Car Biz Today | June 2016 by CBTNews

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CAR BIZ TODAY The Official News Source of The Retail Automotive Industry

June 2016

Volume 3, Issue 6

SELL YOUR FAMILY AND FRIENDS IN JUNE

GRANT CARDONE

... See Page 8

6 STEPS

TO COMPLIANCE SUCCESS

STEVE ROENNAU ... See Page 6

SENDING E-MAILS

CREATE MORE VALUE WITH TARGET MARKETING

AMY FARLEY ... See Page 12

WHERE TO FOCUS INVESTMENTS

AN AMERICAN SUCCESS STORY Elder Auto Group symbolizes all that is great about the auto dealership industry. President Rob Elder uses training, family ties and Mom's legacy to continue to grow

...See Page 20

2016 International Automotive Lending and Leasing Survey breaks down a dealership's key areas to spend ...See Page 14

RECRUITING MILLENNIALS How to set the bar and bring the best service advisors to your team

...See Page 26

Helix allows dealers to view market-specific customer opportunities, generate advanced audience segments for targeting, analyze consumer behavior in real time, track attribution for improved ROI, and much more.

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ForceMKTG.com | 866-854-2815

CustomerConnect Stand out. Connect. Sell more. CustomerConnect allows dealerships to showcase their best salespeople and connect them directly with in-market consumers ready to buy.

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CAR BIZ TODAY M

Letter from the editor

Vice President/COO Bridget Fitzpatrick

There is so much negativity in the news lately, we thought we would offer a success story that truly speaks to the dealership industry. Years ago buying a car dealership was one way to realize the American dream. Today as dealership prices skyrocket, that still is true but a bit more costly. And, it is still, to a large extent, a family business.

Managing Editor

Meet Elder Auto Group, which was founded by John Elder, who after years of working for Ford bought a dealership in Flint, Mich. When he passed away during the height of the 1980s recession, his widow took over the dealership even though she spoke little English and few thought a woman could cut it in a man’s world. Wrong. Today, run by her two sons and daughter, Elder Auto Group has seven dealerships in Michigan and Florida and never forgets its roots.

This issue has other great stories that may not be as heartwarming as the Elder Auto Group, but will certainly help you run your dealership more efficiently, profitably and more inline with today’s consumer’s buying habits. Michael Roppo write about an on boarding process that actually works, while Jim Radogna will make you think twice about your compliance issues and what you need to teach every member of your team. Judy DeVere brings a customer-centric approach to customer loyalty and Grant Cardone brings home a point about selling to those in your home — your family and friends. As Irma Elder would say, it is all about family. So, we will also end with the thoughts and saying of Irma Elder who told her children to never — ever — give up. This Mexican immigrant would remind her children about the last four letters in American. I CAN. We all can make this a profitable month.

By Steve Roennau, Vice President, EFG Companies

8 Finding Your Prospects In Your Family Tree By Grant Cardone,

Entrepreneur, Writer, and Commentator

10 Industry News 12 How Do You Target Your e-Mails? By Amy Farley,

Media & Communications Manager, Force Marketing

14 Survey Automotive Trends By Bryan Ignozzi,

Advisory Partner, PwC

Win-Win By Ryan Williams,

President, Fidelis PPM

20 Dealership Profile: Don't

Turn a Bad Moment Into a Bad Day By Mary Welch

The "Secret Service" Strategy By Michael Roppo, Director of Dealer Fixed-Ops, Automotive Domain Results

26 Recruiting Millennial

Service Advisors By Adam Wright, Cosultant, M5 Management Services

Creative Director Brandy Brewer Graphic Design Ashley Race Director of Marketing & Events Karen Locadia Web Developer Demarus Perry Digital Marketing Associate Erin Mumphord Subscription Manager Emily Wiggins Producer Danny Ramos

News Anchor Joe Gumm Bridget Fitzpatrick

In This Issue 18 Pre-Paid Maintenance A

Managing Editor Mary Welch

Production Assistant Chris Riggins Jillian Kaszubski Jordan Chipps

Mary Welch

Consistent Compliance Success

Email newsroom@cbtnews.com Phone 678.221.2955

President And Publisher Jim Fitzpatrick

Dear readers,

MARY WELCH

CAR BIZ TODAY MAGAZINE

ADVERTISING

28 The Value of Creating Your Own Website By Russ Chandler, Product

Megan Wilson mwilson@cbtnews.com d 678.221.2955

Marketing Manager, PERQ

30 Ask The Pros 32 Compliance Isn't Your Problem? By Jim Radogna, Director

of Compliance, The Llyod Andersong Group of Companies

Revenue Loss in SOP By David Lewis, President, David Lewis & Associates

36 Association News 38 On The Set

CUSTOMER SERVICE info@cbtnews.com SUBSCRIPTIONS To subscribe electronically, log on to cbtnews.com and click the subscribe link on the side bar. Alternately, forward your company name, your name, address, phone number and email address to info@cbtnews.com or CBT News, 5 Concourse Parkway, Atlanta, GA 30328. Please send address changes to the above email or mailing address. Permission to reprint or quote excerpts granted only upon written request. Advertising rates are provided upon request.

RDE SAL VE ES E

EXCELLENCE

#1) How’d you like to sell 2 more units for every 10 write ups you didn’t close? Then hold those Make A Deal Meetings every morning that we talked about awhile ago. Look over every deal that was worked yesterday but not delivered.

YEARS OF 1985–2015

198 5 – 2015

Need To Sell 20 More Units This Month?

AINING,I TR N

The #1 Training Company In The Car Business

AG MAN EMEN T

JOE VERDE

JOE VERDE TRAINING WORKSHOPS Learn How To Train – Coach – Manage Salespeople Management Workshops n Managing For Growth & Profit Our ‘Team Leadership’ workshop is the critical class managers never got on “Managing Salespeople & Profits”. Attend this workshop first.

Don’t say, “We tried everything we could,” because you’ll be amazed at how many ideas you can come up with when all of your managers as a group take a fresh look at those write ups.

n Working Deals (Negotiation) Improve your sales and gross with this easy ‘customer friendly’ 3-Step Process on every deal you work.

The results you can expect: In our dealer/ manager workshops, managers say they find a way to deliver 2 out of every 10 they didn’t close the day before.

n Learn To Hold Effective Training You train M-W-F for 2 reasons, to improve & grow. Problem: If you don’t train, you don’t improve and you don’t grow! Sign up today.

#2) When you work a deal that you don’t make and you’re ready to let the customer go – instead of having the salesperson give them back their keys, have a manager do it.

Sales Workshops n How To Sell A Car, Stay Off Price & Close

With a smile on your face and no paperwork in your hand, give them their keys and say, “Hi folks – I’m the guy who’s been scribbling those numbers back and forth – I’m sorry we couldn’t get together”... visit a minute and then ask... “If there was one thing that kept you from getting this car right now, what would that be?” Then close the sale on that one thing.

The Sale

Want a 20%-50% boost in sales and gross overnight? Sign up now or take the course on JVTN®. n How To Close, Overcome Objections

& Negotiate Tired of missing deals that should have become deliveries? Live & Online...Call today. n Phone & Internet Leads Dealerships miss 8 out of 9 deliveries from these lead sources. We fix that, live in this workshop and online at JVTN®.

The results: 2 more sales for every 10 that you personally get involved in.

Would you like results like these? “We’re up 103 units from last year, and growth is going strong!” – Dennis Andrews, General Manager Jim Pattison Lexus Toyota “After your Sales Workshop, I went from 20 to averaging 67 per month!” – Abner Elidor, Salesperson Toyota of North Miami

“Units are up 29% and gross is up 71% from your classes and JVTN®.” – Brian Nesbitt, General Manager Fred Beans Chrysler Dodge Jeep “In just two months, our gross is already up $27,000 per month.” – Reko Fracassi, Sales Manager Napoli Indoor Auto Outlet

“Our Buick / GMC dealership is up 29% and Subaru is up 22% from last year!” – Patrick Stone, Sales Manager Roper Buick GMC Inc. “Our units are up from 80 to 130 and gross profit up $200,000 per month.” – Ben Gonzales, Sales Manager Pitre Buick GMC

JVTN® – ONLINE TRAINING Train In-House The Quick & Easy Way What is JVTN®? It’s the most powerful virtual sales training in the world! What would Joe Verde teach our salespeople? The complete sales process... n How to sell a car today. No salesperson will be left behind, not knowing

what to say or do when they get a customer. Word for word – we’ll show them what to say from the greeting to the delivery!

n How to close the sale, overcome objections and stay off price on the lot to build value. We teach your salespeople how to handle every objection – including price questions and price concerns that come up during the sale, closing and the negotiation. SC 12351

n How to build your business by phone. Phones ring and leads come in daily, unfortunately most don’t end up as deliveries. We teach salespeople how to take calls and leads and make outgoing contacts, to turn more lost sales into be-backs and more contacts into appointments that show. n How to follow up, prospect and retain your customers forever. Again, word for word on everything they need to say and do to build your future business. JVTN® includes a powerful, easy to use mini-CRM built for salespeople.

Call Now • 888-712-6647

LEGAL

6 Compliance Success STEPS TO

Consistency is Key BY STEPHEN ROENNAU

auto industry won a small victory over the CFPB in November when the

House passed the Reforming CFPB Indirect Auto Financing Guidance Act.

n December 2013, the Consumer Financial Protection Bureau (CFPB) ordered Ally Financial to pay $80 million in civil penalties over Ally’s allowance of dealer markup. This represented the federal government’s largest auto loan discrimination settlement in U.S. history. Between 2013 and 2016, the CFPB has issued several new advisories,

finalized settlements with BB&T, American Honda Finance Corporation and Toyota Motor Credit Corporation (TMCC), and forced numerous other automotive financial institutions to significantly modify their lending

Of the many lenders who anticipated a CFPB investigation, TMCC was arguably the most prepared, having completed a very thorough overhaul of its compliance procedures based on CFPB industry recommendations. However, it appears that the CFPB’s approach of using lenders to regulate dealers has only resulted in sweeping caps on dealer reserve. As a dealer you may be tempted to brush off these changes. After all, the

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ing and Compliance with the Equal Credit Opportunity Act” bulletin, which instructed lenders to eliminate dealer pricing discretion, or constrain dealer pricing discretion by monitoring dealership practices and using “controls” to force dealerships to adjust their practices. This bill is by no means law - and could face revisions before it passes in the Senate. So, until the bill is in final form, we recommend that dealers take stock of the current auto lending compliance practices. Luckily, there are a few simple steps you can implement tomorrow to get

businesses.

In its current form, the bill would nullify the CFPB’s “Indirect Auto Lend-

CAR BIZ TODAY JUNE 2016

your dealership on the path to compliance.

“One of the easiest and most efficient ways of creating transparency is an online credit application including financing and aftermarket information.”

1. IDENTIFY A COMPLIANCE LEADER Identify a compliance “owner” to be responsible for regular compliance training, new employee education, auditing F&I processes daily. They should review your deals daily, and check for things like signed menu disclosures and consistent rate markup. While they should have in-depth knowledge of the F&I process, they should not be an F&I manager or associated with the sales process. Ideally, this should be a separate role within your dealership focused purely on operational compliance. Send your compliance leader - and F&I managers - through compliance training like the Association of Finance and Insurance Professional’s (AFIP) certification course. This team must be fully versed in national, state and local regulations to be effective.

2. PUT PROCEDURES IN WRITING You may already have F&I processes in place – but are the specific procedures in writing? If not, they don’t exist. Document each step of the process and have the compliance leader review it for potential holes. Daily monitoring of your menu use can catch issues quickly. Defined consequences for failing to comply with dealership policies should also be in writing. Employee remediation is much less expensive than a lengthy audit, a potential lawsuit and staff reduction.

3. ENSURE CONSISTENT RATE MARKUP Now is also the time to ensure consistent rate markup by implementing NADA’s Fair Credit Compliance Guidelines. While the CFPB initially preferred a flat rate or a fixed percentage of the amount financed for dealership compensation, their settlements with Honda and Toyota allowed NADA’s guidelines to be implemented with a reduced dealer mark-up. Dealerships should also work with their legal counsel to implement a version of NADA’s guidelines to protect their relationship with the majority of auto lenders.

4. PROVIDE TRANSPARENT, CONSISTENT F&I PRODUCT PRICING Review your F&I product pricing models to ensure it is consistent for customers. Since 2011, the FTC has brought more than 25 cases challenging illegal practices in the area of dealership business. These cases, combined with the CFPB’s investigation into auto financing, have prompted the FTC to take a closer look at the retail automobile industry. Also, take stock of your dealership’s financing and aftermarket pricing. These days, it’s easy for consumers to research vehicle prices. But most consumers have no idea what they qualify for, and what competitive pricing looks like when it comes to researching financing, vehicle service contracts, and other aftermarket products. However, this is rapidly changing. While dealerships have capitalized on this knowledge gap for years, consumers and entities like the CFPB are now stepping in and saying, “No more.” Today’s consumers demand transparency. One of the easiest and most efficient ways of creating transparency is an online credit application including financing and aftermarket information. Providing this information up front allows consumers to self-educate while they are

doing their vehicle research. All of this begs the question, how competitive are your products, financing and pricing? Work with your product provider to truly understand the consumer benefits of the products you offer. Compare benefits to the suggested retail price, with the question, “Are my customers receiving good value for what they paid?” Look beyond dealership profit from aftermarket products to consumer value and find a good balance. Evaluate your pricing structure to determine how you can create a uniform pricing model for your F&I product menu.

5. UTILIZE A COMPLAINT MANAGEMENT SYSTEM Put in place a complaint management system where complaints, online and offline, are reviewed by managers and addressed directly. You don’t have to provide free services/discounts to every complaint, but just demonstrate your willingness to listen and address concerns. A holistic view can help you identify patterns of issues and address them through training, or even talent recruitment. A good measure of customer satisfaction and your dealership’s future profitability capability is a comparison of your dealership performance metrics and your CSI score, online customer reviews, and chargebacks. You want to see a picture where those metrics and CSI scores are aligned. Remind your teams that the customer experience is paramount to a successful dealership.

6. AUDIT, AUDIT, AUDIT Lastly, consider implementing recurring, random audits to ensure your team is complying with local, state and federal laws. Are they complying with OFAC, red flags, risk-based pricing, etc.? You won’t know unless you audit. Your compliance leader can manage this on a regular basis so you can address discrepancies before they become serious issues. Moving ahead, expect that banks, captives, finance companies, etc. will ask for your written policies and procedures, as well as documented training, as they prepare for CFPB investigations. While the road to compliance is long, it’s possible to gain significant headway quickly by applying the steps provided. You can begin implementing these strategies today. However, just like establishing a good habit, they will take time to form into a cohesive compliance platform from which you can build lasting and effective operations.

STEVE ROENNAU

Vice President of Compliance for EFG Companies In this role, Steve utilizes his extensive industry experience to provide clients a sophisticated analysis of their current compliance procedures and proactively prepare them for upcoming changes in federal and state regulations. Steve is an AFIP Senior Certified Professional in Financial Services, and has developed compliance training modules in the areas of Adverse Action, Privacy Rule, Risk-Based Pricing/Exception Notice, Red Flag Rule, Safeguards Rule, Deceptive Practices, and Federal and State Regulations.

JUNE 2016

CAR BIZ TODAY

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TRAINING

S D N E I R F D N A Y L I M A F R U O SELL Y

IN JUNE

Your Prospects Are In Your Family Tree BY GRANT CARDONE

hy are you spending all your time trying to sell people you don’t know when you haven’t yet sold everyone you do know. Your family and friends drive cars and trucks. They need cars and trucks and are going to buy them

from someone.

Why are you not prospecting them? Why are you not calling them? When was the last time you brought them a new car or truck to look at or drive to work? You don’t need Facebook, Twitter or Instagram to sell to your family. You need to use social to remind them you are selling cars. What you need to do to sell them a car this quarter is to get in front of them.

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CAR BIZ TODAY MAY 2016

1) GET YOUR PEN OUT: Make a list of everyone close to you. This list isn’t just people you like. It doesn’t mean they are in the market or they want your product or can get approved for a loan. It means simply make a list of everyone you know starting with your blood relatives:

A. Mom, dad, brother, sister, uncle, aunt, grandparents….

3) PICK UP THE PHONE: Start making calls to set up a time to go see your list. Do NOT ask them to come to you. It is your job to go to them. “Hey, I am going to be in your neighborhood later today are you around?” When they say yes ask this question, “I am selling X cars what do you want me to bring over to show you for fun?” Again your job is to get in front of your family members and don’t miss the opportunity to bring them your bling-bling shiny things.

B. Friends - anyone that has ever been a friend at any time in the past C. Neighbors

2) MAKE A HIT LIST: Put these people on a list of targets to close before July. I don’t want you simply calling them, I want you to have a goal of closing a deal before this month is over. Maybe your parents told you not to mix business with family - well your family members aren’t paying your bills. This is business and if you can’t sell people you do know then how are you going to sell people you don’t know? If you work at a great place with great products, then your duty is to sell your product to your family, friends, and neighbors.

“This is business and

if you can’t sell people you do know then how

are you going to sell people you don’t know?”

4) PUT ON PROSPECTING HAT: When you get in front of them have your prospecting hat on not your sales hat. I know I told you earlier to have them on a target list to close, but first you have to find out what they want the next time they do buy. Ask questions such as, “The next time you do something will you go bigger or smaller than what you have now? Import or domestic? Car or truck?”

Great sales people keep their pipelines full and their calendar slammed. If you are spending more time with other sales people and customers that you don’t know you are destined for failure in this business. Keep your calendar full with appointments. An appointment is defined as an arrangement or agreement to meet someone at a particular time and place. So many automotive people think appointment means the customer has to come to you but it is not true.

BUSINESS DOESN’T COME TO YOU: YOU GO TO THE BUSINESS When I show interest in your product you better come to me and take time out of the equation or you become susceptible to competition. Recently I was looking at selling a piece of property. I emailed three agents and asked them what they thought of the market at this time. All three answered me and one of them was at my place 24 hours later. Who do you think got the deal? I also recently expressed interest with a Lambo dealer here in Miami. One week later he has still not brought me a car. Ridiculous! Unacceptable! So he is either too lazy, too rich, or too busy to make time for me - so instead of buying a car from him I will make fun of him. Wake up folks - If you can’t or you are unwilling to call on your friends and family and neighbors get out of this business and find another industry to fail in because that is what is going to happen. Sorry for the strong language. Also to the managers that allow your people to stand around - shame on you. They are copying the example you have set for them. Everyone needs to do this not just sales people and you will all have a stellar month. This is no longer the time of sales people being successful waiting on showroom traffic or the phone to ring. You have to create your business every day. When I went from being a salesman to a businessman I no longer waited on showroom traffic and created my day turning time into money! Be great.

GRANT CARDONE

Entrepreneur, Writer and Commentator Grant, a national speaker and motivator, is a respected, highly regarded master salesperson whose passion is to teach people how to sell themselves, their products and services regardless of economic climate. His books, audio packages and seminars provide people of all professional backgrounds with the practical tools necessary to achieve high levels of success. Follow him on Twitter @grantcardone.

MAY 2016

CAR BIZ TODAY

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INDUSTRYnews GEORGIA JOURNALISTS NAME CHRYSLER’S PACIFICA BEST FAMILY CAR 2016 The Greater Atlanta Automotive Media Association (GAAMA) held its fourth annual Family Car Challenge at Lake Lanier Islands and named the 2017 Chrysler Pacifica the best family car for 2016. More than 40 journalists test drove 24 vehicles and rated the cars and trucks. In addition to the Pacifica winning Best Family Car, the other category winners were: Best Value: 2017 Chrysler Pacifica Beset Technology: 2016 Mercedes-Benz GLC 300 Best Three Row: 2016 Ford Explorer Best Family Pickup Truck: 2016 Ram 1500 Best Luxury: 2016 Lexus LX 570 Best Green: 2017 Chevrolet Volt “It was our most competitive Family Car Challenge yet and our journalists took almost 200 rides in the cars and trucks in order to truly get a feel for the vehicle, its value, energy efficiency, its technology and comfort,” says GAAMA President Christopher Lawrence, CEO of AutoAcademics. “In the front of our minds was always the family factor and whether this would be a vehicle that would be as family-friendly doing school dropoffs as well as taking the family road trip.” Participating manufacturers were: Chevrolet, Chrysler, Ford, Honda, Hyundai, Lexus, Lincoln, Mazda, Mercedes-Benz, Nissan, Ram, Subaru, Toyota and Volkswagen.

NISSAN RECALLS AIR BAGS OR SEAT BELTS Nearly 4 million Nissan cars are being recalled due to major safety problems where passenger air bags or seat belts could fail in a crash, leading to serious injuries or fatalities. The two recalls are just the latest in safety problems to hit automakers with Acura, BMW, Chrysler, Ford, Honda, Lexus, Mazda, Toyota, and other manufactures having to recall cars over air bag problems. The Nissan problems are unrelated to the other air bag issues. Nissan North America, Inc. said that 3.2 million cars may have a problem with a sensor that detects if the front passenger seat is occupied and if that passenger is an adult or a child. Defective sensors might incorrectly think that an adult is a child or classify the seat as empty, thus turning off the air bag. The recall applies to certain cars of the following models: the 2016-2017 Nissan Maxima, 2013-2016 Nissan Altima, NV200, LEAF and Sentra, 2013-2017 Nissan Pathfinder, 2014-2016 Nissan NV200 Taxi, Infiniti QX60 and Q50, 2014-2017 Nissan Rogue, 2015-2016 Nissan Murano, Chevrolet City Express, and 2013 Infiniti JX35 vehicles.

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CAR BIZ TODAY JULY 2016

ROTARY LIFT® LAUNCHES NEW LOW-PROFILE DOUBLESECTION SCISSOR LIFT The new space-saving Rotary Lift RLP77 Double-Section Scissor Lift offers several innovative productivity features that make it a reliable and economical choice for quick-service jobs and smaller service bays. The Rotary Lift RLP77 scissor lift’s twin platforms were designed with productivity in mind. To service the widest range of vehicles, the lift’s extra-wide platforms feature hinged ramps that fold up and lock in place to extend the vehicle pick-up point surface. The ramps also can fold 65 degrees down and away, to give technicians more access to perform wheel and brake service. With more than 78 inches of clearance (when installed above ground), the RLP77 provides more headroom than other lifts. A low-profile design allows vehicles to drive over the lift platforms with ease. The Rotary Lift RLP77 scissor lift incorporates a patent-pending, fully mechanical hydraulic system that does the lifting work equally for both platforms. This Synchrodrive™ hydraulic equalization system uses fewer moving parts, hoses, valves and seals than other scissor lift systems, to provide greater reliability and fewer wear parts. Synchrodrive also includes unique Blocked Platform protection to prevent out-oflevel lowering. If something causes one platform to stop lowering (if it runs into a piece of equipment accidentally left in the bay, for example) the Blocked Platform function will stop both platforms from lowering further. Rotary Lift engineered the RLP77 scissor lift with a built-in dampener system that allows it to quickly, steadily and smoothly descend all the way to the floor. This eliminates the sudden acceleration in the last three to five inches of descent typical with other scissor lifts, which often results in a loud bang when the lift hits the floor. The lift includes several features designed to protect against corrosion and wear, including a hot-dipped galvanized bottom weldment, patent-pending composite high-strength steel scissor legs, and stainless steel kicker rollers and kick plate. For added protection against accidental damage, the lift filter, regulator and lubricator assembly is located in a recessed area on the side of the control cabinet.

SERGIO MARCHIONNE NAMED CEO OF FERRARI NV

4KNINES ACQUIRED BY HALL-CAPITAL PARTNERS

Sergio Marchionne was named CEO of carmaker Ferrari NV; he is already the company’s chairman. Marchionne's replacement of CEO Amedeo Felisa came as Ferrari posted its best first-quarter earnings ever, a 19-percent increase in net profit.

Hall-Capital Partners acquired 4Knines of Phoenix, Arizona. 4Knines markets a full line of fabric-based protective liners and seat covers for autos, trucks and other motor vehicles.

Marchionne engineered the luxury carmaker's spin off from mass carmaker Fiat Chrysler, after longtime chairman Luca Cordero di Montezemolo stepped down over differences in strategy. He also launched public offerings in New York and Milan. Marchionne renewed his pledge to enter the luxury goods space, beyond cars and more exclusive than the Ferrari-branded caps and watches already available, saying the first offerings would be available to the public in 2017, Ferrari's 70th anniversary. He also signed a non-binding memorandum of understanding to build a new Ferrari theme park in China and pledged to get the Ferrari Formula 1 racing team back into the winner's circle. While Ferrari has placed in the top three in four races this year, it has yet to win.

Although the company is relatively new, it has established itself as a leader at the premium end of this popular and growing segment of the auto accessories market. As the name suggests, 4Knines products are especially appealing to pet owners who love their cars/trucks but want to safely and comfortable include their pets in their motoring routines.

4Knines® offers 36 items that are backed with a 100% satisfaction guarantee and is already developing plans to expand the line into the commercial automobile market, specialty pet stores and popular online e-tailers.

Hearst Magazines Creates Dedicated Automotive Division Hearst Magazines announced the formation of Hearst Autos, bringing together the company’s automotive media businesses into one dedicated, full-service division. Hearst Autos is composed of consumer brands Car and Driver and Road & Track, business-to-business digital media solutions company Jumpstart Automotive Group, and Veretech Holdings, Inc., previously part of Hearst Business Media.

Nick Matarazzo, formerly CEO of Jumpstart Automotive Group, was named president of Hearst Autos. With synergistic brands that address the key B2B and B2C audiences of automotive manufacturers, dealers and car buyers, Hearst Autos will provide content, data, consumer insights and marketing solutions, with offices in New York, San Francisco, Ann Arbor, Mich., Atlanta, Ga., and Boca Raton, Fla.

RACING FOR A CAUSE L.A. Car Connection Teams Up With JDRF to Race for a Cause

BESTOP LAUNCHED SUNRIDER FOR HARDTOP FOR JEEPS Bestop, the nation's leading manufacturer of Jeep soft tops and accessories, launched SUNRIDER™ FOR HARDTOP and three weeks later announced that it would triple production to meet heightened demand. The patented SUNRIDER™ FOR HARDTOP (replaces the Freedom Panels on Jeep Wrangler factory hardtops with an all-purpose, all-weather, yearround convertible top that flips back easily for an open-air experience.

L.A. Car Connection (LACC) and the Juvenile Diabetes Research Foundation (JDRF) teamed up for the 5th year, to raise money for research to find a cure for Type 1 diabetes at Willow Springs International Speedway. Porsche, Ferrari, Jaguar, BMW and Corvette's are just a few of the fast, exotic cars speeding across the track at the world-renowned raceway at Willow Springs International. Last year, LACC and JDRF raised more than $100,000 at this event and the plan to double that donation this year. Drivers and spectators alike participated in a host of activities including speed monitored raceways, ride-a-longs with professional drivers, live entertainment, silent and live auctions with items from David Hasselhoff, Paul Anka, Chris Paul from the L.A. Clippers and a delicious barbecue lunch.

JULY 2016

CAR BIZ TODAY

CBTNews.com 11

DIGITAL MARKETING

TARGET

YOUR E-MAILS Send On Point Emails to Different Customers for Better Value

BY AMY FARLEY

ot all customers are created equal. That’s something dealers know well, and it’s why you use different sales tactics on the different types of car shoppers who step through your showroom doors. So why treat all email subscribers as if they’re the same? Email marketing is a critical part of any dealer’s direct marketing strategy, and is incredibly effective as a component of a multi-channel marketing campaign.

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CAR BIZ TODAY MAY 2016

But if dealers are ignoring the fact that different types of email subscribers should receive different messages and levels of attention, then they aren’t maximizing the effectiveness that email, as a marketing channel, has to offer. Let’s break down a few of the different types of email subscribers.

THE LOYAL CUSTOMER These customers may have purchased a vehicle at your dealership, serviced a vehicle at your Service Center, purchased parts from your Parts Department, or completed any other in-store interaction. They also regularly open and react to your emails. They’re the email equivalent

of your best friends. These customers who visit your dealership regularly and are receptive to your email are yours to lose. They’ve already bought into your brand, and they like hearing from you. You don’t have to bend over backwards for these customers-- simply be careful to continue sending them valuable content and offers and they’ll keep coming back. A great way to keep these customers interested is to create email campaigns that feature content that’s not necessarily always promoting a sale or offer. These types of subscribers will be receptive to content highlighting news about your dealership, updates on your involvement within the local community, information on how to care for their vehicle and more. Offer them content they want to read and they’ll keep clicking through.

THE BRAND NEW SUBSCRIBER These customers may have come into your dealership for the first time recently and that’s how they got added to your email list or they may have signed up for your newsletter through a form on your website. Either way, they’ve expressed interest and now they need to be won over. Try an email campaign geared specifically to recent subscribers. You could offer them an introductory discount on service, or some other type of discount depending on where they are in the customer lifecycle. While you don’t necessarily have to be too aggressive with your offer, it should be enticing enough to compel them to stop by. You could also target new subscribers with your dealership’s unique selling propositions-- if you have a customer loyalty program, or a lifetime guarantee, now is a great time to fill them in on it. This is your opportunity to develop a customer relationship that could last for years. Put the effort in and it will pay off in the long run.

maintenance. But they simply don’t interact with your emails in any trackable way. There’s less risk of these types of customers marking your emails as spam, since you know that, on the whole, they’re engaged with your dealership. They may just skim your subject lines, but they keep you top-of-mind and continue to do business with you. Generally speaking, you can safely continue to send them marketing messages without worrying about your deliverability. But it might also be a good idea to try to win them back. Experiment with different types of subject lines and offers. Maybe they tune out your typical newsletter content, but they’d be compelled to click on a subject line that promises a discount on an oil change. Since you can be reasonably sure they won’t mark you as spam, you can test out strategies to convert these types of customers into the first type-- your loyal customers.

THE LAPSED CUSTOMER THE ACTIVE INACTIVE This customer still regularly visits your dealership-perhaps whenever they need a new vehicle for their family, or anytime they’re in need of routine

"Making an effort to

continually update your list of active and inactive subscribers is the key to a highquality email list."

This is someone who has bought a car or gotten service at your dealership before but it’s been awhile. It’s also been awhile since they opened or interacted with an email from you, though they have done so in the past. What can you do to win this customer back? First of all, it’s more important than usual that you pay attention to the subject line of your message-- it needs to compel them to open the email. You can also try a more aggressive offer, one that might entice them to visit your dealership even if they’re no longer inclined to do so. An offer of 10 percent

off an oil change might be enough to convince an active, loyal customer to stop by for service, but these customers may need more of a push. If the subscribers on this list continue to be inactive, though, you’ll want to consider moving them to an unengaged subscribers list. Some marketers recommend waiting for a subscriber to be inactive for six months; others recommend waiting a full year, but either way, if you find yourself unable to win these customers back, you will likely need to purge them from your active mailing list in order to keep it healthy.

THE TOTAL STRANGER The total stranger is a subscriber on your email list that has never interacted with one of your emails. You may not even know how they got on your list. They may not be sure, either. Because they aren’t engaging with your email messages at all, it’s hard to use your messaging to convert them to become a valuable customer. You also run the risk of being marked as spam or of hindering your email deliverability if you continue to send messages to subscribers who aren’t engaged in your emails. You may want to consider the same strategy with these customers as with your lapsed customers-after a certain point in time, just move them to an unengaged list that you do not actively send emails to. You’ll have a healthier list overall without these types of customers weighing you down. You’ll be better equipped to have successful interactions with the customers who are interested in your dealership, and to re-engage those who seem to have lost interest..

AMY FARLEY

Media & Communication Manager of Force Marketing Amy is a skilled writer and editor with a keen interest in digital trends and topics in the automotive industry. She utilizes her knowledge of what is new in retail automotive marketing to help Force, an automotive digital, direct mail and email marketing firm based in Atlanta, Ga., evolve the dealer-to-customer shopping experience. Visit the website at Forcemktg.com.

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INDUSTRY TRENDS

Current Trends Future Opportunities

Survey shows trends in financing, experience, technology and demographics BY BRYAN IGNOZZI

focus for automotive lenders in the next 3-5 years.

ricewaterhouseCoopers (PwC) recently conducted its 2016 International Automotive Lending & Leasing Survey. This was a cross-functional, global initiative that engaged leaders across the automotive lending industry and provided information on current and future industry trends. PwC surveyed executives from 12 countries, including the United States, using a structured questionnaire. The survey revealed many interesting insights, most notably an overall positive sentiment across the industry, particularly in the United States. At the same time, disruptors driven by rapidly changing technology will demand a shift in organizational strategies as well as operations. Current US trends show a focus in three key areas: TECHNOLOGY DRIVES TRANSFORMATION AND PROFITABILITY: Technology investments are the number one challenge to profitability, but also the focus of their largest transformational initiatives. CUSTOMER DRIVEN FOCUS: Improving the customer experience is the largest investment

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WE’LL GET THERE BY ENHANCING DIGITAL CAPABILITIES: Survey results clearly show a paradigm shift towards digital advancements like mobile, social media, and online P2P lending platforms to meet growing customer demands and increased profitability.

While the Survey provides insights into trends that are top of mind to automotive lenders today, PwC’s analysis of global Megatrends outlines overarching trends that are likely be seen in the future. These Megatrends that will likely have the most profound effect on the automotive lending industry are: ACCELERATING URBANIZATION: America’s urban population continues to grow rapidly, in terms of both raw volume and percentage of total population. The number of US cities with population greater than 1 million went from 37 in 2000 to 45 in 2015 and a predicted 53 in 2030. This shift towards urbanization is changing the transportation preferences of consumers living in densely populated urban cities, giving rise to many innovative companies offering progressive transportation and car ownership alternatives.

DEMOGRAPHIC SHIFTS: There are two key factors impacting demographic shifts. 1) Millennials now account for 27% of new car sales in the US, second only to Baby Boomers. 2) Life expectancies are extending, increasing the population of older borrowers. These two factors are driving shifts in consumer preferences causing lenders and dealers to think about how they attract and retain these two key demographic groups. TECHNOLOGICAL BREAKTHROUGHS: In recent years, we have seen technology advances in mobile devices, social media, the Internet, and data analytics that will continue to transform the automotive finance industry. These technology advances have created a more tech savvy population that expects immediate access to information.

The convergence of these Megatrends is causing automotive lenders to rethink the way they do business so that they are best positioned to take advantage of the following future opportunities: • Leveraging partnership opportunities with non-traditional industry participants such as car sharing platforms and marketplace lenders • Identifying different sources of alternative data for fraud mitigation, credit underwriting,

POWER to the DEALER

It’s pretty simple. If a car isn’t being seen, it won’t sell. WE STUDIED THE VDP VIEW DISTRIBUTION OF 300 DEALERS IN Q1 2016.

25% of dealers’ cars got nearly 89% of the VDP View attention. 100%

% O F V D P V IE W S

80%

88.94%

Target the investment and profitability zone.

60%

These are the VINs that need more traffic driving to their VDPs.

40%

8.12%

20%

Top

Upper

2.48% Lower

0.46% Bottom

QUARTILE OF INVENTORY (VINs)

75% of these cars fight for 11% of the traffic, and may not sell on time. Dealers who focus their advertising on the “Investment and Profitability zone” increase the chance to improve turn rates significantly. We know it takes an average of 30 VDP views to sell a VIN on time. So naturally, you want to get those 30 views to every car on your lot. But that’s not what’s happening. And our proprietary research across more than 300 dealers proves it. Our Q1 2016 study showed that 25% of VINs are getting nearly 90% of the views. That means 75% of dealers’ inventory is fighting for the scraps. But how do you know which VINs are already attracting

attention, and which need help? Easy. The LotLinx Vin View Optimization™ report. And you can get yours for free.

CALL 1-800-625-5469 for your copy of the research report, and your free customized Vin View Optimization analysis. Or visit LOTLINX.COM.

“The convergence between demographic shifts and technology advancements are causing a trend

towards the use of alternative data for credit decisioning for consumers with atypical credit profiles.” and loan pricing decisions

• Thinking about customer experience and servicing strategies to address diverging consumer expectations • Identifying methods for digital and mobile technology enhancement Lenders should take into consideration various factors to effectively build on these opportunities: LEVERAGING PARTNERSHIP OPPORTUNITIES WITH NON-TRADITIONAL INDUSTRY PARTICIPANTS SUCH AS CAR SHARING PLATFORMS AND MARKETPLACE LENDERS

The convergence of accelerating urbanization and technology breakthroughs are causing new companies serving the evolving expectations of consumers to emerge quickly, such as car sharing platforms and marketplace

BRYAN IGNOZZI

Advisory Partner of PricewaterhouseCoopers (PwC) Bryan leads the Lending Community of Interest at PwC. He focuses on Autmotive Lendng & Leasing as well as consumer and mortgage lending. Bryan helps banks, lenders, OEMs and large dealer groups solve their most complex challenges from strategy projects to implementation. For more information, you can reach Bryan at 415.203.9450 or bryan.ignozzi@pwc.com

lenders. Lenders and dealers should consider forming strategic partnerships with these new entrants to limit disruption and drive market share. For example, recently a US captive lender partnered with a peer-to-peer lender and invited its customers in six US cities and London to sign up and rent out their vehicles for short term use. Proactive lenders and dealers should consider forming these types of partnerships to ensure that they are staying ahead of industry developments. IDENTIFYING DIFFERENT SOURCES OF ALTERNATIVE DATA FOR CREDIT UNDERWRITING AND LOAN PRICING DECISIONS

The convergence between demographic shifts and technology advancements are causing a trend towards the use of alternative data for credit decisioning for consumers with atypical credit profiles. Millennials comprise a large segment of the population with atypical credit profiles caused by higher student loan debt, a thin credit profile, and the effects of the 2008 Recession. Traditional credit reports may not provide the information necessary to accurately categorize the credit risk of Millennials and other atypical borrowers. As a result, alternative data providers have entered the market. These alternative data providers use social media data, utility payment histories, and public records to supplement traditional data used in credit decisioning. The use of alternative data may help lenders approve more borrowers with atypical credit profiles. THINKING ABOUT CUSTOMER EXPERIENCE AND SERVICING STRATEGIES TO ADDRESS DIVERGING CONSUMER EXPECTATIONS

Lenders who build the customer experience

into their strategic plans will have an advantage as consumers are beginning to place a higher emphasis on the overall experience. For example, the convergence of demographic shifts and advancements in technology are causing automotive lenders and dealers to address the growing demands of Millennials. PwC’s analysis found that Millennials expect the loan origination transactions to be handled digitally from beginning to end. Millennials will make up a large portion of the population in the future; thus, lenders should begin thinking of ways to provide the digital, seamless experience that Millennials have become accustomed to in other industries. However, lenders and dealers should not forget the increasing population of older borrowers. The goal is to focus on the total customer experience for borrowers across the board, appealing to their differing needs and preferences.

IDENTIFYING METHODS FOR DIGITAL MOBILE TECHNOLOGY ENHANCEMENT

There is no doubt that a majority of consumers today prefer to perform their financial transactions online rather than in person. As a result, most lenders and dealers have adapted by providing some sort of internet or mobile outlet for consumers. However, our analysis also suggests that most mobile apps today do not meet the needs of all consumers. For example, consumers cited the following mobile app features, which are not yet widely offered, as valuable:

• Close to immediate decisioning

• Lock in interest rate on the loan

• Calculate the monthly payment I can afford

• Link mobile and dealer experience

• Compare loan products and rates

To stay on top of current trends and decrease the possibility of a disruptor entering the space, lenders and dealers need to consider including digital technology enhancement in their customer experience strategies. As highlighted by PwC’s 2016 Global Automotive Lending & Leasing Survey, technology, customer experience, and digital are areas that are top of mind for lenders today. These areas will play out in the future via Megatrends that are creating a number of new opportunities. Lenders and dealers should consider making significant investments and laying the foundations today to successfully capitalize on these opportunities in the future. Sources: 2016 PwC Automotive Lending & Leasing Survey Converging Megatrends – shaking up automotive lending – November 2015, PwC

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F&I

PRE-PAID MAINTENANCE A

WIN-WIN FOR ALL

Why Service Customers Buy Prepaid Maintenance Programs BY RYAN WILLIAMS

PLAN: Like a great habit, using prepaid maintenance services helps ensure motorists that critical services are not missed.

ervice customers like to buy prepaid maintenance plans, known as PPMs. For good and valuable reasons, too. These plans pack at least three assets vehicle buyers sense benefits them and 65 percent will buy, our studies show. Customers naturally sense that these plans will help them develop habits of healthy vehicle maintenance – routine, a plan, and a budget, and typically for a deeply discounted price, often up to 45 percent off retail. If you’re not offering customers prepaid maintenance, you are shortchanging them and your business. If well designed, they will appeal to new and used finance and lease buyers. F&I sells most plans, but service advisors, if incented to do so, sell 25 percent. Some dealers opt to give them away to buyers – realizing their value to the dealership is downstream - future service expenditures and business retention. Here’s how these plans simplify consumers’ lives – and why they buy them:

ROUTINE: Plans reduced missed opportunities. A plan keeps upkeep on schedule and a vehicle operating as designed.

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BUDGET: Bankrate.com reported that most consumers cannot cash flow a $500 emergency expenditure. Plan assets, prepaid and discounted (and often rolled into a monthly car payment), save money on routine maintenance services in advance, so when needs arise, the expense is covered. Dealer-branded plans ensure those services are redeemed at the issuing dealership.

PRE-SELL BUYERS TO SELL MORE Plan assets are great selling points – but you shortchange both buyers and you if you’re waiting until the F&I office to talk about their value. Amp up customers’ opportunities to buy you plan by presenting them with a unique opportunity to weigh their benefits. In other words, promote your plan! F&I Express conducted an internal survey of sold customers a few years back that validated that educating consumers about the product options

offered by the dealership – before them stepping into the F&I office – resulted in more product sales. “Sixty-three percent said if they had this information before going to the dealership, they’d be more likely to buy,” CEO Brian Reed told P&A Magazine. “The better educated the customers are about options specific to that car and that dealership, the more likely they are to buy, and the process will go quicker in the F&I office.” Give them more time to make this decision by giving them the information they want before they come into the F&I office. Display your plan on your dealership website homepage. Describe how it works – and helps customers take better care of their investment.

Be sure each sales associate has plan point-of-sale materials on his or her desk. Place descriptive brochures that explain how this program works and its benefits in the customer lounge, in restrooms, and be sure service advisors know the details and value of the plan and can present it enthusiastically and clearly.

“If well designed, they [prepaid maintenance programs] will appeal to new and used finance and lease buyers.”

Finally, be sure your plan provider includes regular to-consumer plan marketing to encourage plan use. Are reports available, through a plan holder portal that shows usage, savings, and other feedback? Like many things in life, plan usage can drop off when consumers aren’t reminded occasionally that with this benefit and that by using it they help maintain their vehicle.

WHY DEALERS SELL PPMS These programs are typically offered in multiyear plans when sold. The aim for the dealer is to keep that customer returning to the dealership to redeem plan services. Depending on the plan the dealer implements, its use can produce: • 85% first-year retention, 65% each of the following two years • $70 customer-pay upsell per repair order • On average $1,105 in customer-pay service business a year with you, for the majority of the six years consumers own their vehicles today Automotive Associates of Atlanta, part of the Ken Page Auto Group, is a premier privately owned automotive group owning and operating six dealerships in the metro Georgia market. In 2011, dealer principal Scott Smith implemented a dealer-branded plan from Fidelis PPM that is helping his stores grow service volume, parts and service revenue and customer retention, for the group’s then two Nissan, two Kia, and one Toyota stores. “We started with Fidelis in 2011 and since then our service and parts departments gross across those original five stores increased from $900,000 to $1.5 million a month,” Smith reported. Automotive Associates of Atlanta’s dealerships are Toyota of Union City, Nissan of Union City, KIA of Union City, Nissan South, Cobb County KIA, and a 2014 acquisition, Nissan of Newnan. This sixth store also converted to Fidelis PPM and is enjoying

similar growth in fixed operations revenue and retention. These stores sell 16,000 new and used cars a year. Dealer branding – meaning the Fidelis plan is redeemable by customers for service only at the issuing Automotive Associates of Atlanta dealership – is a significant advantage that this program brings to his business, Smith notes. “Dealer branding has been a critical factor in these stores realizing a 20 to 22% bump in fixed absorption rates, across the board.” “These improvements help us be more aggressive on the retail side,” he says. As dealer ROI data show, those who offer or sell prepaid maintenance services in F&I and service enjoy measurable benefit and value to the dealership. Some dealers report that plans sold through service can cause additional service upsell commission dollars for advisors, up to several thousand additional per year. Advisors are earning greater income stay, reducing turnover in this important function. “For us, the ROI on this plan is self-evident,” Smith notes. “The reality is there is little profit in new cars, so a dealer has to drive service into the service department and achieve growth there. Sixty-five percent of customers purchase a multi-year plan from his dealerships and customers’ use of these plans has helped drive a 20 percent service growth, he says. “It’s always better to get the customer to spend

“The better educated the customers are about options specific to that car and that dealership, the more likely they are to buy, and the process will go quicker in the F&I office.” money in the back end, and when you do you also keep them in your database for future purchases when things turn around.” For dealerships, offering prepaid maintenance programs through F&I and service are a proven way to help lift customer retention and drive service growth. For many motorists, owning a prepaid maintenance program from their dealership simply makes life, well, simpler. Isn’t that a definition of win-win?

RYAN WILLAMS

President of Fidelis PPM Ryan is a 20-plus year veteran of the auto industry, having served in multiple dealerships as sales manager, F&I manager, and GM. You can reach him at ryan@getfidelis.com.

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CAR BIZ TODAY

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DEALERSHIP PROFILE

Building on the FAMILY LEGACY

Rob Elder, President of Elder Auto Group

Elder Auto Group: An American and Industry Success BY MARY WELCH for their cars, than it’s a great business.”

lder Auto Group symbolizes all that is great about the auto dealership industry. It is a true American success story and as President Rob Elder simply says, “Without Ford and Ford Credit, my family wouldn’t be here. It’s all because of Ford.” Today “here” consists of seven dealerships that encompass the Jaguar, Ford, Land Rover, Lincoln, Aston Martin, Spyker and Fisker brands as well as Elder Auto Insurance, a unit of Allstate Insurance. A seven-time winner of the Ford Motor Group President’s Award and five-time winner of the GM Dealer of the Year Award, the Elder Auto Group has dealerships in Tampa, Fla. and the Detroit area. “The car business is the best in the world,” he says. “There’s ups and downs and it’s a roller coaster ride. You never have the same day twice but if you understand the passion that your customers have

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The business started in a round-about way. Elder’s mother, Irma Barkett immigrated as a young girl to Tampa from Mexico and what little English she learned, she got from watching televisions in store fronts. As the oldest girl, she was responsible for watching her siblings as her parents worked. One day while vacationing in Homestead, Fla., she met James Elder who worked for Ford Motors and went around the country helping to turn dealerships around. They married and in 1967 he decided to buy a Ford dealership in Troy, Mich., where the young couple relocated. While John found success with the dealership, Irma was a typical housewife, putting dinner on the table, overseeing homework and being involved with the community. Then the perfect storm occurred that changed everyone’s life. The 1983 recession hit, which was especially hard in Detroit, Chrysler went bankrupt and Rob’s father died of a heart attack.

NO WOMEN NEED APPLY The widow with three children had two choices: she could learn how to run the dealership or give up everything. “At that point with the recession, the dealership was worthless; there was no money. She decided she’d take it over.” Problem was — or at least the problem for many people — was that she was a woman. There was no woman in charge of a dealership in Michigan and those around her told her it couldn’t happen. The first day she took over the dealership there were 97 employees; the second day, 45 employees had left. “Ford, however, said they thought a woman could handle it and they told her that they would not only teach her out to do it but they’d fight every day with her,” Elder recalls. When she would come home from the dealership at night, representatives from Ford Credit would come over and give her a class on financial statements, leasing and other business issues. “When all those people left, she said ‘fine,’ and kept on going. She surrounded herself with trustworthy people who would work with a woman and she started to succeed.”

But, success doesn’t mean future success. She decided to buy a Jaguar/SAAB dealership and history repeated itself — except this time the excuse was that woman couldn’t handle a luxury dealership. The general manager convinced Jaguar to take a chance on her and she broke the world’s record for selling Jaguars in a month. SAAB, however, still needed convincing. They gave her a one-year trial and she broke the SAAB sales world record four months later. Irma Elder soon became a legend, not only in the car business, but the country. She built one of the most successful women-owned businesses in the country, served on the Federal Reserve Bank of Chicago’s Detroit board of directors and was appointed to the Commission on White House Fellowships by President George W. Bush.

MOM’S LEGACY She passed away in late 2014 but her legacy lives on. “There isn’t a day that I don’t think of her and think of how she would handle a situation or what she would do,” says her son. “It was a lot of luck and hard work. She never took ‘no’ for an answer; she never gave up. She was a young, smal,l minority housewife who could barely speak English and turned herself into a very powerful woman.” His mother always reminded him that the last four letters in American is I can, he said. Today Rob is president and it’s now a sibling-run business with his brother and sister working out of the Detroit dealerships. “It’s a family business and it’s very difficult,” he admits. “Every day is a struggle and we all have different thought processes and we take advantage of each other’s strengths and

recognize our weaknesses. There’s no egos but it took a long while to get to that point.” It’s also a very different business than the one his mother grew. Elder attributes part of it to the constantly evolving requirements of the manufacturers. “Times are constantly changing. The car-buying experience has changed greatly and the manufacturers are helping dealers stay ahead of the curve,” he says. “There’s a lot of learning. As the manufacturers evolve, the dealers have to evolve. Most of our biggest challenges are out of our control. When we have a hot car, we can never get enough. When we have a slow product, we have way too many.” Right now, Ford and Jaguar are hot, he says. Jaguar launched the crossover and two out of his three dealerships are sold out until November. He’s sold out of the $35,000 XE for new next four months. “I’m riding the roller coaster and right now we’re at the top of the coaster. Same with Ford.” Ford, he says, “has so many products coming out, it’s crazy. Every couple of months there’s something new or revolutionary. Ford is great to work with and their goal is to strengthen dealers.”

SHOW THE CARS TO THE CITY And, although he is a self-described “tech geek,” he appreciates marketing the old-fashion way. When he wanted to introduce Tampa to the XE sports sedan and the Jaguar F-PACE performance SUV “we took the mountain to Mohammed,” and took it all over the city. The car was on display near a bar in downtown Tampa, close to the Amalie Arena and law offices, a casino and Ocean Prime restaurant. “It was pandemonium. It was very successful,” he says.

“The car business is the best in the world. There’s ups and downs and it’s a roller coaster ride. You never have the same day twice but if you understand the passion that your customers have for their cars, than it’s a great business.” - ROB ELDER | PRESIDENT, ELDER AUTO GROUP

One challenge that hasn’t changed over the years is getting employees, especially in the service drive. “It’s not easy to get employees and it’s always a challenge to get certain skill sets. They continually talk about free college. I don’t need free college, we need free technical schools,” he says. Elder, who has female locker rooms for its female technicians, start mechanics off at about $40,000 and salaries go up to $130,000; average is about $80,000 a year. He finds a large percentage of his

JUNE 2016

CAR BIZ TODAY

CBTNews.com 21

workers from the nearby McDill Air Force base. “Our sales staff is a consistent core of people,” he says. “But it’s constant training. We train every day Monday although Saturday. It’s long hours and it puts some people off a bit. It’s a very demanding job when it comes to hours, but it’s a very lucrative job.” Elder Autos also has services Fisker (at one point they were the fourth largest Fisker dealership in

“No matter what happens, never, never give up. You may have a bad moment, you don’t have to make it a bad day. You keep on trying.”

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CAR BIZ TODAY JUNE 2016

the world) and Spyker cars. He has a technical who specializes in fixing Fiskers and there currently are seven in his shop awaiting service. He recently went in to the insurance business after being contacted by All State Insurance with a new program for car dealers. He went to school and earned his insurance license and now the dealership offers insurance for just about everything — cars, house, RVs. “I just did a dog insurance policy,” he says. “We’re saving people money and they like that it’s a one-stop shop. The average American stays with their insurance agency more than 10 years so we expect great returns.”

A FAMILY DYNASTY? As for the future, Elder says that he hopes there is a third generation even if they aren’t in the dealership selling cars. “First off, I want my kids and my nieces and nephews to have fun. The industry will change before they even think about entering it. But we would never force it,” he says. “Still there are so many ways,

as outside vendors, that they could be involved. I’d love to have one become a lawyer; my bills are astronomical due to contract changes. I’d love one to become an accountant, an IT person. They can follow their dreams and talents and still be in the car business.” He also is interested in expanding, both geographically as well as brands. “I’m looking for the right deal,” he says. “We’ll see what comes our way.” Still, no matter what comes his way, his mom will always be in his thoughts. “She taught me so much,” he says. “But she always told me that no matter what happens, never, never give up. You may have a bad moment, you don’t have to make it a bad day. You keep on trying.”

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MANAGEMENT

THE

“SECRET SERVICE”

STRATEGY

A Management Alignment Onboarding Success Process That Works! BY MICHAEL ROPPO

he following information is all about delivering a Truly Outstanding Service by Streamlining a Management Alignment Onboarding (MAO) Process that holds everyone accountable! It is also the behind-the-scenes support structure for the new TRM (Total Relationship Management) buzzwords that everyone in the industry is talking about! While we did not invent the MAO process like the one being discussed here, please know that we do spend ample time and capital in customizing a process to fit the needs of every individual dealer and client! Keep in mind that there are many more pieces to support the Secret Service MAO Process initiative. This information is just the beginning and is intended to provide dealers, leaders and managers with the guidance they need to address some of their most pressing challenges in a dealership environment.

MAO CAN MAKE OR BREAK A DEALERSHIP’S VALUE-ADDED SERVICE PROPOSITION

Management Alignment Onboarding processes can often make or break a dealership’s value-added service proposition. It is a management-driven process that can play a deciding role in the ultimate success of a new customer or client experience in every profit center of the dealership! From the very early stages, the cost of failure can be very high. However, unless the proper value-added service support is provided and a foundation is established, the odds of a successful management alignment onboarding experience for the customer and the dealership may be doomed to failure and compromise! Let’s look at the requirements for every dealer leader, manager and employee who comes in contact with the valuable customer. As a service provider we all need to better understand and address MAO

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CAR BIZ TODAY JULY 2016

processes before embarking on the journey to implement what we like to refer to as the Secret Service Management Alignment Onboarding process! INTRODUCTION TO MANAGEMENT ALIGNMENT ONBOARDING: We often witness that Management Alignment Onboarding processes go missing within the automotive dealership industry; this is mainly due to lack of accountability! The Processes represent a critical point in the managed service process and the customer engagement process. This is really a time where the service provider has to deliver on its claims and commitments that they make to their entire customer base as well as to their teams.

No matter how impressed the customers may have been by the sales person or service person involved in closing the initial car or service deal, the MAO process must be something that dealers do on a continuous basis. In fact, this serves as the customers’ ultimate test in determining whether they made the right decision to do business with you and your dealership! MANAGEMENT ALIGNMENT ONBOARDING MUST BE DONE CONSISTENTLY! As a result, even relatively minor hiccups during the MAO process can be amplified for the customer and trigger doubt, suspicions or concerns. If more significant issues, delays or cost misunderstandings arise, it can damage the dealer’s and service

drawn up by dealership sales and service reps. They are driven by customer expectations and what it is that they value. Service providers need to build value-added pre-packaged service offerings that are based on the input and collaboration of all key areas of the dealerships business including including business service operations, customer expectations, best practice success, marketing, sales and service delivery. They need to be explained as value-added service service MAO deliverables and you should provide detailed definitions of each service offering that explains what you do, why you do it and how much it will cost. This service initiative or catalog form must describe what’s included, what’s not and what the service will accomplish. If the customer has expectations and requirements beyond the standard offering, those services can be communicated and delivered as an á la carte offering with á la carte pricing. These services represent the initial blueprint that operations can use to start the value-added work you promised the customer. Through the service catalog, sales and service can know what it is they are selling. The service catalog should also function as a marketing tool used to develop current and future dealership sales and service promotions and content.

“We often witness that Management Alignment Onboarding processes go missing within the automotive dealership industry; this is mainly due to lack of accountability!” provider’s credibility and set a negative tone that may permanently taint the dealer’s and customer’s relationship, potentially even leading to customer attrition. On the other hand, if the onboarding process goes smoothly, it can set the stage for longterm customer loyalty and retention, which goes way beyond customer satisfaction. “CUSTOMER SATISFACTION IS WORTHLESS AND CUSTOMER LOYALTY IS PRICELESS!” -JEFFREY GITOMER MAO success doesn’t start once the customer deal is signed and the vehicle is delivered. If the proper groundwork and support aren’t established, MAO can be difficult, if not completely doomed to failure. The following describes the key elements that set the stage for successful management onboarding efforts. These elements should be instituted before any customer sales and service dealings are signed.

CRITICAL FOUNDATIONAL REQUIREMENTS

Before any of your service and sales representatives start hitting the phones attempting the processes of drumming up business for your dealership and service department, your Secret Service MAO initiatives and overall business would be even more well served by making sure the following requirements are in place. STANDARDIZED VALUE-ADDED AND WELLDEFINED SERVICE OFFERINGS: Managed value-added service solutions aren’t

Well-Defined Operational Processes Operations and Management Alignment onboarding teams need best practices and operational inventories that spell out the specific processes for implementing each piece of your Secret Service MAO initiative! For example, a best practice for a monitoring service delivery would include such details as which metrics are tracked, specific benchmarks, how to handle customer alerts, how critical performance indicators are developed and used to monitor the customer service experience as well as the overall performance and profitability of the dealership and so on. This information influences repeatable best practices automated methods, which lead to success. Simple and duplicable process documentation is critical to setting the foundation for MAO standardization and delivering consistent, predictable results across the entire value-added customer service experience and engagement process. MAO ensures that no matter which person is

deploying the value-added Secret Service initiatives, you will have the same level of service being provided to every customer, every day, every time, without fail and no exceptions. GOING BEYOND TRAINING Service Sales training represents a critical step for every dealership organization. They need to understand how to sell the value of the dealership and organization’s expertise and experience and how they differentiate from competitors. This is critical when it comes to selling value added services.

Look at this way. How does your dealership and organization differentiate its products and service offerings and ultimately provide a better higher level of value-added service from a competitor that is in the same business, buys the same tools, has the same hours and sells the same services? That’s why it’s so important that sales teams are trained to sell the value of the entire Dealerships services! It’s a requirement and it must be done in a value-added way. Service is what makes up the value of every product that’s able to be sold! Without value-added services any product can expire worthless! If your dealership organization is delivering and monitoring the service process, then audit the assets that help build value in the processes. Inform the customer about the level of services that you and only your dealership can provide such as: • Providing Premium care! • Being Open More When others are closed • No Appointment Necessary ( Seriously) • No Hassle pricing • Longer term warranties on work performed • Easy payment terms • Complimentary pick-up and delivery These are just some of the customer’s expectations that help build and provide value to the customer! MAO is a relentless process. It’s the Secret Service policies, best-practice standards, and the related experiences that articulate how these attributes ultimately result in timely, actionable MAO information. Ultimately it benefits the dealer — and even more importantly the customer.

MICHAEL ROPPO

Director of Dealer Fixed Operations Consulting and Training /QPS at WithumSmith+Brown PC and Automotive Domain Results

Michael has over 30 years of hands on experience in dealer fixed operations training, consulting business development. He helps dealers attain maximum performance, profitability, customer satisfaction and retention levels, by improving the quality of their management teams and the personnel who come in contact with their customers. Visit his website at www.Withum.com / www.AutomotiveDomainResults.com.

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LEADERSHIP

E H T G N I T I U R C E R N O I T A R E N E G T X E N OF SERVICE ADVISORS Millennials Want Work/Life Balance and Fair Treatment

BY ADAM WRIGHT

these individuals could represent a huge win for a dealership over the long term, infusing fresh perspectives and energy into what is, at many stores, a stale atmosphere.

very time the word “millennials” is uttered, it’s easy to see the eye rolls and groans from the employers of America. They are a part of our workforce who were given participation trophies and grew up with a computer in their hands. But now they are all grown up. Today they are starting families and desire jobs that pay more than minimum wage and offer a lifestyle above the poverty line. “Millennials” are typically considered Americans between the ages of 18 and 30. They make up roughly one third of our workforce (about 50 million adults) and will soon surpass the Gen-Xers and the Baby Boomers generations. Think back to the last time you hired a new service advisor. Often, each market area is its own mini-hurricane, with the same folks moving from store to store to store. As good as many of these “recycled” advisors are, why do so many managers settle? Service advisors are the face of the service department. At many stores advisors see 20 or more different customers every single day. This kind of exposure merits real consideration into where we have set the bar with our hiring and training policies.

WHAT MOTIVATES THE MILLENNIALS? Many dealerships and their managers have little to no recruitment strategy in place to attract and retain young, talented, and motivated individuals. In a stagnant economy that hasn’t experienced strong job growth in over a decade, there are a huge number of such young men and women in the workforce. Most would jump at the chance to work in a fast-paced environment with an opportunity to make significantly more money than they’re currently earning. With the right plan in place,

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When designing a recruiting strategy, we need to start with a simple question: what is important to Millennials coming into a dealership from outside the industry? Over the past few weeks I personally spoke with a large number of new young service advisors to get their input. Below are the three top desires they have and ideas on how to address them.

LIMIT THE HOURS AT WORK AND MAKE

THOSE HOURS MORE FLEXIBLE Advisors typically work very long hours, many working from start to close all week plus handling a full or partial day on Saturday every other weekend. This can add up to well over 60 hours a week – burn out zone for many people. In my informal poll, the hours worked are far and away the number one source of job dissatisfaction among new advisors. The work schedule is also the number one deterrent for potential new hires. So what can be done? The top request is to limit the hours and, when possible, make them more flexible. Take a page from Goldman Sachs – a firm

notoriously hard on interns and new hires – even they implemented a 17-hour per day maximum! If a weekend day is scheduled, give them a day off during the week. A study by Ford found that working 60+ hours in a week only results in a short term (up to one month) increase in productivity. Afterward those long hours lead to a decreased productivity. Allow all employees a “must-have” – for example, if an advisor is in a sports league with games scheduled for 6 pm once a week, let him off early.

STRUCTURED TRAINING – BOTH ON THE DMS AND WITHIN THE DEPARTMENT Even the brightest and most talented young people need training — especially when they are coming in from outside the industry. Too often dealership training goes like this – the manager walks the new hire around the dealership, shows them their desk and computer and then says, “Follow ‘Insert Senior Advisor’s Name Here’ around for a week.” This is a terrible way to introduce a new employee to their new career. Many times that “Senior Advisor” is extremely busy, and/or does not have the skills, attitude, or desire to train a fresh face who may “take away their business”. A good service department will have a structured, written training program in place for all new employees. The best of these typically include rotational training with current employees in all departments and different roles – including but not limited to technicians, sales people, office personnel, receptionists, finance, and business development centers. Upfront

exposure to all the different departments in a dealership will be extremely beneficial in the long run. The new employee will begin to form relationships with their co-workers and have a chance to see what goes on in other areas of the store. Managers should also set up formal DMS training for new hires. Contact the DMS rep and see what is available – many have webinars or online training available. Another way to ease into the system is to allow the new employees to handle internal vehicles for a few days away from the pressures and time constraints faced when dealing with customers on the service drive. FAIR TREATMENT FOR ALL In my polling, many of the younger advisors feel that they receive the short end of the stick from their manager and/or other older employees. This often leads to a worker being disengaged in his or her job, driving down productivity and morale. An example of perceived unfair treatment is a senior consultant taking all of the vehicles from fleet accounts, regardless of whether they were requested at write-up. A simple solution here is to have a written policy to govern how fleet accounts and internal vehicles are handled. Another concern new younger advisors have is a lack of equal treatment regarding breaks (lunch time included) and time off. Again, having written policies in place regarding these issues will help prevent this issue from being a larger one that could lead to turnover or poor performance.

“When designing a recruiting strategy, we need to start with a simple question: what is

important to Millennials coming into a dealership from outside the industry?” Millennials have grown up in an era of financial uncertainty and huge advances in technology but ultimately they want what all workers want: better hours with some flexibility, training and opportunities for advancement, and fair treatment from their co-workers. Dealerships can and need to adapt. The new generation is already here!

ADAM WRIGHT

Consultant/Coach M5 Management Services, Inc. Adam began his career in the automotive industry as a file clerk in 1995 and worked his way up through the ranks. Spending time as a lot porter, assistant service advisor, service advisor and customer relations manager he has experienced all aspects of a dealership. Working through school while attending the University of Central Florida where he graduated summa cum laude earning a BSBA in Economics, a BSBA in Finance and a Master’s in Business Administration he gained a thorough understanding of how a dealership runs. He also spent several years as a service manager for Cintas, bringing an expertise of the uniform industry to M5. Adam brings a high level of intensity and a broad spectrum of experience to the M5 team.

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DIGITAL MARKETING

THE VALUE OF:

CREATING YOUR OWN WEBSITE Third Party Shortcuts May Not Be the Answer BY RUSS CHANDLER to get a trade appraisal or quote. These are brands the majority of Americans still trust to this very day. And at the time, it made collecting leads a piece of cake.

hether you realize it or not, there’s a tremendous shift occurring in the automotive industry. As technology continues to advance at a wildly rapid pace, dealerships are looking to further enhance their marketing and sales efforts more than ever before. The reason for this, naturally, is because the automotive sales industry (namely the dealership aspects) is so unbelievably competitive. Seeing that so many consumers do a tremendous amount of research online, they have a pretty concrete idea of what they want. Really, the only thing consumers actually need to do is find a dealership (any dealership) to pick up their vehicle. With that said, dealers are always looking for ways to stand out digitally by implementing more heavily branded, highly personalized elements to their website.

THE GOOD OLE DAYS Now, let’s backtrack about…oh… I dunno… 5 or 7 years ago. Amongst the majority of dealerships, third party tools were all the rage. Because consumers were already familiar with brands like AutoTrader, Edmunds, KBB and Black Book, they weren’t hesitant to input their information in order

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Along with garnering trust from consumers, what made these third party tools so special was that they were easy to integrate onto your website, and it took care of a lot of the “hard stuff” — the stuff that many dealers don’t know how to do. Instead of dealing with the painstaking task of learning how to create forms, websites and rich media, dealerships could have it done for them. With these tools, lead information is collected easily by having consumers answer a few simple, but relevant questions. Now mind you, this doesn’t just apply to third party lead generation tools. This applies to almost every aspect of your dealership’s online presence — including your website, which might or might not have been created through a dealership website service.

COSTS ARE RISING, HOW’S YOUR ROI? Okay, so now, let’s fast forward to 2016. Third party branded tools are still a reliable option but there are a few issues that lie ahead of dealers that continue to use them. First issue: As time progresses, the cost of the third party tool you’re using will steadily rise. And no, it isn’t because they’re greedy or anything like that. That’s just what businesses do. The real problem

with this is that as you continue to pay more and more, your ROI begins to suffer and depending on just how awesome business is, you’re either losing money or you’re simply breaking even. Neither option is good for business. Developing your own tools and resources to drive traffic to your own website might seem cumbersome (and initially expensive), but down the line, it’ll prove to be a very wise decision. If you’re in it for the long haul, those third party shortcuts won’t be doing you any favors… and that brings me to my next issue. The second issue with many all-in-one, cookie-cutter and third party tools is the customization factor. As many dealerships now leverage third party tools to engage with consumers and capture leads, standing out becomes more challenging. Although dealerships can customize some aspects of their tool, they can rarely take full ownership of it. If they’re lucky, they might be able to swap out a logo or two, but for the most part, all these tools, website templates look identical to one another. This means no customized questions, branding or rich media. This is definitely an issue since branding has become an extremely important component for dealership success. Although many consumers generally trust third party providers, consumers are still weary about giving their information away. Properly branding your online presence gives your dealership the opportunity to prove your value as

well as prove your trust.

CUSTOMIZE MESSAGE, OPTIMIZE LEAD CAPTURE Along with implementing your logos and designs, you can fully customize the messaging and optimize it for optimal lead capture. This is especially important if you’re running a themed campaign that would benefit from cohesive branding on all aspects of the online presence (social media posts, tools, website theme changes, etc.) Given the issues discussed with third party branded tools and services, many dealerships have placed a significant amount of focus on refining (and promoting) their own unique brand, as well as developing their own tools. Not only do dealers prefer having full control over how their brand is represented (and what information is being collected), they really enjoy seeing a really nice return. If your dealership leverages and develops its own tools and services, you have full control over its presentation and can make changes based on how many leads you’re generating and how your sales are going. Many dealerships across the nation have already begun heavily personalizing different aspects their online presence.

HERE SOME OF THE CHANGES THAT MANY DEALERSHIPS ARE ALREADY MAKING:

“Developing your own tools and resources to drive traffic to your own website might seem cumbersome (and initially expensive), but down the line, it’ll prove to be a very wise decision.” as humanly possible. To do this, dealerships will typically do one of two things. The first thing a dealer can do is hire a professional web designer to code and design an entire website for them. Although this can be a pricier option, the returns you’ll likely receive will make all the extra time, effort and funds worth it. The second option is to use a website provider that’s more flexible with their website customization. Obviously, this is a more practical, cost-effective option. Although many dealership website providers have significant limitations on their templates, some provide dealers with the option to heavily customize templates on the backend. Both options have provided dealers with the opportunity to improve the overall consumer experience.

COMPLETE WEBSITE REDESIGNS AND OVERHAULS

In a valiant attempt to stand out amongst the competition, many dealerships have been doing complete overhauls of their websites. While many standard website templates provide dealerships with everything they need to boost their online presence, they often don't allow for dealerships to fully develop a brand of their own digitally. Most dealership website providers have limitations on what elements can be customized, thus making it difficult for consumers to differentiate among dealerships. In addition to not being able to brand their websites to the fullest extent, dealerships also find it difficult to give consumers with the online experience they want to provide them. Because of this, a number of dealerships across the nation have begun rebuilding their websites in order to better reflect their brand, and provide a more engaging online experience for their consumers. And along with wanting a more useful, branded experience, dealerships are especially excited about the concept of a sleek, clean, professional looking website that both impresses and legitimizes their brand. Instead of leveraging a limited design template to create pages on their website, dealers are attempting to customize every aspect of their site as much

Another primary reason dealerships are creating and heavily personalizing their lead capture tools is that they want to get as much useful data as possible. Lead capture tool customization allows dealers to ask questions that would help dealers to better assist their consumers. The more relevant questions dealers ask (from the lead capture tools), the better your generated buyer profiles will be and the better rapport you’ll have with your consumers.

USE OF RICH MEDIA

The last thing dealerships are focusing on in regards to lead capture tools is the use of rich media. Whether it’s pictures or video, the typical third party lead capture tool doesn’t have a whole lot of flexibility or options for it. Obviously, rich media is completely optional. But it’s a great way to nab a consumer’s attention and inform new and seasoned customers about new promotions or inventory. Essentially, it’s an additional opportunity to communicate with consumers prior to you actually speaking with them personally.

INTERACTIVE LEAD CAPTURE TOOLS BECOMING MORE ADVANCED

As you can see, there’s more than just one significant reason for dealerships wanting to personalize their online presence. Dealerships want to collect useful data, save money, and more importantly, prove their legitimacy to consumers old and new. As technology continues to evolve rapidly, there’s no doubt that dealerships will find more ways to not only customize their online presence, but their showroom presence as well.

Interactive lead capture tools (Ex: Trade Appraisal, E-Price, Test Drives, etc.) are getting the heavy customization treatment from dealerships as well. Like their websites, dealers are heavily focused on the branding aspects of their lead capture tools.

Consumers who are forming opinions and making decisions in your market are likely to be looking for a lot more than just a good price these days. With dealers all priced so competitively, non-monetary value is making a huge impact on where consumers end up buying.

The reason for this is because most third party lead capture tools possess their own branding — even when they’ve been integrated onto a dealership’s website. To the consumer, these tools are simply appended to the website and have little to no association with the actual brand, which diminishes consumer legitimacy and trust.

This new generation of dealers are responding with what we’ve talked about today and the results have been that they’re now one of the leaders in their market. It is most evident with larger groups that have the ability to invest heavily but now, even the small dealership as very affordable options to carry the same strategy on a level that is management by a small dealership.

RUSS CHANDLER

Product Marketing Manager at PERQ LLC Russ has more than 11 years of experience in auto sales, dealership digital marketing and technology product sales. In his current job, he leads the sales and marketing of automotive apps powered by FATWIN for PERQ, a consumer engagement technology provider.

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ask THE

pros

hat is the necessity of quarterly audits? -Stewart, Troy, NY

A: Max Zanan, Total Dealer Compliance: Car dealerships are sales organizations that are focused on delivering cars in order to hit the objectives set by manufacturers and dealer principals. When the entire organization is tasked with sales, oftentimes compliance becomes secondary and employees might bend the rules. When a third party conducts an audit it guarantees results, however, if it is a one-time audit there is no guarantee that the proposed changes will continue to be implemented. Quarterly audits such as ones provided by Total Dealer Compliance ensures that changes in policy and procedure are being executed and the new culture of compliance is being adopted by the entire organization.

've been hearing a lot about ransomware and hackers who hold companies' files hostage. Is this something we should be concerned with and how can we protect ourselves? -John, Erie, PA

A: Erik Nachbahr, President of Helion Technologies:

Dealerships do need to be concerned. In March of this year the U.S. Department of Homeland Security issued a cyber alert warning because of the recent surge in attacks. Thousands of hospitals, government agencies and private businesses in the U.S., both large and small, have been attacked.

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t CBT News, we are fortunate to partner with the best trainers in the industry. Whether it’s information on sales, F&I, marketing, management or fixed ops, our contributors are the go-to professionals for reliable, relevant advice for dealership personnel. You have access to the foremost authorities in the retail automotive industry. Need a new closing technique? Wondering what’s the best way to increase sales in the service lane? Send us your questions at AskThePros@ cbtnews.com. We’ll forward your inquiries to our ensemble of experts.

Ransomware infects a computer's network when an employee downloads an email attachment or clicks on an email link that leads them to an infected website. It's important to notify employees that they should never click on links or download attachments from an unknown source, even if the email is personally addressed to them. Once inside your network, the virus lies dormant for weeks. During this period, any back ups you do of your files will also back up the ransomware. When the virus goes live, all your back ups will also be infected so it's impossible to restore files from back ups. For this reason we recommend a 90-day back up retention. The anti-virus software we currently recommend is Webroot. Install this on every PC and keep it updated. Also keeping your Windows OS updated is important for prevention. If your dealership has been victimized by ransomware, contact your local FBI field office and report the incident to the Bureau's Internet Crime Complaint Center. The FBI doesn't support paying a ransom because there's no guarantee that you will get your data back. In some cases, businesses have paid the ransom and never received their decryption key.

y team says we need to go on Twitter. Why should I tweet about my dealership and what should I tweet about? -Luis, Reno, Nev.

A: Toby Bloomberg, President of Bloomberg Marketing:

It’s fast, sleek and powerful. No, it’s not the newest automobile on the road… it’s Twitter the social media network that reinforces your brand, drives customers to your dealership and increases sales in 140 characters. Twitter gives you the opportunity to tell the story of your dealership in a way that provides a unique competitive advantage. Like any vehicle, or marketing initiative, Twitter’s performance is only as successful as how well you understand how to work what’s under the hood. Here are a few tips that will give your dealership precision performance. UNDER THE HOOD TIPS 1. Build your audience of followers • Train your service and sales staff about Twitter and encourage them to ask customer to follow the dealership • Include the dealership’s Twitter handle on billing statements, email signatures, signage at payment window, signage in refreshment area, website

• Ask your employees to follow the dealership’s Twitter page 2. Who to follow • Your customers • Media, especially local reporters who cover automobiles • Influencers who tweet about cars 3. Tweets are 140 characters but links and photos are not included in the count • Include interesting photos and videos in your tweets • Create your tweet with compelling ‘headlines’ or first lines • Include a call to action, when appropriate e.g. link to your website for more information 4. Understand what success is for your dealership • For leads and sales - track where people heard about your dealership • Media attention - stories and interviews about your dealership • Understand if Twitter referrals are coming to the dealership’s website • Twitter analytics are helpful to show what tweets are getting the most traction SHIFT TWITTER INTO HIGH GEAR TIPS 1. Tell the story of your dealership • Photos of the dealership staff • Important events e.g. dealership anniversary • Quotes about cars and brand values 2. Include # hashtags in your tweets to join Twitter conversations of people tweeting about cars. Hashtags. org may give you some hints. https://www.hashtags. org/ 3. Include your location in the settings on your Twitter bio 4. Take advantage of the Twitter header • Reinforce the brand image • Add text to promote specials or events 5. Tweet about what your customers care about • Seasonal safety tips • Service tips • Tailgating tips

• Community events the dealerships sponsors • Vehicle Spotlight - new brand vehicles • Driving with pets in the summer • Driving with kids in the summer • Gifts for your car 6. Listen to what people are saying about • Your dealership • Type of car they want to buy • Community events your dealership sponsors 7. Most important! • Engage with your followers and people who are talking about vehicle related issues • Like and retweet tweets that are directed towards your Twitter handle. It makes people feel good that they you are hearing and acknowledging them.

Unlike advertising or public relations, Twitter and other social media tactics take time to bring results. Twitter needs an internal champion who enjoys engaging with people and customers. Digital skills can be learned but a passion for authentically helping, even in the virtual world, is what will bring Twitter success to your dealership. #GoodLuck!

DEALERS Check out ServiceDriveToday. com for news, information, GENERAL MANAGERS best practices, training tips from the nation’s top fixed-ops SERVICE MANAGERS trainers, in-depth interviews with industry experts and more. It’s FIXED-OPS DIRECTORS completely FREE to all dealership PARTS MANAGERS service department personnel!

AD Jeff Cowan

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COMPLIANCE

MEANS DOING THINGS

THE RIGHT WAY It’s not Just What Not to Do — but WHAT to Do

BY JIM RADOGNA

ews broke recently about five dealership employees that were arrested and face federal charges of conspiracy, bank fraud, wire fraud, and aggravated identity-theft. This brings the total to eight employees at the same dealership who have been indicted so far this year. Not very pretty. Now you may be thinking that these folks must have engaged in really outrageous behavior to get

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arrested, especially by the feds. You’re likely also thinking that this could never happen to you – and you may be right. But before you ignore this as something that only happens to people in other dealerships, you might want to read on. For a number of reasons I’ll get into shortly, my take on this latest government action is that there’s a profound change occurring in the car business legal environment – not only for dealers, but for everyone who plies their trade selling cars. I know, I know - you’ve heard this all before – but please stay with me for a little bit. It’s no secret that for the last few years federal and

state regulators have sent a clear signal that they’re fed up with what they consider to be deceptive practices in the auto industry -- and they’ve placed a bull’s eye squarely on the backs of car dealers. But where the game is changing the most is that instead of just hitting up dealers with their typical arsenal of fines, lawsuits and consent decrees, the Powers-That-Be have apparently decided to go directly after dealership staff. Eye-opening to say the least. Since it’s likely that you don’t go to work every day with the intention of getting charged with a crime, you might want to hear about some significant takeaways from this recent action as I see it:

THE INDICTMENTS RESULTED FROM PRACTICES THAT HAVE BEEN AROUND FOR MANY YEARS AND STILL ARE COMMON IN SOME DEALERSHIPS – The charges included creating or altering documents to submit to financial institutions to show inflated income, misrepresenting proof of a customer's residency, unlawful use of a customer's personal

“The missing element in most compliance programs is that employees are taught what not to do but given no guidance on how to be successful doing things the right way.” identification, listing accessories not actually included on a vehicle so a financial institution would increase its loan amount, utilizing straw buyers, and quoting customers an inflated monthly vehicle loan payment so that a finance manager could add a service contract and GAP insurance without the customer realizing it. In carspeak, that’s kinking credit apps and stips, power booking, straw purchases, and payment packing – sound familiar? VIRTUALLY ALL POSITIONS IN THE SALES DEPARTMENT WERE CAUGHT UP IN THE OPERATION – Sales managers, a finance manager, a GSM, and three salespeople were indicted. So if you’re involved in any aspect of selling a car, you could be at risk.

THE IDEA THAT ONLY EMPLOYERS ARE RESPONSIBLE FOR ANY ILLEGAL ACTIVITIES THAT OCCUR AT THEIR DEALERSHIP IS SIMPLY NOT VALID - There’s no indication in the media stories that the dealership owners were named in the indictment – just the employees (although news that seven of your employees were arrested can’t be good for business).

caught up in risky behavior not because they’re bad people, but because they simply don’t know any better. In many cases the old-timers have taught the new hires the “old school” way of doing business. It’s not unusual for dealership employees who have never been properly trained to simply rely on doing business the way it’s always been done. Obviously, compliance training is vital for all dealership personnel, but it goes beyond that. The missing element in most compliance programs is that employees are taught what not to do but given no guidance on how to be successful doing things the right way. Let’s face it, sales department staff members are put under tremendous pressure to “make the numbers”. In the absence of proper knowledge and skills, this can lead to the temptation to step over the line legally and the

rationalization that “everyone else is doing it that why, why shouldn’t I?” The answer is complete education. When dealership personnel learn skills like loan underwriting guidelines, subprime financing and proper deal structuring, it eliminates the need for kinking credit apps, power booking and straw purchases. This goes hand-in-hand with superior sales training to teach employees how to build relationships with customers so that they can land them on the right vehicle that fits their budget and credit profile – again eliminating the need to “fudge” things because the customer “needs more income” or doesn’t have enough down payment. Next, when F&I personnel become better at selling products, there’s no longer the need to “pack payments” in order to increase their numbers. In my humble opinion, it’s really pretty simple. By becoming better educated on doing things the right way, you’ll not only be far more successful, but you’ll sleep better at night. Sounds like a win-win to me. Good luck and good selling!

JIM RADOGNA

Director of Compliance for The Lloyd Andersen Group of Companies Inc Before joining LAGC, Jim spent 15 years in dealership management as a sales manager, F&I director, GM, training director and compliance officer. He was the founder and president of Dealer Compliance Consultants Inc., a national automotive compliance resources and training firm. Jim has used his knowledge and industry experience to develop unique, no-nonsense compliance and reputation management solutions for automobile dealerships of all sizes. Jim is a sought-after speaker and frequent contributor to several automotive industry publications. Visit the company’s website at CollegeofAutomotive.com.

MULTIPLE LAW ENFORCEMENT AGENCIES WERE INVOLVED – The U.S. Attorney’s office, the FBI and the IRS all participated in this operation. Thought you only had to worry about the CFPB and FTC looking over your shoulder? IT’S EASIER THAN YOU THINK TO GET CAUGHT – According to media accounts, a confidential informant who had previously worked at the dealership “provided multiple volunteered audio recordings regarding the loan fraud, documented proof of the loan fraud, and miscellaneous documentation he acquired during his employment at dealership” to the FBI. So not only are dealership employees at risk of exposure for illegal practices from disgruntled customers, their co-workers could also implicate them.

THE POTENTIAL PENALTIES ARE VERY REAL AND QUITE DEVASTATING - According to the media stories, the maximum penalty for conspiracy is five years in prison and a $250,000 fine. The maximum penalty for bank fraud is 30 years in prison and a $1 million fine. The maximum penalty for wire fraud is 20 years in prison and a $250,000 fine. The minimum penalty for aggravated identity theft is two years in prison. And if those numbers aren’t bad enough to shake you up, here’s something else to think about: even if these employees are found not guilty - was it worth being criminally charged, having their reputations ruined, paying legal fees, losing their livelihood and likely having to change professions?

Quite frankly, many dealership employees get

JULY 2016

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FIXED-OPS

REVENUE LOSS IN

SOP Is Your Process Benefiting You In The Long Run? BY DAVID LEWIS

The problem is, parts and service departments all around the country consider this a grey area and only follow the processes in place 50% of the time. These orders are money spent that is not producing

or decades Dealership parts departments have developed strict guidelines for one of the most important processes in that department. The process of handling special order parts (SOP).

Processes like: • All retail transactions on non stocking parts must be pre-paid for by the Customer. • Warranty Customer special orders whether sales or service must be signed off on by a manager. • After receiving these parts, they will only be held for 30 days or less then they will be returned to the factory. • Track Lost Sales • Lost sales occur when a demand for a part is not filled. The only exception is if the Customer declined the sale.

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income and reflects poorly on the Parts Department as a whole and management in particular. In essence, it affects all of Fixed Ops in a negative way and restricts budget accounting and growth for the entire Dealership. Parts that stagnate on your shelf for months are costing you money by preventing you from carrying other items you actually can sell.

The Service Department is a large culprit of

Research tells us that special order parts in the

counter productive. The Service Manager needs to

average Dealership Parts Department is over 60% of the obsolescence. This can become a monstrous problem if Parts Managers are not tracking sales closely and monitoring what portion of their inventory is becoming obsolete. Usually the affect this has on the bottom line will not be felt until it is too late. Since the parts inventory represents a high percentage of the Dealerships capital exposure, parts obsolescence limits their ability to correctly measure their return on investment and hence predict proper inventory turnover for future ordering.

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“The problem is, parts and service departments all around the country consider this (special order parts) a grey area and only follow the processes in place 50% of the time.” increasing parts obsolescence and for them it is be a diligent promoter of their staff sticking to the right processes. If the parts department has less money tied up in idle capital (obsolescence) they can stock more things like tires, brakes and other daily requested parts. One main area of concern is the sales department. They always request an inventory of accessories that they feel certain will sell, such as, mud guards, floor mats, rear spoilers etc. When they do not sell this is another area that often goes unnoticed and can increase over aged parts quickly.

As a Parts Managers, you loose if you order in accessories on a hunch and 60% of the crate of parts is still on the shelf 9 months later. Now you are trying to unload them for 50 cents on the dollar, donate them or having to write them off. With the manufacturers ratcheting down on their return policies, it is getting harder and harder for parts managers to return these SOP. You must have a plan. The following is plan of action: • The Parts Managers of today need to be analytical and process driven. • Parts and Service Managers should meet once a week and discuss the SOP still sitting on the shelves and develop a plan and follow the plan. • Retail Customers must pre pay for SOP if the vehicle is leaving, NO Exceptions! • Accessories must have demand, and NOT be

Would the Dealership let every Salespeople order and purchase every new or used vehicle where a Customer stated, “If you order it I will come back in three days and buy? Of course not! And that should be the same thought process in your Parts

ordered in on a promissory note. • Pre schedule the warranty Customers return appointment in the computer. • The Service Department must have some liability if non-returnable parts are ordered and Customers do not return to pick them up. • Have a process for SOP that are of a package quantity. • Have a process on how to handle the SOP that the Manufacturers will not allow returned with a cost less than $5 or $10. Ignoring parts obsolescence is costly on everyone and must be dealt with promptly if these losses are to be contained. Putting the correct system in place and sticking to it is the most efficient way to deal with this problem. It will make everyone’s job easier, more profitable and productive at the same time.

DAVID LEWIS

President of David Lewis & Associates, Inc. David Lewis & Associates is a National Training and Consulting Company that specializes in the Retail Automotive Industry. He is also the author of 5 industry related books, “The Secrets of Inspirational Selling,” “The LEADERSHIP Factor,” “Understanding Your Customer,” “The Common Mistakes Automotive Salespeople Make” and “Winners versus Losers.”

Department.

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ASSOCIATIONnews CHRYSLER MINORITY DEALER ASSOCIATION CELEBRATES 30 YEARS The Chrysler Minority Dealers Association (CMDA) celebrated its 30th anniversary. For this anniversary celebration, CMDA donated a $60,000 endowment check to Northwood University, Midland, Mich. That check permanently funds three automotive education scholarships for minority students. Since the CDMA’s inception, it has donated more than $1.2 million to Northwood University. Also during the event, the FCA US Network Development team recognized nine minority dealerships with FCA Dealer Performance Awards. Kudos to the following award winners: Sales Volume Leaders • Tyson Motor Corp., Shorewood, Ill., Metro • Landers McLarty Dodge Chrysler Jeep Ram, Huntsville, Ala., Non Metro • Rick Case Alfa Romeo FIAT, Davie, Fla., FIAT YOY Sales Volume Growth Leaders • Champion Chrysler Jeep Dodge Ram, Lansing, Mich., Metro • James Hodge Dodge Chrysler Jeep Ram, Broken Bow, Okla., Non Metro • Johnson Alfa Romeo FIAT of Annapolis, Annapolis, Md., FIAT Customer Experience • Lakeside Alfa Romeo FIAT, Macomb, Mich., Metro • Parkway Chrysler Inc., Clinton Township, Mich., Non Metro Mopar Parts Leader • Mac Haik Dodge Chrysler Jeep Ram, Houston, Texas, Metro

AUTO DEALER SUCCESS IS KEY ECONOMIC DRIVER As auto sales continue to rise, new-car dealerships across the country continue to hire, according a new report released by the National Automobile Dealers Association. Employment at new-car dealership in the U.S. reached 1,110,700 in 2015, up 4.3 percent from 1,064,000 employees in 2014, according to NADA Data 2015, the annual financial profile of new-car dealerships. On average, a new-car dealership employed 67 people in 2015, up 3.1 percent from 65 employees per dealership in 2014. “For 2016, expect new-car dealership employment to reach an all-time high. The past six years have been the longest period of new-vehicle sales growth since the 1920s, and the outlook for 2016 is just as bright,” said NADA Chief Economist Steven Szakaly. “But what matters even more is that dealers continue to be drivers of economic development in their local communities. Last year, new-car dealers employed more than 1.1 million workers directly; in addition, hundreds of thousands of other local jobs across the country were dependent on dealerships.” Annual payroll at new-car dealerships was $62.8 billion in 2015, up nearly 8 percent from 2014, the report said. Average dealership payroll was $3.8 million, showing a similar 8-percent increase compared to 2014. In each of the past three years, new-car dealership employees have seen their incomes rise by more than 2 percent, and total compensation increased by almost 6 percent, Szakaly added. This has outpaced total compensation in other retail sectors, and dealers boast one of the highest average salaries of all industries. Dealers spent billions last year on contracting, services and wages - almost all of which flows right back to local communities. For the fifth straight year, net pretax profit at new-car dealerships as a percent of total sales was 2.2 percent.

The FCA US minority dealer network has increased more than 90% since 2009, from 105 to 203 dealers. The 203 minority dealers currently represent 7.6% of its dealer network but 9.7% of our retail sales. FCA US added 13 new minority dealers to our network in 2015. In addition, its FIAT and Alfa Romeo brands continue to lead the industry with nearly 16% of the FIAT/Alfa Romeo dealer network comprised of minority dealers.

NEW HAMPSHIRE LEGISLATURE PASSES AFTERMARKET PARTS BILL A bill requiring an insurer to disclose whether or not an estimate has been prepared based on the use of aftermarket parts has passed both the New Hampshire House and Senate. Any insurer that fails to provide the disclosure would be prohibited from requesting or requiring the use of aftermarket parts. The Automotive Service Association has been a proponent of the legislation. In a statement, the ASA said: “ASA supports requiring insurers and auto collision facilities to provide disclosure of part type, description and warranty information to the consumer for all part types. Consumers will be best served if written consent is required for the use of these parts. “ASA believes a competitive parts marketplace, of tested and verified quality parts, is in the best interests of the motoring public. ASA opposes parts policies that focus solely on cost efficiency without regard to certification, verifiable quality and safety.” The bill is currently before the New Hampshire governor for final approval. To view the text of the legislation, please go to www.TakingTheHill.com.

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AIDA LAUNCHES ‘YOU AUTO KNOW’ CAMPAIGN The American International Automobile Dealers Association (AIADA) announced the launch of its “You Auto Know” campaign, aimed at highlighting the positive impact America’s 9,500 international nameplate dealers have in their local communities and in the U.S. economy. America’s 9,500 franchise dealers are a significant economic engine in the U.S. They provide employment for more than 570,000 Americans in cities and towns across the U.S., creating a payroll of $32 billion and more than half of all light vehicle dealership employment. “The import label assigned to international franchise dealers—and the brands they sell—is long outdated. The truth is that these dealers employ the majority of all U.S. dealership employees, and in the process provide significant revenue and support in their communities,” said AIADA President Cody Lusk. “The You Auto Know campaign will share their stories about their businesses—and the brands they sell—with legislators, the media, and the public.” In 2015, international franchise dealers sold more than 8.3 million vehicles to U.S. consumers, accounting for 59 percent of U.S. auto retail sales. Their brands—including BMW, Honda, Hyundai, Kia, Mercedes-Benz, Toyota, and Volkswagen—built 5.4 million vehicles at their American production facilities last year. While most of these were in turn sold to American consumers, international automakers also exported more than 750,000 U.S.-built vehicles to 140 countries. For more on the “You Auto Know” Campaign visit youautoknownow.com or follow the campaign on Twitter at @YouAutoKnowNow.

MINORITY-OWNED AUTOMOTIVE SUPPLIERS TO BOOST CAPABILITIES Qualifying minority-owned automotive suppliers can receive tools and training necessary for increased capabilities and competitiveness. In support of automotive manufacturers' efforts to boost minority supplier development and industry participation, the Automotive Industry Action Group (AIAG) is collaborating with the Michigan Minority Supplier Development Council (MMSDC) to prepare minority businesses for direct part sourcing. A direct part supplier is one whose component, material, or service is part of the finished vehicle. "The development of minority businesses for direct part sourcing is mission critical for OEM and Tier One suppliers," says J. Scot Sharland, executive director of AIAG, an organization providing industry-developed standards, allied tools, emerging best practices, and training in quality, supply chain, and corporate responsibility. "MMSDC and AIAG share a singularity of purpose and speak with a common voice.” AIAG is offering free memberships in its organization ($1,000/year value) to any current or prospective minority direct part suppliers with under $20 million in annual sales. Qualifying suppliers will receive the free membership for five years. "We are making it easy for minority suppliers to participate in the AIAG experience," says Nancy Malo, who leads AIAG's minority supplier development strategy. "AIAG can provide the tools and training to accelerate development of minority suppliers and deliver more predictable manufacturing outcomes at minimal cost, but we need the collaboration of organizations like MMSDC that represent minority business enterprises.”

NADA RAISED RECORD $128,000 TO TRAIN SERVICE DOGS Giving back was the theme during an ADESA auction at the NADA Convention & Expo in Las Vegas, where a record $128,000 was raised to train service dogs for wounded veterans. “ADESA is very proud to once again support the National Automobile Dealers Charitable Foundation (NADCF) and Canine Companions for Independence. We look forward to future opportunities to partner with these fantastic causes.”

AIADA RENAMES GRASSROOTS LEADERSHIP AWARD; HONORS FRITZ HITCHCOCK The American International Automobile Dealers Association (AIADA) renamed its Grassroots Leadership Award in honor of California auto dealer Fritz Hitchcock, who was also named as its first recipient. The award was presented during AIADA's 10th Annual International Auto Industry Summit in Washington, and recognizes Hitchcock's efforts in engaging elected officials and other policymakers on the issues important to the international auto dealer community. "I can't think of anyone who has been so deeply involved in advocating for America's international franchise dealer community with legislators and policymakers," said AIADA President Cody Lusk. "Naming the award in Fritz's honor should inspire other dealers to take the same proactive role he has in building relationships with legislators and ensuring they know about our industry." A former chairman of the California Chamber of Commerce, Hitchcock is the owner and operator of three Southern California auto dealerships: Puente Hills Toyota, Northridge Toyota, and Toyota of Santa Barbara. He served as chairman of AIADA's Board of Directors and was a co-founder of the Automotive Free International Trade Political Action Committee (AFIT-PAC).

LOU VITANTONIO NAMES EXECUTIVE OF THE YEAR BY ATAE Lou Vitantonio, president of the Greater Cleveland Automobile Dealers' Association, has been named Executive of the Year for 2015 by the Automotive Trade Association Executives (ATAE). This annual award recognizes outstanding work in representation of the nation's franchised new car and truck dealerships.

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CBTNews.com 37

ON THE SET WITH

Carols Ledezma of Cable Dahmer Automotive Group with David Kain of Kain and Co.

Aaron Wirtz of CurveBreak Video Marketing

Lary Portman of EasyCare

Cory Mosley of Sales Strategist & Speaker

Erik Nachbahar of Helion with Joe Gumm of CBT

Curt Z. of Sales Trainer

David Lewis of Straight Talk

J.C Baker of Jake Sweeney Chevrolet with Joe Gumm of CT News

Gina Allen of Santa Margarita Auto Group with Jeff Cowan of Weekly Tune Up

Erin Kerrigan of Kerrigan Advisors with Joe Gumm of CBT News

Gary Tucker of Dealer Rater with Joe Gumm of CBT News

Frank Lopes & Candace Crane of Crane Automotive with Becky Cherneck of F&I Today

Toff Fitzgibbons of Zumbrota Ford with Joe Gumm of CBT News

Carl Madea with AutoFusion with Joe Gumm of CBT News

Jon Nigbor of Media272,INC. with Brian Pasch of AMN.

Mike Haeg of Car Wars

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CONVERSICA: THE PERFECT COMPLEMENT TO ANY AUTOMOTIVE SALES PROCESS

With the same number of leads, two dealers can have dramatically different sales results based on process, technology, and their human resources. Managers of automotive dealerships know that despite investing in sales training and perfecting CRM workflows, human nature will always impact final sales results.

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It’s natural for sales associates to choose to work a “fresh” lead in the CRM. In the auto industry, this behavior is called “cherry-picking,” and it is costing dealers thousands of dollars each month in lost auto sale.

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Our research has also discovered another factor hindering sales conversion: a technical issue that we have not publicly discussed to the degree that would satisfy our concerns: email deliverability. What if the emails that dealers thought were being delivered to customers, were not consistently being delivered? Our research into assisting dealers on how to increases sales by maximizing all their Internet sales leads led us to Conversica. We encourage you to learn more about this product. Request our 25 page research report and we will email a full color PDF to you immediately.

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