If you’re like most people, the thought of taking on a used car salesman is not your idea of fun. I hope I can help change that.
As a kid, I always enjoyed playing RISK, you know the game that has you trying to take over the world. One of the key strategies of the game is negotiating treaties and picking your fights. It turns out as I learned the hard way, it can also sour friendships when you treat negotiating into a win-lose proposition. One of the successful strategies to winning is to play the “Switzerland” in the game and constantly looking for win-win strategies with your opponents so they are not incentivized to come after you rather they choose to go after your other opponents. My first tip in negotiations is to view the negotiations as a Game and that it is Fun.
Negotiations as a Game
It’s a mental thing, if you can convince yourself that this is human interaction game with rules (ethics) and you can get a deal that most people can’t, it’s FUN! Try to play the game as often as you can so you get comfortable with it. I’ve tried negotiating at retail stores (you’d be surprised if you talk to the GM, you can get all kinds of discounts including employee discounts as they are trying to make their quotas), restaurants, health clubs, phone service, cable bills, even movie theaters. Not all of them will work with you, but if you never try, you’ll never win. I’m also not saying that all negotiations should be win-win, there are *some* negotiations that need to be win-lose and I’d love to hear your opinions on that in the notes below.
Now, let’s take the used car salesperson as an example. I’ve bought all my cars used primarily because I’m cheap and I hate losing 10-20% of my car value as soon as I drive off the lot. So, I end up in the used car lots on several occasions and I do help friends and family negotiate. The second tip is PREPARATION. The used car salesperson, let’s call him Hank. Hank has a leg up on you, he has a lot more information about the cars, the market, what he bought the car for, and successful negotiating tactics. You, on the other hand, have none of these. The most prepared person always wins, hands down. He knows when to walk away and when to deal, emotion is generally taken out. So, what do you do to counteract this and have an advantage? Prepare. Know everything you can about the car you want before you step on the lot, know the blue book price, know the craigslist price, know the new car price, set an alternative so that you can walk away. Never negotiate in the dark! Your alternative keeps you from making a bad impulse buy, if your alternative is better than what they are offering you walk. Build that in.
My last tip for today is make the playing field LARGER. What I mean is that often times we focus on price as the only variable in negotiations and it often leads to an unsuccessful negotiations. You say $15,000 for the car and Hank says not a dollar lower than $16,100 and you both are stuck. Imagine that instead of focusing on price, you had asked Hank what else is important to him and how does he get compensated? Hank replies that he also gets paid a commission on add-ons like a warranty, protective paint, floor mats, financing through their preferred lender. You quickly realize that you were planning on buying the warranty and you were planning on financing through him anyways, but you use them as bargaining chips to allow him to reach his targeted compensation. He agrees to the $15,000 price if you finance through him and you purchase a warranty. Deal done. Ask more questions upfront than your negotiating partner and you’ll discover new ways to make a deal work on your terms. I’ve had tremendous success with this tip negotiating with software vendors who are willing to give on price for a case study or a steady reference. I’ve also had success with service companies like caterers assisting them with scheduling such that they could double-book in a single evening and getting a discount in return.
There are several other tips that I have, but I’ll save it for another post. Let me know about some of your success stories and share some of your tips in the comments below!