Dealer Business Journal, January 2014

Are you ready for a profitable 2014?

Embracing Change Page 8

Vital Rules of Vision, Strategy and Tactics Page 16

Turn Insurance Into A Profit Center ...Your Success Is Our Business

y rve u S r s! ade detail e R Page 18 our 9 for e k Ta page January 2014 DEALER BUSINESS See JOURNAL | 1

TWENTY GROUPS

Looking for a Twenty Group of Elite Dealers?

Leedom & Associates Announce the Formation of a New Dealer Twenty Group • Group Comprised of Dealers who retail a

minimum of 100 units per month

• Experienced BHPH Dealers • Monthly Proprietary Composite • Share New Ideas & Best Practices • Become A Charter Member: Choose Future

Members & Meeting Sites

• Moderated by Chuck Bonanno • Three meetings per year • Day and a half meetings in Hub City locations

Organizational Meeting will be held March 31 – April 2, 2014 in Tampa, Florida For an invitation or more information, please contact Alicia Artz at alicia@leedomgroup.com

2 | DEALER BUSINESS JOURNAL January 2014

DealerBusinessJournal.com

Contents Volume 11, Issue 1

IN EVERY ISSUE 4 CORNER OFFICE 6 Front Line 8 IMPROVING PROFITS

y for a u read Are yo e 2014? bl profita

January 2014

e

g Chang

Embracin

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Page 6

les of Vis Vital Ru s tic and Tac

y rve

Page 16

Su ils!

Into er urance ad eta Turn Ins nter Re r d Ce ur 8 fo A Profit eo e L|1

LEGAL & LEGISLATIVE Legal Opinion 10 Form Roulette Make sure you know what’s in your dealer forms arsenal before you pull the trigger.

By Tom Hudson

General Counsel 12 Reviewing Your Retail Installment Sales Contract Make sure you review these 10 things before you keep using that same Retail Installment Sales Contract you have always used.

By Debra Dawn

Legal Compliance 14 CFPB Holds Field Hearing on Arbitration Study News from the Consumer Financial Protection Bureau on the use of pre-dispute arbitration clauses.

By Eric L. Johnson

LEADERSHIP & TRAINING Learn to Lead 16 Vital Rules of Vision, Strategy and Tactics Lead your business in 2014.

By Dave Anderson ...Your Success Is Our Business

ag JOURNA ak INES TBUS ep S 4 DEALER Se ary 201

Page 18

BUSINESS OPERATIONS ess Is Our ...Your Succ

Janu

Business

ReInsurance 18 Lapsed Insurance Could Turn Into Your Profit Consider Debt Cancellation Coverage before a customer’s insurance lapses.

By Tim Byrd

By Jeff Karg

By Greg Wells

Skip Trace 26 Don’t Wear the Wrong Hat Make sure you are focused when it comes to skip tracing.

By Kate Bullach

Web Strategy 34 Find the Right Product for Your Dealer Website With all the options available for dealer websites these days, it can be hard honing in on the things you need.

Business Basics 24 The Eight Cylinders of a BDC: Fine Tuning for High Performance A fully blended call center needs eight things.

Customer Relations 32 Individualized Communication is the Key to the Customer Kingdom Customers are looking for a pleasant, personal experience when purchasing a car.

Investment Return 22 Is Your GPS Device an Asset or Expense?

GPS devices can now incorporate Automated Collection Technology that assists in on time payments.

SALES & SERVICE

By Monique Seifullin

Female Perspective 36 Marketing Strategies that Work with Women Female buyers have a lot of influence in the purchase decisions in the majority of households.

By Cherie Watters

By Alex Price

January 2014 DEALER BUSINESS JOURNAL | 3

LEEDOM GROUP

Corner Office Welcome to a New Year

W

elcome to 2014! It is hard to believe another year is behind us; say goodbye to 2013 and hello to 2014! This issue is dedicated to looking forward to 2014. I personally think it is going to be an outstanding year for our industry.

There is a lot of positive momentum in sales, finance and the overall automotive market.

I have decided this year not to implore you with the idea of setting resolutions and all of that good stuff (not that you shouldn’t). I am also not going to remind you this is the time to already have your budget and forecast done and in place.

What I would like to do is suggest you step back and try to analyze your business from a very high level.

We have had the opportunity and privilege to work with some of the best dealers in the country. These top performing dealers don’t just get there by mistake – they work hard at it just like you. I would suggest given our ever changing market landscape this is a great time to stop and ask yourself if you are truly committed to your organization performing at the very highest level possible.

Have you made the investment in people and processes to compete in your market at the very highest levels? If not, stop and ask yourself why not?

The single biggest observation that I would offer that separates those performing at a high level versus those that want to perform at a high level is commitment. Top performers are “all in” when it comes to commitment. They live it, breathe it, and yes as business owners we all even sometime sleep it. So if you are not quite achieving the level of performance you desire as we enter a New Year stop and evaluate your level of commitment.

As President of the Leedom Group, I want to personally thank each of you for your support during 2013. We are very grateful for that. Whether you are a Twenty Group member, a consulting client of the Leedom Group, a partner of PayMaxx Pro or a sponsor or exhibitor of one of our premier industry events we appreciate the opportunity to work with you to continuously improve our business. It is truly a pleasure to work with those that are passionate about our industry. We look forward to a continued relationship in 2014.

This is another issue packed with great information to help you analyze and assess your business. Feel free to interact and email our guest columnists and ask questions. Each month we receive dozens of email interactions with these experts and contributors. They love to hear from you!

So now I invite you to read on and have a great 2014.

dealer BusinesS JOurnal

A L e e d o m G r o u p P u b l i c at i o n

Dealer Business Journal 3700 S. Tamiami Trail, Sarasota, FL 34239 Ph: 800.966.8733 | Fax: 941.371.2874 Executive Publisher

Christopher M. Leedom | chris@twentygroups.com Associate Editor Buy Here-Pay Here

Chuck Bonanno | chuck@twentygroups.com Contributing Writers

Dave Anderson | dave@learntolead.com David Brotherton | davidb@leedomgroup.com Debra Dawn | debra@leedomgroup.com Tom Hudson | thudson@hudco.com Jay Prassel | Jay@leedomGroup.com Jessica Sweeney | sweeneyj@paymaxxpro.com Guest Columnists

Eric L. Johnson | ejohnson@hudco.com Tim Byrd | DealerRE Jeff Karg | jkarg@passtimeusa.com Greg Wells | greg@myallcall.com Alex Price | alex.price@masterfiles.com Kate Bulach | FordDirect Monique Seifullin | dealercenter.net Cherie Watters | askpatty.com

FOR QUESTIONS REGARDING SUBSCRIPTIONS CALL 800.966.8733

or subscribe online at DealerBusinessJournal.com ADVERTISING INQUIRIES CALL 941.371.7999 OR SALES@DEALERBUSINESSJOURNAL.COM

DISCLAIMER: The information included in this publication is obtained from sources believed reliable and has been produced with reasonable care in production and editing. It is not intended to be legal, accounting, tax, technical or other professional advice. Readers are advised to consult a professional for application in their particular situation. Copyright 2013 Leedom and Associates, LLC. All Rights Reserved. Content may not be photocopied, reproduced or redistributed without written permission. Dealer Business Journal is a publication of Leedom and Associates, LLC. POSTMASTER: Send change of address form to Dealer Business Journal, 3700 S Tamiami Trail, Sarasota, FL 34239

Chris Leedom

Executive Publisher

4 | DEALER BUSINESS JOURNAL January 2014

DealerBusinessJournal.com

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January 2014 DEALER BUSINESS JOURNAL | 5

LEEDOM GROUP

Front Line

By Chuck Bonanno

How to Reach Benchmarks? Join a Twenty Group!

A

s I was reviewing our 2013 Buy Here Pay Here Industry Benchmarks, it struck me that achieving those results is the ultimate goal of a Dealer Twenty Group membership.

The best way to know how you are doing is to compare yourself to these industry benchmarks. These benchmark numbers represent the results of the best dealers in the industry. It only takes three steps to become a benchmark dealer. But, before I discuss the three steps to becoming a benchmark dealer, I have to ask you if you are satisfied with your performance. If you are not satisfied, please read on and I can show you how to become a benchmark dealer. It’s really easy. All it takes is time, energy and a good road map.

The first step to becoming a benchmark dealer is to join a Twenty Group. There is no other way to get accurate benchmarks of performance than through this program. You can’t ask your buddies at the auction. You can’t ask your friends in the associations you belong to and you can’t rely on your gut feeling. There is only one place to get real numbers, real results and real benchmarks to measure your dealership. So, how hard is it to join a group? The first part is very easy.

Just call us and we can get you an invitation to an upcoming meeting of a group that has dealers similar to you in size and scope. The hard part

is to actually take time out of your schedule, get on airplane or in a car, travel to the meeting destination and spend a weekend away from your business. We completely understand how hard it can be to get away and, we know, there is always a reason not to go. But to begin the process of becoming a better dealer you must get out of the trenches. You must take this time to work ON your business versus IN your business.

The second step is to ACCURATELY submit your monthly operating results so that a composite (book of comparative statistics) can be created. That sounds easy, but it may not be if you don’t create monthly financial statements. It also requires that you look at your business in ways you have never looked at it before.

And it ABSOLUTELY requires that you give CORRECT information.

It does you no good to submit bogus numbers. We can’t help you if we don’t know what’s wrong with you (sounds like my Doctor). The compilation and submission of these monthly results takes time and effort. You must be committed to this process if you are to maximize the Twenty Group experience and become a benchmark dealer.

The third step is both the easiest and the hardest step of all. You must take what you learn from the benchmarks and make changes.

It is the easiest part because you have the answers regarding your current situation (your results versus benchmark results), and you know how to change your situation (from your group meetings) and you have support of your fellow members

6 | DEALER BUSINESS JOURNAL January 2014

(the Twenty Group member pledge to each other). The hardest part of this process is to actually make change. People typically do not like change, do not embrace change and will avoid change. Why, because it is scary. It is the unknown. Bad things can happen and the one reason that no one ever admits to is that change is uncomfortable. So to become a benchmark dealer, you must embrace change, help your people embrace the change and most importantly, take action. We have so many dealers who thank me and their fellow group members when they make dramatic changes that improve their business. While we are humbled to think that we play a role in that change, we always remind our members that THEY made the changes, THEY took action and THEY deserve the credit.

Our job is to show my members the benchmarks and give them a road map to get there, but we do not take the journey for them nor can we.

So if you think you are a great dealer, who can still get better, or a struggling dealer who must get better, we can show you the way. We can give you the road map, we can give you encouragement and we can give you feedback on your progress.

Chuck Bonanno is the executive vice president and senior partner of the firm, Leedom and Associates, LLC. He is an Executive Conference Moderator of Buy Here-Pay Here and Automotive Finance Twenty Groups. He is a nationally recognized speaker, author, industry trainer and consultant. chuck@twentygroups.com.

DealerBusinessJournal.com

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January 2014 DEALER BUSINESS JOURNAL | 7

LEEDOM GROUP

Improving Profits

By Jay Prassel

The Paradigm Effect and Embracing Change:Part 2

L

ast month I wrote about author Joel Barker and his thoughts about paradigms and in this issue I would like to let Barker continue to walk us through the Paradigm Effect. While all of this doesn’t specifically pertain to the automobile business, it does help explain why some manufacturers (and dealers) have survived, and thrived, and other have missed the paradigm changes.

Barker’s thoughts: “All human beings, not just scientists, have paradigms that influence the way we see the world.

We all constantly select that data that best fits our rules and try to ignore the rest.

“As a result, what may be perfectly obvious to a person with one paradigm, may be totally

imperceptible to someone with a different paradigm because each paradigm filters the world in a different way. I call this filtering phenomenon, the Paradigm Effect.

It is the Paradigm Effect that makes dealing with change and anticipating the future so difficult.”

The Paradigm Effect can prevent any one of us, no matter how smart we are, no matter what line of work we are in, from finding breakthrough solutions to the problems in our lives. No one is immune. It’s so easy to say no to a new idea. After all, new ideas cause change. They create uncertainty.

And it’s much less bother to do it the way we’ve always done it before.

New ideas are resisted from boardrooms to shop floors all across the globe. Too often, good ideas are shot down by people who assume that the ideas from yesterday, that brought us to where we are today, are the same ideas that are going to take us to tomorrow.

8 | DEALER BUSINESS JOURNAL January 2014

•

Barker’s list of excuses: We tried that, and it doesn’t work.

• Somebody else tried it, and it didn’t work.

• We don’t have the time.

• We aren’t going in that direction.

• We are too small to that.

• We are too big to that.

• That’s not our business.

• We’ll have to look into that at another time.

• We won’t make money.

• Great idea (that is never brought up again).

• We can’t teach old dogs new tricks.

• It would be too much work.

• That’s not the way we do things around here.

Have you heard any of these at your organization? Have you said or agreed with any of them?

The people who create new paradigms are usually outsiders.

They are not part of the established paradigm community so they are not invested in the old paradigm.

Therefore, they have nothing to lose by creating the new paradigm. If you want to find the new paradigms developing in your field, you must look beyond the center, way out to the fringes.

Barker continues…..

“Who is the voice of opportunity in your organization?

How are these “outsiders” treated?

Are they welcomed? Shunned?

Do people listen to their “fringe” ideas?”

Look at the following list of words. Check the descriptors that best describe how the members of DealerBusinessJournal.com

your organization view outsiders.

• Speculators • Rule-busters • Gamblers • Scenario-planners • Precedent-breakers • Heretics • Visionaries • Crazy • Forecasters • Dreamers • Troublemakers Our tendency to resist change often has little to do with the merits of the new idea, but springs from emotions like fear or envy. When a new paradigm takes on the status quo, we can feel threatened, scared, resentful, or worried.

By now, it should be plain that many people, as well as the organizations that employ them, would benefit from doing a better job at anticipating and understanding changing paradigms.

Still, it is not surprising that people resist change. After all, even the

most benign shift entails some disruption and loss, and raises the question of, “what’s next?”

In addition, not all new ideas merit acceptance. Sometimes individuals advance new ideas just to serve their own interests. At times, the effort we would have to expend to make the change is not worth it. That’s why many of us head to the same grocery store week after week, even if it doesn’t fit our needs or our budget.

The challenge, of course, is to determine when we’ve discarded an idea based on its lack of merit, and when we’ve discarded it because it falls outside our established paradigms.

Who can identify some of the new applications that are being used today that are changing paradigms?

• Spotify • SnapChat • Instagram • Vine • Pinterest

• Dropbox • WhatsApp • Uber • Lyft That is just a partial list of what is out there today. Who knows what is on the horizon tomorrow.

Of course it could be argued that the first paradigm shift stared with the birth of social media. We could spend hours discussing how Facebook and Twitter have changed how we now communicate.

Next month we’ll look at how paradigms in our business have changed and how have we adapted to them.

Jay Prassel is the Leedom and Associates Vice President, Director of Operations. Jay has 37 years of automotive experience and has worked with over 300 dealerships as a profit improvement consultant and Twenty Group moderator. jay@leedomgroup.com

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A L e e d o m G r o u p P u b l i c at i o n

Reader Survey Your success is our business, so we want to know how we can help you be more successful. Please take a moment to go online and take a brief survey that will help Dealer Business Journal continue to be your number one industry resource.

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January 2014 DEALER BUSINESS JOURNAL | 9

LEGAL & LEGISLATIVE

Legal Opinion

By Tom Hudson

Forms Roulette

W

e’ve seen enough movies to be acquainted with Russian roulette, that potentially lethal game of chance in which a player places a single bullet in a revolver, spins the cylinder, places the muzzle against his head, and pulls the trigger. The odds, depending on the capacity of the cylinder, aren’t all that bad. But when you lose, you lose big.

This dramatic game came to mind recently as I was contemplating the sorts of difficulties a dealer can encounter when the dealer’s forms for sales, finance and lease transactions have been accumulated over the years from a number of different sources.

Perhaps the retail installment sales contract comes from a national vendor, the buyer’s order is one that the state association sells, the service contract, the credit life insurance policy and the GAP contract are all provided by the separate providers of these services, and so on.

In many cases, these forms have been added to the dealer’s form arsenal without any legal review.

In other cases, a lawyer might have reviewed one or two of the forms, but probably wasn’t asked to review all the other documents that the dealer uses to see whether the documents are consistent from a compliance point of view.

So, the retail installment sales contract might disclaim implied

warranties, while the buyer’s order might contain a 90-day warranty, making the disclaimer inappropriate. A dealer might believe that a sale is an “as-is” sale, relying on the disclaimer language, only to find that a court won’t enforce the disclaimer because the dealer also is offering a warranty.

Perhaps the buyer’s order contains an arbitration agreement that conflicts with an arbitration clause in the retail installment sales contract or the language in a separate, free-standing arbitration agreement the dealer has elected to use. And often, the agreements provided by the sellers of so-called “ancillary products” contain arbitration language as well, leading to further potential for dueling arbitration provisions.

A court looking at a group of documents containing several different arbitration agreements likely will refuse to enforce any of them, depriving the dealer of an important line of defense against class action lawsuits.

Perhaps the terms used in the buyer’s order and the terms used in the remaining documents are different – an “administrative fee” in one document is called a “doc. fee” in another

10 | DEALER BUSINESS JOURNAL January 2014

document. Such confusion in terminology can give a customer’s lawyer ammunition (sorry, I couldn’t resist) for a legal challenge to the transaction.

So, the next time you toss another document into your forms inventory without knowing for sure that it works with all of your other documents, you’ve spun that chamber. Maybe the document will work just fine, and you’ll never have a problem.

But you might want to think hard before pulling that trigger.

Tom Hudson, Esq. (tbhudson@ hudco.com) is the author of several compliance-related books that are available online at www. counselorlibrary.com. He is also the publisher of Spot Delivery®, a monthly legal newsletter for auto dealers, and the Editor in Chief of CARLAW®, a monthly report of legal developments in all states for the auto finance and leasing industry. Call (410) 865-5411 or visit www.counselorlibrary.com.

DealerBusinessJournal.com

Calendar FEBRUARY Feb. 6, 2014 LHPH Training School, Sarasota, FL

AUGUST Aug. 5, 2014 LHPH Training School, Sarasota, FL

MARCH March 11, 2014 Manager’s Boot Camp, Chicago, IL March 12, 2014 Collections Boot Camp, Chicago, IL March 13, 2014 Sales Training Boot Camp, Chicago, IL

SEPTEMBER Sept. 2, 2014 Sales Training Boot Camp, Atlanta, GA Sept. 3, 2014 Manager’s Boot Camp, Atlanta, GA Sept. 4, 2014 Collections Boot Camp, Atlanta, GA

APRIL April 14-16, 2014 20th Annual BHPH World Convention Las Vegas, NV April 23-24, 2014 BHPH Training School, Sarasota, FL

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JUNE June 3, 2014 Manager’s Boot Camp, Dallas, TX June 4, 2014 Collections Boot Camp, Dallas, TX June 5, 2014 Sales Training Boot Camp, Dallas, TX

DECEMBER Dec. 1-3, 2014

Dec. 9-11, 2013

Dec. 18, 2013

Credit/Collections Conference Dallas, TX Credit & Collection Conference Dallas, TX Sales Training Academy, Sarasota, FL

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January 2014 DEALER BUSINESS JOURNAL | 11

LEGAL & LEGISLATIVE

General Counsel

By Debra Dawn

Reviewing Your Retail Installment Sales Contract

A

s we start a new year, now is the time to re-read and bring up to date old operating documents that you likely have not reviewed in several years.

DMS providers do not do this for you.

Accordingly, it is highly likely that versions you currently use may not have been modified in several years. One of the most important documents to review is the Retail Installment Sales Contract which is utilized in virtually all your sales and forms the basis for the agreement between the dealership and the customer.

Here are 10 things you should review in regards to your Retail Installment Sales Contract.

1

Have you drafted the appropriate corporate documents to substantiate the transaction? If your dealership does not have a Related Finance Company, this is not an issue for you and you can proceed to the next point. However, if you do have an RFC there must be a Purchase Agreement in place between the dealership and the RFC. That document must be approved by the Board

of Directors of both companies. It must state how each contract is being purchased. You must also have a Repurchase Agreement or a provision in the Purchase Agreement delineating in detail the circumstances under which the dealership is required to repurchase the Retail Installment Sales Contract, when the repurchase is to take place and for how much. If you do not have such a Repurchase Agreement, you cannot apply for a sales tax credit upon repossession.

2

Have you decided whether to mandate arbitration? The decision as to whether or not to require a customer to arbitrate grievances depends upon the level of concern regarding class actions.

If you do embrace arbitration, the dealership should be willing to front the cost of case management and filing fees for your customer in order to ensure enforceability of the provision. In many cases, arbitration may be more costly than small claims actions. Furthermore, the rules in arbitration are far more lax than the rules of evidence in court. Arbitrators also have a tendency to “split the baby” no matter what the set of facts. If you do elect to arbitrate, the method of arbitration must be carefully spelled out in the contract.

12 | DEALER BUSINESS JOURNAL January 2014

3

Does your state have a “cooling off ” period? If it does, the timeframe within which a customer can cancel the contract must be identified. If your state is one of those that does not provide for cancellation due to a customer’s change of mind, I would recommend a provision called “No Cooling Off Period” which tells the customer that state law does not provide a cancellation period for the contract and informing them that their signature is final and binding.

4

Do you have risk of loss language? It is important to tell the customer that they will be bound by the contract even if the vehicle is lost, stolen, damaged or destroyed.

5

Are the events of default complete? A good provision provides for default under a variety of circumstances. All contracts have language which protects the seller in the events of payment stoppage, bankruptcy, property lien or violation of contract terms and conditions.

However, a higher level of protection is achieved when language is incorporated which includes more general provisions such as, “We reasonably believe that you are unable to perform your obligations under the contract” and “We discover that you have made a false or misleading statement in an attempt to obtain credit.”

6

Are your rights in the event of default clearly spelled out? Although it is common DealerBusinessJournal.com

to state that, in the event of default, all payments are due and owing and the vehicle may be repossessed without notice, a less common provision requires the buyer to deliver the property to you. I also recommend language stating that the dealership may attach or garnish a buyer’s disposable earnings, whether or not you are or become a head of family consistent with state and federal law.

7

Do you have the right to run continuing credit reports?

Although you have likely obtained the initial right to obtain a credit report by means of the credit application, in the event of nonpayment the dealership or finance company may wish to run additional reports to locate buyers and/or co-buyers. This provision should be in the contract.

8

If you offer optional service contracts, have you stated that they are not required in order to obtain financing?

This language is likely in the optional service contract, but only infrequently have I seen it in the Retail Installment Sales Contract.

9

If you require full coverage insurance, is the buyer required to name the dealer as an additional insured?

Although it is acceptable to use a separate Power of Attorney form to obtain authorization from the customer to negotiate with an insurance company in the event of loss, all the insurance provisions you are requiring of the buyer ...Your Success Is Our Business

(including maximum deductibles) should be spelled out in the contract.

10

If you use a GPS to locate AND for starter interrupt, are those possibilities both spelled out in the contract? In virtually all my compliance audits, there is a separate document signed at the time of the sale indicating that the customer agrees that a GPS device may be installed. However, the Retail Installment Sales contract does not indicate that the dealership is entitled to use starter interrupt capabilities.

The Retail Installment Sales Contract is an integrated document.

This means that no additional provisions may be introduced that have not been covered in the contract (although ancillary documents may be used for further explanation). All rights and responsibilities must appear in the actual Retail Installment Sales Contract, or in an addendum to that document clearly marked as such, attached to the contract, and signed by the parties. Best practices are to incorporate any and all material provisions into your base agreement to avoid enforceability issues in the future.

Dealer Business Journal is a publication you will find in the hands of over 20,000 dealer principals, general managers and dealership executives each month.

It is a magazine read by the decision makers of the industry.

Don’t miss out on an opportunity to connect with this educated, experienced group of professionals in one of our many media outlets:

Print Advertising

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For Advertising Information

Debra Dawn is Leedom Group’s General Counsel and Compliance Director Debra Dawn has formed AUTOLAW Group to assist dealers in all facets of dealership compliance. debra@leedomgroup.com

sales@DealerBusinessJournal.com

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January 2014 DEALER BUSINESS JOURNAL | 13

LEGAL & LEGISLATIVE

Legal Compliance

By Eric L. Johnson

CFPB Holds Field Hearing on Arbitration Study

T

he Consumer Financial Protection Bureau (CFPB) recently released its preliminary research on the use of pre-dispute arbitration clauses in connection with credit cards, checking accounts, payday loans, and prepaid cards. What’s interesting about their preliminary study is that it didn’t include automotive finance products in their review. The CFPB held a field hearing in Dallas, TX to deliver their preliminary results and to give consumer activists and the industry an opportunity to provide testimony and to answer select questions posed by the CFPB. Public comments were also taken during the field hearing. I attended the field hearing and can provide my thoughts about the preliminary report, the field hearing and the next steps for the CFPB. The study of pre-dispute arbitration is mandated by Section 1028 of the Dodd-Frank Act which requires the CFPB to “conduct a study of, and to provide a report to Congress concerning, the use of agreements providing for arbitration of any future dispute between covered persons and consumers in connection with the offering or providing of consumer financial products or services.”

Section 1028 also provides that the CFPB may by regulation, prohibit or impose conditions or limitations on the use of arbitration

agreements if the CFPB finds that such a prohibition or limitation is in the public interest and protective of consumers. The CFPB has been seeking standard forms of checking account agreements from various financial institutions and other consumer financial services agreements to review in connection with their arbitration study.

The preliminary results of the study provided by the CFPB were reportedly based on a review of hundreds of consumer agreements, as well as on filings from the American Arbitration Association (AAA), which the CFPB found was the predominant administrator of consumer financial arbitrations in the markets covered by the study. The CFPB looked at AAA filings about credit cards, checking accounts, payday loans and prepaid cards between 2010 and 2012.

The CFPB observed that fewer than 1,250 consumer arbitrations concerning those four products were filed. Other preliminary results for the markets the CFPB studied included: • Larger institutions are most likely to use arbitration clauses. Larger institutions are more likely than community banks or credit unions to include an arbitration clause in consumer contracts for credit cards or checking accounts.

• Arbitration clauses are more complex than the rest of the contract. In credit card contracts, the arbitration clause section of the contract was almost always more complex and written at a higher grade

14 | DEALER BUSINESS JOURNAL January 2014

level than the rest of the contract.

• Around nine out of 10 arbitration clauses expressly bar consumers from filing class arbitration. Around 90 percent of the arbitration clauses specifically bar consumers from filing class arbitrations. The few clauses without this provision were in smaller bank contracts.

• Consumers do not choose arbitration over class action settlements. At most, only a handful of individuals chose to file for arbitration over a class action.

• Consumers do not file arbitrations for smalldollar disputes. Almost no consumers filed arbitrations about disputes under $1,000.

• Few consumers file small claims court actions. A number of arbitration clauses allow a consumer, and sometimes the company, to use small claims courts rather than arbitration for dispute resolution. In credit card disputes, not many consumers initiate small claims court cases.

Rather, the analysis shows that small claims court cases are much more likely to be brought by banks than by consumers.

The field hearing followed the same drill as in prior CFPB field hearings. Director Cordray read from his prepared remarks which were posted online late the night before; the consumer activists brought out their horror stories-one of which included the story of a DealerBusinessJournal.com

Buy Here-Pay Here From page 8 digest the first one. You have to look at reports, see what is available and see the integration for yourself. This is the most critical point in the relationship where it’s time to make a commitment.

CONFUSED ABOUT

COMPLIANCE?

to include other financial product markets, such as automotive finance products. Finally, the CFPB will look at whether consumers are are the factors when deciding clause, and blasted “forced” aware of the terms of arbitration Fear of Changewhich they say strips whether to use an arbitration arbitration Being afraidofoftheir change is a good thing when considering clauses and whether arbitration provision?changing By far though, the consumers fundamental your DMStosolution. single will havewere the highlight clauses influence their decisions public comments right a trial, Every the right toperson a juryin your organization to start back at zero. Everything will be different. Speed and efficiency C O M P financial theoffield hearing as the public LIANabout right to joinand with CE Awhich UDITconsumer willand dropthe in the short-run youother may have to do of a lot double-entry : products to purchase. Stay tuned as “hijacked” hearing.

There were consumers a class action to its hold to ensure that theindata is maintaining integrity and the new the DMS is ... CFPB didn’t provide a timeline working as advertised.

AccountingThe integration won’t the comments same, etc. on the actualuptciesthe verybefew corporations accountable. r k n Knowing all of this means youurged shouldthe not make arbitration this sort of decision Ba more for the next round of itsistudy. report, and many industry representatives ns... cavalierly: it is a big deal to change systems and you need to make sure gulat o e R comments on the evils of payday CFPB to focus the arbitration study . that the new features are worth the price. ...Licensing.. lenders and title lenders in the state on what is best for a consumer, Eric L. Johnson is a partner withrms... of Texas; calling them rats, snakes fromPlans the relative speed and low Growth ...F o Hudson Cook, LLP in Oklahoma Doesofyour DMS have functionality mind?

Are they en- evil. just downright costs arbitration vs.new those found in and hancing reporting,Some integration analysis? Your DMS to be in phase of its study, City. He practices automotive finance Inneeds the second in litigation. of theorCFPB’s a position to grow with you.

Do you want an innovator and industry law, banking and consumer financial the CFPB plans to spend more time questions to the consumer activists leader (read more expensive here) or are you satisfied with a follower services law. This article is provided analyzing and considering class were very runs interesting: As and I saidindustry before, our business on data. How that data is captured, for information purposes and is not actions.

It willyour look at the types of (i) Are there products or markets interpreted, utilized and analyzed is absolutely critical to growing intended nor should it be taken as legal business maintaining competitive is the most casesThis brought by public and private whereand arbitration isyour helpful?; (ii) advantage.

Debra Dawn • 800.966.8733 • debra@leedomgroup.com • leedomgroup.com critical system you will make in your business. advice. actors. It may also expand its study Are there markets where arbitration deployed servicemember who was

is troublesome?; (iii) What are

Training the costs and benefits to using foreclosed on and not able to litigate Will your provider send people to you to install and train? How arbitration clauses?; and (iv) What the dispute because of an arbitration much support is included?

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January 2014 DEALER BUSINESS JOURNAL | 15

LEADERSHIP & TRAINING

Learn to Lead

By Dave Anderson

Vital Rules of Vision, Strategy and Tactics

W

ith the New Year underway, many dealerships are rolling out their 2014 vision to their teams. Vision unifies, unites and excites a workplace; it gives people a greater sense of purpose and can transform jobs into campaigns and causes. But while vision is important, the strategy and its execution is where the money’s at.

In fact, vision without strategy and execution is hallucination. To add perspective to key aspects of vision, strategy and tactics, I’m listing a number of basic principles in this regard; essential tenets I have shared with attendees for the past dozen years at my annual, year-end Strategy Summit workshop: 1. Vision is “where,” strategy is “what,” tactics are “how.” Vision defines where you’re going; strategy defines what you’ll do to get there; tactics determine how you’ll implement the strategy.

2. A great dream with the wrong team is a nightmare.

Without the right people, in the right places, who consistently do the right things, your vision isn’t going to happen. In fact, if you’re at a point where your dream is bigger than your team you must either give up the dream or grow up the team; get people better or get better people.

3. Vision must start with the leadership of an organization. The leader’s job is to see farther,

16 | DEALER BUSINESS JOURNAL January 2014

4.

5.

6.

7.

8.

sooner and more than his or her people. While you can delegate many things for your organization, vision isn’t one of them.

Your vision objectives should require a stretch.

If a vision is either too high or too low, people will mentally check out of it. Thus, it must hit the “sweet spot.” The sweet spot is that point where you believe in your heart it can be reached, but you know you won’t get there with a business as usual approach.

An effective vision requires: change, risk, decisions to be made, discretionary effort and an exodus from comfort zones.

Vision must be communicated constantly to be credible. Without continual updates, reviews, celebrations of achievements and visibility, vision is reduced to the latest management whim or flavor-ofthe-month.

Your culture must align with and support vision. If you don’t have the right foundation of values, standards, competencies and right people within your culture your vision will fail. Culture is your foundation; no builder or leader can erect a significant structure on a foundation filled with cracks or holes, or that has been built on sand.

Strategy must be simple. If you can’t articulate it, you sure can’t execute it. Vince Lombardi spoke well when he declared, “It’s hard to be aggressive when you’re confused.”

Strategies must be flexible: Lock like a laser on your vision, but don’t become attached to how you get there. Stay focused without losing flexibility. Don’t fall in love with your plan! Napoleon was right when he famously observed that no battle plan survives first contact with the enemy.

9.

Strategies should play to your strengths. They should build on and leverage your corporate core competencies, and create greater differentiation between you and your competitors.

10.

Strategies should attack centers of gravity; high leverage targets. The common tendency is to do what’s easy, what won’t be resisted, DealerBusinessJournal.com

looking for a

what’s cheap, pleasant or popular; what’s essential is that you do what matters.

11. Strategies should attack multiple centers of gravity simultaneously. This counterintuitive approach ensures that the status quo is adequately affected and less likely to reestablish itself and reverse your progress because you didn’t go far enough, fast enough to anchor change in your culture.

12. Strategies must be implemented at an acceptable of velocity. As multiple actions are leveraged chased arate vehicle. against to high leverage targets, reduce the duration of In addition ramping up its marketing, TrueCar is now looking at a related though as yet relatively untapped market — independent effort. dealers.

Potter said always win had wars. the ability to provide 13. Tactics winTrueCar battles, has strategies Consider this service to independent dealers, but now the company is gearing this contrast; tactic, whereasdealer a up. It purchased a newSpiffs boothare forathe independent trade show comprehensive process is strategic.

Tactics circuit and was a sponsorhiring at the June National Independent AutomolikeAssociation increasing spiffs can generate quick, short- term bile Dealer Convention and Exposition.

“The total loss have you fits in wellon with used veresults, but product may alsowetempt tovery depend them hicles since the average total loss unit runs between $8,000 and too heavily when attempting to increase future $12,000,” Potter noted. “Independents typically have the lower-cost performance.

A long termvehicles.” strategy would be to units that fit well with replacement develop an effective recruiting and hiring process and Because TrueCar can easily work with franchise dealerships’ bring people on board you don’tworks need tobest continually DMS systems, the pay-per-deal model in the states where it’s allowed. among DMS systems among inbribe to do Fragmentation their jobs. dependent dealers requires a subscription-based model.

Pricing can 14. Consistency is a key to effective tactical execution. range from $299 to $2,500 a month depending on the volume of incannot hope to reach your vision by doing what’s ventoryYou at the dealership. and effective occasionally, on theovercrowded,” good “Atright the NIADA show only our booth was literally days,“Dealers or only know when about you feel It’s the consistency Potter said. us, like and it. were excited to learn we had a product available them.

We will to roll in execution thatforwill separate thecontinue good from the out our productgreat line toinindependents at various events across the country.” any endeavor.

The company is also testing and getting ready to roll out na15. Beware of tactical struggles. Doing more of theto dealer tionally a private-party to private-party and private-party same thing harder, longer and faster and not getting vehicle purchase program. The idea came about from the military a different result locked in to a tactical members in their affi nityindicates portfolio you’re who often have move from base to base or getindeployed They much like the idea struggle; this caseoverseas. you must stepvery back, reevaluate of beingyour able plan, to put and theirchange vehicleyour on thestrategy. site and sell it quickly, easily and get a fair price, Potter said.

“Would-be Closing sellers thought: bold vision will about flush out those reareaasked to answer 50 questions on your team who’ve just “Was been the along for the ride. In garding the vehicle,” he said. vehicle smoked in?fact, Are the whenever you set winners will love itand anddealers headlamps fogged?

Wethe askbar forhigh a Carfax or AutoCheck andlosers other will private individuals vehicle.”leaders leave it; eithercan waypurchase you win.the Effective It’s done in an online auction-like setting andpeople another resolve not to waste their energy smacking in member the of their credit union or other affinity partner can purchase the veheads with bats and dragging them around the bases. hicle or a used car manager can buy it.”

The program has run for three months in a beta test and several hundred vehicles were sold. Potter said the program will roll out nationally Dave soon.

Anderson is president of LearnToLead. He is an “We don’t like to even use thegiving phrase ‘lead-generation’ about international author and speaker, 1,000 leadership ourpresentations service,” Potter said.

“We prefer the term ‘introduction.’

It does over the past decade in 14 countries. Call more accurately refl ect what we do.

We introduce the buyer to the 818.735.9503, e-mail dave@ learntolead.com, or visit www. seller and detail the parameters of the price of the vehicle they are learntolead.com.

Follow Dave Twitter of @DaveAnderson100. interest in. It’s worked well for on hundreds thousands of sales and

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Dealer Business September 2013 January 2014 DEALER BUSINESSJournal JOURNAL | 17 25

BUSINESS OPERATIONS

ReInsurance

By Tim Byrd

Lapsed Insurance Could Turn Into Your Profit

T

here’s another one to add to the stack of lapsed insurance notifications--another customer has decided that having insurance is not a priority.

Some you can’t blame. The premium is higher than their car payment.

You’ve hired a full-time person just to make those calls every day, and why?

To cover your butt, that’s why.

Because, if they total the car they can’t afford to pay for a car they no longer have, that’s why. Then you will lose them as a customer, not to mention the loss of the car itself. So, you call them up and say, “you agreed that you would keep insurance on this car.

If you don’t have your insurance reinstated right away we are going to have to repossess your vehicle.”

But wait, if they are paying you like clockwork, do you just overlook the fact that their insurance has lapsed? After all, payments are the lifeblood of your Buy Here Pay Here business. The dilemma is that you need them to keep paying, but your collateral is unprotected. So, you pay someone to call them and threaten to repo their car if they don’t go spend money with someone else for an insurance policy (yeah, this is logical). OR you take a chance.

You let them ride, unprotected. You, by the way, are the unprotected one.

The problem begins

when the customer allows their coverage to lapse, therefore putting into jeopardy the dealer or finance company’s collateral. Industry research indicates that 50% of most BHPH books of business, are uninsured. Customers put an average of $300 into insurance policies that they let lapse within 90 days, essentially throwing away that money. Many dealers have personnel on their own payroll exclusively for the purpose of making collection calls for the financial benefit of insurance

You require that your collateral be covered and you make collection calls on it, shouldn’t you be the one to profit from it?

18 | DEALER BUSINESS JOURNAL January 2014

companies! Seriously?

Have you wondered if there isn’t there a better way? What if you made a deal with your customers?

“You pay a little extra each pay period to me, in return, if you total your car or it’s stolen and not recovered, I will forgive your debt to me.”

That is the definition of Debt Cancellation Coverage (DCC). You collect the premium with each car payment. You can make it a part of their monthly payment to you or as a side note. Debt Cancellation Coverage is a solution to relieve the lapsed insurance problem and turn what once was an expensive, neverending problem into a tremendous profit center. By capturing the money the customer would be spending with the insurance company and ceding it to your dealer-owned reinsurance company, you are the one that profits.

So, you profit from money that you had required the customer spend with someone else. DCC alleviates the need for you to require full coverage insurance.

DCC puts you in control when there are claims. Instead of dealing with the insurance adjusters, you have a professional claims team looking out for your best interest, nationwide. DCC dealers avoid having unprotected collateral on the road and having to absorb uninsured losses. Plus, DCC makes it simple for you to enroll right away at the time of sale, both your current customer base as well as your new customers.

You require that your DealerBusinessJournal.com

DealerCentric Unveils ID Scanner Technology

DealerCentric Solutions, the consumer finance management system innovator, today launched ID Drive, a patent-pending collateral be covered and sinceID youscanner technology that gives dealerships the most require it, and you make collection powerful protection against fake IDs and idenit, doesn’t it make sense that titycalls thefton imaginable. you To clarify, this and ID profit theft isfrom now it? a national epidemic, more criminals are insurance. using fake IDs to State test-drive, is not liability The andrequires even buy, cars. in partnership they getDeveloped liability, but that is with AssureTec Technologies, an ID authenticano longer your burden. tion technology firm, ID Drive is the first soluvery important tion thatAnother gives dealerships the same, state-of-the to used owning a Dealer-owned artbenefit protection

by Homeland Security and thereinsurance U.S. military. company is its tax With oneI scan at IDaDrive, of combenefits. am not CPA, dozens but I know plex tests for thousands of ID types are automatsome good ones and they tell me ically performed, leading to instant validation or layman reinsurance redinflags going terms up. Butthat the dealer benefits don’t companies are small property stop there: with that one swipe, a customer’s information is put into serious action: it’s extractand causality companies.

“Small ed,property purified and can be pushed andenhanced, casualtyand insurance into a dealer’s CRM and finance systems. companies with less than $1,200,000 The customer, the vehicle, any pre-existing inorannual net data, premiums may lead credit app the sales andelect F& I deto be taxed only management on investment partments, and sales are all electronically and able Revenue to communicate. incomeconnected under Internal So,Code when 831 that (b). test-driver returns, the right deal ” Distributions structure can already be in place, shrinking

time-to-close by hours. data is present on a card, not that it’s valid. And “The ID thieves hitting dealerships today dealers are forced to make time-consuming calls are taxed super-sophisticated and sorate. is their technol-way, to Your organizations the DMV to verify idenVehiclelike Service Contracts are at the dividend ogy. But dealer ID verification processes aren’t”andtities, but most cars are bought on weekends Warranty reserves can be ceded These corporations, unlike S said Pete MacInnis, CEO of DealerCentric. when these organizations are closed. It’s bethe same Dealer Reinsurance corporations or Limited Liability barcode-intocoming “With all that endless photocopying, an increasingly expensive, scary probTrust Account.

Corporations (LLC) where income scanning and verification calling, they have re- lem: some lenders are now requiring dealers to mainedthrough in the Dark powerless against this buy back ID-theft-related Collecting premium,deals. contingent flows to Ages, the shareholders costly problem. IDliability,IDtaxes, Drive’s Extreme Technology: fast-growing accounting, claims, ID Drive annually, areand C incredibly corporations.

Drive may be small and sit on a desk, but it’s thetraining was created through an exclusive auto retailand know how. Like Internal Revenue Code 831(b) most potent anti-fraud and test-drive security ing partnership with AssureTec Technologies, anything else, is a RIGHT solution way chopermits C corporations to allow solution ever invented for dealerships.” which is thethere ID authentication the shareholder a more long-term National & Dealership Epidemic: ID theftto do senthings. by the Department of Homeland Security, is an American According approach.

If aepidemic. distribution is notto the FBI, the Department of State, the NYPD and DMVs it has overtaken the drug trade as the most cost- nationwide. ID Drive incorporates the world’s desirable, you can retain the money ly U.S. crime. According to an Open SecurityTimmost powerful ID-scanning hardware and softByrd is Founder and President in your reinsurance company, Foundation report in 2013, more than 267 mil- ware and customizes it for auto retailers, so they & Associates, Inc., or or yourrecords otherwere business lionyou consumer exposed, and a re-of Tim haveByrd the extreme technology they need to fight DealerRE is a managing agency entities borrow fromID wound back against the fake ID wave. cord, 60 may million piecesmoney of personal up in reinsurance the hands of company. identity thieves, DealerCentric we’re onAna mission to in Gloucester, Virginia. your Theselast year.located “At And more dealerships are reporting innovate solutions thaton will make the test-driveIndustry Expert Dealer types of corporations make greatthat moreAuto fraudsters are presenting impeccable-lookingOwned to-sales-to-financing process radically more efReinsurance Companies, retirement programs. Earned (fake) IDs for test-drives, and then driving off… ficient for both dealers and their customers,” Operations F&I reserve be invested in stocks, or even can successfully purchasing vehicles withBHPH MacInnis said. “IDand Drive is a key component in Development.

A 25+ be year bonds them. or other securities within what will ultimately the veteran first end-to-end dealThe government requires ership thatTim bridges gap between the carsolution business, is athe trusted the Trust account. They alsodealers make to takeof the steps to flag identity fraud.

But dealerships use auto sales and financing processes, at the pint advisor to many car dealers. a great estate planning tool. By the barcode scanners, which can only verify that of sale.”

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January 2014 DEALER BUSINESS JOURNAL | 19

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January 2014 DEALER BUSINESS JOURNAL | 21

BUSINESS OPERATIONS

Investment Return

By Jeff Karg

Is your GPS Device an Asset or an Expense?

I

nvestment or expense. Asset versus liability. These fundamental concepts of finance can be applied to a lender using or looking to use GPS technology for their asset tracking and management needs. Anyone in the Buy Here Pay Here or greater subprime automotive financing industry is likely familiar with GPS technology used to track vehicle assets. With dozens of providers of GPS devices in the industry, it can be difficult to discern between them. One way you can evaluate your device provider is by asking: Is my GPS solution an

you get the vehicle back, the device expense is worth it, but if one link in the chain fails, you might be losing money. But if you save enough money by getting the vehicle back, the expense is justified, right?

There is a better way; a solution on the market that can be thought of as an investment, not an expense. Using Automated Collection Technology in addition to your GPS might be the investment in your company that you need.

GPS functionality combined with Automated Collection Technology (ACT) allows lenders to facilitate regular and on time payments GPS functionality combined with from their Automated Collection Technology customers.

The (ACT) allows lenders to facilitate regular and on time payments from difference in the investment their customers. versus the expense can be measured in investment or an expense? terms of the Return On Investment If you are buying a basic GPS (ROI). An investment should device, you will likely need to chalk give you a return, and that’s what it up in the expense column. You products with ACT are designed pay a hundred or two hundred to do. The difference between a dollars for a device, and perhaps a solution with Automated Collection small monthly or yearly service fee Technology and one with simply to keep the device on its network.

GPS is that ACT is designed to You install it in the vehicle and keep a customer in their vehicle, then‌ you wait. You wait to see making regular payments and if your customer defaults on their staying current. Through the loan. You wait to see if the device use of this technology, customer is still operating correctly. You wait communication is improved while to see if you can get a location on helping reduce delinquent payments. the vehicle in which case you can Securing up even one extra payment attempt to repossess it. If you are from each customer than you using this practice, you are likely would have without the help of this looking at your GPS device as an technology will typically pay for the expense. If your customer defaults, device with even a little left over. and your device works properly, and Bringing in a second extra payment

22 | DEALER BUSINESS JOURNAL January 2014

or more can provide you a return on your investment and differentiate your solution from the various other GPS devices on the market. The ability to bring in extra payments per loan (than you would without a device) makes your GPS solution an investment that can provide you a return on that investment.

In addition to and in conjunction with helping to reduce delinquent payments thereby increasing payments, Automated Collection Technology can help making your collection process more efficient. Using Automated Collection Technology is a way to help improve your collection process. Studies, such as the National Association of Buy HerePay Here Dealers (NABD) Best Practices Study show that the use of devices can enhance the collections process for lenders and can help collectors manage a larger portfolio per collector.

So, is your GPS device an investment or an expense? Are you buying an asset or a liability? If you are using just a GPS device you may have chalked it up as an expense, the cost of doing business. Investing in a total solution as opposed to simply a GPS device can bring you a return on your investment by helping decrease your delinquent or late payments and improving your collection process.

Jeff Karg is the director of corporate communication for PassTime. Reach him for more information by email at jkarg@passtimeusa.com or by phone at 877-PASSTIME. DealerBusinessJournal.com

...Your Success Is Our Business

January 2014 DEALER BUSINESS JOURNAL | 23

BUSINESS OPERATIONS

Business Basics

By Greg Wells

The Eight Cylinders of a Business Development Center: Fine Tuning for High Performance

P

rofitable automotive business development centers are fine tuned in eight key elements, or cylinders.

Cylinders in the sense that each element works in tandem with the other seven.

Without this calibration any BDC will underperform or fail. Success lies in your ability to hit on all eight cylinders.

Like a V8 engine, there are many moving parts to a fully blended call center, or BDC. Use the eight cylinders to guide you to a fine tuned and profitable business development center.

Customer Experience. The development of a unique and compelling value proposition is critical to BDC success. Since customers actually visit very few dealerships, they are obviously making decisions based on their online experience and interaction over the phone, in live chat and through email.

Customers primarily choose which dealership they visit based on price, quality of interaction and reputation.

However, most customers will give you an opportunity to make a sale if you do just two things: Be transparent in your pricing. It may surprise you that most customers are agreeable to an appointment when they know your pricing tools are the same ones they use. This is not a gross killer. Business development center grosses are at or above showroom average.

Make buying the car quick and easy. Customers don’t want to be in your store for hours and hours. As a matter of fact, the longer a customer sits in your showroom the less they like you.

The more prepared you are for a BDC appointment the higher the close rates will be. An accelerated process will make your customers want to do business with you and then Yelp about it!

Structure, is about your people. Their roles, compensation plans and performance standards; all of which are designed to deliver the customer experience with excellence.

Staffing is your biggest BDC expense and you have to get it right. If you’re just starting a BDC, build it in phases.

24 | DEALER BUSINESS JOURNAL January 2014

Start with phone and Internet, then add outbound processes and finally service. You don’t have to go in that order necessarily, many BDC’s started out with service; just don’t try to do it all at once.

Culture may seem intangible or hard to define, but simply put, it’s more the way you do things than what you do. Culture isn’t really created. Culture is what creates you. It defines your sincerity in delivering an excellent customer experience. With great enthusiasm and skill, culture separates the average from the truly great dealerships.

Going through the motions without enthusiasm, passion and expertise just doesn’t facilitate the best results.

Process is the execution of your customer experience. A BDC is a chasm of processes but seven distinctive processes drive revenue, loyalty, CSI and a healthy ROI for your BDC. 1. Showroom 2. Sold Follow Up 3. Internet 4. Phone 5. Database Marketing 6. Prospecting 7. Service Overarching processes include CRM integration, data collection and the appointment process.

Marketing with a BDC in place should drive customers to your website or websites. A well configured website with a compelling value proposition is the pathway to the showroom.

Most dealerships get plenty of traffic to their website.

Branding your value proposition and the right conversion tools give your BDC the high quality leads they need for great close rates and a low cost per sale. Without this strategy, all your BDC reps have to leverage is price. If it’s only about price, the cheapest dealer is going to win.

Technology makes your BDC more effective and efficient. The most important technology is the CRM. Calibrating your CRM for the correct task creation and accurate reporting is essential to a BDC’s efficiency.

Technology also drives website conversion. Live chat, interactive credit application tools, credit estimators, DealerBusinessJournal.com

T L payment calculators and trade-in value tools boost conversion and add to the quality of the leads the BDC is managing.

Metrics are the key to performance standards for employees and vendors, or lead providers. Maybe the simplest and most important metric is the BDC’s conversion of leads to showroom visitors. The benchmark should be around 25 percent as long as you have a healthy lead mix with at least half of your leads coming from your website or VIN specific leads from inventory listing sites.

Training is a big challenge but certainly as important as all the other cylinders. You must train to retain your reps and realize continuous improvement. Your showroom and service personnel need training as much as your BDC reps.

At AllCall, we train daily for ten minutes on a specific tactic or process and then monitor that focus point all day. This way, training is constant and improvement comes daily.

So you see, a highly effective and profitable BDC can be tuned for high performance. Just like an engine, a BDC needs to fire on all eight cylinders to run like the well oiled machine you need to see great results.

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Greg Wells is the President at AllCall Automotive Contact Center. A US based outsource BDC serving dealers in the US and Canada. Greg is a popular industry expert on BDC’s, Internet Sales and Digital Marketing.

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January 2014 DEALER BUSINESS JOURNAL | 25 Dealer Business Journal September 2013

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BUSINESS OPERATIONS

Skip Trace

By Alex Price

Don’t Wear the Wrong Hat

H

ow many hats do you wear each day? Are you focused for the hunt? Before beginning work on any skip we must clear our heads of all of the daily distractions. Each of us wear many hats during our everyday lives. We are mothers, fathers, husbands, wives, business owners, managers, accounting experts, mechanics, conflict resolution experts, and the list goes on... Skiptracing is the one job where we must stay totally focused on the task at hand. You see, you are hunting the most elusive creature on the planet: MAN. Your prey has the ability to reason and think, so your hunt requires the kind of focus that a professional brings to the game. (To understand more on how to apply the different hats wear may I suggest each of you read “Six Thinking Hats”

by Dr. Edward de Bono this book will help you get on the right path.)

Many years ago I developed a simple exercise that will help you clear your head of any distractions and free the mind to focus on this task that we call skip-tracing.

Ask yourself these three simple questions: 1. What would you do?

2. Where would you go?

3. With whom would you stay in contact?

I do not believe there is a skip that cannot be found. In my adult life I have only seen or heard of one true skip, and that was a gentleman by the name of D.B. Cooper who in 1971 hijacked a Boeing 727, ransomed $200,000, and at 10,000 feet above the wilderness of Oregon,

jumped from the airliner that was travelling at 200mph—never to be seen again. Now that was a skip!

Humans are social creatures, so we all keep in contact with someone from our inner circle.

Take the famous case of Unabomber Ted Kaczynski; he eluded capture for more than 20 years, living as a hermit with no power, water or cable, yet he couldn’t resist the pull of his inner circle of contacts (review Question 3 above.) Once a month he traveled to town to purchase supplies and mailed letters to his mother and brother, who subsequently noticed the similarity in the writing style of the Unabomber. They notified federal authorities, leading to Kaczynski’s capture and conviction.

We are all creatures of habit and, statistically, we each will react in the same manner under the same circumstances.

What I am asking you to do is place yourself in the shoes of your debtor and use your God-given gifts of instinct and imagination.

If you will do this, you will find you are correct more often than not.

We must continue to strive to broaden our net in skip-tracing, by talking to more people who know or may know our

26 | DEALER BUSINESS JOURNAL January 2014

subject until we find that one party that has the info that we need to capture our prey.

Until Next Time… be blessed, be safe and happy hunting!

Alex Price is a nationally-recognized expert on the Art of Skip Tracing.

Currently he is the Executive Vice President for MasterFiles and author of Skip Tracers National Certification Program, The Florida Records Guide, The Military Installations Guide and blogger with over 25+ years of experience in skiptracing, collections and public speaking.

Contact alex.price@masterfiles.com or call (972) 735-2353 for more information.

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SALES & SERVICE

Customer Relations

By Kate Bullach

Individualized Communication is the Key to the Customer Kingdom

T

he saying “the customer is king” has been around for decades, but it takes on an even more urgent meaning in the context of the digital marketplace. Today’s customers have remarkable, unprecedented power to make informed purchasing decisions due to the abundance of online information about products, services and peer feedback. With research showing it costs six to seven times more to acquire a customer than to retain one, there is a strong business case for dealers to create customized experiences that make these customers feel like royalty, and ensure their loyalty.

Certainly, new customers are a vital factor in dealership success and growth, but loyal, longterm customers bring with them many unique business benefits in addition to lower acquisition costs: lower cost of sales, better revenue predictability and greater word-ofmouth referrals, to name a few. In other words, sustaining the loyalty of your customers may require fresh marketing approaches, but the effort is well worth it.

In my work helping dealers effectively communicate with

customers, one truth rises to the top time and again: customer loyalty is driven by customer satisfaction.

Because of the immense purchasing power of today’s customer, shoppers have a growing expectation to receive tailored, personalized communications with the businesses they spend their money with. And smart dealerships are meeting those expectations through marketing strategies that make each customer feel like he or she is the only one.

FordDirect research revealed that while 60 percent of consumers are always or most of the time loyal to one brand, messaging and content can make a difference to attract the remaining 40 percent. This same study showed that the younger a customer is, the less satisfied he or she is with the overall sale experience at the dealership. At the intersection of these findings is a need to communicate with current customers, especially Millennials whose spending power is increasing, and is now at a total of $170 billion per year.

If customers are king, and an increasing number of them are making their decisions about

dealerships and vehicles online, then the digital marketplace is their kingdom. The key to entering this kingdom is humanizing your dealership and focusing more on driving relationships than transactions. Social and digital channels are particularly well suited for interactive, genuine customer engagement and as a result can be strong loyalty builders when used in ways like the following: Relate to them locally. You already share something very important in common with your local customers – the community.

Tell stories that express how important the local community is, and you’ll automatically connect with customers. For example, use your website to communicate your business history in the area, and leverage digital channels to showcase local philanthropic efforts of the dealership.

Manage your reputation.

Dealership reviews have an impact on a consumer’s choice of dealership.

And even if there is online feedback that’s less-than-positive, the way you respond can still improve your reputation: FordDirect research Continued on Page 35

32 | DEALER BUSINESS JOURNAL January 2014

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January 2014 DEALER BUSINESS JOURNAL | 33

SALES & SERVICE

Web Strategy

By Monique Seifullin

Find the Right Product for Your Dealer Website

A

dealer website is your dealership’s online showroom and with the growing number of customers searching vehicles online before going in-person to a dealership, it’s critical to get that online visitor to your site and then

systems or tools that support adding metadata and copy and supporting ongoing updates to pages are a great choice.

Once the visitor has come to your site, it needs to create a great first impression. This includes eyecatching website template designs/ colors and components like largeimage slideshows and featured vehicles sections. Look for a dealer website product that gives you template and color options that you can “test drive” to see what works with your The marketplace is very visitors and a product competitive. You do not have that supports highto spend a lot of money to get a visibility content areas on the homepage so great dealer website. you can catch your visitors’ attention to your dealership. So what are and draw them into your vehicle the must haves in a dealer website inventory. product? What is the right product for your dealership? Your dealer Engage website needs to attract, engage, To keep visitors on your website, and connect with your online you need to make sure your website visitors and provide performance is engaging. Select a dealer website measurement. product that is easy to use and allows the customer to search vehicles by a Attract variety of relevant parameters: make, Attractiveness of a website includes model, price, and year and then click both getting customers to your to inventory detail pages to learn website as well as attracting their more and see additional pictures. It attention upon arrival. For your is best to choose a dealer website that dealer website to get customer supports a large volume or unlimited traffic it needs to be optimized vehicle pictures to maximize your for search engines. This includes showroom’s visual impact. using appropriate search engine optimization (SEO) meta tag Connect descriptions and keywords in the Now that you have an engaged source code of the webpages as well visitor looking through your as using relevant keywords in the vehicles, you need to make sure your page copy. Dealer website products dealer website effectively connects that provide content management them to you. The dealer website

34 | DEALER BUSINESS JOURNAL January 2014

should have dealership contact information including phone, email and physical address on every page in the header section of the page, so it is always readily available.

Besides general contact information, a dealer website can provide connectivity through lead generation and interest capture, including online credit application, request for information, or schedule a test drive forms. All provide the opportunity for a customer to connect with you as well as a valuable and actionable lead. Make sure your website product supports the connectivity options you want.

Finally, don’t forget social media.

Including social media channels on your dealer website can keep you connected to customers and provide potential viral and referral networking. Make sure your dealer website product supports the social media channels your dealership uses like Facebook, Twitter, LinkedIn, Google+, and You Tube and be sure to use them frequently so the information is always relevant and up to date.

Measure In order to tell if your dealer website is performing, you need to be able to measure it. Statistics such as total and unique visitors and page views of different site sections like inventory, featured vehicles, and information request pages will tell you how many people are coming to your site and what they’re looking at while there. You can use this information to better understand your customers’ areas of interest.

Most dealer website products DealerBusinessJournal.com

provide analytics. The most common forms are either a custom dashboard or integration with Google Analytics. With the dashboard option, high-level metrics relevant to your selected template are provided in table or graphic format. With the Google Analytics option, you’ll need to sign up for a free Google Analytics account and use a Google tracking code available in the account to tie into the website.

With Google Analytics you’ll be able to see more detailed information like the users’ path through your site (entry and exit pages), time spent on site, and a variety of other

demographic information. What type of analytics is best for you depends on your desired level of analytical detail.

There are many different dealer website products on the market.

Do your research to make sure you identify products that will attract visitors with SEO and captivating, testable template designs, engage and connect them to you with easyto-use functionality and contact methods and provide you with a comfortable level of measurement capability. Once you have a short list of products that meet your needs, you’ll be able to price shop

and identify the best value for your money. The marketplace is very competitive, and you don’t have to pay a lot of money to get a great dealer website.

Monique Seifullin is VP Corporate Marketing & e-Commerce for Nowcom Corp. Nowcom’s DealerCenter DMS provides robust functionality, connectivity to over 1,000 finance sources, and Dealer Website, BHPH, and Online Ad Post add-ons. For more information visit www.dealercenter.net or call 888-6692669.

FORECASTING AND BUDGETING continued from Page 6

finds that 59 percent of auto shoppers feel more positive about a dealer who responds to negative comments.

Build relationships in, and out, of the showroom. In a recent study conducted by FordDirect, we found that a dealer’s website was one of the top reasons consumers selected a dealer, and good website content can help keep their dollars with your business in the future.

Make sure you review website traffic patterns to understand what most appeals to customers, especially pages on new and pre-owned inventory and current specials. Also, a major driver of customer online activity is convenience, so cater to that customer need with features like trade-in appraisal tools, credit estimators and online appointment schedulers.

Get personal, get social.

Whether it’s Facebook, Twitter, ...Your Success Is Our Business

YouTube or Instagram, social channels offer dealerships a chance to showcase content and engage in a way that appeals to the current customer. Simply offering the customer a forum for sharing feedback indicates that your business cares about its customers, which can encourage loyalty. Current customer promotions, available exclusively online, are another way to keep them satisfied. And one of the many great things about social media is that it also lends itself to measuring customer sentiments, as well as the effectiveness of your loyalty marketing activities. For example, social channels are a natural opportunity to pulse check customer satisfaction. Simply ask “How are we doing?” or poll your social network as a focus group for new dealer services.

A king is one in a million and so is every one of your current

customers. Online channels offer may interactive, personal and powerful ways to form genuine relationships with your customers and keep turning those relationships into sales for years to come.

Kate Bullach is Vice President of Marketing and Communications and a member of the leadership team at FordDirect. Bullach brings more than 15 years of experience to the position and is responsible for marketing communications, public relations and marketing. Before joining FordDirect in 2002, Bullach served as Account Executive for John Bailey & Associates (now Lambert, Edwards and Associates). Bullach earned a Bachelor of Science degree from Eastern Michigan University and a Master of Science in Administration degree from Central Michigan.

January 2014 DEALER BUSINESS JOURNAL | 35

SALES & SERVICE

Female Perspective

By Cherie Watters

Marketing Strategies that Work with Women

W

ant to attract more women to your business? Consider this: women influence more than 80 percent of purchase decisions made in households today. Based on current research, that number is only going to increase. Can you afford to overlook these statistics? If you’re smart, you realize you need to attract women to your business.

So now what, where to start? What can you do to attract more women to your business? Well, look no further then your own backyard.

There are some very effective ways to reach women in your community

I used to offer the local women’s business council my employee lunch room once a month for meetings.

This made everyone happy; the group had a place to hold their meetings, and we had people that may not have ordinarily visited our establishment or even heard of us before coming to our place of business for the meeting. Just by word of mouth this increased our exposure in the community and brought more women to our location to do business. Women like to talk about their experience and if they find something good or feel well-treated they Women influence more than are likely to share that with their friends and 80 percent of purchase decisions made in households colleagues.

I also recommend today. Based on current reaching out to the research, that number is only local area high school.

It’s a great place to find going to increase. opportunities to reach without breaking the budget. If women, particularly the moms that you are willing to put in the time, are working with the students at the there are some great local marketing high school events. I have found this strategies that work effectively with to be a great way to gain exposure women. especially with the women who One of the first suggestions we know drive the family business I will make is to contact your decisions. I have offered my location Chamber of Commerce which is as a place for the High School to a great resource for a lot of free hold fundraisers or worked with the information about local businesses PTA to sponsor an event. It is easy and potential customers. Find to sponsor a breakfast event or give out what women’s groups are in out t-shirts or other inexpensive your area; see if any of the groups small gifts that help bring attention might benefit from your services to your business. Notepads with or products; reach out to them your company’s name and logo or with a telephone call or email. folders the kids carry around all day Depending on the type of group and then take them home provide you are soliciting, you might offer great exposure. Donate some of your location as a place to host these items to benefit the school and meetings or offer special discounts the students. The items do not have to members of the group. to be expensive however the “free

36 | DEALER BUSINESS JOURNAL January 2014

stuff ” goes a long way with Moms.

When it comes to their children’s education, any resources that help them achieve their goals will make a positive impression. I once became Principal for a Day at a local high school and I have to admit it was a very enlightening experience. More importantly, it really brought a lot of awareness of our business among the teachers at the school as well as the parents involved with the program.

It was a win-win experience all the way around. I felt great about what I was able to learn as well as contribute and the school benefited from my time I gave to them.

Another great group to reach out to is the Girl Scouts of America.

The Girl Scouts offer many classes and programs to their members; perhaps your business has something to share. Maybe there is a merit badge they can earn from you.

One example is a car care badge; your repair shop could offer classes that help the girls get their car care badge. Another great way to attract women to your business and benefit the Girl Scouts!

Unless you live under a rock, you know that Social Media is a must especially in today’s marketplace. This is a great way to reach women and you can localize your social media efforts. Three times as many women are likely to use social media then men as a viable resource. Make sure your business has some kind of local social media presence. Pictures are great and easy as long as they are nice pictures. Examples would be pictures of what makes your place inviting. If you have a nice customer waiting area, post it on DealerBusinessJournal.com

When it Comes to GPS: Disclose, Disclose, Disclose!

of installation. These documents provide information about the devices,

By Jeff Karg how they operate and what responsibilities the customer has in relation Passtime USA In today’s technology driven world, using GPS to track assets and to the devices. payments One of the however it does require more of your Facebook and you’ll “likes”.

Additionally, a benefit of disclosure is the psychological aspect that Collection technology to get helpsome customers make their andmost as- important Market strategies I havea customer found who knows atime deviceand is installed on their vehicle. This sistTalk in vehicle is common practice in theLocal subprime finance and affects personal commitment. aboutrecovery your customer service is a powerful customerinknows BHPH space. on social media; it’s their has a GPS deis making sure people know who tool. When Theabenefits return canvehicle be very philosophy While improvements in the technology, lower prices, and additional vice that can determine their location and/or prevent them from driving if you are in your area. Every place rewarding and well worth the a great place to get a little more features have made utilizing technology for asset management and track- they do not stay current on their loan, they have good incentive to make youdisclose go, every person see, make investment. find thattool disapwith your clients.

It isthe a need to fully ingpersonal mainstream, it has also increased these sys- you payments.

If you don’tpersonal disclose the device, thisYou’ll psychological it a point to introduce pears. yourself. business will benefit Many and you place to consumer. connect with women, not tems to the TheItmethod ofyour disclosing is also important. device providsurprising Informing consumer of the device, how itis operates, andhow howmany it erspeople, offer written disclosure forms that about can be used. signed consent from will feel good yourAcommunity just market the to them.

If you belong will used by the lender, is essential to maintaining a good customer ex-are happy the consumer way to ensureBe that the and customer and especially women, to is the best involvement. sure postunderstands the tobeany charities or organizations, perience for the consumer and addressing compliance and liability conagrees with the use of a device. make that one-on-one connection. organizations you belong to on your social media is the best place to cerns for the lender.

A recent, independent survey study -addressed the issue of discloTalk, share, and let them know who website well; it’s importantindicated to letAnd everyone know.

Women like to if you are not disclosing, your argument against it is likely: ei- sure. Ninety-four percent of theasasurvey respondents that they you are.

Share at the place where let potential customers know that know who they are doing business ther the customer will object to the device and you will lose a sale or the use written disclosure forms from device providers. The use of disclolunch,Even or talksures to the store the customer customer tamper with the it ishave in vehicle. improves leads toofreferrals you areexperience a trustedand member the and repeat with sowill don’t be afraid todevice shine.if they knowyou thatGet being said, there two distinct reasons should be fully dis- bank. business.

Not “leaving your customers dark”you’ll can create clerk or teller at the Talk to community.

Try init;the I think find a better, personal; it’sare about creating a that you closing these devices to your customers: long-term customer if they are treated with respect and fully and say hello to the women you run even you can be successful withoutinformed of relationship that lasts. Tell them who 1. It’s a good business practice, and their obligations and the consequences if those obligations are not met. around business and hand youryou marketing andif you tell you are the andbest what company 2. It’s wayyour to lower your liability as ainto lender againstyour potenI know what you“killing” are thinking: will losebudget customers them a good old fashion business reach the thestudy women who can help not expensive tialrepresents. legal action It’s regarding the deviceand them about the device.still However, has found that customers rarecard.and/or That is still one oflythe most of You a GPS tracking Collection First takes off, disclosing object to the installation of the device whatsoever. Specifically, when your business grow! it just a little bitthe of use time.

Technology is aeasily good business practice. effective ways to get theresponders to the survey were asked if customers object to the installation word out. can find device out very how many One of the single best ways to succeed utilizing these devices is to of a device Be friendly and sincere; that goesasaa condition of their financing/leasing, 99 percent answered women Facebook users are in your disclose the device to the customer. Disclosing the device in a positive no or infrequently. Only 1 percent answered that their customers object to long with areasmore Watters is the president of area can use from that avenue for which way canand helpyou get “buy-in” the customer, canway reduce thewomen like- awho device a conditionCherie of financing. likely to be “relationship” buyers.

Sales and Marketing for AskPatty. an excellent opportunity to market lihood they will become delinquent. Many technology providers offer So, disclosing is a good business practice, and customers rarely Local Marketing written disclosure forms for lenders to have customers sign at the time is not difficult, com, Inc.; www.askpatty.com Turn to page 27 locally to women.

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