In business, we negotiate daily. Successful negotiating is arguably one of the most important aspects of any business. In collision repair, we negotiate with each new estimate that is captured and we must negotiate with both of our customers: the vehicle owner and insurance company.
While some shop owners insist the insurance company is not a customer, others treat them as one because they deliver the shop a lot of work through direct repair programs (DRPs). Even with those shops that have DRPs with insurance companies, the initial negotiation highly influences the profitable outcome of each job. Negotiating is extremely important. We negotiate with the parts suppliers for the best discount on our purchases. We negotiate delivery times. We negotiate with our employees as work is completed. It's such an important skill that some universities have entire divisions dedicated to the study of negotiation.
How can a manager of a collision repair shop expect to become a skilled – which translates into profitable – negotiator? It helps if the company has a set of core values, those established principles that won't be compromised. Core values should include service, quality, honesty and profit. With an established set of core values, a negotiator – and everybody in the company – will have a better set of principles to negotiate within.
Keep in mind that when negotiating, the objective is to get the work and capture customers who will be satisfied enough to return if they should need future service. We're selling service, and it costs much more to generate a new customer than it does to keep one.
Making a reasonable profit also is a necessary end to the negotiation. Each aspect of the repair should be profitable: labor, parts, materials and even sublet work. If we negotiate away our profit for items such as sublet work, we're only swapping dollars, or even worse, losing money in that area.
Following are a few tools and techniques for negotiating:
1. Have a negotiator (Fig. 1). Though every salesperson should develop negotiating skills, some transactions will require an expert. Each shop should find, develop and train a person who's best suited for difficult negotiating. A negotiator must be knowledgeable and understand the core principles of the business. He must know what it costs the company to perform each task and the percentage of profit that must be made on that task.Lacking these specific details, he won't know the limits of the negotiating. A negotiator must have the personality suited for the task and be able to identify the key point of the issue at hand and not become emotional, therefore, being able to keep the negotiations focused on the big issues, not the incidentals. A successful negotiator will even be able to up sell, which takes practice and training. Additionally, skilled negotiators will better themselves as they add new skills from experience.
2. A win-win. This term is used often in business, but it warrants discussion. If the negotiation is approached in a nonadversarial manner, with the goal of both parties being successful, a more favorable business relation will be established. If you earn the reputation of being a fair businessperson, it will pay in terms of respect and profit. Be prepared with the essential facts and to give and take.
Know what you can give the customer, such as prompt cycle time or convenience. The insurance company wants to finish the job for the best price and wants all customers to be satisfied, so it can keep them. An attitude that projects positive nonverbals into the situation also will lead to a better outcome, one in which both parties come away feeling they have the best deal possible (Fig. 2).It takes a self-confident person to deflect potential personal assaults that may be inferred during negotiation. By not responding to such tactics and refocusing discussion on the issue at hand, an expert enables a successful negotiation to proceed. Learning how to control the visual aspects of your emotion is critical. There's a time to show emotion and a time to control it.
4. Focus on the big issues. Understanding the main issues of the negotiations and not letting less important areas into the conversation will help the outcome and keep the task from dragging out. Agree on one specific topic to be negotiated that can be covered individually, and go on to the next.
Concentrating on each area to reach an outcome will quicken the process and assure each is addressed completely. If your point can be proven in print, or through a third-party standard such as a repair manual, crash manual, technical service bulletin or manufacturer's recommendation (Fig 4), the point is much easier to make. Being ready with an industry standard that can be cited can be extremely influential.5. Focus on specific points. The person with the most information usually does better. You should know what you're worth and what other enterprises in your area are charging for each task. If the task is structural, it should be billed as structural. The estimates should be detailed so each charge will be identified easily and a standard can be cited. When dealing with venders, know what type of discount your competitors are getting. If you can, ask for the same discount. Know your real costs, have an acceptable profit margin for each area and ask for it. Expect people to ask you for discounts and be prepared with an acceptable response. Have something to offer that costs you little but may be of value to the customer, such as detailing. When a customer asks for a discount, you could offer a free detailing following the repair. By having something to negotiate away, the customer may feel they've bettered their position successfully.
6. Be friendly. Get to know the other person. The old saying "you can catch more flies with sugar than with vinegar" applies. Attitude counts. Smile, greet each person with a handshake and learn their names (Fig. 5). If you must, write the name down so you'll remember, and reference it when addressing the client. When writing an estimate for a repair resulting from an accident, ask if everyone is OK. People respond best to friendly people. Even if you're having a bad day or you're tense or frustrated, try to not let it show. The body language you project communicates a great deal to the other person.a. Open arms suggest a person is open to your proposal.
b. Facial expressions and details. If someone is looking around constantly, it indicates attention isn't focused on the topic. Conversely, dilated pupils mean the person is interested in the subject. Be careful with controlling or translating mannerisms. Sometimes dilated pupils are an involuntary expression. Other facial expressions, such as a wrinkled brow or a shocked and surprised look, aren't involuntary and may be part of the strategy.
c. Open palms indicates a person is relaxed and comfortable.
d. Chin. If you note a person rubs his chin, it indicates you've provoked thought. Though you can't tell what he's thinking, you know you've captured his attention.
e. Stance. People who are comfortable with you and what you're proposing will stand in front of you, facing you. If they don't look at you or face away from you, it suggests they're disinterested.
These are signs you can learn to read as you're negotiating. Practice reading each person's mood, and as you become skilled at it, you'll learn other signs that will give you more information about the person with whom you're talking.
8. Who should make the first offer? This is a debatable point. The first price offered acts like an anchor, and all other subsequent numbers will typically evolve around it. If the first number is unreasonably high, the other person may walk away. If it's too low, it's difficult to raise it because the first offer acts as the anchor. If you decide to let the other side make the first offer, it's best to hesitate before countering. Knowing your last and best offer beforehand is your best tool.
9. Silence as a negotiation tool. When someone offers a number amount as a counteroffer, your silence puts pressure on a client. He may adjust his offer just because of your silence. You also can offer other disapproving poses or a surprised look. As the number becomes closer to what you're hoping for, show engagement by a motion before offering your counter.
10. Up sell when negotiating. During negotiations is a perfect time to sell additional services and products. Repairs of prior damage, spraying a bed lining, polishing of the nonrepaired areas and detailing are some of the many services by which you can increase your total sales with solid profit margins.
11. Know when to say no. Though it's not the result most negotiators want, knowing when to say no is sometimes the only feasible outcome. If you know your profit point, and it becomes obvious this point can't be reached, saying no calmly and without emotion can be a useful tool. Be prepared for the discussion to end and that your refusal may just be the leverage needed to seal the deal on your last offer. However, it may mean the deal is lost, and you should be prepared for that outcome.
Though there are some people who are born with traits that lend themselves to skilled negotiating, most of us can become good at negotiating with practice.
