I’m so glad you joined us because we have Jack Zenger and Paul Maloney. Jack is the best-selling author, world premiere expert in leadership development and he’s the CEO at Zenger Folkman. He’s written more books than I can count and it’s going to be great to talk to him about that. Paul Maloney is the Car Buyer’s Advocate and the Owner of Car Leasing Concierge. He’s got a book and he’s got some advice. If you ever want to buy a car again, you want to listen to that. This is going to be an interesting show.
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Leadership Development with Jack Zenger
I am here with Jack Zenger, who is the Cofounder and CEO of Zenger Folkman. It’s a professional services firm providing consulting and leadership development programs for organizational initiatives. Jack is well-known for all of his books. The Wall Street Journal named his work as one of the ten best suppliers of executive development. He’s worked teaching at Stanford. He’s authored or coauthored 85 articles on leadership and at least five books on leadership. He’s coauthored at least fourteen total books if you add his books plus one he’s coauthored. It’s exciting to have you on the show, Jack. Thank you for being here.
You’re most welcome. I’m glad to be here.
You have quite the background and what you write about is right up my alley. In fact, I was looking on your website and I love that some of the people you cite that who you think are good are included in my book on curiosity. You talk about Carol Dweck’s Mindset, you’ve got Daniel Pink’s Drive that you talk about here. Those are all such great books. What I want to talk to you about is all the work you’ve done and how you think it has changed how much we’re having better leaders now because of all this leadership development we’re doing. Can you give a little background on how you reached this level of success? It’s an amazing background.
My career has been very eclectic in the sense that I’ve been involved as a corporate officer and worked in business in a traditional way. I have been in academic. I taught for a while at USC where I’d done my Doctoral degree. When I went to Palo Alto and was working in a pharmaceutical company, I taught at the Stanford Graduate School of Business. I started a small company in the Bay Area of California and began my long tenure in the entrepreneurial world, but that’s been a nice mixture. It’s very helpful for someone who is an external supplier of leadership development and consultant of an organization to have been on the other side of the table and know what it’s like to work inside the organization. There’s no question that one of the wonderful things about the discipline that we’re in is it has one foot in academia and one foot in the business world as well. That’s been my career. I was going from one to the other and trying to keep some sanity.
That’s interesting that you’ve got your Doctorate at USC. What did you write your dissertation about?
I did my dissertation on a longitudinal study of the effectiveness of having teams of salespeople go through some team building experience. My theory was that a lot of salespeople feel very lonely and they feel isolated and they feel no sense of identity with the organization. I managed to work with an organization who had the head of their Human Resources function, a guy who was oriented toward research and he was an IO psychologist. We put together this experiment where we had some control groups and had some experimental groups. The experimental groups went through some keen training sessions and we’ve shot a measured impact on their performance. It was a quantitative analysis of, “Does this make a difference in the productivity of salespeople?” I chose them as a group only because you can measure and you have some way of quantifying the outcome whereas, in many other areas, it’s very hard.The necessary ingredients are no mystery. Tailor the initiative to the organization so that it fits the institution. Click To Tweet
My dissertation was quantitative in sales as well, but I looked at emotional intelligence. It’s hard to determine factors in sales sometimes. That’s an interesting area of research. You also have an Honorary Doctorate. I’m going to be speaking at Shoreham and I’ve had a lot of people interested in what I’m working on, which is about curiosity. What interested me was how so many things came back to the curiosity that led to motivation. We don’t talk about it that much, but there’s so much leadership development going on out there and billions of dollars are spent. Why don’t we have better leaders?
It’s a little bit like asking a person who is in the kitchen baking a cake, “Why didn’t the cake turn out very well? It’s not very tasty.” The cook tells you, “I didn’t have all the ingredients. I made it with flour and I didn’t have any sugar and baking powder. I just went on and left those out.” There are some very key ingredients to a successful leadership development initiative in an organization. We could rattle off what those maybe six key ingredients are, but most organizations don’t bother to include all the necessary ingredients. Hence, they don’t have great success as they could if they chose to seriously put in place the necessary ingredients. The necessary ingredients are no mystery. Tailor the initiative to the organization so that it fits the institution. Use good science in terms of creating a good competency model for the initiative. Make sure you are using powerful learning methods that can change behavior.
One of the biggest issues is that we see organizations with 3,000 leaders, and each year they put through twenty people through an internally sponsored program and they say, “We’ve got this robust leadership development program going on.” You say, “Have you ever heard of herd immunity? If you don’t inoculate all the children in the community, you’ll see this outbreak of disease. If you don’t impact a third or maybe a half of your managers over three or four-year period of time, how do you believe that this is going to change the behavior of the leaders in your organization and fill your leadership pipeline?” A lot of organizations ignore the importance of any kind of tools or processes for sustainment. They don’t involve the direct manager in the participant’s development. If organizations would be serious and organize their leadership development initiatives, they could have enormous success. We know that people want to learn and people want to behave effectively in leadership positions. We don’t see organizations very often doing all those things. They have to be done simultaneously. You can’t just pick and choose one or two. You’ve got to do them together.
I’m interested in your perspective on curiosity since I’m into that. What do you see in terms of how leaders help build curiosity or don’t do much to build curiosity in their organizations? How important is that?
Frequently in some of our writings is intellectual curiosity. One of the things we know about great leaders are, they’ve got this insatiable curiosity for the world around them. They watch and carefully observe what’s going on in their markets. How you develop greater curiosity is not something that we have focused much of our research and attention on, but we recognize how important it is. I’d love to hear what you think can be done about changing it. The thing that I deeply believe is that if you can encourage people to seek intellectual stimulation in areas that are uncomfortable to them or that are not their usual fare, you can help them see the virtue and the joy of being exposed to new and different ideas. I remember this consultant talking to a group of executives and encouraging them to read Rolling Stone magazine. He knew that for eventual Wall Street Journal reader, this was not their usual fare. If you wanted to understand what was going on in the world, you need to read Mad Magazine and Rolling Stones and some others. That’s a silly example of trying to get people to get out of their usual routine of what they read.
I found four things kept people from being curious, which were fear, assumptions, technology and the environment. Once you recognize what’s holding you back, then you can move forward. That’s what we didn’t see. We knew curiosity was important, but to recognize the factors that were holding us back and then have a plan to move forward is what I’m working on. What you’ve done to help in leadership is so fundamental. You have so many great books about inspiring leaders and developing extraordinary leaders who can motivate and that type of thing. I still teach a lot of courses where we talk about the difference between coaching and mentoring. Do you get into that? Do you think it’s more important to have a good coach or a good mentor or do you see them in a similar way?
Behaviorally, you would hope that they would act in a consistent way. A lot of different people can be effective coaches for me. They don’t need to be an expert in my field. They just need to be interested in me in wanting to help me see my world more clearly and to face my reality more directly and to explore alternatives that maybe I hadn’t thought about. Mentors are people who are often older, wiser, been there, done that. I go to them because I’m seeking either their knowledge of the organization and how I navigate the whitewater inside the organization or some field whereas the coach doesn’t necessarily need to be the expert in any given field. We are very interested in the topic of coaching. We’ve written a book and we think it’s an extremely basic skill for leaders in nowaday’s world to possess and to practice. It’s the behavior that you want leaders to emulate and to use.
You’ve written a lot of great books about some of the things that leaders can do to become better. What do you think are the major deficiencies that organizational leadership programs and development programs should include that we’re not seeing that you’d like to see more of?
First is a belief and a desire to bring science into the whole process and to make it more objective rather than being based truly on hunch and opinion and belief. Second is to increase the scale and the scope so that rather than focusing on a group of high potential people and focusing all your attention on them or only focus on your most senior people. The organization is much better served when it opens the door and includes more people of all levels. For a new employee coming in, we want you to work for a good boss. We’re not content to have mediocre supervisors or bad supervisors and to tolerate them in the long run. If you believe everybody is entitled to work for a good boss, then you can’t just be doing development for a handful of people and being content with that. We know that better leaders produce better results. They impact employee engagement, customer satisfaction, profitability and innovation. Reaching out and getting more people involved is clearly the right thing to do. We also wait too long. One of our clients in Silicon Valley who’s done a great job with leadership development in that organization, I said to her, “What would you do differently if you were going to do this all over again?” Without hesitation she said, “We would start earlier in people’s careers.”
We know for example that the average age of people going through one of our development programs is 42. In most cases, this is the first formal development that they’ve encountered. If you say, “What’s the average age of a supervisor in an organization?” It’s around 27 or 28. The average supervisor’s age is 27 or 28 when they were first appointed. The average age of participants going through development is 42. There’s clearly a good chunk of time that they’ve been functioning never having received any formal training in being a more effective supervisor. It’s that scale and scope issue that is missing. Gaining the support and the involvement and participation of the senior executives is key. Support doesn’t mean they are willing to write a check or that they’re willing to come in and make a one or two-minute introduction in the first day of class for one group. They are ongoing active participants and they display their support by coming in meeting with groups of leaders who were being formally developed.
They’re there to talk to them about the practicality and the application of what they’re learning. They meet with them afterward and talk with them and find out how they’re being able to implement what they’ve learned. What I see missing is this practice of putting together a very glitzy development effort, but not doing very much in preparation for it. Once it’s over, it’s over. There’s no follow-up, there’s no follow on. There are no refresher courses, there’s no email, there’s no interaction with upper management, there’s no pursuit. The little research that’s been done in this field shows this enormous difference between when the organization follows through and when they don’t.
You mentioned research and I agree that the ball gets dropped. You learn a little bit and that’s it and then it goes nowhere. I’m thinking about some of the people I’ve interviewed. I’ve had John Kotter and Daniel Goleman and I talked to Albert Bandura. They are great minds who have inspired me of what I’ve wanted to write about and help leaders with. Since you’ve written all these books and done so many papers and articles and all this type of thing, who inspired you? Which authors or researchers stood out in your mind?Mentors are people who are often older, wiser, and had been there and done that. Click To Tweet
There’s no question that Albert Bandura influenced me a lot. I had been very involved in the early days of sensitivity training and key group training. I had gone to UCLA, the hotbed of all that. I had been somewhat steeped in it, but then I looked at the research and the research was not all that encouraging. That’s when I heard about behavior modeling and the application of Bandura’s social learning theory. Even though I’m not a friend of Bandura’s personally, I’m a great admirer because it was so well researched and so practical. Bandura has been a strong influence in my life. I did become exposed to the work of Carol Dweck when she was still at Columbia. Most of her work at that time was young school children. I was very impressed by her research on fixed versus growth mindset. There’s no question that Peter Drucker has been an enormous influence. He had this enormous ability to stand back and look at the world and talk about a person who was intellectually curious. He was between a wide variety of activities. Those have been some of my favorites.
I love Carol Dweck’s work. I used a lot of that in my study of curiosity. I’m interested in assessing in general. I know that you do some of that training and development programs backed by research gathered by 360-degree assessments and all that. Are there any particular assessments that have stood out that you think are the most helpful?
We’ve looked at a variety of assessment tools and devices. We continue to think that the 360-degree feedback assessment is the most economical, most reliable and most valid instrument that’s available to most organizations. We’ve compared it to some of the well-known and respected psychometric instruments. Statistically, the 360 is far more predictive of outcomes. I have not seen anything that has caused me to want to diverge from our reliance. I know that there are some people that don’t think 360s are all that effective. The research is very clear and very compelling about this being an effective tool and we’ve seen its impact on people.
When people get constructive ideas from people whom they’ve selected and whom they trust, it can make a big difference in their lives. If it’s presented to them in a constructive way where you’re not just looking for their faults, you’re looking for their strengths. The other person was Martin Seligman. He had an incredible impact on the world of psychology and on the thinking around leadership and leadership development. Positive psychology research has been very influential to me. I don’t know anything that comes close to this 360 process.
There are so many interesting things that you’ve written about. You write for Forbes and Harvard Business Review. Are you going to write any more books? You’ve had a lot of books. Are you going to continue to blog? What does the future hold?
I’m only 87, so I’ve got a lot of time left. We are in the process of turning a manuscript for a revision of our book called The Extraordinary Leader. We’re expanding that to include several chapters on not just what individuals need to do to improve their leadership, but what the organization does to fill its leadership pipeline. I’m working on that book. I’m not sure about the next one, but I hope there’s one or two more in me.
I’m sure that you’ll be writing extraordinary content. It’s wonderful to have you on the show. Thank you so much for doing this. A lot of people would want to know how they can reach you or find out more about your company or get your books. Is there a site you’d want to share?
The site is www.ZengerFolkman.com. We would be delighted to have people visit our webpage. They are welcome to communicate with me at JZenger@ZFCO.com. I would be delighted to hear from them and try to respond to their questions.
Thank you so much, Jack. This has been so interesting. I was honored that you decided to do the show. I appreciate it.
You’re most welcome.
It’s nice to have you on the show.
Advice From The Car Buyer’s Advocate with Paul Maloney
I am here with Paul Maloney who is known as the Car Buyer’s Advocate and Owner of Car Leasing Concierge. He is a professional car buying expert. This is going to be interesting. Welcome to the show, Paul.
Dr. Diane, how are you?
I’m doing well. Where are you from originally?
I’m originally from the land down under, Australia.
We were introduced by John Tantillo and it was so nice of him to suggest that we connect. He’s a character and he does a lot of interesting things. He said that you are the guy to talk to if you need to buy a car because you help people understand the psychology and emotions behind it. What led to your interest in being into the car business in general?Reference is key to your business. Click To Tweet
When I first came over here, I was always in hospitality back home working in five-star resorts and stuff. I worked on Hamilton Island for a little while, which is great. I had my cousin who works for the UN. She came back in the early ‘90s and said, “Paul, we’re the same age. Why don’t you look for something different? Why don’t you come over to the US? You’ve got as much family here as you have back home.” I came over here. I had no clue what I was doing. One of my friends says, “You’ve always been in hospitality. I’ve got a bartender job for you.” I ended up doing that and I was doing another job at the same time. Bartending was like the movie, Cocktail. You’re working all night and sleeping all day. I just couldn’t handle that anymore.
I didn’t know that he sold cars at the dealership during the daytime and he says, “You’re great with people. Why don’t you come and sell cars?” I said, “I hate car salespeople.” At the first week, he showed me how to greet customers and how to help them out. The customers were beating me up than I was beating them up and they almost fired me. For the first week there, one of these older guys that have been in it forever took me aside and said, “That’s not the way to sell automobiles. You’re going to sit with me and I’ll show you the real side.” I got into that and that’s when Subaru was coming around with Paul Hogan with the Subaru Outback.
They threw me in there and people flocked to that with the accent as they just want to put up together. I said, “I suppose your name is Paul too.” They said, “Where are the cameras?” I said, “You can’t make this stuff up. It’s real.” I led from there. I managed for Subaru for a while and then I got into the other side, which is Fleet. It sells vehicles to corporate companies, big box stores and everything else like that. Now you’re not dealing with the public, you’re dealing with a whole different clientele of people. I did that for almost twenty years back and forth. The last four or five years when I was dealing with these clients that would come and buy their own personal vehicles from me that worked for these companies, they say, “Paul, why would we go to the car dealership? We can come through you on the fleet and get it at wholesale fleet pricing.” I said, “You can, but you can’t tell everybody about that because we don’t sell to the public.” Legally of course, you can. We didn’t want to do that because you’ll save 100 business cards printed up at a time when we normally do with 10,000. You have to stop the whole process just for one client. I would always tell them, “I can check your numbers for you. All you have to do is to go drive the car and go pick it out. Go get your numbers and before you sign somewhere, let me check it out with our fleet pricing to see if we can do it at a cheaper price.”
We always care, but we wanted to see how much more incentives we have. Sometimes it could be a couple of $100 or it can be thousands of dollars, but it was always cheaper. That worked out great for all the people that would come back and reoccurring all the time when their leases or when they wanted to get out of their vehicles. It was great because I would network with them also. I would send clients to them. It was a great niche networking clientele that we all hadn’t trusted. We all know that reference is key to your business. If something happens to that client, it’s going to come back and reflect on you, not the person that referred you to. You always have to be on the up and up with everybody. That was a good part. I ended up saying, “I’m seeing all these people. These new clients are all sent into me.” They’re coming to me with half the information looking, “What’s the best price on this?” I said, “That’s not how you purchase a vehicle. Whoever is telling you that, it’s the wrong way to buy a car.” People come to us with the numbers we checked them at. Long story short, they weren’t understanding that.” I said, “Let me put pen to paper here and draw out a diagram.”
A few sentences become a paragraph, become pages, become a number one bestseller on Amazon. I didn’t even know about it until they showed up one day and they said, “The book that you wrote, How To Beat The Car Dealer Every Time! It’s So Simple It’s Ridiculous. It’s number one on Amazon in seven different automotive categories.” I was like, “That’s good.” I simplified it for the buyer. They can either have it as an eBook. They can take it with them and download. They can use it on their phone as their own little private negotiator. All I have to do was ask a simple question and fill in the simple answer. It’s full proof. Even the most novice of buyers can understand that up.
What kind of questions are we talking about?
When you first go into a car dealership, it’s like going out with your friend to a bar or something. The car salesman is your bartender. Before you go out somewhere, you say to your friend, “We’re only going to go out for one or two drinks. We’ve got a big day tomorrow. We’ve got other things to do.” You go there and all of a sudden, the bartender now becomes your friend. He’s given you advice on certain things or listening to what your problems are and before you know it, you’re having such a great time. You forget all about time and it’s not until the next day people wake up with a hangover and they realize, “What happened to me last night? What did I say? Where did I go? How did I end up on the corner of buyer’s remorse boulevard on the second street?”
I tell people, “There are two ways you can look at it. I act as your accountant. When you go to get your taxes done, your accountant can save you all the money in the world. Unless he has the numbers to work with, he can’t save you anything. You need to come to me with that. Take the downloaded book with you. For $10, you’re getting professional advice from an expert. You can use and keep it forever. I wouldn’t care if it’s $50. I’d buy it personally. That’s just the way I am.” I act as a designated driver who steers you clear of all the potholes and dead-end streets. Car dealers will try and steer you into when you’re already drunk on emotion. That’s how car dealers work. They play on your emotion. That’s how we buy things. The emotional side already decided what we want to do and what we want to buy, but we just need justification to clarify it. Without that, we get lost. That’s when the logical side comes in. The car buyer’s advocate slows and collide it down and says, “Here’s how you don’t go buy a vehicle. Here’s the right way to go buy that vehicle.”
What are some of the biggest mistakes then? Where are we losing money the most?
95% of all people make the same mistake when they go to buy a car. They don’t know what the actual selling price of the vehicle is. 95% of people end up either leasing or financing the car. They have some payment that they have to pay. They’re payment buyers. When you go into a dealership, they’re going to show you the vehicle that you want and everything else like, “Here’s the price.” It doesn’t matter. It all comes down to your monthly payment on what you want to pay each month. They head on to everything else. They’ve taken you off the selling price and put you into a payment, but you don’t know what that payment is based off because they don’t show you that. The term can be anything. As long as that number is fine, you go out and you feel like, “I go home and that’s when I end up on buyer’s remorse boulevard on the second street.” They go, “What did I do? How did these numbers get to be where they are? What did I just do?” That’s the biggest mistake most car buyers make.The emotional side already decided what we want to do and what we want to buy, but we just need justification to clarify it. Click To Tweet
I was lending not with cars, but for homes. We made points on the backside. How do we find out the actual price of the car?
Unless you’re a licensed dealer or a land broker, you don’t have access to all those manufacturers to dealer’s incentives and rebates. There’s no place on the line you can go and get your car price checked. It doesn’t exist. Unless you paid thousands of dollars a month to have that software and the programs you used to have to work with, you’re never going to be able to get to that price. That’s where I got into the concierge side of it because there were so many online car marketers that are in cahoots with the car dealers. We paid them a commission when they used to send us their clients.
The biggest abuser of it used to be TrueCar, which we used to joke and call Untrue Car because they would never be upfront with the clients. Any of those that you see online, they’re just glorified telemarketers that would come to the dealership. They’d send them the commission price and the selling price. Unknowing to the client, they end up paying for that service in the deal that they don’t even know about. I said, “I’m going to stop this and clarify this for them.” Since I’ve started doing that and showing them, it’s been a whole different way people started to look and buy an automobile.
What do you think of the buy versus lease thing?
It’s good and bad. If you’re a salesperson and you’re in the vehicle that you need to be putting a lot of miles on, it’s not going to be beneficial to you because you’re going to pay the penalty you’re going over on the mileage. The average person only drives between 12,000 to 15,000 miles a year. Most companies and the banks, they give the programs toward 12,000 to 15,000 miles a year. In that way, you can get into a car that is $30,000 or $40,000 or $300 a month. If you were to go into that same vehicle and finance it, you’d have to go out five to six years. They put down a good chunk of change just to even come close to that and that never happens. By that time, you’re upside down the depreciation. By that time, most people don’t keep their cars anymore now in three or four years because they changed the models and makes around so often. They’re so competitive that people look and go, “I don’t want that car. It looks old.” It’s like an old pair of shoes.
I was thinking of my mom in her mid-80s and I was looking at cars. I don’t know how long I want her driving. At a certain age, you don’t know and then you’re thinking, “What if something happens?” She totals the car right after you buy it. I know you can spend extra on insurance for certain things, but price-wise, is it worth it? When you total something you own, it’s a little different than totaling something you lease. Isn’t it more of an expense?
When you lease, most of the companies have GAP insurance. If you have an accident and the car gets totaled, the insurance company will pick up what the vehicle’s worth, but you are still on the hook for all the payments. The GAP insurance picks up that difference. It pays it off. You can do it on finance or you can do it on the lease. Most companies state that down. Toyota is one of the exceptions that don’t. I drive a Toyota Highlander, so I have to buy the GAP insurance extra. It was only a couple of $100, but it’s as if driving a car with no insurance. I always say to clients, “If you don’t do it, here’s what could happen. If it does happen, here’s how this can save you.” If they don’t, when they go into the business manager’s office, they’ll charge you $800 to $900 or something that’s only a of couple $100. That’s when people say no to things because they hear the word warranty insurance and they know what’s going to happen to them right from the idea.
It’s going to be interesting to see what happens to the whole car industry in general with driverless cars and Uber and different things. What are you seeing happening in the near future?
Car dealers don’t have to change too much. It’s two-fold because one, you can’t go online and drive an automobile. You have to go to the dealership and car dealers know that. When you go there, you can be prepared for all you want. Have all your numbers, be prepared for what you think you’re going to say, but as soon as you walk in the door, it’s as if going to your neighbor’s house and you haven’t been there before. You walk in and they’re going to greet you at the door. They’re going to let you in and you’re going to be so discombobulated with, “Where’s the bathroom if I need to use it?” You’re not familiar in the area and you’re so awed by what’s going around.
All that information you had gone right out the window. Once you go in there, they’re going to be firing questions at you like, “Do you live locally? Who’s the vehicle for? Who’s the lucky person?” That’s when they start to play on your emotional side. I call it the potion of emotion because that’s exactly what they serve you when you go in there. That’s why I said the car seller is your bartender. They’re there to give you that good time. Once they get you intoxicated on numbers and your head is spinning, you’re already drunk in emotions. By the time you go out of it, that’s when you end up the next day and have that buyer’s remorse. Car dealers don’t want to change it. They’re very old set in their ways and they don’t know how to go about getting their clients in the dealerships. That’s where these online telecom marketers came like, “We’ll worry about that, give us a commission, we’ll get the customer in there. We’ll bite them so when they’ll be at your door, we’ll know exactly who they are because I’ll give you a nice little certificate to take you in with them.” That little certificate is just an invoice for the car dealer to pay them that they hand deliver. It plays in the car dealers favor and it doesn’t have to change.The automobile is the most appreciative thing you can ever purchase. It's also the second biggest purchase you'll ever make in your life. Click To Tweet
I’ve driven by it on the way the airport here in Phoenix. They’ve got the stacks of cars. I guess you buy it online. You don’t even look at the car. When we bought our Tesla, there was no dealership. What’s the future going to be like for that? Do we have to go to the dealership? What’s happening with that?
Tesla has its own separate way of dealing with vehicles. The car dealer can’t make any money on you unless you come into the dealership. You have to legally go in and sign unless you’re a concierge that takes all the legal paperwork to you and signs it. That part won’t change because the whole thing to get you in is to sell you stuff. The money is not made on the sale part of it. It doesn’t matter if you go online and say, “I got this car for $21,000 through TrueCar.” I go in there and I’d sit them down and say, “Go sign them up, but don’t sign the buyers. Make sure they do take their deposit. Put them outside and sit them beside the business manager’s office. He then recoups everything that you thought that you weren’t going to buy. You’re going to spend hundreds or thousands of dollars or more with extended warranties. There’s window etching, which is all BS. Whatever comes out of their mouth is BS. You do not need these things. The manufacturer’s warranties covered just about everything for the length of the term if you’re going to lease it or buy it. You’re pretty much covered most of the time.
Is there anything that you should get in addition to the regular warranty when you buy a new car?
No, because at any particular time, you can purchase extended contracts outside of the dealership from independent sources that are a lot cheaper. You don’t have to buy it right there and then. I had a client on my show and we’ve got onto about warranties. I said, “If you out are listening and you have purchased the warranty, the good news is that you can go in and cancel that at any time and get your money back. You’re not going to get it all back, but you’re going to get a good chunk of it back, but it’s less what you’ve already used on the length of the term that has been already on it. You can go and cancel that. Ask money back in your pocket.” If that has happened to you, you could absolutely do that.
What about sticker price and percentage rates and all that? What do we need to know when we’re looking at that on the car? Should we be paying 0%? Can we get that or is that just a thing that they run once in a while? Can you give a little background on some of that?
The window sticker or the manufacturer’s suggested retail price, that’s what the actual window sticker price is. If you go into a grocery store, it’s a list price for this but it’s on sale for this. It’s just the list price or retail price. That’s the negotiating price. You start from there. Ask the salesperson, “Are there any rebates on the vehicle that you’re looking to buy? Are there any special financing rates?” Sometimes you might have a 0% interest rate. You might also have a $4,000, $5,000 or $3,000 rebate, but you can’t combine both of them. You add up the numbers and see which one is going to come out. If I take the 0%, my numbers are going to come out to this on the finance. If I don’t take that and I try to shop my own rates through my credit union, I might be able to get 1929. I can also use my $3,000 to $4,000 rebate because you’re not going through the manufacturer itself so you can combine them both. It’s always best to check out those numbers first.
Certain companies sell their products at the same price everywhere like Dyson vacuum cleaner. It doesn’t matter where you bought it because it would be the same price. Is there ever a dealership where they don’t play all these games where you don’t have to negotiate where it’s like, “This is the price, take it or leave it?” Why so much negotiation? Why game playing?
Saturn, which is owned by GM, tried that years ago. It never worked. People said, “Why would we pay this price for something?” The automobile is the most depreciative thing you can ever purchase. It’s also the second biggest purchase you’ll ever make in your life. You’re always going to be upside down on the vehicle no matter what. Is it worth to spend window sticker price on the vehicle? As soon as you drive it out of the dealership, you’re going to lose 25% right off the bat. It’s the biggest depreciation you’re going to take in the first two to three years. That’s why people are like, “Here’s what an invoice price is.” You can negotiate with an automobile. People didn’t know that you can negotiate with an automobile. Everybody be getting window sticker price and the sales are living in the Bahamas with the commissions.
How about new versus used? What’s your thought on that because you talked about depreciation? As soon as you drive off the lot, you’re done. Many people don’t know how to read the reports and know if they’ve been in accidents and all that stuff. What can you tell us about new versus used?
The good part about pre-owned vehicles is that you can go on Lawndale and you can use CARFAX. It reads the identification, it sees if it was reported in any accidents over a certain amount of damage. It has a $500 plus an upwards. It shows you the exact history report of every vehicle in the United States. When you get there, it’s $30 to $40. When you get there, you can look at it or you can ask it at the dealer. Just say, “I want to see the CARFAX before I buy it.” They’re more than happy to give it to you if they’re reputable.
Most of the vehicles that go through the dealerships have to put them through the service department and make them roadworthy certified and spend the extra money so that you’re not coming back with a broken-down vehicle all the time. They have to certify those vehicles. All these added costs got added to the selling price. The average selling price markup on 100 pre-owned vehicles is anywhere from $3,000 to $4,000. There’s a lot of negotiating room you can use on there and there’s only one of that actual vehicle. There are no two identical used cars with the exact same amount of miles and the way it looks. I’ve never seen that.
If we take all the stuff that you say and do in your book and we go, “This is the price. Explain it. We read this. This is what we’re willing to pay.” How likely are they to work with you and give you that price?
The beauty about it is I give them the actual questions to ask them directly. It’s like a game of chess. I’m putting them in the corner and check them with the questions I have to ask. They’re only going to fire them back at you if you don’t already ask them. It’s going to be like, “Am I right or wrong?” You’re going to have the answer right or wrong. All of these would play on you. I put them into the sentence and I just work them back on it because I say, “This is what they’re going to ask you and this is what you’re going to say back to them.” Up and down on your iPhone, you can flip it and say, “I have to ask for this prize. I scroll down. I put it there.”
The best part is people that have used my stuff going in and said like, “How do you know how to ask all these questions? Do you work in the auto industry because nobody ever comes in and asks for this stuff?” They’ve had sales managers come over and say the same thing. I said, “You asked for this stuff. If they’re not going to give you that, stand up, go and reach out to shake their hand, say thank you very much and go to leave.” There are plenty more places that you can go to. No dealer is silly enough to let a client leave. If the salesperson lets them leave, most of the time they would get fired for that. That’s why they say, “Let me check with my sales manager.”
The salesperson goes back over to them, gives them the information and say, “Here’s where we’re at.” He comes over and tries to keep you there and make the numbers be what you’d want them to be and all that good stuff to make you drive it home that actual day. If somebody says to you, “We make the numbers be what you want them to be. Do you want to drive the vehicle home right now?” Run because there’s so much profit that’s in that vehicle that if you left there and went somewhere else, they know somebody else could beat it.” They had you sign right there and then and send you home in it and as soon as the tail lights go over the curb, that’s your vehicle. It doesn’t matter if you jump up and down and scream or whatever. You own that vehicle right there and then.
It’s a helpful book for a lot of people because it gets so confusing for so many people. It’s called How To Beat The Car Dealer Every Time! It’s So Simple It’s Ridiculous. That’s the app too. I want to make sure that everybody can get this if they want to and be able to contact you. You said you have some way that they could reach you or link you could share.
They can go on Amazon and just type in How To Beat The Car Dealer Every Time! It’s So Simple It’s Ridiculous or they can go to my website at CarLeasingConcierge.com. They can also flip through there and it gives the details on the book. When they go to the website, they have three options. They can download the book and go use it. If they do go on and use it, they can come back and if they’d pay $40, we can do a car price check for them. I give them a printed-out report that shows them, “Here’s the actual selling price that they were selling the vehicle for you too. Here’s how much profit they’re making. Here are all the BSPs that they were hiding in there.”
You have two options. One, you can take this report back to them and good luck trying to negotiate with them. You’re asking for a lesser price. As a retailer, they’re going to give you fleet wholesale prices. The second part is, knowing all that, here’s what you can do. We charge people $300 if they come to us if they want to get their vehicles. If Sony wanted to come to buy 300 cars off us, our fleet charge for them is $297 per vehicle. That’s what it costs us to run the system through and pay the software and do whatever. That’s how we get paid. I say to people, “If you got that prize, we would not want you to come to us and use our service if we know that we cannot bet on that price. We would beat that price including the cost of our service.” You’re getting a service for free.
I still get paid by the manufacturer from fleet wise anyway like a government grant money. I’m giving you the money to use. It’s up to you whether you want to use it or not. If you don’t want to, you can go back to the car dealership. Once most people know that they go like, “I’d have to be crazy to go back there.” I do get odd people that say, “I’m going to take that report. I’m going to go in there.” They’re the hard-nose penny pinchers and those are the kind of people that nobody can ever satisfy. Unbeknownst to them, they ended up paying more in the long-term. They come back to me and they say, “Paul, what’s the best price on this?” I said, “Don’t call us or trump to me and try to play car dealer. That’s not what we are here to do. We’re not here to sell you something. We’re simply here to help you lease or purchase something without you getting taken for a ride.”
I appreciate having you on the show, Paul. I hope everybody checks out your site. Thank you.
You’re more than welcome.
I’d want to thank Jack and Paul for being my guests. We got so many great guests. If you’ve missed any past episodes, please go to DrDianeHamiltonRadio.com. I hope you join us for the next episode of Take The Lead Radio.
- Zenger Folkman
- John Kotter -previous episode
- Daniel Goleman – previous episode
- Albert Bandura – previous episode
- Carol Dweck
- Peter Drucker
- Jack Zenger on Forbes
- Jack Zenger on Harvard Business Review
- The Extraordinary Leader
- Car Leasing Concierge
- John Tantillo – previous episode
- How To Beat The Car Dealer Every Time! It’s So Simple It’s Ridiculous
About Jack Zenger
John H. “Jack” Zenger is the Co-founder and Chief Executive Officer of Zenger Folkman, a professional services firm providing consulting and leadership development programs for organizational effectiveness initiatives. Jack Zenger is a bestselling author, speaker, and a national columnist for Forbes and Harvard Business Review. With more than five decades of experience, Jack is considered a world expert in the field of leadership development and organizational behavior. He is a highly esteemed and influential speaker, consultant, and executive coach with the ability to connect with audiences though compelling research and inspiring stories.
About Paul Maloney
Paul Maloney known today as THE Car Buyer’s Advocate and owner of Car Leasing Concierge is a professional car buying expert with over 20 plus years experience in the auto industry mostly as a Fleet Car Sales Director. He is the author of “How To Beat The Car Dealer Every Time, It’s So Simple It’s Ridiculous”!