This article in no way gives pricing guidance or is a suggestion you band together to set prices. That is illegal and a practice known as collusion. Customers are free to negotiate price and you are free to set them. For legal advice see your dealership's attorney.

In the motorcycle business we have a tendency to make our own rules. For example as I write this my computer's spell check is screaming at me (well, you know the way computers do) that "desking " is not a word.

Well it is in our vocabulary. The fact we've taken a noun and made it a verb is not unusual. Take for example the company and search engine "Google. " Google is actually a proper noun, but how many people say, "Why don't you Google it? "

What is unusual is how "desking a deal " means many things to many people.

Now this newsletter is not setting out to outline the differences between descriptive and prescriptive grammar. But it does intend to give some guidance around the art and science of "desking " deals.

For our purposes, let's refer to desking a deal as the art and science of negotiating a motorcycle purchase.

Our dealerships, thankfully, come in many different configurations, each with nuanced differences. For the most part when it comes to negotiating the price of a motorcycle sale our dealerships are configured thusly (not a word you see enough):

• Sales people have complete control.
• Sales people have partial control.
• Sales people have no control.

The term "desking " typically comes from dealerships (originating in the auto industry) where the sales person gets an offer to purchase and then has to take it to the "desk " for approval and or structuring. This is also where sales people started saying, "I'll have to ask my manager, " drawing the inevitable eye-roll from the customer feeling as if some sort of "tactic " is being used against them.

Giving sales people complete control and paying them on something other than gross profit is really a recipe for disaster ( "If I didn't give him $2500 off he was going to walk! ").


Giving them no control really means eventually the skill level of the people attracted to your business will be such that they wouldn't be able to sell a cold beer during bike week. These short timers will more than likely not be making a career of this business. Not good for them. Not good for the industry.

My preference is for sales people to have some control over their own fate when it comes to deal negotiations.

When a sales person is commissioned on gross profit, and has some negotiating parameters, it typically makes them feel as if they have some control over their own fate and are more inclined to learn the product knowledge, language skills, and processes which will help them negotiate the deal.

The sales manager should be giving the final approval to all deals making sure they meet the profitability guidelines of the dealership.

When sales people have to run to the sales "desk " for every dip dot and t-shirt included in the transaction, it dramatically slows the sale process and invariably ends with the customer either saying or thinking, ‘Why am I talking to you? "

By the way, this level of autonomy depends greatly on the dealership's sales crew, their experience level and their ability to work together.

No I'm not asking if you're Asian, that's ethnicity. This is centricity, i.e. what's your focus. Some dealerships are "sales-centric " meaning the sales people control all portions of the deal and determine and communicate such things as selling price, down payment, monthly payment, interest rate and length of term. In other dealerships they are more "business office-centric" where the sales people sell the bike and the business manager structures the finance options.

My preference here is for the latter. When you allow experienced business managers to structure the deal, amazing things can be done. They know the ins and outs of current lending rates and may even be able to leverage finance promotions.

Sales people sell the bike.

Business managers structure the financing.

Aspects that influence this:

• Dealer Principal's operating philosophy.
• General Manager's preference.
• Power and influence of sales manager.
• Power and influence of business manager.
  

Deal Variables

I may have missed an item here or there but here in all their glory are the items which can and can't be negotiated in a deal. First, aspects of deal that can be negotiated:

• Front End:
  
• Motorcycle Price
• Trade Price (if applicable)
• Freight
• Set Up
• Accessories
• Labor
• Riding Gear
  
• Back End:
  
• Down Payment
• Interest Rate
• Extended Service Plan
• Pre-Paid Maintenance Plans
• Batteries for Life
• Tires for Life
• Oil changes for Life
• Or any other "lifers " I haven't thought of!
  
• Other:
• Dealership "VIP " Membership (buying clubs)
• Free TV's (or some other gift with purchase).

Aspects of deal which can't be negotiated:

• Taxes
• Titling Fees
• Doc Fees
  
  Doc fees of course could be their own article. Doc fees are sometimes capped and regulated by the state. If so, you can't charge more than the cap. (And no, thinking you are creative and calling them administrative fees or some other name is a sure fire way to raise the ire of your customers and possibly your state's attorney general).
  
  Doc fees, unless the customer refuses to pay them, can simply be charged to provide the vehicle registration purposes, but otherwise you should be consistent in your practice of this particular fee.

The problem is the single most negotiated variable is the selling price of the motorcycle. With more than 14 total items available to negotiate, the one that gets the most play is the price of the bike.

What if we were to maximize the other variables available to us first? That's right. What if you kept the price of the motorcycle static (more about pricing strategy later) and instead added or subtracted value based on the other peripheral items which could be included?

My bet is customers would still be well taken care of and you would be better compensated. And that is a good deal. Then you are more in control and can create short term and varied offers to stimulate sales and give negotiating power as necessary.

Common Pricing Strategies:

The problem is that many dealers and sales manager don't really know the options available to them. The following are just a few off the top of my mind.

• Dealer Suggested Retail Price:
  
  Also referred to as market pricing this has the ability to dramatically improve profitability. It also has the ability to create negative repercussions.
  
  In the Harley-Davidson world I've actually had customers tell me, "It's our turn now. " Meaning they were grinding dealers for low price in retaliation for their treatment in the days of scarcity.
  
  
• Manufacturer Suggested Retail Price:
  
  This is the ultimate in terms of ability to defend. "Hey we are an authorized dealer and go by the guidance of the manufacturer. " This is a fair way of doing business.
  
  
• No Dicker Sticker:
  
  To the best of my knowledge this idea of a "no dicker sticker " was put into place in the earliest days of Saturn (ok, ok, enough jokes about how that turned out.)
  
  But you know if you think about it, there may be some real merit to this idea. Most research shows that the least desirable piece of the transaction for customers is the price negotiation (ala the desking of the deal) and this removes this potentially unpleasant phase.
  
  
• Car Max Model:
  
  Speaking of removing things this is almost the entire operating philosophy of Car Max. Take the hassle out of buying. If I'm not mistaken they too are incorporating a "no dicker sticker. "
  
  Their wrinkle is they use a very sophisticated market place monitoring systems so they know what the prices of used cars are going for in a given area and they try and price just over that amount. You're there, you're comfortable, what's a couple of hundred bucks when you're spending $15,000?
  
  
• Take 'em High to Take 'em Low
  
  This is when a price is set intentionally high so that there is negotiating room. Often creating an adversarial relationship between customer and dealership.
  
  
• Low Price Leader:
  
  Every day low price or we won't be undersold. However you describe it this is non-strategic discounting. Unless you are in a state of extreme crisis (high debt, low cash flow) I believe this is a strategy you should avoid at all cost.

There are pros and cons to each of these approaches. And by the way dealers sometimes use a blended approach. Whichever you choose you should be aware of the strengths, weaknesses and potential repercussions.

Also as an aside you should make sure you always comply with federal and state laws and regulations and your franchises' MAP policies.

Here are some ideas which can help you when desking deals.

Methods for More Dynamic Desking

• Forget about low price.
  
  A good deal is when the customer feels well taken care of you and you feel well compensated. Pour on the value and price and desking nuances fall by the way side.

• Allies not adversaries.
  
  The relationship between you and the customer should not be "us " against "them. " Be open and matter of fact. Answer questions honestly and establish trust.

• Why you?
  
  You must be able to articulate quickly and succinctly why the customer should do business with you. If you can't in a compelling yet conversational manner explain to the customer your inimitable superiority in the marketplace someone needs to get their allowance taken away.

• Why now?
  
  You also need to be able to explain why buying now benefits them. We've published a white paper and posted on the web site for help with this. Or email me and I'll send it to you: Mark@PeakDealershipPerformance.com

• Give ranges.
  
  When a customer inquires about monthly payment or interest rate use numbers but give ranges. They do not for example need to know that their monthly payment will be 403.22 due on the 18th. They do need to know that monthly payments on motorcycles like what they are looking at range from $350 to $450 a month.
  

• Don't create 100% of your policies for 1% of your customers.
  
  Oh I know what you're thinking. "But Mark we had a guy once who insisted he knew the exact monthly payment and interest rate before he bought. " One guy doesn't make a trend. Don't generalize from a specific. Use your solid control of language to move the deal to a close.
  

• Cheap price?
  
  We've covered this ground before but what the heck - here it goes again. When the customer says, "I can buy that motorcycle cheaper somewhere else. " Your first response should NOT be "well if you bring me a signed purchase order we'll meet or beat that deal. " What should it be?
  
  Ask immediately, "Are you just looking for a cheap price on a motorcycle or are you looking for a great dealership experience? "
  
  Most will say, "Great dealership experience. " To which you then enumerate the three reasons why people choose to do business with you.
  
  If the person says, "I'm looking for the cheapest price. "
  
  You simply respond, "If all you're interested is a cheap price on a motorcycle I can guarantee you WILL be able to buy this motorcycle for less somewhere else.
  
  But if you're looking for a great dealership experience, there is no better experience then at our dealership. Any other questions I can answer for you? "
  
  If they want to stay and talk and see the value in doing business with you, great!
  
  If not, let them go.
  
  For most dealerships (you know those not on the brink of bankruptcy!) no business is better than bad business.
  
  If the customer says, "I want both, low price and a great dealership experience. "
  
  You can respond with, "I've been on this planet a good many years and I've discovered you have anything in life you want but you can't have everything you want. The lowest price and best dealership experience almost never reside under the same roof. Do you have any other questions I can answer for you? "

• Minimize the need to run to the desk.
  
  Give your sales people the word tracks, skills and support necessary to do the lion's share of the work putting a deal together before you bring it to the sales manager for approval or restructuring (desking).
  
  I was watching an exchange between a customer and a desk happy salesperson when after the third, "I'll go ask my manager. " The customer said, "You don't know the price, the payment and whether you can give me a t-shirt. Why am I speaking with you? "
  
  Not a bad point.

Five Things Your "Desk " Manager Should Ask Themselves While Desking a Deal

1. Does the deal meet the profitability guidelines of the store?
   
   Some stores use percentages, some dealerships have dollar targets, and some include accessories and riding gear in this decision. However you do it in your store pick a method simplify and streamline it and then stick to it.
   
   Now, some deals will be over, some will be under, but at the end of the day the person responsible for hitting this number is the "desk " manager (usually the sales manager).
   
   
2. Are there dramatic, extenuating circumstances to be considered?
   
   Do you have a motorcycle which has been with you, er, a little too long? The longest I've heard of recently was 504 days! Now that's reason to blow it out. A little longer and you could send that bike to college on what it's cost you.
   
   Additionally this pendulum can swing the other way. If someone brings you a low ball deal and you know you're only getting 2 or 3 of that model, you may want to take your chances.
   
   
3. Are there other higher quality deals in the offing?
   
   A great "desk " manager will know if there is anything else cooking. Now this is the equivalent to high stakes poker but hey, no risk no reward. For example if a person comes to you with a deal that's $2000 grand low on a model, but you know for a fact another sales person has someone hot who may be a better deal. Now it's decision time. Are you a risk taker or a safe bet kind of guy?
   
   This is why you get the big bucks.
   
   
4. Can we make it work?
   
   There are a lot of ways to get a deal over the finish line. Here are a few:
• Can you get a larger down payment and get a better approval?
• Can you add additional value to the offer, i.e. an extended service plan or motorcycle safety course tuition?
• Can you use a dealer paid promotion?
• Can you get a co-signer on the deal?
• Is there a different motorcycle which would work?
  
  
5. Always explore a Quid Pro Quo
   
   Never, ever give price off without getting something in return. This is a basic tenet of negotiation. Does the customer want money off the deal?

• Sure but we'll need a testimonial letter.
• Sure but we'll need you to invite two of your friends down for a behind the scenes dealer tour.
• Sure but we'll need for you to get permission for us to display a motorcycle in your company's lobby.

One last item and then I'll stop. Don't forget about the usefulness of using credit bureaus in the buying process. Remember this is not an approval but rather a bit of "Kentucky wind-age " as to whether the person has the means to be able to purchase.

You must have permissible purpose to pull the bureau and the customer's permission, preferably written. No, a signed credit application is not permission to pull a bureau. It gives the lender whose credit application you used permission. Not you.

Ok so there you have it, some basics about desking a deal. Next up we'll turn things over to Brad Bacon, to give you some additional insights into desking a deal.

1. Desking Deals: The Art and Science of Negotiating a Sale
2. What’s your centricity?