Resolve to be a Pawn Star – Employer Recruiters can begin to build a hugely successful recruiting protocol by studying the shrewd negotiating skills of these owners of a highly successful Las Vegas pawn shop.
Although I haven’t checked into the figures, I wonder every year how many New Year’s Resolutions fizzle out by February. My guess is that it’s a pretty high percentage, and among many reasons could be that people tend to set their goals too unrealistically. Well, if you are an employer recruiter and your resolution is on the ropes or already kaput, I have a simple and powerful “resolution solution” that can last all year and pay dividends: Resolve to be a Pawn Star.
There is a show on the History Channel called Pawn Stars which chronicles the everyday life of a family who has run a successful pawn shop in Las Vegas for years. I imagine people from all over bring in goods such as old cars to a book once owned by Isaac Newton, from a circa 1700 musket to a vintage boom box.
I want you to quickly get past the fact that this is a pawn shop, but an extremely successful BUSINESS. And there is a very simple reason for it that experienced salespeople and sales trainers (and great recruiters) quickly recognize – the principals at the pawn shop not only win virtually every negotiation with customers who bring in their goods, but they also almost never lose.
How would you like to have a simple process that cuts to the quick virtually every time with jobseeker prospects, that drastically improves your results – from closing percentage, getting the appropriate terms your employer is pressing for with the newly hired employee, and improve your retention numbers while getting a sincere “win-win” where both you and the new employee are totally satisfied?
I’m going to recommend that you, in a general sense, model your recruiting approach around how these pawn shop owners negotiate so focus on how they do it.
The Advantages of the Pawn Stars:
Experience: The first thing to recognize is the pawn shop owners have an incredible advantage – they negotiate dozens of deals every day vs. the person off the street who has perhaps never tried to pawn or sell anything they have owned before – this is no different than the advantage an employer-recruiter has over prospective candidates from physicians to specialty nurses.
Exclusivity: The next factor is the pawn shop owners have money – in other words, they have what these people want for the goods they are pawning. Sure, we don’t know the motivations of the people – for instance, they may be desperate for cash or just curious to see what the item they have may be worth.
The point is it doesn’t really matter because the pawn shop owner is going to set the terms. These customers came through the door. Similarly, your jobseeker prospects are at least casually interested in you; after all, you have an open job and they are at least sniffing around about it. They are coming to you.
Knowledge and Expertise: These pawn shop owners must be masters of the goods and products over which they are negotiating – because they must turn around and sell anything they buy at what they want to be a considerable profit. Much of the things people bring in, from jewelry to guns, they already know what their store’s selling price is going to be based on market conditions. The more unusual the product the better – the pawn guys will simply leverage an expert to come into the store for them in front of the customer and provide an assessment of the value of the product. The experts seem to have good
credentials, and talk intelligently, they have a reputation to uphold – but they clearly favor the pawn shop owners; nonetheless, they usually provide a “retail value” of the product.
Even with a starting price from which to negotiate, the pawn shop owner has the process to win the deal while promoting a deal that will either satisfy the customer or there will be no deal.
This is similar to recruiting, is it not? A jobseeker will come in with an expected salary and compensation range while to employer recruiter needs to promote a win-win that first benefits the employer, or be smart enough to drop pursuit of a jobseeker with unrealistic expectations or who isn’t sincerely interested.
People buy on emotion. All good salesmen and recruiters know this. An emotional attachment to a product or a job can be used against the customer or jobseeker, respectively, just as the emotional attachment to a product by a Pawn Star or to any particular candidate by an employer, can cut into the bottom line of the businesses.
To keep this blog entry more brief and focus on my orientation of developing a “process,” let’s agree for this post that because the Pawn Star and the employer-recruiter have always done this, they should have a clear advantage on this subject and have an awareness (gut .
feeling) when emotion is playing too big of a role in their considerations. Clearly, an employer-recruiter needs to be consciously aware of attempting to generate a number of emotional responses from jobseeker-prospects – it helps to out-recruit other employers as well as in the negotiations; will a candidate accept lower terms for a job and a community they have fallen in love with? You bet!
The Negotiating process: What all great sales professionals have in common, as do great recruiters, is they have a “sales process” or “presentation” which is refined and improved as they gain experience into which they incorporate their experience and exclusivity, which can turn style and recite in their sleep.
While this is a multi-step thing to evaluate, you’ll be amazed how simple it is and how the pawn store owners operate so smoothly that what comes off as a normal conversation is a big victory almost every time for them, and equally importantly, the customer leaves the negotiation satisfied – a “win-win;” this is what employer-recruiters also hope to achieve, and it’s clear that an established, expert process gets to the bottom line expeditiously – which is also important as unfilled jobs cost money.
The Two Negotiations – as I review these negotiations with you keep in mind that the customer is totally oblivious to almost all these factors and their brain isn’t wired to pay attention and understand they are involved in an almost totally orchestrated sales process that is a great disadvantage to them. But also understand the end result is either going to be a perceived “win-win” – the customer is not going to accept an offer they don’t want, or they will part company for the best.
A) Without a third-party expert providing a price from which to start:
From the get-go, understand the pawn store owner isn’t going to start any negotiation unless they already know the value of the product being offered by the customer, and what they perceive they will get for it. With the orientation toward being able to sell the product at the highest re-sale possible as well as knowing the most they can pay, they also start the negotiations.
The pawn store owner will naturally give a low offer with the customer generally not even understanding it is a low ball offer:
Pawn Star: “I’ll give you $200 for it.” (This is the lowest the Pawn Star thinks the customer may accept and he also already knows he will only pay $275 at the most, and he thinks he can resell the item for $600)
Customer: “Well, geez, I was hoping to get at least $500.” (Generally speaking, the customer has a ballpark figure of what they hope to get for their merchandise, but it is often not really based on any facts or knowledge about the product; often they have had the product laying around the house for years and they have no reference point such as their own purchase price – all conditions which the Pawn Star knows is likely the issue)
Pawn Star: “You need to understand that I need to be able to sell this for a profit, but I want to give you a fair price. The best I can do is $250.” (Here the Pawn Star introduces a fact that the customer likely did not consider, which promotes a sympathy of sorts and this is a power statement designed to loosed the customer’s hold on any firm price they may insist upon).
Customer: “How about $300?” (This is far less than the $500 the customer just said he was hoping for, but this is the counter offer that the customer is saying he will accept)
Pawn Star: Long power pause…head shake no (that’s called a “take away”). Brow wiped. Stare at the merchandise. Look at the customer (all choreographed acts). Head shake again. “$275 is the best I can do.” (This is exactly what the Pawn Star hoped would be the number with anything below being “extra gravy” to his bottom line, but is also the firm amount he has concluded will be a fit number where it would be worth it to take the time to turn around and display the merchandise for sale)
Special Note: The Pawn Star will never speak again after making the offer. It’s a selling tenant that “the one who speaks after the offer loses.”
- Let’s say the customer does not accept this number, keeping in mind that the customer himself offered $300 – which is $25 less:
Customer: “I just can’t do it.” Usually this would not be the response because many customers who get this far do not have an absolute firm price or a need to have one.
Pawn Star: “Well, if you want to spend the money to open your own pawn shop, advertise, pay the light bill, insurance for the business, and deal with all the hassles, maybe you can sell it for $275. I’m sorry, I can’t do better than that.” (This is called a “rebuttal” and the Pawn Star follows that with the close again at $275.
- Let’s say the customer tries again to jiggle the price:
Customer: “Are you sure you can’t do any better?”
Pawn Star: (Firmly now) “$275 is the best I can do. (This is an absolute statement made to promote the close. We really don’t know if the store owner will go higher but that’s not the point. This is the art of negotiating.) I want you to come away satisfied and come back again to me in the future. That’s the best I can do.” (Another rebuttal promoting good feelings and prospective future business, which has no value to this deal, which the Pawn Star knows, but his intention is to get leverage, and then back to his close)
Customer: “Ok, I can do $275.”
Pawn Star: (Will immediately offer a handshake to consummate the agreement – this is a sales tactic, and repeat the agreed upon price) “$275 it is. Let’s write you up for the sale.”
- It is important to also understand that the Pawn Star was operating with a large profit margin on the negotiation, so he had flexibility to make adjustments based on the variety of factors – from the customer’s knowledge of the product to any insistence on a specific price. Also remember that even if the customer turns down the final offer, if there is truly a remaining profit to be had, the Pawn Star has that 40 feet from “No” until the from door to change that “final offer.”
B) With a third-party expert’s retain price estimate:
The only difference between this negotiation, when one of the pawn store owner’s “experts” is brought in to provide a retail price from which any negotiation (which is up to the Pawn Star to start, if at all), is that there is a literal starting price point that will be established by the expert.
Expert: “Considering other products like this that are in the market, the demand for it, and it’s condition, I would say the retail prince of this widget is $1,200.”
Now, regardless of what price is offered, including the Pawn Star’s experience to quickly be able to discern how easily he may be able to re-sell it and previous demand for a product like this, if any – which are obvious considerations he quickly needs to incorporate, there is going to be a percentage the Pawn Star always works from for this negotiation. Let’s say it’s 40%. That would be the best he would go – that’s $480.
But the Pawn Star is not going to throw the number out there because the customer may be willing to settle for less. So here’s the question:
Pawn Star: “How much do you want for it?”
From here, the negotiation, based entirely on the $480 mark, is going to be run by the Pawn Star in the same manner as before (the expert knows he is supposed to leave after giving the quote so as not to interrupt the Pawn Star’s deal – he was sent away with a hearty thanks and handshake by the Pawn Star).
Review: Promising that I would keep your resolution easy to follow throughout the year, these are the basic tenants I want you to come away with:
Watch the show – it’s actually the same song and dance, over and over, with the pawn store racking in money with satisfied customers leaving. The biggest thing you can learn from this is the efficiency and discipline Pawn Stars have.
- They have a specific routine. They make customers feel like it is a natural and normal process when the entire thing is choreographed without the customer knowing it. Your dealings and onsite interview visits should feel this way to your jobseeker prospects.
- Pawn Stars run the process and the negotiation; in fact, they already know the outcome of the deal – which will be terms THEY can accept, or no deal. The customer (or in our case, the jobseeker) never runs anything but are steered to choices they think they have or directions they feel they are choosing. A big criticism of employer recruiters is they allow the candidates to run things. When you start to see this happening, it’s almost a certainty that you will lose the deal or be forced into poor terms for the long run.
- Exclusivity and Firm Offers: Desperation also kills. You’ll never see emotion or desperation shown by a Pawn Star. For the employer recruiter to remember they have the desired job and stand firm in their dealings may be the most important factors – which garner first the respect from the candidate, but also a basis for credibility and real negotiating.
In the end, it is far better to know your best offer and be willing to walk away from the deal.
So for the rest of 2011, if your New Year’s Resolution isn’t doing anything for you, follow these basics and you will begin to craft an improved recruiting platform.
Remember, “Be a Pawn Star!”
The show Pawn Stars is on The History Channel and you can learn more about it and when it airs on the website http://www.history.com/shows/pawn-stars