Thursday, October 28, 2021

Sense of Urgency!

One trick salesmen use to snare a prospect is to instill a sense of urgency in the prospect.  If someone pressures you to "Buy Now!" maybe you need to step back a bit.

A reader writes asking me about how sales people pressure prospects with a "sense of urgency" to buy things NOW rather than think about them.  I covered this before in a posting about games car salesmen play, which included links to videos (which may not appear on the mobile platform - sorry!).

In response to that posting, I got some feedback from readers who claimed such things could not happen as they were illegal!  And that saddened me almost as much as the comment I received from a young law student in response to my posting on inheritance scenarios, which he claimed were "against the law!" and thus could never happen.  Sigh.

Naivete is also a big weapon that salesmen use to snag prospects - people assume that a big company with a slick storefront and fancy ads on television has to be legit - after all, how could they operate if they were ripping people off?  But the reality is, the police today consider these economic disputes, better solved through tort action than criminal law.  So if you get ripped-off, for example, by one of those national dental chains, well, your only recourse is to sue them, and that costs even more money, and you might lose, as it is a "he said, she said" kind of deal.

It struck me, as I drove through the strip-mall hell that is our local "city" that so many of these shiny chain stores and whatnot were in fact, utter rip-offs, yet they remain in business because people really can't do much to get their money back.  And let's face it, half the people don't even realize they have been scammed.  And those are just the obvious rip-off places.  So many more, like car dealers, just offer horrible deals that cost the consumer far more than they should actually pay.  Leasing cars, for example.

But as the dealer training videos illustrate, instilling a sense of urgency is often essential to getting the customer to buy.  As they point out, everyone wants a new car - the smell of new vinyl, and the new gadgets and toys you can have.  In the 1950's, it wasn't hard to sell a new car to someone driving a pre-war flathead six, with three-on-the-tree, manual brakes, and manual steering.  Sure, it may have been good for a few more years, but hey, overhead valve V-8 power!  Hydramatic transmission!  Power Brakes!  Power Steering!  And those shiny new tu-tone paint jobs!

So people are inclined to buy - a good salesman just needs to push them over the edge.  It is sort of like a seduction, sex, a conquest.  And if you talk to salesmen, they talk about their sales in those terms - behind closed doors, of course.

So they put on a "Sale!" of a new car or a new sofa, and tell the customer that they can buy the product today at the sale price, but that if they decide to come back on Monday, that price is no longer available.  Of course, it is a ridiculous proposition - prices are based on market demand, and not on some arbitrary points in time.  Even with a factory rebates, a clever salesman can back-date the sales contract.

There are other ways of inducing urgency.  The old line of "they didn't make many in this color!" (or with these options, or this model) and the "I'm not sure when we'll get another one in - if ever!" is a way of pushing your prospect into buying now rather than waiting.  Of course, it is nonsense - the factories make millions of these things - whatever they are - and there will always be another one coming down the line.

Another gag, often used with cars, is, "I had a gentleman here a while ago who was very interested in this car!  So it might not be here when you come back!"  Same shit, different day.  There will always be another car.

Speaking of which, Ford just reported unexpected better-that-forecast earnings, even as sales were down due to parts shortages.  Why was this?  Well, most car manufacturers have horrendous overcapacity.  Worldwide, there is more than double the amount of production capacity to meet demand, in normal times.  As a result, in normal times, companies have to offer rebates and sales to cut prices and move metal, particularly at the end of the year or for unpopular models.

With the "shortage" of parts, the car companies can lay off workers and close plants (or drop second and third shifts) and thus cut costs.  And since they don't have to offer rebates or discounts (particularly volume discounts to larger dealers) they make more money per car.  As they taught us at GMI, we could make $1000 a car and sell a million cars, or make one car and sell it for a billion dollars - it didn't matter, the end result was the same.  Profitability trumps market share.

So in recent months, people have panic-bought cars and trucks and RVs, even though they should have known that shortages were only temporary in nature.  Indeed, I drive by the RV dealers today and see the lots overflowing with rigs.  I see big-rig trucks on the highway laden with new Ford F150 pickups.  The shortages will end, eventually - and some people will feel foolish for overpaying for things.

But this "shortage" nonsense is good for business.  Already retailers are saying that due to "pipeline" problems, there will be shortages of "must have!" Christmas presents, so "if you see it, buy it" as one retailer noted.   Again, Christmas creates yet another means of instilling urgency.  Your kids will hate you if you don't have that new PlayStation by December 24th - so get cracking Dad!  Black Friday is only a month away!

It's all pretty stupid.  And by the way, deciding you "must have!" a certain product basically gives up whatever leverage you had in the marketplace.  It is akin to raising the white flag of surrender.

So why does this time-honored technique work?  Well, if a prospect comes into the showroom and kicks the tires on a new Edsel and then says, "I'll think about it and talk to you tomorrow!" they may go home and talk to the wife and discuss the finances in more detail.  Some bills arrive and they realize that their "paid-for" '39 Plymouth still has some life left in it, and they can always buy the Edsel later on.  The neighbor stops by and tells them the Edsel is a lemon of a car and not to buy it.  The longer they think about the purchase, the less likely they are to buy.

This is why Amazon loves "one-click" buying and tries to instill urgency in its customers.  I don't know how many things I have bought online in the last year that were listed as "only three left!" or "order soon, inventory running low!" and so on.  Some places, like Wayfair, have convoluted algorithms that change the prices in real-time.   If you "think about it" for more than an hour and then go back to their site, you may find the price has gone up.

And of course, today, who knows how we are being spoofed?  Google knows what I am searching for, and perhaps tells some of these retailers what I am searching for, what I have clicked on, and what prices I am looking at.   You really have to dig, it seems, to find bargains on the Internet.  I was all set to click on some drain fly killer liquid on Amazon for $48 when I realized that a competitor had it for $32 for the exact same product.

So urgency works in a number of ways.  In many cases, if the customer "sleeps on it" they will likely decide not to buy at all but instead keep their money and learn to live without the product.  Or, they will find the same product (or a better one) at a better price elsewhere.  Whatever the result, the customer leaving the building (or the website) is usually the last time you will see them - or so goes the folklore amongst salesmen.

Instilling a sense of urgency is essential in making a sale.  It prevents the prospect from cross-shopping on price, or even thinking whether they need the product at all.  You can "close the deal" by using good old FOMO or Fear Of Missing Out.  In the real estate business, this is particularly true, particularly in times like these, where people start bidding against one another for the privilege of buying a house.

So salesmen - they're a bunch of rotten, lying, sons-of-bitches, right?  Well, some are.  Others are just using the time-honored techniques to sell things.  And like the salesman's training videos note, the prospect wants the product - all you are doing is showing them how they can afford it.  So from their perspective, not only are they not cheating you, they are doing you a favor!

They have a job to do, and so do you.  Managing your money and spending it wisely should be approached as a serious job and not some ride at Disney World.  Buying anything isn't "fun" it is a battle - and the marketplace is a battlefield.  Yes, this isn't a fun as going "whee!" and just paying whatever or signing whatever they put in front of you.  But that approach to commerce usually ends up in tears.  And which is better - the long-term satisfaction of scoring a good deal, or the trail of tears when you realize three years later you are stuck in a crappy lease deal?

The good news is, you have so many weapons at your disposal.  And the sense of urgency is one of them.  Whenever someone tries to sell you something - anything - predicated on the limited time to make the decision, this is a tipoff - police tape - roping off the deal as potential ripoff.  And the shorter the time period they offer, the more likely it is a scam or at the very least, a bad bargain.   If the "rebate" or sale on a car is good for a week, well, you can go home and think about it (even still, you'll probably change your mind).  If they tell you the deal expires at midnight, odds are, you should walk away entirely.  If they tell you that you have to buy within the next ten minutes, just run away as fast as possible!

Sure, it is nice to have nice things.  But getting snared into a bad deal, with high-interest financing or insurance you can't afford, isn't a good way to go about it.  And I know from experience - when I was younger, I did bonehead things like trade-in a perfectly good car for a new economy car that cost me more in insurance premiums than in car payments.  And I could afford neither!

I've learned to walk away.  When we bought the F-150, we texted back and forth for nearly a week before we reached a price agreement.  The Nissan Frontier we looked at for five years before pulling the trigger on it.  The Hamster was the same deal - we negotiated the price over the phone before we even went to the dealer.  You can do these things.  Few do.

We saw people in dealerships coming in with their "trade-in" and then sitting down to see what the dealer would do for them - often spending hours there and walking away without even knowing what they paid for their new car.  It is sad, and it leads a lot of people to be unhappy and think the system is stacked against them.  And yes, the poorest people in this country often are snookered this way - which is how they became poor and how they stay that way.

Sense of urgency is just a huge red flag.  Whenever someone tries to pull this stunt on you, step back and think about what is really going on.  Odds, are, it won't be good!