I get asked by non-automotive industry friends all the time about car salespeople. The questions typically pertain to the questionable practices that they perceive car salespeople as having. We all know the stereotypes and they exist very much today as they did in the past despite the fact that, in my opinion, many dealers have changed their business practices either because they’ve come to the realization that you just can’t rip people off or it’s been regulated out of them.
“Perception is reality” is the old saying. Holding gross on a deal is considered good business by the dealer while the consumer thinks they’ve been ripped off.
One of the more common questions I get involves MSRP. What is it? Do people really pay that? Why? Don’t you feel guilty selling it to them at MSRP?
When they ask me that, I tell them this story:
A few years ago, there was a knock at my door. This little Asian guy offered to clean all the flooring and furniture in my house free of charge. The carpet in my house was the original carpet that was in it when we bought it and having it cleaned had been on my “to-do” list for awhile. He said there was no trick involved nor any obligation. I agreed.
I watched this little Asian guy proceed to vacuum my whole house. He then pre-treated the couches and shampoo’d and cleaned them. After that, he pre-treated and shampoo’d the carpet in my entire house – all 2500 square feet of it. I watched him scrub and put elbow grease into each part of this process. It took him 5 hours. He didn’t say a word the whole time.
Being a salesperson, I was waiting for a pitch. At the end, the house and furniture looked fabulous! I appreciated all the hard work and effort he put into it and told him that. I told him I was a salesperson and that I understood he was selling this machine and gave him permission to “pitch” it to me.
He told me that he had been for the last 5 hours.
I thought about it for a minute. The vacuum we had actually had just broken. It was not the first time it had broken. The vacuum only cost about $200 but we’ve had to have it fixed at least 3 times over it’s lifespan at $50 each time. The vacuum he had used undoubtedly, in my mind, did a fabulous job cleaning the house. I asked him how much the vacuum cost and then proceeded to pay $1700 for it.
Now, since that day, I’ve had quite a few friends tell me that they owned a Kirby and had paid much less for it. They told me that this little Asian guy ripped me off.
I told them I didn’t feel ripped off at all. The salesperson that came to my door had met me for the first time. I was probably the hundredth door he had knocked on that day and probably the only one that took him up on his offer. I knew when I invited him in that he wanted to sell me the vacuum. After he was done, I thanked him and complimented him on his hard work.
Through his hard work and effort, he slowly and methodically, over the course of 5 hours, BUILT VALUE into his product. At the end, I FELT that the vacuum was WORTH $1700. To this day, I don’t regret paying that much for the vacuum (which still works great and runs beautifully). I’m sure that I paid MSRP. I didn’t haggle nor did it even cross my mind to do so.
You may be saying that you don’t have 5 hours to waste with a customer like that. Salespeople tend to pre-qualify and try to figure out whether the customer standing in front of them is going to “buy today” and then base the time and effort they spend with the customer on those perceptions.
The customers that the salespeople think are buying today get all the attention from the salesperson and, at times, the salesperson will spend 5 hours with a single customer from contact to close. The difference is that most of that time is CLOSING and not BUILDING VALUE.
If a salesperson spent more time building value with EACH customer without trying to figure out if and when the customer is going to actually buy something, I believe that the process would take the same amount of time (whether that is 2 hours or 8 hours) but, in the end, the gross would be higher, the close would be easier and the customer would be happier.
Salespeople wonder why the people that don’t “buy today” (but do come back and buy at a later date) don’t remember their name. It’s because not only did they do nothing to build value in their product, but they did nothing to build value in themselves.
The little Asian guy’s name was David. He is one of the best salespeople I’ve ever met and not once have I regretted paying MSRP.