Posted: June 24, 2013
The no-haggle edge
A strategy that worksDavid Sneed
From the Curious Marketing File comes this: car dealers and “No-Haggle Pricing.”
This scenario seems like a dream come true, doesn’t it? No longer do we need to match wits with Slick Rick who schemes to squeeze us for every penny. No more will we wait while the “manager” comes over to rip another chunk of flesh from our exhausted, disoriented corpses.
Except …the freedom is also the chain.
We’re discouraged from offering less than sticker since the lowest price is right there on the windshield. This saves AutoHaus from taking a beating at the hands of a world-wise consumer who, with only his phone, can see what the dealer paid Detroit.
So I wonder: Is no-haggle pricing good for the consumer? Somehow I doubt it. Much like casinos, the house always holds an edge.
This shopping model stems from a smart double-pronged marketing strategy. The first part is convincing the fraidy-cats to "Come on down! We won’t take advantage of you, honest." You can see your cost right there on the windshield. No need to attempt your laughably bad poker face since you’re already getting the best deal.
No-haggle attracts the most lucrative type of customer: Wilty Wilma, who can’t stand the pressure and pays the price on the glass.
The other prong of their plan reduces the power of the savvy car buyer. With bargain shopping Apps, more and more people are buying at rock bottom prices—or they don’t buy at all. The dealership sees margins shrink when these cats walk in the door. Now with no-haggle pricing, Bargain Betty can take it or leave it.
This is an old contractor trick. I know; I’ve done it myself. When we don’t want the job, we over-bid it. We can’t just say “We don’t want your business,” even though that’s what we mean. Instead, we offer a deal you can’t accept. And if it turns out you do accept, we grin-and-bear-it all the way to the bank.
So to recap: Bring in the rubes with a no-haggle price $2,000 below MSRP (because these hillbillies don’t realize we used to take $3,000 off in old-timey haggling days.)
Meanwhile, the dealerships have a new defense against the tough negotiators who drive off without leaving their pound of flesh: Our way or the highway.
It’s win-win—but mostly for the dealers.
So I’m not necessarily against this strategy, I just like knowing why companies do what they do. And auto dealers are in a tough racket. Where else do we routinely offer less on an item with a price tag?
Good marketing is good marketing. If you can attract your best customers while discouraging the worst, you’re doing something right. Even though some may consider this to be a bit sneaky, the dealers who offer no-haggle pricing are on to something good—for their bottom line.
David Sneed is the owner of Alpine Fence Company,and the author of" Everyone Has A Boss– The Two Hour Guide to Being the Most Valuable Employee at Any Company." As a Marine, father, employee and boss, David has learned how to help others succeed. He teaches the benefits of a strong work ethic to entry and mid-level employees. Contact him at David@EveryoneHasABoss.com