My wife and I had occasion to shop for a new car recently, and she happily handed the reins of the negotiation process over to me. I gladly took on the responsibility, not because I’m a natural born negotiator—although I guess I hate it less than the average person—but because I was eager to try out some of the negotiation principles I talk to my coaching clients about and see how well they translate to a car dealership.
This article tells of my car purchase negotiation experience and the lessons it reinforced.
Old-school vs. New-school negotiation
In a recent article, I talked about a salary negotiation and the analogy of negotiating over pie. If you and I are negotiating over pie and we’re old-school negotiators, we’re both going to assume that winning equals fighting for the biggest piece of pie we can negotiate for ourselves.
Applying the old-school pie model negotiation approach to the car dealership scenario, I’d define winning as paying as little as possible for the car I want, and the salesperson would define it as having me pay as much as possible. And where do we go from there? We do the ol’ dance in which I offer low, they counter high, and eventually we zig-zag our way to a “fair” price somewhere in the middle.
But this time, I was determined to try a new-school, more nuanced approach to car buying negotiation. My plan was to:
- Be transparent about what was important to me
- Ask what factors, other than price, were important to the dealership
- Look to co-create with the dealership an agreement that worked well for both parties and wasn’t based solely on price
New-school approach meets reality
I started by telling my salesperson that I honestly didn’t need to buy a car at this time and that I was looking for a “deal of the century” that I just couldn’t afford to pass up. Wait, what?! Didn’t I just say that I didn’t want our agreement to be based solely on price? Yes, I did. But in my case, it really wasn’t about a particular number I had in mind. When I walked in the dealership that day, I wasn’t sure what I’d be willing to pay; I just knew that I wanted to feel like I was getting an “exceptional” deal.
Feeling a certain way was a requirement for me to agree to a deal, and I wanted to be transparent about that. In my mind, the dealership had an opportunity to help me understand how “exceptional” a deal they could give me, and in the process help me feel how I needed to feel to buy the car.
Does that sound too nuanced to you? It apparently sounded that way to the folks at the dealership because, as soon as I got in front of the sales manager and told him how I wanted to “feel,” he asked me: “OK, so what number do you have in mind?” Reflexively, I gave him a number that definitely represented an “exceptional” deal, which of course took us right back to the old-school zig-zag negotiation dance of offer low, counter high until we get to a “fair” price.
But I stopped myself from doing the zig-zag dance. Instead, I asked him: “So other than price, what are some things that you guys care about when you’re selling a car?” This approach landed a little more effectively with him than the one about how I wanted to feel. He answered: “We want to move cars; that’s what we care about.” OK, that was good to know. So price wasn’t the only thing they cared about; they also cared about volume.
At the apparent end of the road, we found a way forward
I asked what else they cared about but didn’t get very far with that line of questioning. At this point, he wanted to settle at $1,000 more than the number I had mentioned earlier, and I was throwing him for a loop because I wasn’t doing the zig-zag bargaining as is the local custom in car dealerships. Realizing that I was frustrating him and seemingly having reached the end of the road with the negotiation, we shook hands and expressed mutual regret that we couldn’t reach agreement.
And then it happened. As I was about to walk away, he said:
“Well, there is one thing I just thought of.”
It turned out that, if I set up my financing through the dealership, the dealer would get a cash incentive, and he could pass that incentive along to me, and that would get us to my exceptional deal. We had reached the end of the road, but then we found a way forward. Excellent!
We both failed to reveal additional motivators
So that’s it: proof positive. If you follow the 3-step plan above—if you lay out what’s important to you, ask the other party what’s important to them, and remain open to co-creating a solution—you can make new-school negotiation work at the car dealership, right? Well… not exactly.
I believe I had a good plan, but I executed it less than perfectly. Although I got exactly what I said I wanted out of the deal (feeling like I had gotten an “exceptional” deal), soon after we agreed on price, I started seeing the signs of things I forgot to consider in the negotiation.
I’m a collaborative guy who likes to look for win-win scenarios. So if my win represents your loss, that’s not satisfying to me. And yet, in this car buying negotiation, it looks like that’s exactly what I created: a win-lose scenario.
As I was signing the purchase paperwork, we had a hiccup relating to the number of oil changes that were included with the purchase of the new car. During the negotiation, I had understood the car came with two years of oil changes, but the finance manager was telling me that it came with just one. As we started discussing the oil changes, I realized the negotiation had not gone as well as I had hoped when I heard the words:
“Come on, we’re already not making any money with this deal!”
OK, so you might say that they’re sore losers. But I say that, if they’re thinking of themselves as losers in this deal, then I didn’t create a win-win scenario, did I?
Start by taking full account of what’s important
How could I have created more of a win-win? I could’ve asked more questions about what was important to them. By the time we worked through the oil change misunderstanding, I came to understand certain other things that mattered to the dealership in addition to price:
- They want to create a long-lasting relationship with a valued customer
- They care about the opinion I express of them in surveys and online reviews
- Certain numbers in their deals matter more to “corporate” than others
- They care about “moving” cars (i.e., volume)
I could’ve done a better job of understanding these things about them before we hammered out a price. But even before I got to the negotiation, I also could’ve had greater awareness about the things that mattered to me:
- Having both parties feel like they won
- Feeling like a valued customer
- Feeling welcome at the dealership after the deal
New-school negotiating takes time and energy
It’s possible that my experiment of trying out the new-school negotiation at a car dealership was misplaced. The type of negotiation I had in mind, where the parties come in with a genuine interest in sharing what’s important to them, takes time and energy to conduct. If a party cares about price, speed, and volume much more than any other factors, then they might not be willing to invest the time and energy it takes to reach an optimal, win-win agreement.
But I don’t write off car buying negotiations as a lost cause either. As I mentioned, I could’ve done much better—particularly when it came to acknowledging all the factors I cared about in my car buying experience. Had I gone in with the same open, collaborative attitude that I hoped to see in them, had I shared that I wanted to create a win-win and that I wanted to feel valued and welcome after the purchase, I wonder how much better of a deal we would’ve struck.
Guillermo Villar is principal coach with Cambio Coaching. He helps high-achieving individuals and teams communicate with Purpose to get the business results they want.