Understanding the Four Square
by Jon Robert Quinn
The four square is a very integral part of the sales process. Understanding the four square will help you get the deal done. Mastering the four square will help you hold gross, which means to maintain value, and will also help you increase revenue and profits.
In The Cold Call King: Executive Edition, I talked about how I would add accessories onto a truck I was selling when I was in the car business. I also talked about how I turned a “mini” into a “pounder”. A “mini” means you’re making the minimum the dealership guarantees for a unit sold, which is usually around $100. A “pounder” means you’ve added gross to the unit and are making in excess of $1000 on the deal. So, how do you do this? How does this work? Let’s start by looking at the four square.
There are four quadrants on the four square. The top left can vary depending on how you structure your deals or also how the dealership does business. However, I can guarantee some ninety percent of dealerships use this model. I have also seen this model used in other sales industries so it’s common and should be used frequently if you’re a small business owner looking to increase sales and revenue.
The top left quadrant is either your trade’s value or as I like to ask the customer what they loved most about the product they’re looking at, and use this box to bullet-point the likes of the product. Here, I would list things like running boards, paint color, wheel or tires, ie: the benefits of the product. This adds value and is a quick reference point as to what the client likes so I can use these “hot buttons” so help close the deal.
The top right quadrant is the vehicle’s price or what ever the item’s price that you’re selling. Pay attention here. This is where you can bump the customer on price. Always write the BEFORE discounts price with the word “WAS” before the price. Then below it, write “NOW” and list the sale price. This gives you room if the buyer wants to haggle on price. If you’re starting at the sale price, then you’re haggling on the already discounted price and you don’t want to do this. If the buyer wants to haggle, then use the payment box to haggle. Get into conversation listing the items that they like and that you have already reduced the price and use the payment box to make the numbers fit.
Remember to use your 3 P’s or 3 M’s during the transaction. If they like you and product and they aren’t signing on the dotted line, that means the only thing holding them up is the price. Make the numbers fit for them and don’t be afraid to ask them what number would work for them. Most times, they will tell you the number and even if it’s low, you can work from there and move the deal forward. If you get pushy and they don’t like you, chances are they aren’t buying anything from regardless of the price.
Ok. Now let’s get into the bottom left quadrant which is the down payment. The common language used here is, “Mr. Customer, the bank usually likes to see a third down.” Now take the MSRP price, remember that’s the “was” price and divide by 3. If the price of the car is $30,000, then write $10,000 in this box and suggest that the bank wants to see a third down which is, in this case, $10,000. If the buyer balks, then scratch that and ask for $9000. If they still balk, then go for $8000. After three or four attempts to recommend a down, politely ask them what they think would be a fair down payment for the car.
The number they tell you will really tell you how serious of a shopper they are. If they want zero out of pocket, they probably aren’t very serious. If they intend on putting at least a couple thousand down, then chances are you’ve got a serious buyer. Also keep in mind that the customer wanting zero out of pocket may not have the FICO requirements to get approved for the loan as the person with money down has a much higher chance of being approved.
The bottom right quadrant is the most fun in my opinion. Now usually, what I do is make a guess on the payment without doing math. This formula is an illusion because the payment won’t actually be determined until after the deal has been made and the loan is approved, but by using a little salesmanship, you can really make this deal a good one. You ready?
Remember when I said the bank wanted to see a third down which was $10,000? The same rule of thumb applies here. “Mr. Customer, from what I am looking at here, (go down the list of options and start making suggestions, such as wheel locks, custom wheels, stripe kits, window tinting) if we add (line item), your payment would only be reflected a matter of a few dollars per month. Get a commitment on some accessories before you get into what the payment will be. Then, once it’s time to discuss payment, take your “recommended down payment” of $10,000 in this case, move the decimal place over, making it $1,000 and reduce by $100 making it $900. Now, do the same thing you did with the down.
If $900 doesn’t work, scratch it and go for $800. If $800 doesn’t work, go for $700. Now, again pay attention here. If the buyer says yes to $700, follow up with a range of $700 to $750. This gives us a ballpark. If we land at $765 and he’s approved, chances are he will take the deal. If not, you can still work on the term of the loan to make it work. One thing to keep in mind is that all those accessories you added are already on the deal and aren’t being sold in finance, which means you’re making that money and not the finance guy.
This, my friends is now you get from a “mini” to a “pounder” on a new car. Never did you rip the guy off. All you did is ask the right questions, you found him the right car and you structured the deal to work for him and you and the dealer which is a win win win for everybody.