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True story: Recently, my daughter and her boyfriend went to a major brand car dealership to buy a used car. Note that I made up the numbers for my daughter's financial privacy, but the results are still the same.
The dealer was asking for, say, $26,000 “all inclusive” for the car, but my daughter had already decided that $20,000 was the most she would pay. So there was a lot of work to do to actually close a deal. After some discussion, the salesman did his best and brought the price down to $25,000. But that still left a big gap, so he told her, “Let me talk to my manager and see if he has any ideas.”
After five minutes, the salesman and his manager entered the room together. The manager explained that $25,000 was a great price; he was already way below the suggested retail price and that he felt the offer was “very paltry.” Then he used the famous line, “Okay, here's what I'm going to do to sell you this car today.” The manager pulled out a piece of paper with revised numbers on it, showing his price now at $23,995. He explained to my daughter that this was the absolute best price. He was “all in”; this was his “best offer,” and he told her to take it or reject it. To top it all off—remember, this is a 100% true story—the manager took out a big red stamp and pressed it onto the paper. On the stamp, in bold red ink, was written “FINAL.” $23,995. FINAL.
My daughter replied, “Thanks, but I'm sorry. It looks like that's not going to work.” Without hesitation, he immediately blurted out, “How about $22,500?”
When my daughter told me the story, I had a great laugh. After the big show, the manager held his price up for a full six seconds. And the idea of the red closing stamp made the story even better. But the more I thought about it, the more I realized that there is actually a lot to explain here in terms of sales tactics, psychology and effectiveness.
Related: 3 Unconventional Sales Tactics to Help You Close More Deals
I'm not in the car business and have never sold cars, but I can see some common sales tactics (and mistakes) at play here:
The waiting game
All of this happened after my daughter had spent hours on the property. It was late on a Saturday and the manager knew she was hoping to finally make it. Somehow the manager wore her down and let the time pass, playing the “waiting game.” In this case, it didn't work, but often this idea of using time as a weapon can be very effective. Using time as a strategic element in the negotiation process can be effective, but you have to use it carefully and respectfully. Too much time pressure can backfire.
Closing the deal by changing the sales setup
When the salesperson reached their personal negotiating limit or felt they were losing it, they brought in their manager. This move not only added time, but also created a new opportunity for a new dynamic. The dealership never wants a potential buyer to leave the store, so if one person isn't getting the job done, it's always worth trying with someone else. Bringing a manager or company administrator into the negotiation process can create new dynamics and opportunities for closing a deal.
Submit your best and final offer
Although I laughed hysterically when I heard about the red stamp, I soon realized that it was actually a smart move. I guess there was once a few sales and marketing people sitting in a room and someone said, “I have an idea – let’s make a red stamp that says ‘Final’ and use it in negotiations.” Everyone probably laughed and said, “No, I’m serious!” And then everyone thought about it and agreed that the idea, as funny as it was, actually made sense. It’s one thing to tell someone something verbally, but when it’s “official” and in red ink on paper, it’s human nature to believe it and view it as irrefutable. Using psychological sales tactics to create a Fear Of Missing Out (FOMO) effect, such as pitching customers to make a decision, is a common mistake. A stamp such as a “Final Offer” can be effective in conveying seriousness and finality, but you must keep your word or you are likely to lose credibility.
All of the tactics described above were smart, but in my opinion the dealership screwed up in the following way:
Attempt to shut down too early
The manager came in unprepared and instead of taking time (again, time is on his side) to talk about value, create alignment and build rapport, he went straight on the attack. This tactic may work, but I found it too aggressive. He would have been better off discussing the product's pain points and goals, coming up with additional incentives, etc. Understanding the customer's needs, discussing the product's value and building rapport and trust can be critical to successful sales.
Related topics: How to master your sales success – Why every response and every rejection counts
Putting an unattainable offer on the table
The manager decided to try to close the deal in a pretty aggressive way. In some cases, that tactic makes sense. But he got the numbers completely wrong. He knew it was a full $5,000, or 20% off, and he decided to go all in, $23,995. Of course, given the speed at which he dropped another thousand dollars, he had a lot more wiggle room. If he was going for the hard close and the “FINAL” offer, he should have made it more convincing. By putting on a big show and then immediately lowering his price, he completely lost credibility and reduced the chances of closing. In this case, he lost my daughter's trust and the sale. When negotiating, it's important to know the other party's budget and limitations before making an offer. Being aware of their limitations increases the likelihood of closing a deal.
Saying that your offer is “final” when it is not
If you offer something of value at a good price and say it's “final” (which I personally don't recommend as a sales tactic), stand by it and mean it. Your word has to mean something. When he realized his “final” price wasn't going to work, instead of lowering it, he could have offered an additional valuable incentive, perhaps a free service or some kind of special financing. When a “final offer” is presented, it's important that you stand by it and have your final say. If adjustments are needed, they should include additional incentives or value to maintain trust and credibility.
Selling is an art, there's no doubt about it. A good salesperson builds a relationship, asks questions and listens, understands the customer's problems, is honest and transparent, and acts with integrity. Of course, strategies, techniques, incentives, and a lot of human emotion and psychology play a role, but all of this can be done successfully without losing your credibility.
And the moral of my story? Make a wise decision before using the big red stamp!
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