One time I smarted off to my dad saying, "When I grow up and start working, I'll buy whatever I want." His response: "You won't want as much then." He's proven correct.

excerpt from: DaveRamsey.com Violet Quote

July 10, 2010

#506 - Saving

My father told us to save for the short term and long term. Short term was for things we wanted; long term was for things we needed.

excerpt from: DaveRamsey.com Shannon quote

July 07, 2010

#503 - Confessions of a Car Salesman Glossary

Confessions of a Car Salesman Glossary

Glossary to "Confessions" Car salespeople have their own vocabulary. It describes their customers, the deals they make and the day-to-day life on the lot. Here is a sampling of how they talk when the customer's not around.

Be-backs - A customer who leaves the car lot promising to return later, saying, "I'll be back," or some variation of that statement. "The guy was a be-back. But I think he meant it. I'll see him again."

Boss - The typical way that salespeople address the managers or the GM. "Hey boss! Got a deal for you!"

Bumping - Raising the customer's offer for a car. "If Mr. Customer says he only wants to pay $250 a month, just say, 'Up to -- ?' He'll probably bump himself up to $300 without you doing anything."

Closer - An experienced salesman who is brought in to "close" the customer by making them agree to a deal. "If I worked with a better closer I'd have more units on the board."

Desk - This is the sales manager, not the place he sits. "Ask the desk if these rebates are still in effect."

Demo - This is the test drive. "This guy comes in, demos the car and I think he's ready to buy, right? Then he tells me the car's for his wife and he can't make a decision without her."

F&I - This stands for the Finance and Insurance office where the documents are signed. The F&I salesperson usually will push products such as extended warranties, fabric protection and alarms. "The wait for F&I is two hours. Better stick with your customer so they don't leave."

Full pop lease - This is when a vehicle is leased at 110 percent of the sticker price - the highest amount allowed by most banks. "I got them into a full pop lease. I'll get a nice voucher for that."

GM - The General Manager. The GM is the head honcho at the dealership. He runs the business from day to day. "The guys were standing out on the curb drinking coffee so the GM called them into the tower and read them the riot act."

Green pea - A new salesperson. "The funny thing is, green peas can outsell the veterans. That's because they don't know how hard this job is."

Grinder - A customer who negotiates for hours over a small amount of money. "We were only $500 apart but the guy wouldn't sign. Man, what a grinder."

Lay down - A customer who takes whatever deal the salesperson offers. "I quoted him monthly payments of $575 and he took it! I wish all the customers were lay downs like that."

Mini - The commission on a deal where the car was sold at close to invoice price. "Sure, the deal was only a mini. But I qualified for a weekend bonus and made a grand."

Mooch - A customer who wants to buy a car at invoice. "People are spending too much time on the Internet. It's turning them into a bunch of mooches."

Packing payments - Adding extra profit to the cost of a car. "This place I used to work got busted for packing payments. Next job I get is going to be in a no-haggle store."

The Point - The place on the car lot where the "up" man stands looking for customers. "The GM saw me standing on the point with my hands in my pockets. He went ballistic and sent me home for the day."

Pounder - A deal with $1,000 profit in it. "Doctor comes in and buys the top of the line model, fully loaded - and he pays sticker! That'll be a two pounder for me."

Rip their heads off - This describes taking a customer to the cleaners. "I stole their trade in, I sold them the car at a grand over sticker - I mean, I just ripped their heads off."

Roach - A customer with bad credit. Not to be confused with the "roach coach" (see entry below). "The guy looked good. But we ran his credit and he turned out to be a roach. We're talkin' a 400 credit score here."

Roach coach - The food truck that comes around to the dealership every day. "I should've known better than to eat that chili from the roach coach. My stomach's killin' me."

Spiff - A tip, kickback or payment of any kind, usually cash which is handed between salespeople. "I spiffed the F&I guy $20 bucks and he took my customers first."

Strong - This has a special meaning on the car lot. It means holding firm on your price and being a tough negotiator. "When they ask for your price you have to be strong. Hit 'em with high payments, then scrape them off the ceiling and start negotiating." (See also "weak.")

Tower - The office where the sales managers work. This is usually a raised platform allowing the managers to see over the roofs of the cars so they can watch customers and their salespeople. "Attention: All new car salesmen report to the new car tower!"

Turn over - Also known as "turning," this is the practice of passing a customer from one salesman to another. It is thought that this will prevent customers from leaving the car lot. The theory is that the customer might just have bad chemistry with the first salesman and he might like the next salesman. "I turned this guy to my partner and he wound up buying. I'll get half of the commission on the deal."

Up - A customer that walks on the car lot. The term probably comes from the order in which customers are taken, as in: "I'm up next." Many dealerships also have an up system. "We've got ups all over the lot, and you're in the back drinking coffee?!"

Voucher - Car salespeople receive a voucher to let them know what their commission was for selling a car. They don't know until the deal is finalized exactly how much they will receive. "Check out this voucher. I thought I had a pounder. Instead it's a mini."

Weak - This describes being a weak negotiator or coming down too quickly on price. "The guy was weak so he only lasted a few months. How are you going to make money in this business if you give away cars?"

Source: Edmunds.com

July 06, 2010

#502 - Confessions of a Car Salesman Part IX

Confessions of a Car Salesman Part IX

Part 9: Lessons from the Lot

In this final installment, I'd like to sum up what I've learned, and offer a few things that can help you the next time you shop for a car. I've decided to divide this chapter into two sections: Car-Buying Concepts and Specific Recommendations. The Concepts are general thoughts underlying the car-buying process. In some cases these are simple, fundamental realizations that you might already know. But it doesn't hurt to revisit them before we move on to the Specific Recommendations.

Car-Buying Concepts
Concept 1: The Stakes Are High

This realization hit me very strongly while I was selling cars — people can lose a lot of money by making the wrong choice when buying a car. This is a serious decision for the average household budget. If you are unprepared for the encounter with the salespeople and make a poor decision you can lose money. A lot of money. How?

Well, say Joe Consumer decides it would be nice to have a new car. Without doing any research he heads on down to the car lot and hooks up with a sharp salesperson. Joe Consumer might be talked into buying a car in too high a price bracket. He could also be switched to leasing without his knowledge or consent. And he might also put down too much money. In the F&I Room he might be talked into buying protection packages, road safety kits and extended warranties.

What would these mistakes add up to? Over the course of five years (the length of some lease contracts) this could mean he pays thousands of dollars too much for that car. This might convert into hundreds of dollars too much per month. Many people are on tight budgets. Paying a hundred dollars too much could sink the ship; certainly it would produce stress and prevent a family from saving or investing their money for the other necessities of life.

The monetary loss is only part of the problem here. People become angry, humiliated and resentful once they find out they have been deceived and overcharged. And yet, once they sign the contract, it is difficult — if not impossible — to unwind the deal.

I should add that there are many good dealers who wouldn't cheat or overcharge even a naive customer. But, sadly, there are enough unscrupulous dealers out there to make caution and suspicion necessary. I know that many of the salespeople I worked with would take an extra thousand dollars profit without a thought, then laughingly brag about it to the other salespeople. The management of the dealership rewarded this kind of profit taking and called it superior salesmanship.

Concept 2: Self Defense is Simple

OK, that's the bad news. The good news is that it's not that hard to protect yourself from severe economic loss. By doing even an hour's worth of research, by keeping in mind several simple concepts, the average person can be reasonably sure they won't be swindled. By doing an additional hour's research, they can get a pretty good deal. It's not that hard. In fact, some people find that they like the process once they learn how to handle it.

Knowledge is power. That's almost a cliche. But it holds this simple truth: if you know the numbers of the deal it will be hard for the salespeople to overcharge you. It's like going to a store and seeing a nice lamp for $30. Then you go to a second store and see the exact same lamp for $50. Now a salesperson approaches you and tries to talk you into buying their lamp at the higher price. Will you do it? Probably not, because you know the exact same lamp is sitting on the other shelf for $20 less. What can the salesman say to you to convince you that their higher price is justified?

Now let's extend this concept to car buying. If you wander onto a car lot without knowing how much the cars should cost, you have no frame of reference. As your reasoning power is reduced by a combination of breathing new car smell and test driving the car, you will begin to believe the car salesperson when he tells you the car is going to cost a lot but it will be worth it. Remember, the salesperson wants you to be excited about the car because then the rational side of your brain will become disabled. Just ask yourself this: if you buy today, how will you feel when you wake up the next morning? Is this a decision you can live with?

What car buying numbers do you need to know? Find out how much the dealer paid for the car you want to buy. Find out what cars like that are actually selling for. Find out what your trade-in is worth (if you want to trade it in to a dealer). And finally, if you decide to finance the car, find out what your monthly payment should be by shopping for a car loan before going to the dealership.

Concept 3: Profit Equals Commission

I never really thought of this until I sold cars but... Car salespeople earn their living by inflating the price of the car you are buying. The more they inflate the price, the bigger their commission. This might seem very obvious, but we tend to lose sight of it when the smiling salesperson greets us on the car lot. They make us think they have our best interests in mind. The good salespeople do have our interests in mind. The unscrupulous salespeople are thinking how your purchase increases their commission.

One of the dealerships I worked at had a sliding scale for commissions. The higher the profit, the higher the commission. Naturally, the salespeople tried to hit that point where the commission was bumped to the higher percentage. That might mean moving you into a higher level vehicle. It might mean increasing the profit by financing sleight of hand. In both cases, this smiling salesperson, with the personable air, didn't have your best interests in mind.

I believe in paying a dealer a profit for his car. I also believe in rewarding the salesperson for their expert help. But I don't think this justifies making an unfair profit at my expense.
Car-Buying Recommendations
Now we come to the nuts and bolts of getting a good car at a fair price. This isn't a tutorial, since we have this information already posted on the Edmunds.com Web site. Instead, these are guiding principles to help you navigate the choppy waters of car buying. These are rules I saw being broken all the time by the shoppers that turned up on the car lots where I worked.

1. Use the Internet. The Internet is an amazing tool for car shopping. It levels the playing field by giving accurate information to the consumer. It takes the anxiety out of negotiating. It forces dealers to slice profit because they must beg for your business. It allows consumers to comparison shop loans and leases, as well as extended warranties and insurance. It gives the consumer power. Use Edmunds.com to conduct research and our PowerShopper tool to solicit bids. Once you enter the information about the car you are looking for into the PowerShopper interface, the dealers will come to you.

It's likely that you will have to visit a car lot at some point in the car buying process (for the test drive, for example). The following recommendations are general tips that will help you if you insist on face-to-face negotiations with car salespeople when buying a new vehicle.

2. Don't be in a hurry. This is a tough one because many people live busy lives with tight schedules. Their car breaks down and they have to do something about it this weekend, or on their day off, or at night. They might be overwhelmed by the problem and just throw themselves at the mercy of the car salesperson. Big mistake.

First, if your current car is on its last legs, consider sinking a little money into repairs so you don't have to make a panicked move at the car dealership. Yes, it's tempting to think of getting a new car and leaving the old heap behind. But caving in to this kind of impulse will cost you money.

If you can't fix up your old car, rent a car for a week. And make sure you rent the kind of car you are thinking of buying. There is no better way to test drive a car than to live with it for several days, using it for your daily commute or your typical errands. I guarantee you will learn something significant about the car that will help you make your final decision.

3. Walk away from any deal/salesperson you don't like. If you aren't committed to this rule you will lose money. Car salespeople know that if you leave the car lot to "think it over" you might decide not to buy their car. So they pressure you to "buy today." This isn't good for you. It means you might buy the wrong car. It means you might agree to financing that doesn't fit your budget. It means you will probably pay too much.

If you have serious misgivings about the deal you are making, walk away. Similarly, walk away from any salesperson who seems too aggressive, overbearing, bullying, evasive or unreliable. There are plenty of good salespeople out there. Find one. And deal with that person until you have the car you want, at the best price with the right financing for you.

4. Know the numbers. Yes, we already covered this under the heading of general concepts. Now let's look at it in a little more detail.

When you visit a dealership, and go into the sales room, the salesman will reach for a 4-square worksheet. They do this to keep track of the numbers in the deal that will affect their profit. Don't you think that if the pros do this, you should do the same thing to protect your money? If you don't, how else will you know what to pay for the car? What to take for the trade-in? What your monthly payment should be?

Using Edmunds.com, find out what the invoice, sticker and Edmunds.com True Market Value^® (TMV) prices are for the car you want to buy. TMV^® is a new concept developed by Edmunds.com. It's a guide that provides you updated weekly pricing on what you should pay for a vehicle — without having to spend hours negotiating with a dealer.

Write these prices down. Then find the approximate price of your trade-in. Then figure out how much money you will have to borrow and how much your monthly payment should be. Consider the difference between paying cash, leasing and financing. Make sure you also find out about holdbacks, rebates and incentives.

Is your head swimming with numbers now? That's pretty normal (unless you're some kind of math whiz). That's why you should write all this down. Then, with the numbers in front of you, get out your calculator and crunch them. When they have been put through the wringer, you will get one gleaming, shiny number which represents what you should pay for the vehicle you want to buy. With that number in mind, set a range. Start low and increase your offer in small increments until they say the magic words, "We've got a deal."

5. Shop around. Say for a second you didn't know any of the numbers. Say you were in a jam and had one morning to get a new car. You could probably get a good deal by shopping around. You can do this in person or on the phone — or even with e-mail.

What you do is this. Contact dealer number one. Tell the salesperson, "I'm ready to buy today but I want your best price on the car." When the salesperson gives you his best price, write it down. Or, if you are doing this in person, have him write it on the back of their business card.

Now contact dealer number two and do the same thing. Only, tell them you have already been to dealer number one and you got such and such price. Then, repeat the mantra: "I'm ready to buy today. But I want your best price." Naturally, they will try to undercut the first guy's offer.

Now contact dealer number three and do the same thing. By now you should have three offers. If you want, you can even go back to the first guy and see if he will whittle a few more bucks off his offer. If not, can the dealer throw in something else to make their offer more attractive?

The beauty of this is that the market will define itself in a short period of time. And when you're done, you will be confident that you got the best price possible. Incidentally, dealers hate it when you shop their offer. They hate it because it can get you a very good price.

6. The deal's not done until you drive off in your new car. You don't have to be a jerk about it, but you should be on guard throughout the entire car buying process. The biggest place that people err is when they have struck a deal with the salesperson. They breathe a sigh of relief and think the dealing is done. But the buyer needs to stay alert for the F&I process. Extra charges can appear in the contract. There may be a problem with the condition of the car. All these things can be addressed if you have the right attitude. If anything crops up during the F&I process that doesn't jibe with your numbers you can still walk away from the deal.

7. Always remember that it's your money. Car salespeople are good at making us feel obligated to buy from them. They serve us sodas in the sales room. They run to get the keys for the test drive. They brave their bosses wrath with our lowball offer. So, when it comes time to make a decision we're tempted to think we owe it to the salesperson to buy from them. Yes, we certainly do owe them our business — if the deal is fair. Don't do it just for the salesperson. Do it when the numbers make sense. After all, you may be signing a contract you will have to honor each month with your hard-earned money. How will you feel about it as the years roll by and the car begins to show its age. Thinking about that can be like a bucket of ice-cold water in the face.

Final Thoughts
The world of car buying is changing rapidly. Buyers are more informed. Dealers are more sensitive to their customers' satisfaction. But, like in many industries, the old ways die hard. So it is still important to be informed and to make a good decision when shopping for a car for yourself and your family.

Of all the advice I've offered, I'd just like to stress that it's important to remember that buying a car should benefit both you and the dealer. While I have focused on deflecting the sales techniques in the dealership, I don't recommend becoming overly defensive. If you deal fairly with the car salesperson, and you get the same in return, the transaction can be enjoyable — even exciting. It really should be. So, I wish all of you a great shopping experience and many years of driving pleasure in your new car.

Source: Edmunds.com

July 05, 2010

#501 - Confessions of a Car Salesman Part VIII

Confessions of a Car Salesman Part VIII

Part 8: Parting Shots It was the last day of my career as a car salesman. I was working the evening shift at the no-haggle dealership, on a day in the middle of the week. A typical day. A slow day. I made my sales calls in the "business development center," trying to set up sales appointments I knew I would never keep. My heart wasn't in it and, not surprisingly, I couldn't convince anyone to sell me her "quality used car" for "above market value."

I sat at my desk in the showroom hoping for some diversion to pass the time. I had done that a lot as a car salesman. And on this day, sure enough, something happened to kill a few minutes. It involved a salesman I'd gotten to be friends with, a guy named Craig. He had recently moved from Montana and true to his roots he looked like the Marlboro man — rugged features and a thick graying mustache. Unfortunately, Craig also had bad teeth and was a foot shorter than what I imagined the Marlboro man to be.

Early on, I had been told a good salesman "walks the lot" every day to check on inventory. Craig did this religiously and memorized the location of every car on the lot. If you were in the middle of a sale, and the customer decided he wanted a white coupe instead of a black four-door, you had only to call over to Craig and he would instantly give you the location of the car that would seal the deal. I later realized Craig had another reason for walking the lot. He had a bottle hidden out there somewhere. He'd always return from the lot a touch more animated, a glow in his face.

On one return trip from walking the lot, he went to sit at his desk and missed the center of his chair seat. The chair was on wheels and began sliding backward as he continued downward. Despite his heroic efforts — clawing for handholds on a nearby potted plant — down he went. And all this happened right in front of the boss's office window.

There was silence in the showroom for a few seconds, then high-pitched squeaks of laughter from a saleswoman, named Allie. Her laughter continued until it infected the rest of us. We stumbled outside to recover ourselves and, as Allie lit up a cigarette, she began regaling us with stories of other mishaps involving the parade of salesmen and women who had worked there during her tenure. I felt odd as she talked about past co-workers since I knew I would soon be joining their ranks, disappearing into the anonymous job market.

Allie told us how she had helped a friend named Mark get a job as a salesman there because, "He was an even bigger klutz than me." One day he took a customer's driver's license into the showroom to photocopy before going on a test drive. Turning back to the customer, he walked right through a plate glass door, saying, "Here you go," and handing back the license as if nothing had happened. As he turned away, Allie saw blood spurting from his knee where an artery had been severed. They wrestled him into the break room and a mechanic in the service bay, who had been a medic in Vietnam, staunched the bleeding. They rushed back outside to tend to the customer and discovered he had a long shard of glass protruding from his foot.

Another time, Mark went outside to "lock and block" and never returned. Lock and block is a nightly ritual where the sales staff makes sure all the car doors are locked and the entrance is blocked by parked cars. In this case, the salesman had pulled on a chain link gate to see if it was locked but succeeded in pulling it down on top of himself, pinning him to the ground. When they lifted the gate off him, he had a waffle pattern on his face from the chain link fence.

As we talked, the afternoon turned to night and a chilly wind came up. Allie went inside to make more sales calls and Craig drifted away to do a thorough check of our inventory. I leaned against a car and watched the traffic passing in the street. From where I stood I could see the guys across the street at the Dodge dealership drinking coffee and smoking. It was slow over there too. I began thinking back on my experiences, summarizing what I had learned from my three months as a car salesman.

Of course, I absorbed a lot I couldn't easily describe, bits and pieces of information I knew would come back while I was at Edmunds.com. But how had my view of the big picture changed?

I know for sure I'll never look at car salesmen and women in the same way. I used to hate and fear them, to lump them all in the same category with sweeping generalizations. Now, I had some insight into the waters they swam in. I sympathized with them, I pitied them, and — in some cases — I admired them.

I saw that many car salesmen and women, like myself, were just moving through the dealership experience, on their way from one point in their lives to another. Most of them didn't have college degrees and were trapped in lives that they thought offered few chances for advancement. The car business offered them a way to use a lot of hustle and little book learning to make money. I admired anyone who was trying to improve his (or her) life, particularly through hard work. But making big bucks in the car business wasn't the slam-dunk it was made out to be.

Previously, I had known car salesmen from the outside, as I encountered them while buying a car. Now I had worked alongside them. I had been rejected by customers and bullied by sales managers. I had been excited by a big sale and disappointed when a sure thing fell apart. I saw the same dream they saw: big commissions from easy sales. All you had to do, as my assistant sales manager Michael told me, was get "right in the head."

In the Friday morning sales meetings at my first dealership the managers tried to psyche us up by saying that we could make more money as a car salesman than a doctor. True, some of the successful salesmen made a lot of dough. But the vast majority of car salesmen were eking out a living, thinking that some day, somehow, their luck would change and the money would begin rolling in.

So, you think I'm romanticizing car salesmen? Trying to clean them up and excuse their evil ways? And, you might ask, if the salesmen aren't the bad guys, who is?

Having been a salesman myself, I began to view the managers and dealership owners as the real culprits. While salesmen play people games with the customer, the guys in the tower work the numbers with computers, their eyes fixed on the bottom line. They can see at a glance what kind of profit they are taking from the customer and they do it any way. Furthermore, they bully the sales staff, encouraging them to manipulate, control and intimidate customers while they take the lion's share of the profit.

Sometimes, the profit a salesman generates is not even pocketed by them. One salesman told me the F&I people can work their magic to rob a salesman of his commission. They move front-end profit to the back end where it evaporates from the salesman's voucher and returns, over the years, to the dealer in the form of high interest and steady payouts. I experienced a little taste of this myself. I leased an SUV to a single mother and at sticker price expected a nice commission. But on payday I cashed a $65 check. No explanation. No hint of where my commission had gone.

The management pushes the salesman out the door, lets him meet and greet the customer, then takes the profit. Not only that, but the management also blames the salesman when something goes wrong. I saw this quite clearly when the TV news team did its hidden camera investigation of the dealership (more on this in Part 6). A salesman was made out to be the bad guy. When the camera was turned on the dealership owner he disavowed knowledge of what was happening in his business and promised a complete review of their practices. This, despite the fact that at Friday sales meetings, the owner was cheering the boys on to get more deals at a higher profit.

Profit.

By itself profit is a positive word. But in the car business, the dealership's profit is the consumer's loss. I'm not suggesting that the dealership be run without a profit, but in one case I heard about, the dealership made a 16 percent profit on a $25,000 car. That meant the consumer, the average Joe buying the car, paid about $4,000 too much.

While working as a car salesman I became impressed with the damage a bad car deal can do to the budget of an ordinary person. In one case, I participated in leasing a car to a couple at well over its value. I was haunted by the thought that this nice ordinary couple had trusted me, and I had let them sign a contract that would bind them for five years to a high-interest lease. I consoled myself thinking perhaps another dealer would have inflicted greater damage.

How did the car business get so screwed up? There's nothing else in our society that is sold with the consumer so conspicuously unprepared.

During the sales seminar I took, the instructor attempted to tackle the "Why is it this way?" question. He said that just after World War II there were a lot of people who wanted to buy cars, and there were a lot of people who had money, but there weren't enough cars to go around. So the car salesman didn't really have to "sell." Their job was merely to qualify customers, to find out who was really going to "buy today," so they could move on to the next customer. This set the tone for the business and it is still that way today.

Source: Edmunds.com

July 03, 2010

#499 - Confessions of a Car Salesman Part VII

Confessions of a Car Salesman Part VII

Part 7: No-Haggle Selling When I was hired at the no-haggle dealership, I was told I would be doing some phone work to build up leads. "Phone work" is a euphemism for calling people at dinnertime and harassing them. I realized I had become one of those people that I despise — a telemarketer. Still, to complete this experience, I attacked it with enthusiasm.

The leads we were given were names and numbers of people who had bought cars several years ago (and presumably would be ready for a new one) or people who had recently brought their cars in for service. We were given about 20 names a day, and those people who seemed like hot prospects were then called more frequently. Other people who had responded coolly were called again in six months. All our calls were logged into a computer database.

We were given a script to follow when making our calls. To me the dialogue sounded stilted and ridiculous. But I made a point of following it word for word. For example, after we had identified ourselves, we had to ask, "Am I interrupting anything important?" This seemed like a poor strategy to me. I felt they would tell us if we were interrupting anything. Or we could tell from their tone of voice if they were busy.

Assuming we hadn't interrupted something important, we then explained why we were calling: "We have a shortage of quality used cars on our lot right now and my manager would like to offer to buy your car at above market value. We would like to invite you to come down here for a free appraisal. Is the afternoon or the evening better for you?"

The beauty of this system, the BDC manager told me, was that "they're expecting you to sell them something. But you're not! You're offering to buy their car!"

Of course, all you're really doing is offering to take their car as a trade-in. Because, when you are appraising their car, it will begin to occur to them that — if they sell their car — they will need another one. So they begin looking around our car lot and before you know it, you have a sale and a trade-in deal. Nice idea. But it never worked for me.

Another ploy was to call someone who had once bought a car from our dealership and leave a brief mysterious message such as, "Mr. Jones, I have some information about your 1996 (fill in make and model of car) and I need to contact you as soon as possible. Please call me at — ." This method nearly always brought a return call from a customer with visions of recall information or maybe even police trouble. When they found out that we merely wanted to "buy" their car, they were often quite annoyed.

Still, I was surprised at how receptive most people were to talking with me on a cold call. They were more open than I am to people who call me at dinnertime or while I'm not "doing anything important." I was even more surprised at the loyalty customers showed toward this car manufacturer. Apparently this "no haggle, no hassle" style of selling created a feeling of good will that lasted throughout the entire ownership of the car. And it was an American car at that! I was filled with patriotic pride thinking how these cars might someday be as popular as the hot-selling Japanese models.

But still, I hadn't sold a car at this dealership. I had attended class, talked on the phone and even taken a few ups on the lot. But no one was buying. When I looked restless, the assistant sales manager, a heavy blond woman, said: "Please don't quit! I know it's slow, but wait till the weekend. You'll sell a car this weekend."

"Wait till the weekend," was a popular refrain in the car business. Everything revolved around those two days when ups were supposed to stream onto the lot. One of my other sales managers told me, "On the weekends, we have so many ups, we call it the tuna run."

"Tuna run?" I asked.

"You know — so many fish it's hard to pull them all into the boat. You'll see."

The tuna run never materialized at my old job. I was anxious to see if it would come true at my new job. I made sure I arrived early Saturday morning because, I was told, salespeople took ups in the order in which they arrived for work.

At noon I was still waiting for my first up. I decided I better eat something before the tuna started running. I began walking toward my car when Al called me back, "Dude, where're you goin'?"

"McDonald's. You want something?"

"Dude, dude. You can't leave. You miss an up, that would be like a $300 burger."

Al was very persuasive. We ordered a pizza to be delivered. When it came it had the wrong topping and Al didn't have enough money for the extra charge. He was going to send it back. I made up the difference and we sat down to eat in the break room. I never saw food disappear so fast. He hunched over the pizza, I heard muffled grunting noises and it was gone. He belched a few times and headed back outside to look for ups.

One thing I discovered was that car salesmen are easy marks for anyone selling things. That's because they are always hanging around — they're a captive audience. And some of them are flush from a recent sale. At the first dealership, I was in a sales cubicle one day when a guy stuck his head around the corner. "Silk ties, 10 bucks," he said, and disappeared.

Outside I found a cluster of salesmen gathering around the open trunk of a shiny black BMW. In the trunk were boxes packed with ties in protective plastic sleeves. I picked out two ties and gave him a twenty. The tie guy (as he was called) fingered the tie I was wearing and then compared it with the two I had selected. He nodded approvingly. "You've, like, got this pattern thing going. Cool."

After the tie guy visited the dealership, the salesmen would congregate in the bathroom trying on their new purchases, complimenting each other. Gold ties were the most popular. They went nicely with the watches, rings and chains the salesmen wore.

Besides the tie guy we also had the sandwich lady and an older guy who sold golf balls he had found in water hazards. The balls were neatly arranged in egg cartons in the trunk of his car. "Three bucks a dozen. Mix and match," he told me. "Lotta Titleists there." Then he dropped his voice confidentially, as if he was giving me a special deal. "Got a Callaway three iron in the backseat. Ten bucks." I imagined an irate golfer giving it a heave into a water hazard. Little did he imagine that it would be resurrected in this way.

Then there was the chicken man. You never saw the chicken man so much as smelled him. He seemed to appear on weekend nights when it got busy. You would smell fried chicken and see a figure out of the corner of your eye carrying a cardboard box on his shoulder. Then the word would spread: "The chicken man's here!"

I went into the F&I office one night and found a sales manager hunched over a chicken dinner with his tie thrown back over his shoulder to protect it from grease splatter. He was eating with great purpose, making harf, harf, harf noises.

"Is it as good as it smells?" I asked.

"No. But I was starved," he said, throwing the bones in a trash can. He wiped his mouth, picked up his contracts and moved back into the hallway to a waiting customer.

It was almost 2 o'clock that Saturday afternoon when I got my first up. I saw a man wandering among the new cars. This was the first real up I had gotten since I took my sales seminar. As I walked toward him I began rehearsing all the things I had learned.

His name was Ron and he told me his car was in the service department. He wasn't going to buy a car today but since he had a few minutes to kill he wanted to see the new family sedans we offered. The top of the line model came with a V6 engine that had been highly praised.

I took Ron to the lowest level family sedan on the lot. We had been told in the seminar that it was "easier to sell up, than down." This meant that you always started the customer at the least expensive model and let them bump themselves to the more expensive models. The reasoning was that, once they had sat on leather and felt the power of a V6, how could you get them excited about driving around in cloth and plastic, powered by a whiney little four-banger?

The strategy worked. Ron told me he liked the roominess of the car and the way it handled, but he wanted power. No problem, I told him. Then, as if the thought just occurred to me, I said, "Tell you what, while we're on the test drive, I'll have your car appraised. Then, if you decide you want to buy, I can give you an idea of what your payments will be."

He agreed, although he told me he would pay cash rather than finance or lease the car. I got all the information on his trade-in and gave it to the assistant sales manager. She began feeding the information into her computer, then pounded on the keyboard in frustration.

"Damn thing's locked up," she said. "I'll have to do it the old-fashioned way. She pulled out a small reference book and added the cost of options and the mileage allowance. She gave me a trade-in value of $4,200.

"Great news," I told Ron, who had been waiting in the showroom. Salesmen always return to their customers with what they call "great news." I told him: "We can give you $4,200 for your trade-in. Believe me, that's high. You'd never get that anywhere else."

Actually, $4,200 really did seem like a lot. But I wondered if that was just in relation to the ridiculously low figures we gave for trade-ins at the first dealership I had worked at. Ron seemed encouraged by this figure so I decided to give him a little sales pitch about leasing I had cobbled together from bits and pieces of presentations I had heard, or overheard, from other salesmen.

Leasing is very popular these days. One of the benefits, from the salesman's point of view, is that it is so complicated that the customer sits transfixed during negotiations, unable to defend themselves. Usually, the salesman hits the customer with incredibly high monthly payments on a purchase plan. Then, as if the idea just popped into their mind, the salesman will say, "You know, there might be another way to get the payments down... Have you folks ever considered leasing?"

Personally, I think leasing can be a good way to go. For one thing, leasing allows people to drive more expensive cars. But you have to be careful. Some dealers base leases on 110 percent of the vehicle's sticker price. This is called a "full pop lease" and it's what most dealerships aim for. Also, it's easy to disguise the interest rate in a lease because it is expressed as a decimal multiplier instead of a more recognizable percentage rate. For example, a 9 percent interest rate becomes .00375.

At the first dealership I worked at, a veteran sales manager rounded up all of us green peas and taught us how to present it to Mr. Customer. He said to tell customers: "In three years, you can turn your old car back in and get one that has the latest technological inventions. And what do you think cars will be able do in three years? Who knows? Fly in the air! Go across the water! Go under the water? Who knows?"

I didn't give Ron that speech. But I did tell him that if he paid only the drive off fees (about $650) and gave us his trade-in as a down payment, he would have a $257 monthly payment for 39 months. I pointed out that we offered interest rates of 4.9 percent.

"Why take your money out of a mutual fund at 16 percent when you can use our money at 4.9 percent?" I asked him. "Then, at the end of the lease, if you love the car, you can buy it at about half its current value."

I looked up and saw the assistant sales manager frantically waving me into her office. I left Ron to ponder the advantages of leasing and stepped back into the sales manager's office.

"You didn't give him the price on his trade-in did you?" she asked.

"Of course I did. Why?"

"Damn. The computer just came back up. We're offering him about a grand more than what it's worth." She thought it over. "Look. We have to stand by our offer. But tell him it's good for today only. And if I were him, I'd jump on it, big time."

I walked back out into the showroom and rejoined Ron. "You're going to like this," I said (using a variation of the "great news!" opener). I explained what had happened, then added, "You can tell all your friends how you outfoxed the car salesman."

He chuckled. If you could get people laughing it got them on your side.

Still, there was a problem. Of course, there was always a problem in every deal. Ron's problem was simple and very common: he had to talk to his wife first. He kept calling her on his cell phone. But she was out with the kids. He confided in me: they had agreed his wife would be the next one to buy a new car. He was worried that she might be upset with his purchase.

By now I had been with Ron for about two hours. It had gone from being a hot, sunny afternoon to a cool, windy evening. Ron was hungry and so was I. But after all this, I didn't want to turn him into a "be-back."

Ron had given up trying to reach his wife. He was about to go home and talk it over with her when his cell phone rang. It was his wife. I moved outside to give him some space. It might sound corny but I began visualizing that I had made the sale. This is a popular technique with salespeople. It just means that you picture the outcome you want before it happens. I pictured shaking hands with Ron and saw him signing the contracts. But life isn't that simple. When Ron was done talking to his wife his answer wasn't yes or no. He merely said, "She's coming down."

A few minutes later a van pulled up and Ron's wife stepped out. Before she could speak I said, "I'm the pushy salesman who's been holding your husband hostage all afternoon."

She laughed. And I knew I had a sale. They leased the car for three years. I even sold them a service contract.

After Ron and his wife signed the contracts, I led them outside. They transferred all the crap from their old heap to their gleaming new car — cupholders, maps, cassette tapes, Kleenex, flashlights, etc. After they drove away, I pulled their trade-in to the back of the lot. The thing was a real beast. The interior had a moist, funky smell. At this very moment, I thought, Ron was driving home, inhaling new car smell. I enjoyed imagining how happy he must be.

Back inside the dealership everyone was hurrying to lock up and go home. The F&I manager came over and said, "You did a phenomenal job with that guy. I'm going to break my rule and speak to you before you've been here for six months."

So, did Ron get a good deal? Well, he drove in behind the wheel of an old heap. He paid only $650 out of pocket (drive-off fees on his lease) and he drove out in a more powerful, more reliable, safer, top-of-the line car.

Was the no-haggle method of selling better? From the salesman's point of view, it allowed me to focus on what the customer really needed. Also, the good will I built up on the test drive was preserved during the deal-making process. The only problem I could see with no-haggle selling was with my commission — I made about $350 on the deal. Not bad for four hours of work. But, as it turned out, it was the only car I sold that week.

Source: Edmunds.com

July 02, 2010

#498 - Confessions of a Car Salesman Part VI

Confessions of a Car Salesman Part VI

Part 6: Learning From the Pros I first started working as an undercover car salesman I was e-mailing my editors every day with accounts of car lot life. But as I settled into the job, my e-mails tailed off. There just wasn't much room in my schedule for writing. For example, one night I had a deal that didn't wrap up until 1 a.m. I had to be at work the next day at 9 a.m.

I must have let several days go by without writing my editors because I received an e-mail from my boss asking: "Have you gone native on us?" Maybe they thought I was making so much money, or enjoying life on the lot so much that I was going to change my profession. Not a chance. Sales isn't in my blood. I didn't like "tap dancing on rain drops," as one salesman described the sales pitch.

However, I had agreed to work at one more dealership — a no-haggle car lot — before I ended this undercover project. Before I could do that, though, I needed to leave my present job where I had worked for about a month and sold five cars. And I needed to find a way to make a graceful exit. Little did I know the unexpected form it would take.

One Friday morning I was trying to sell a pickup truck to a college student. During a break in the dealing I phoned home to get my messages. I heard my brother's voice on the message machine calling from the East Coast. He said he had sad news. My brother-in-law had died the previous night. It was completely unexpected and it left me in a state of shock.

I stumbled outside and told my sales manager what had happened. He said to take as much time as I needed and he would hold my job open for me. Later that week, I phoned him from the East to say I would not be returning.

When I got back from the funeral I began looking for a new job at a no-haggle dealership that sold American cars. This would make an interesting contrast to a high-pressure dealership that sold Japanese-made cars. I called several places until I found one where they were actively looking for salespeople. They asked me to come in for an interview.

It was a small dealership on a busy street filled with storefront businesses and strip malls. The used cars were parked along the front row facing the street with signs in their windshields listing the year, model and price. The new cars were parked farther back in two short rows and there were another 40 new cars on the back lot. Inside the showroom, two new cars were on display, surrounded by desks for the "sales consultants" — as the salespeople were called here. I noticed that, unlike at the previous dealership, about half of the salespeople were women. The uniform here was a polo shirt with the car manufacturer's logo on it.

My interview was with the sales manager, a laid-back guy in his mid-30s named Kevin. When I arrived he was in his office off the showroom floor. Evidently, there was no sales tower here. Kevin reviewed my application and recognized the name of the dealership at which I had previously sold cars. He whistled.

"How long did you work there?"

"A month."

"You lasted that long, huh?" he laughed. Then he added, "Why did you leave?"

"I got tired of lying."

"Right. When you work here you won't have to lie —." But then he stopped, reconsidering what he had said. "Actually, it depends on your definition of lying. But the point is we won't ask you to do anything that conflicts with your core beliefs."

He explained that the way they handled the trade-in is a judgment call for the sales consultant. Say the used car manager appraises the car at $4,500. The sales consultant could then tell the customer that we would give them $4,000 for their trade — thus adding $500 profit to the deal.

But in general, Kevin told me, things were as straightforward as they appeared.

"We don't hit people with stupid high numbers," he said. "We don't pack payments. We tell people we're no haggle, no hassle and we stick to that. It's a good place to work."

He offered me the job starting immediately. But first, he wanted me to attend a four-day sales seminar. I resisted because there had been so much training at my previous job. What I wanted was more of a chance to sell cars. Eventually, though, I agreed to go because I thought it might add a new dimension to the experience.

I attended the seminar with two other salesmen starting at my new dealership. They were both in their early 20s. One was a surfer dude named Al who had long brown hair combed straight back and a big tattoo on his upper arm. He blinked constantly — an affectation either left over from his surfing days, or caused by all the chemicals he'd poured into his bloodstream. The other salesman was Jeff, a sincere guy who was a gearhead.

There were a total of about 15 salespeople in the seminar. The others were from a variety of dealerships selling many makes and models of U.S.- and foreign-built cars. The class was taught by a tall, handsome man named Roy, who had sold cars for 17 years and wore an exquisite suit and silk tie. He told us that when he first started selling cars he was terrible at it. But then he decided to imitate the successful salesmen on his lot. Eventually he made a bundle using the skills he would teach us here. I had to wonder just how big a bundle he made if he was teaching seminars like these.

We then went around the class and introduced ourselves. I was struck by how the other salesmen described themselves in ways that revealed extremely low self-images. Most of them were divorced or refugees from other unsuccessful careers. Others were downright bitter and hostile. One salesman, 50-ish with a pink, bald head and white fringe of hair said, "I'm the kind of three-time loser that hasn't kept a job, a wife or kids for more than three years."

I prepared to listen attentively during this seminar since, after my first job, I had questions about how to sell cars more effectively. One thing that baffled me, for example, was how to get people into the sales office after the test drive. In some cases, the customer loved the car, they felt comfortable with me, but they wouldn't take that big step through the dealership door.

In one case, I had a husband and wife interested in a crew cab pickup. It was obvious the husband wanted to "buy today." The wife didn't. After the test drive I held the door open so they could walk into the dealership. He stepped in. She stayed outside. They had a little spat right there. The wife won and I lost the sale.

It didn't bother me that I didn't sell the truck. I wasn't there to sell cars as much as to understand the process. I felt bad about pressuring this couple when it was obvious it was causing conflict between them. But it came at a time when I hadn't sold a car for a few days and my boss was beginning to give me heat.

The names of slackers such as myself were put on a white board in the sales tower labeled, "Three-Day No Sale." This meant you had to meet with your manager to figure out why you were in a slump. Usually they told you the problem was that you weren't taking enough customers on test drives (called "demos"). The general manager of our dealership was fond of saying that if we demo-ed three cars without selling one, he would give us a "come-to-Jesus talk." This was like being read the riot act. You had to come to Jesus — to give everything to the dealership — or you'd be fired. Then, he added, if you demo-ed another car and the customer left without buying, you'd follow them home (because you'd be "blown out"). He reinforced his point with another of his favorite expressions: "You'll do it my way, or hit the highway."

Roy, the instructor at the seminar, was like the GM at my first dealership. He was filled with trite phrases and platitudes about sales. The difference was, Roy taught a total system for sales, called "Needs Satisfaction Selling." You found out what the customer's needs were and then you presented the car in such a way as to meet their needs. This meant you needed to know the car's features so well you could present it in a number of different ways. If the customer wanted safety you had to talk about ABS, airbags and crumple zones. If the buyer wanted performance you talked about the V6 engine, the silky-smooth tranny and the platinum-tipped spark plugs.

The selling system was built around a progression of questions we were told to memorize. That night I took these questions home and my 9-year-old, who loves role-playing, helped me practice using them.

I'd shake my son's hand and say, "Welcome to the dealership! And your name is?"

"Freddie."

"Good to meet you Freddie. Are you familiar with our product line here?"

"Uh uh," he'd say, trying to be serious like an adult.

"Fine. Do you mind if I ask you a few questions? That way I can better understand which cars on our lot to show you."

"OK!"

"Freddie, let me ask you, what are you driving now?"

"A BMX bike."

"OK. And what do you like about that bike?"

"Goes real fast."

"So Freddie, what you're saying is performance is important to you. Is that right?"

"I guess."

"Well, we have a model over here with a V6 engine that puts out 210 horsepower. Follow me."

He always followed me when I turned and walked toward the imaginary cars. I wished all the customers were like Freddie.

The next day in the seminar I was called up in front of the class to role play with the teacher. With 14 other salesmen watching, and snickering, and hooting, it was difficult to remember all the lines I had memorized. But I began to appreciate the way the questions helped identify and address the customer's needs. I thought back to all the haphazard sales pitches I had given at my first dealership. And I was glad I'd have another shot at selling cars in my new job.

During a break in the seminar I stood outside with my two buddies from my new dealership. Al, the surfer dude, told me his dream was to work at a Mercedes dealership. His father had once owned a Mercedes and he knew everything about every model ever made.

"Test me, dude," he said to me, blinking rapidly. "Dude, I'm serious. Test me. I know everything."

The other guy, Jeff started testing him and, sure enough, he did know everything. He could talk forever about how the taillights had changed from one year to the next, how they had added chrome or flashing to such and such a model. Jeff, on the other hand, knew everything about the motors they put in the cars.

Back in the seminar we learned about how to present "feature-benefits." It wasn't enough just to say this car had, for instance, an antilock braking system. You had to point out the feature — ABS — and then link a benefit to their needs — in this case, safety.

The teacher then took out a $20 bill and taped it to the easel he had been making notes on. He told us all to stand up. He then went around the class and named a benefit, and we had to name a corresponding feature. The last man standing (actually, our group included one saleswoman) got the twenty.

As we stood up, I whispered to Jeff, "You're going to win this thing, man."

"I wish."

"You will," I said. "You're like an encyclopedia."

"Economy," the teacher said, pointing at a standing salesman.

"Fuel-injected four-cylinder engine," the salesman said.

"Safety," the teacher said, pointing at another salesman.

"Dual front airbags," the salesman responded.

In the beginning, it was easy. But one of the rules was that you couldn't repeat any features that had already been mentioned. So we began to run out of benefits for our features.

Finally, there were only three of us standing: me, Jeff and the salesman who described himself as a loser.

"Performance," the teacher said, pointing at me.

"Twin-cam engine," I said.

"Aaaaant!" the teacher said, imitating a buzzer. "Sit down. Someone already said that."

I didn't hear anyone say that. I was disqualified on a technicality!

Jeff and the guy battled it out and Jeff finally won. I had identified Jeff as a winner and the other salesman had accurately described himself as a loser.

Jeff went to the head of the class and got his twenty. As he sat down, he said to me, "Good thing I won. I didn't even have gas money to get home."

An assignment for our class was to go to a dealership and critique a salesman or woman who waited on us. We weren't supposed to tell them this was for a class or that we were car salesmen. We were merely supposed to evaluate their performance in relationship to what we had learned. I chose a German car dealership along a street near my home. As I walked inside, it occurred to me that this was getting complicated. I was an undercover car salesman for Edmunds.com, sent to a dealership, which sent me to a seminar, which sent me to another dealership as an undercover shopping evaluator. I guess that made me a triple agent. Very good lines.

At the seminar we had been taught how to meet and greet, how to shake hands, how to evaluate needs and even how to overcome objections about discounts and pricing. The woman who waited on me at the German car dealership never shook my hand. I had to ask her for her business card. And when I raised a question about the car's performance she snapped, "Well you obviously haven't been reading Motor Trend. It was their top pick in all categories." I left the dealership feeling vastly superior.

We all graduated from the seminar a few days later and received cheesy little diplomas. The other salesmen were psyched up to go out and sell about 10 cars that very day. I went back to my no-haggle dealership and was eager to use my new sales skills. But there wasn't a customer in sight. So I hung around and shot the breeze with the other sales consultants.

In the car business, there's a lot of down time. All you have to do is drive past a car lot in the middle of the week. What do you see? Six or seven sales guys hanging around out front, sipping coffee, puffing on cigarettes, and watching the traffic flowing past, hoping someone will turn in. If a customer appears, they park their coffee cups behind the bushes and pop a breath mint. During the slow times, the conversation turns to dealerships where the other salespeople used to work. On this day, a saleswoman asked me about the place I had just worked.

"Was it as bad as that TV news station made it out to be?" she asked me.

"What do you mean?"

"Didn't you see the piece they did on it?" she said. "They went in there with a hidden camera and caught them packing payments and doing the old bait and switch."

I was amazed. "Are you sure?"

"Yeah. It's been running all week."

When I got home I logged onto the news station's Web site. Sure enough, the expose targeted the dealership I had previously worked at, along with several others across the city. Judging from the dates, they did their "investigation" just after I quit. I skimmed the article, looking for the names of Michael, my assistant sales manager, and the members of my team. As my eyes flew over the text, I realized I was hoping I wouldn't find their names. Why did I feel loyalty to them? When I reached the end I saw that they had escaped. But the hidden camera had caught a guy I knew vaguely.

The TV news investigation seemed pathetically shallow to me. A reporter went in posing as a customer to see what kind of service she would get. Six hours later they came out with the earth-shattering news that the salesmen were guilty of pressuring customers (you're kidding!). They also accused the dealership of overcharging the customer (stop the presses!).

It gave me renewed respect for my Edmunds.com editors who had made the commitment to send me into this world for several months. But with my deeper level of understanding, the morality of the issue began to blur. I don't think I'll ever be able to make sweeping generalizations like I once did, by declaring, "Car salesmen are scum!" I knew a lot of salesmen whose skills I admired. Besides that, it's a tough life. The hours stink and you live or die by your ability to sell dreams and move cars. So for the TV reporters to crucify the salesperson was a farce. The system was corrupt from the top down. This was proved when the TV reporter went to the head of the dealership. He said he was going to launch a thorough investigation into his dealership's practices — as if all this went on without his knowledge. And yet, he had been present in every Friday morning sales meeting, whipping the salesmen into a frenzy, urging them to go for "pounders" — a deal with a $1,000 commission for the salesman.

It was a pretty good bet that we would never be investigated here at the no-haggle dealership. We didn't pressure people, we didn't pack payments or steal trade-ins. The only problem was, we didn't have customers. I found myself wondering whether this phase of the undercover project was going to be a bust. If there's no dirt, what is there to talk about? But that was before the weekend arrived and we actually got some ups. And it was before they sent me into the phone room to drum up business with a technique that didn't exactly fit the company's customer-friendly image.

Source: Edmunds.com

October 16, 2015

March 15, 2015

March 09, 2015

January 11, 2015

December 27, 2014

December 19, 2014

February 06, 2014

January 11, 2014

August 20, 2010

August 09, 2010

July 16, 2010

July 10, 2010

July 07, 2010

Confessions of a Car Salesman Glossary

July 06, 2010

Confessions of a Car Salesman Part IX

July 05, 2010

Confessions of a Car Salesman Part VIII

July 03, 2010

Confessions of a Car Salesman Part VII

July 02, 2010

Confessions of a Car Salesman Part VI

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