(Photo by Nick Fewings)
I am a car-buying junkie. I am not hooked on cars themselves (though I was a bit of a gearhead in college). I am, however, hooked on the process of buying a car.
One of the primary reasons I am hooked is because car buying is a negotiation process that totally favors the customer, making it a great opportunity to practice my negotiation skills. Many would disagree. Polls show that most people do not like the car buying process. In fact, a recent survey found that 75% of the respondents would handle the entire process online if they could. So how could a sales process, where most of the negotiation power sits with the buyer, be so widely disliked by buyers?
I believe it’s because most people don’t realize how they can change the process and actually make it fun. You just have to use your BATNA to drive the deal.
“BATNA,” which is a concept coined by Roger Fisher and William Ury in the book “Getting to Yes,” is your “Best Alternative to a Negotiated Agreement.” Simply put, it’s what you will do if you can’t reach a deal with someone. For example, suppose you’re sitting in a Ford dealership, and you can’t get the price you want on a new Ford pickup truck. What do you do? You don’t want to give in and pay too much.
One alternative is to go to another Ford dealership, and see if you can get a better price. Another alternative is to go to a Chevy dealership and negotiate for a different model truck. Whichever of those two alternatives works better for you, that is your “best alternative” or your BATNA.
Large companies leverage BATNA all the time. It’s called a request for proposal, or “RFP.” Companies issue the RFP to a dozen vendors and gradually whittle the list down to those alternatives they like best. Often, the company will pick one vendor to negotiate with, and keep a backup vendor as a BATNA. This gives the procurement team leverage to try and get the best deal out of the chosen vendor, because the vendor knows a backup alternative is waiting in the wings.
I actively use the concept of a BATNA when I am buying a car. For example, I needed to get an inexpensive “commuter” car, and decided to go with a lease. I picked three car dealerships, all on the same street, each with competing models of cars which fulfilled my interests.
I walked into each dealership, found a salesperson, and said, “I am leasing a car today. I would like your best price on your base model of X. I am going across the street now, and I will make the same request of that dealer. Whoever gives me the lowest price will get the deal.” Each salesperson looked at me, and then looked over at the competing dealership, and nodded their head, acknowledging my alternative.
A few hours later, I had three bids, and leased the car from the lowest bidder. No long negotiations. No hassle. I just let my BATNA drive the deal.
