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Permalink Reply by Brad Bowers on July 19, 2012 at 10:57am

I have been training dealers on a Limited Negotiation process for several years.  Jim Boldebook has some good points - namely that some people would be thrilled with some movement, hence the Limited Negotiation philosophy.

However, there are many benefits to a Limited Negotiation Model:

1) The ability to attract a more diverse workforce - women and Gen Y don't want to negotiate so they don't think of careers in car sales.

2) Take out all the "back and forth" and the time to sell a car is dramatically reduced.  Faster transaction times means more sales per salesperson.  12 cars a month should be the MINIMUM acceptable performance.

3) Increase sales and salespeople without adding managers - with empowered salespeople, managers have to spend less time on each deal.

4) Everyone talks about gross compression with "One Price" but never about the other costs to sell a car.  If salespeople can sell more cars per person, you can reduce the average comp and they still make a very good living.  And selling more cars without adding managers reduces supervision costs per car.  In the long run, advertising costs also come down because the word of mouth is so strong.

Finally, a Limited Negotiation philosophy is the key component to a better sales model, but not the total answer.  If a dealer can consistently deliver a sales process that makes the customer comfortable AND is different from the competition, he can maintain gross.  Jim Boldebook said it himself "Because I didn’t have the heart to grind another dime we made the deal."  When the customer is comfortable, the negotiating stops.

If anyone would like to discuss the other components to a differentiated sales process, feel free to contact me.

Brad Bowers

brad@bowersgb.com

 

 

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