It may sound like the ending line of a Disney movie, but it may be the only way to get decent margins on tires.
Lawrence Steinmetz, a consultant with High Yield Management Inc., told attendees at the World Tire Expo that the best way to beat a price war is to believe in the prices you charge.
``Customers have to believe that you believe you're going to get that price,'' he said in his keynote address March 27 before an audience of about 200 (see related story, page 10).
The least effective strategy, he said, is getting embroiled in a price war, which he defined as ``two flaming idiots spitting at each other.'' More businesses go broke trying to compete solely on price, he said, and cutting prices ends up being a ``self-inflicted wound.''
``If you're willing to give away products for little or no money, I guarantee people will be willing to take them for little or no money,'' said Mr. Steinmetz, a former professor of management at the graduate school of business at the University of Colorado. He also wrote the book, Nice Guys Finish Last.
According to Mr. Steinmetz, tire dealers-and all business owners for that matter-succumb to price pressure when they commit two fatal errors: ``wowing and cracking.''
``Wowing'' refers to a salesperson implying to the customer that the prices are too high. This gives the unspoken signal to customers that if they haggle, the price will come down. Mr. Steinmetz said a classic sales pitch that does this is: ``Are you sitting down?''
``You've just told them your prices are too high,'' Mr. Steinmetz said.
Other indicators include advertising come-ons that prepare customers for a haggling session. Car dealers, Mr. Steinmetz said, are major culprits. He cited advertisements that lure customers with the prospect that they can drive the price of a vehicle down as low as possible.
``Translation: Come on in and let's have a fistfight over price,'' Mr. Steinmetz said.
Business owners can beat this scenario by having their salespeople record their sales pitches with pocket tape recorders. Later they can point out the clues they gave customers to start haggling over price.
``Listen to it, and you might be surprised how much wowing you do,'' he said.
In fact, the smallest clues can have an impact, Mr. Steinmetz said.
``The way you handle your price will largely determine your ability to get that price,'' he said.
``Cracking'' is the next step in the price-cutting process. Once salespeople signal that price is negotiable and the customer starts laying on pressure, they are more likely to crack and cut the price. The common lines that show someone is cracking include: ``Let me talk to the boss''; ``Tell me where I need to be''; and ``You know I want to work with you.''
``You can't say that to a customer and not expect them to kick your butt,'' Mr. Steinmetz said.
Another implied signal that a salesperson is ready to crack is when he or she uses an unnecessary adjective to describe the price. These words include ``normal,'' ``regular,'' ``asking,'' ``standard,'' ``list'' and ``special.'' Those adjectives, Mr. Steinmetz said, hint at another, more lucrative price the customer can easily get with some carefully applied pressure. The ultimate culprit? Manufacturer's suggested retail price.
``The more you do that, you've suggested to the customer you've got more than one price,'' he said.
Reynold Hester, owner of Hester Tire Service in Bladenboro, N.C., said he is guilty of cracking.
``I crack all the time,'' Mr. Hester said, laughing.
Gary Ingber, CEO of Open Road Technologies Inc., said cracking is a first response to the fear of customers walking out the door to get a better price from the competition. He said his company, which provides software to retreaders, feels the same pressure as many tire dealers.
But Mr. Steinmetz said business owners shouldn't be fearful about their prices.
``You've got no one to blame but yourself if you're too wimpy to raise prices,'' he said.