNLESS, you are prepared, educated, calm and dug in.
The sales person will continue to try to keep you excited and will fill one of these out with you.
Credit: my own work
Before any of the four big boxes are filled out, the top will be filled out, and the "Statement of Commitment" will need to be signed. Once those things happen, the action happens. The first time you see numbers in the "4-Square", it will be numbers that are way to high. This is called a "rocket sheet". The reason dealerships do this is because they want to get your thinking up, and they want you to see them as the good guys when they drop the price. It also gives them an opportunity to make a lot of money, should someone actually agree to it. Their goal is to get you to negotiate on the bottom two squares. That allows them to move numbers around, without losing as much profit. There is really no way getting around the negotiations, but as long as you stand fast, eventually you will get the true best number that the dealership can offer. But not until after a few "turns." That is when the salesperson can go no further, either because he is frustrated, or the sales manager loses trust in his ability to close the deal. This is when you will meet the Assistant Sales Manager. That is who you want to meet, as negotiations are reaching a point where the Sales Manager is getting uncomfortable. When everyone agrees on the numbers, you sign a final agreement, and move on.
WHY THEY DO IT - To sell a car while maximizing profit.
HOW YOU SHOULD HANDLE IT - First, stay calm, cool and collected. Fake frustration, act angry, sure, but keep your real emotions under control. You should always negotiate from the selling price, and trade value blocks. Make sure they are negotiating "out-the-door" price, meaning after taxes, registration fees, and administrative fees. Don't expect a huge discount right away. It is going to take a little give from you for you to take from them. They high ball, you low ball. It is all a part of the game you must play. As the dealership comes down in price, you go up, but not much. Once the salesperson introduces you to the Assistant Sales Manager, you'll know that you are getting close. As long as they don't let you go, then they still have room to move. When the Assistant Sales Manager starts to lay the ground work to let you leave, that's when you know that they really are at a near bottom line number. When you are finally happy with the price in front of you, ask for just one more thing. Ask for either, tinted windows, another $250, free oil changes for the first year, something little. If they say no, eh so what, you were already happy with the price. If they say yes, then yay! You got a little extra, and now you get to move on to the next step.
I know I didn't really cover HOW to negotiate, but that is because there is already a good infobarrel article with some quick tips.
Step 6 - Finance
Now that you have agreed on how much you are willing to pay for the vehicle, you may think you are done being sold to. Wrong! Your salesperson will introduce you to yet another manager, who will "go over the paperwork with you." It is hard for me to give you much direction here, because what you find important is your decision. You will be offered some products, and be asked to sign a lot of different papers. When everything is done, you will be directed back to your salesperson, and be ready to take delivery.
WHY THEY DO IT - To sell more products and make more money
To finalize the deal and get contracts signed.
HOW YOU SHOULD HANDLE IT - Simply remember, everything in the finance office is being sold to you. It will sound a lot less like selling than what you've just gone through, but it is still selling. Because they want you to buy it, they will negotiate it. If you are putting less than 20% down, then buy GAP insurance. This product will protect you if you total your vehicle while you have negative equity. That is the only product that I would buy in the office. Pay attention to what you are signing. Mistakes are made, and sneaky managers may try to get something added in that you may not have agreed to. This is not the time to blindly sign paperwork. If the dealership agreed to tint your windows, or add a pinstripe decal to the car, this is where you need to get documentation of that. You will also be shown a lot of different numbers. The line items mean less than the bottom figure. That is your "Out-The-Door" number. Make sure it matches what you agreed to. If it doesn't, mention it. If the Finance guy says there's nothing he can do, say nothing, stand up and walk out. Don't worry, the deal isn't over. Your salesperson is intently watching you in the office, and when he sees you walk out without a handshake, he will panic and sprint to the sales office. The sales manager will fix it. More than likely, it won't come down to that. Also, if you are financing the vehicle through the manufacturer or a bank that the dealership has set up, notice the interest rate. If you have a better rate at your bank or credit union, tell them. Even if you don't, pretend you do. The finance guy makes money on that too, so he won't want to lose that business, and will usually be able to drop the rate by at least 1%, sometimes even 2% or more, depending on the state, your credit history and the bank. If you have financing set up through your bank or credit union, and the dealership can't beat their rate, then feel free to finance with your bank. Don't feel bad for the guy in front of you, he's not paying for your vehicle.
When everything is signed, you have only one thing left to go through at the dealership.Credit: from buddawiggi via Flickr Creative Commons
Step 7 - Delivery
The Selling is over. You are almost done. While you were in finance, your new car has gone through make-ready to get it detailed, it has been given a full tank of gas, and a great sales person will have taken the preset radio stations from your trade and programmed them into your new car. This is now delivery time. This is when the salesperson will be trying to repair his reputation with you, if it became a little hostile during negotiations. First, if the Service Department is still open, your salesperson should walk you through the service area, introduce you to one of the service writers and the parts guy. Then, he'll explain all the little gadgets in your new car, and walk you through setting your car up. Once done, you will get to move all of your stuff from your trade into the new car, shake another few hands, get a business card, and drive away.Credit: from Tatiana12 via Flickr Creative Commons
WHY THEY DO IT - To make sure you understand your vehicle before you leave
To ask for perfect scores on Customer Service surveys
To get referrals
To earn repeat business
HOW YOU SHOULD HANDLE IT - Well, since you are done buying, be excited. Show them how happy you are to have your new car. If the sales manager comes out, you can have a little fun with him just by saying, "I love this car so much, I would have paid sticker price for it." That will get a few laughs, but make sure they know you are joking, otherwise it may get your salesperson fired. When you see your clean car for the first time, make sure that you do a thorough inspection of the vehicle. Scratches, dings, bumps and other imperfections should be pointed out, and you should get something in writing from the dealership saying you can get them fixed at no cost to you. Shake those hands, take the business cards, and carefully, drive off the lot. YOU HAVE A NEW CAR!!!
When they bring up the survey, pay attention. That really is an important part of the salesperson getting a paycheck. If a salesperson does not make survey score standards, he will lose out on bonuses and days off. It doesn't hurt you or cost you anything to give your salesperson a perfect score, and it means the world to him. So despite what really happened, you still bought the car, and were happy enough with them to do that. For the sake of salespeople all around the world, give them a perfect score when you get that phone call.
Step 8 - Follow up
You salesperson will follow-up with you a number of times over the next week or two, then you should hear from him at least once or twice a year. They will call you or email you or send you letters, just to let you know that your business is appreciated.Credit: from andrew.wippler via Flickr Creative Commons
WHY THEY DO IT - To get future business from you or your friends and family
To get perfect survey scores
To keep your pulse on when you might reenter the market
HOW YOU SHOULD HANDLE IT - Don't be afraid to answer your phone or respond to emails. Just like any business, it is never good to burn bridges. As I mentioned above, give your salesperson a perfect survey. It means the world to him, and costs you nothing. If you did not enjoy your experience, don't refer anyone to them. If you did, refer someone to your specific salesperson, but let your salesperson know. Make sure you get a referral fee. Some dealerships offer as much as $250 bucks to refer someone. There is no reason not to get a little extra money. This is a good way for you to bring up any questions or concerns you may have with your new car. Don't get irritated, salespeople are trained, and required to follow-up.
Despite over 4,000 words, I know there are some things I could have added. I have even considered writing an entire book about navigating The Steps to the Sell. I know the article is long, but just by reading this, you will be a much more successful car buyer. You may only remember a few things from this article when you go to the dealership, but just those few things will help you have a better experience.