My Misadventure In Buying A Car: How Not To Persuade
July 26, 2016
by Dan Solin
Baupost's investment process involves "never-ending" gleaning of facts to help support investment ideas Seth Klarman writes in his end-of-year letter to investors. In the letter, a copy of which ValueWalk has been able to review, the value investor describes the Baupost Group's process to identify ideas and answer the most critical questions about its potential Read More
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My wife and I recently went shopping for a new car for her. She’s an artist and uses her car primarily to commute to her studio. Her main concerns were safety and comfortable seating. She feels strongly about having a light exterior and a light interior color.
You now know more about her preferences than the car salespeople at five dealerships, where we spent several hours. Based on our experience, the poor reputation of car salespeople is richly deserved.
Here’s what you can learn from our experience.
Failure to ask questions
Not a single salesperson asked us anything other than perfunctory questions. They were too preoccupied with trying to sell us a car. We learned a lot about the differences in the various models of the cars they were selling and why they believed their cars were the right choice for us.
But they learned almost nothing about us and showed no interest in us as people.
This failure to shift focus from being the know-it-all salesperson to addressing the concerns of the prospect is also common with registered investment advisors. In my experience, it’s the primary reason conversion rates are so low.
An interesting phenomenon occurs when you have asymmetric information, defined as “a situation in which one party in a transaction has more or superior information compared to the other.”
This was the case with the car salespeople, and often (but not always) is with you.
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