If you talked to everyone who came into a traditional dealership and asked if they were dreading a specific aspect of the car-buying process, chances are a common answer would be “negotiating on the price.” Dealerships are well aware of this, and many are starting to implement an entirely different sales method. Also called the “no-haggle” price model, the one-price selling model aims to completely eliminate the negotiation process.
With the one-price selling model, dealerships come up with the price before the customer walks through the door, and no haggling is needed.
The negotiation process has become more obsolete because we are in the age of the Internet and more customers are doing thorough research on vehicle prices before walking into any dealership. They are getting an idea of what fair and reasonable prices for specific vehicles are, and they’ll walk out of any dealership that they feel is trying to scam them even after the long, dreary haggling process.
Good dealerships do their research, too, and know the price points of both their competitors and the auto market as a whole. If done right, the prices they come up with are usually competitive.
Cox Automotive’s 2019 Car Buyer Journey study noted that consumers are making fewer visits to dealerships when shopping around for a car, which may increase the benefits of the one-price selling model. If consumers are shopping at less dealerships, they are more likely to take an offer from whichever ones they do choose to go to. It saves time, which people seem to have less of these days, and it also reduces the number of “eager” salespeople customers have to talk to.
PCG Digital Marketing noted that dealerships who are looking for new employees may also benefit from this model because most auto salespeople “would prefer a salary with bonuses rather than a percentage of their sales.” It’s no secret that many salespeople at traditional dealerships have a difficult job because if they don’t make the sales, their income suffers. Since “negotiation skills” aren’t required with the one-price sales model, the position may also be more attractive to newer talent.
Sales managers may find that the one-price sales model is more helpful to them as well, as the Rikess Group finds they can “focus on developing people while managing a very well defined sales process.” Instead of trying to teach the sales staff better negotiation tactics, they can focus on other skills such as customer service, expediting the paperwork process, and finding ways to increase customer satisfaction.
The Rikess Group reported that the one-price sales model can help bring in customers because “the process is fast, fair, simple and transparent,” which can lead to referrals and five-star reviews online. Unsuccessful negotiations at traditional dealerships can leave customers unhappy and more likely to post negative comments about the dealerships, which can lead to less business. The one-price sales model, therefore, doesn’t cause the risk of a lower rating because of negotiation handling.
Of course, many customers may not trust the one-price selling model, and it could lead them to look elsewhere. The customers don’t know how the dealership came up with the final offer price and whether or not it’s a fair price; therefore, they may decide to leave and check the price another dealership. Sarah Shelton of US News also reported that many consumers think the simple process is too good to be true and will opt out. The one-price selling model, according to Shelton, is also not good for those customers who like to “win” negotiations, as they aren’t given the chance to haggle at all.
Traditional dealerships who switch to this model, of course, won’t find it to be an easy transition. Having a solid picture of how the dealership should look and be run is crucial before trying to make the change. The Rikess Group indicated that another downside to transforming the sales process is that sales managers might not always be “on board” with the changes because they “either don’t have the desire or the skill set to take the journey.” Making sure the entire team is comfortable with making the change can avoid future issues.
Change is never easy, but it can indeed be the best option with the way that the economy and consumer attitudes have changed.
Overall, one thing that doesn’t change is the requirement of dealerships to have competent and friendly sales staffs. Even though much of the car buying process is done online now, Cox Automotive’s 2019 study also found that 16% of survey respondents still reported that “dealing with the salespeople” was their top frustration with the car buying process. Therefore, the people in a dealership still need to have the skills required to engage with customers and ultimately make the final sales regardless what price model they use.