“You’ll see. First they stick you with the undercoating, rust-proofing, dealer prep. Suddenly, you’re on your back like a turnip.”
“Look at these salesmen. The only thing these guys fear is the walk-out. No matter what they say, you say, ‘I’ll walk out of here right now!’ “
— George Costanza, Seinfeld, “The Dealership.”
George Costanza, Jerry Seinfeld’s neurotic malcontent friend, uttered these two memorable lines during the Seinfeld episode that centered around Jerry’s trip to the car dealership to buy a new Saab. Throughout, George constantly rails at Jerry to trust no one, and to treat his deal negotiations with the salesman like a fight to the death.
Jerry though, tells George to relax. The salesman, Puddy, is Elaine’s boyfriend. So Jerry is going to get “the inside deal.”
The episode works because George is in all his way-over-the-top glory, veins popping out of his forehead as he snaps at even the slightest hint of provocation. But it’s also funny because Seinfeld’s writers are tapping into something the audience feels as well: When you go to buy a car, you’re not collaborating with the salesperson to reach a deal that pleases both sides. You’re stepping into a battle, one in which the salesperson has more information and thus, the upper hand.
But what if the salesperson voluntarily gave away some of that information and leveled the playing field? What if “the inside deal” was actually just a typical deal?
Transparency > Mystery
What if commercial lenders took that approach?
What if lenders, rather than drawing a line in the sand on rate and trying to make the customer blink, instead opted for transparency over mystery and vulnerability over power?
Here’s how that might work. A customer comes into the bank looking for a business loan at a particular rate. The lender plugs those numbers in and sees that the deal in that form won’t reach his ROE target. But he can see there are several other ways the deal can be adjusted so that it can work, with the rate the customer wants – perhaps by changing the rate type, or the length of the loan, the initial fees, etc.
Now for the the crucial part: The lender then explains all this to the customer.
The lender opens himself up a bit, letting the customer “inside” and essentially giving a glimpse of what it’s like on the lender side of the table. The customer doesn’t have to guess at what the lender’s goal might be. Instead, that information is out in the open, along with multiple ways in which the lender is willing to craft the deal.
Now the ball is in the customer’s court. And now that the lender has given a little, the customer is more likely to do the same – often by sharing some additional information that will help the lender create even more options that are suitable to both sides.
The alternative to that vulnerable approach is the power play, holding your cards close to the vest and waiting until the customer’s need for capital overcomes his caution and discomfort. Sometimes that works, but sometimes, he pulls a Costanza and bolts for the door.
If your lenders open themselves up a bit, trust is built and the customer comes away feeling empowered. The lender comes away with a deal that meets targets and a customer who feels like they just got “the inside deal.” And that’s a customer who’s likely to bring more business to the bank in the future.
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