Dealer Business Journal May 2014

Today’s customer is tech-savvy and dependent on digital devices.

Forward-thinking dealers who are ready to use new strategies and techniques will be the ones to end up with the sale. Page 18

ALSO INSIDE: BHPH World equips dealers with first-class training.

Page 10

Does your dealership have an internet identity?

Page 34 ...Your Success Is Our Business

May 2014 DEALER BUSINESS JOURNAL | 1

Payments as a service.

It’s more than just transactions.

Products to revolutionize the way you take payments.

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877.527.5658

www.paymaxxpro.com DealerBusinessJournal.com

Contents Volume 11, Issue 3

IN EVERY ISSUE 4 CORNER OFFICE 6 BHPH Boot Camp 8 payment PROCESSING 36 INDUSTRY NEWS

h-savy r is tec devices. custome ital Today’s ndent on dig rs who are pe and de -thinking deale gies and ate end Forward use new str ones to to be the ready es will Page 20 techniqu le. h the sa up wit

May 2014

ALSO

:

INSIDE

rs s deale rld equip BHPH Wo lass training. t-c with firs Page 10 have an alership de r Does you ntity? ide internet Page 34

4 DEALER

May 201

L|1

S JOURNA

BUSINES

LEGAL & LEGISLATIVE

LEADERSHIP & TRAINING

BUSINESS OPERATIONS

Legal Opinion

Learn to Lead 16 Ten Tips to Retain Talent The most successful businesses are the ones that find, hire and keep good employees.

By Dave Anderson

Skip Tracing 28 Super Charge Your Search Engine Tips on how to get your internet searches to find the results you are looking for.

By Alex Price

Employee Relations 24 Going “One on One” With Your Team Leaders lead people, not manage them. Understand how your personal connection with staff can make the difference.

By Rick Resinger

Customer Communication 30 Five Keys to CRM Success in the Showroom Get the most out of your CRM with a few tweaks and suggestions.

By Greg Wells

12 No Insurance Coverage for Alleged Violations Sonic Automotive, Inc’s alleged intentional acts void its right to be insured and indemnified.

By Tom Hudson

General Counsel 14 Ten Steps to a (Hopefully) CFPB Approved Customer Complaint Procedure Do you have a plan in place to take and record customer complaints? Use these suggestions to make sure you are in compliance.

By Debra Dawn

FEATURE ARTICLE 18 Staying Ahead of the Curve Technology is changing and so are the customers. Your dealership needs to be prepared with solid strategies for the future. We are sharing five up-andcoming technological trends that can help. ...Your Success Is Our Business

ess ...Your Succ

ness Is Our Busi

BUSINESS OPERATIONS Business Basics 26 Flexible Spending Accounts In an always changing marketplace of health insurance, employee benefits and federal requirements, the flexible spending account is often overlooked, but has its advantages.

By Robert N. Parnas

ReInsurance 32 Being Brilliant in the Basics Equals Superior Service Let above average customer service set you apart from the rest of the pack.

By Tim Byrd

Online Strategy 34 Does Your Dealership Have an Internet Identity?

Updating and maintaining your contact information on the major search engines can help customers find you easier.

By Dani Sherrod

May 2014 DEALER BUSINESS JOURNAL | 3

LEEDOM GROUP

Corner Office An Event Like No Other

W

ow! I have just returned from the 20th Annual BHPH WORLD Convention in Las Vegas. It was truly an event like no other and it was great seeing so many of our readers at that event.

This event was truly an eye-opener and I heard more comments about the quality of content than ever. To our knowledge this was the first BHPH industry event to feature a CFPB-focused workshop and we were grateful to have Mr. Rick Hackett, the former deputy director, lead the session. It was standing room only and he truly shared insights that helped dealers understand their role in the compliance process.

I personally was very privileged to receive a Dave Anderson Red Belt Award presented by Mr. Anderson himself. It was truly an honor to share the stage with him and his comments were appreciated and taken to heart. Thank you Dave for your kind words and we look forward to featuring you again!

Something I heard a lot at the convention was “where do you think the industry is headed?” I always have the privilege of reading the tea leaves and weighing comments from dealers, experts and all sorts of people to form an opinion as to the answer to this question. I would sum it up by saying the industry is certainly shifting and adapting but it is not going away. Yes, there has been increased scrutiny and yes it may not be quite as easy as it used to be, but this segment of the auto industry, provided 99.9 percent of dealers do things properly, will not go away anytime soon. It is simply too large and too many consumers are dependent upon dealers for basic transportation to get to work, school and fun.

Now the important question that begs asking is “how will you stay relevant?” One of our keynote speakers, Ross Shafer, addressed this issue and the message resonated with our attendees. The most important thing any business faces is how to stay relevant. How do you get your customers to keep choosing you? How do you succeed when others start to fail?

I think this is a key focus point for dealer business owners to contemplate and answer over the next few years.

This issue features all things technology. There is no question improvements in technology have impacted our industry – some managers do not even remember ledger cards!

Seriously though, look at the market landscape and determine what products and services you may not be taking advantage of at this time. We serve dealers all across the country and I can tell you it is even tough for us to keep track of what is new. Hopefully we can give you some great ideas in this issue that will help your business.

Until next time, have a great month and remember to make it happen!

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 Jessica Sweeney | sweeneyj@paymaxxpro.com Guest Columnists

Tim Byrd | DealerRE Alex Price | alex.price@masterfiles.com Robert N. Parnas | CliftonLarsonAllen Rick Resinger | rresinger@champion-chev.com Dani Sherrod | dani@autoshopper.com Christy Taylor | Dealer Business Journal Greg Wells | AllCall Automotive Contact Center

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 May 2014

DealerBusinessJournal.com

Calendar

JUNE

June 3, 2014

June 4, 2014

June 5, 2014

Buy Here-Pay Here Manager’s Boot Camp, Dallas, TX

For Buy Here - Pay Here Dealers, General Managers, Sales and Finance Managers and moderated by Chuck Bonanno.

Buy Here-Pay Here Collections Boot Camp, Dallas, TX

For Collection Managers, Collectors and Buy Here - Pay Here Dealers and moderated by Chuck Bonanno.

Buy Here-Pay Here Sales Training Boot Camp, Dallas, TX

For Buy Here - Pay Here Dealers, General Managers, Sales and Finance Managers and moderated by David Brotherton.

AUGUST Aug. 5, 2014

Buy Here-Pay Here Leasing Academy, Sarasota, FL

For Buy Here - Pay Here Dealers, Managers and moderated by David Brotherton.

SEPTEMBER Sept. 2, 2014

Buy Here-Pay Here Sales Training Boot Camp, Atlanta, GA

For Buy Here - Pay Here Dealers, General Managers, Sales and Finance Managers and moderated by David Brotherton.

Sept. 3, 2014

Buy Here-Pay Here Manager’s Boot Camp, Atlanta, GA

For Buy Here - Pay Here Dealers, General Managers, Sales and Finance Managers and moderated by Chuck Bonanno.

Sept. 4, 2014

Buy Here-Pay Here Collections Boot Camp, Atlanta, GA

Collection Managers, Collectors and Buy Here - Pay Here Dealers and moderated by Chuck Bonanno.

DECEMBER Dec. 8-10, 2014 Credit and Collections Conference

Dallas, TX

For Dealers Principals, General Managers,

Collections Managers, Collectors, Skip Tracers

Find out more about these events and register to attend online at www.TwentyGroups.com and click on events.

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May 2014 DEALER BUSINESS JOURNAL | 5

LEEDOM GROUP

BHPH Boot Camp

By David Brotherton

Change Is Upon Us

W

e have reached a critical point in the industry; increased competition, expensive and hard to find inventory, and more consumer regulation have come together to change it.

Dealers who reinvest in their business through technology and training can stay ahead of this curve and meet or exceed their sales projections. On the other hand, dealers who don’t see the need for changes are the ones who wonder what happened to tax season this year and are slowly watching their portfolios shrink in size.

The Buy Here – Pay Here customer has more options for financing than ever before and this, combined with evolving underwriting criteria, has resulted in an increased likelihood of our customer jumping ship to another vehicle with another lender and leaving us to dispose of the old unit through charge off. Even if we can resell the unit, we still lost a paying customer as well as incurring additional reconditioning and overhead expenses. Knowing the customer can go elsewhere with relative ease forces us to take a longer-term approach to acquiring and maintaining our relationship with that customer. In essence, we must make them want to stay and we must approach our relationship with our customers as a true one that requires work to maintain.

Success or failure in this area will

6 | DEALER BUSINESS JOURNAL May 2014

define the winners and losers as we go forward.

Before The Sale How we develop, build and qualify the relationship from initial contact to sale is the first really critical piece of this puzzle. CRM systems are no longer a luxury – they are critical to the information management and follow-up that is essential to our sales efforts. There is simply too much competition for customers. Few people possess the organizational skills to track, organize and prioritize their prospecting efforts on their own and, as a result, leads that don’t buy immediately tend to fall through the cracks. CRM Technology automates these tasks and will generate a standardized follow-

up path for every type of lead.

Effectively implementing a good CRM solution can help you generate (and quantify) increased lead traffic.

“Closing” becomes defined by appointments that show rather than cars that are sold. The real sale is in effectively selling appointments and a CRM solution is utterly critical to this process.

Our industry is rapidly becoming divided between the organizations that embrace technology and take a Business Development Center (BDC) approach to their business and the ones that complain about there not being enough traffic.

Technology alone is not the answer.

Taking a page from successful BDC operations, the organization that generates, captures and

Knowing the customer can go elsewhere with relative ease forces us to take a longerterm approach to making them want to stay and building a true relationship with them. Success or failure in this will determine the winners and losers as we go forward.

DealerBusinessJournal.com

systematically follows up on its lead traffic will be far more successful than the one that allows its team to “wait for the next up.” While you are waiting, your competition is getting customers in their dealership. Concentrate your team on managing leads, rather than selling cars. Sales are the result. A result of what? It is that “what” that makes all of the difference. The bottom line is that three critical changes are required to keep up with today’s market: 1. Implement a quality CRM solution that fully integrates with your DMS. 2. Focus your training and coaching efforts on communications skills that emphasize building and maintaining relationships.

3. Manage your team’s activities, not the results. Focus on what is done every day and the results will come.

After The Sale Focusing on customer service in your organization is critical to winning this information battle.

The best dealers are successful because they embrace the need to talk to our customers regularly

and essentially forever. Current customers need follow up. They need to be asked for referrals. We also need to proactively talk to them about vehicle maintenance (service reminders) and their situation. I know of dealers that insist on talking to their current and former customers every thirty days. This is a huge commitment but it pays huge dividends as well.

Buy Here – Pay Here customers will trade their vehicle when we let them. Of course, we would like them to make all of the scheduled payments first, but, we need to be realistic about this. If we were the only game in town, it is far more likely that we could insist on this but we clearly aren’t. Our customers will become dissatisfied with their vehicles. It is the nature of things and, if we don’t stay in touch and aggressively look to protect the payment stream, we will be trying to figure out why customers we have lost touch with (because they are good customers) are dropping their vehicles off and leaving them.

Overcoming vehicle service issues is a critical part of our business and is, honestly, the area where I see the need for the greatest improvement. Our customer does

not have the capacity to handle unexpected repairs and it amazes me every time I see a charge off because the dealer wouldn’t help with a needed repair. What amazes me in this is that the first thing the dealer does as soon as the vehicle is repossessed is to do the repair that they wouldn’t help the customer with in the first place – and that they don’t see anything wrong with this! Think about your true cost of generating a new sale and then tell me if not helping a paying customer makes sense. We have to be willing to continually reinvest in our portfolios or our paying customers will become someone else’s with no warning.

Ultimately taking a customer service approach to our business is critical to maintaining portfolio health. The days of “AS IS” are over. As an industry, we have too much invested in these deals to take such a cavalier approach and to get an appropriate ROI, we have to be willing to continually invest in our technology and with our time.

David Brotherton is a consultant and Twenty Group moderator with the Leedom Group Contact him at davidb@leedomgroup.com

Don’t Forget Our 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.

DealerBusinessJournal.com ...Your Success Is Our Business

May 2014 DEALER BUSINESS JOURNAL | 7

LEEDOM GROUP

Payment Processing

By Jessica Sweeney, ETA, CPP

Technology’s Impact on Payments

T

he payments landscape is ever changing; about a year ago I wrote an article talking about the evolution of payments starting all the way back to when we would barter for goods and services up to the newest technology of 2013.

Shockingly the newest technology of last year is approaching ancient history as the products and applications in the payments industry are evolving at a rapid pace. At this point in time the opportunities are endless; with all of the technology based start-ups popping up in the payments world you would be hard-pressed not to find someone to customize your system specific to your needs to help you better run your business.

In fact the Electronic Transactions Association’s membership has expanded to more than 550 global payments technology companies in the past year alone.

With the transition to all-out customization, the trend in setting up your business with payment processing is changing as well.

Business owners are less focused on the cost savings and more focused on what tools payment processors can provide to better their bottom line. What products and services do they offer to help them streamline procedures or add value to the customer? In today’s industry two providers are likely to offer the same pricing but what

8 | DEALER BUSINESS JOURNAL May 2014

sets them apart is what else they can offer. Can they set them up for web payments, what features are associated with the web payments, what security is set in place? Can this payment processor offer any mobile applications for taking payments or reconciling them?

There are more and more people every day that are becoming completely mobile; mobile phone, mobile tablet, lap tops and the list goes on. Where do credit card terminals plugged into phone lines fit in to that? It’s simple, they don’t, so the “free credit card terminal with sign-up” is thrown to the way side. In a report published by Adil Consulting (an Omaha, NE based payments consulting firm) 55 percent of merchants surveyed named increasing their sales as a top priority for the year, only 2 percent said reducing costs were their top priority.

Businesses are also focusing more on the customer experience.

As the saying goes “Customers are King,” therefore, it has always been a focus to make sure that the customer’s experience in all aspects of your business is a great one. The payments industry has honed in on this and has created tools giving the customer multiple, convenient ways of making a payment at their finger tips. This is quite present in the banking industry; there is very little that you have to actually go to the bank for today. You can transfer money with a click of a mouse, deposit checks with a picture from your smart phone, and even pay for items by simply waving your phone over a reader at

many locations. In the 2013 U.S. Consumer Financing Satisfaction Study by J.D. Power and Associates they found that 70 percent of the Consumer Satisfaction Index is from billing and payment. What about those customers that don’t have the savvy new technology toys to have these options available to them? Again, companies like Pay Near Me and Money Gram are creating tools for your customers to make their payments in cash at their local Wal-Mart or 7 Eleven.

I don’t think there is an avenue that hasn’t been paved for a more convenient way for companies to get their money.

As we look towards the future we are seeing emphasis on mobile payments and digital currency. While these ideas are still a little ways off from being the norm, it shows us that all types of technology are embraced in the industry. While the use of credit and debit cards seems to be the overwhelming payment of choice today, it could be quite soon that we are paying each other digitally with no cash, check or credit around. Where does your business stand in all of this? How much of the new technology have you adapted? It’s time to jump on the band wagon because it’s taking off and you don’t want to be left in the dust.

Jessica Sweeney, ETA CPP, is the relationship manager for Paymaxx Pro, the national payment processing division of the Leedom Group. sweeneyj@paymaxxpro.com DealerBusinessJournal.com

...Your Success Is Our Business

May 2014 DEALER BUSINESS JOURNAL | 9

LEEDOM GROUP

Thanks to all the dealers, vendors, speakers and sponsors who made BHPH World 2014 a roaring success! Stay tuned to www.BHPHWorld.com for information about the 2015 event.

It was standing room only in the seminars and sessions as dealers paid closed attention.

Chris Leedom (L) and Dave Anderson (R)

Keynote Speaker Chuck Bonanno chats with an attendee.

NIADA President Keith Hagler and Executive VP Steve Jordan.

The exhibit hall was buzzing with vendors and dealers.

BHPH World has provided superior training for 20 years.

Continued on Page 12.

10 | DEALER BUSINESS JOURNAL May 2014

DealerBusinessJournal.com

...Your Success Is Our Business

May 2014 DEALER BUSINESS JOURNAL | 11

LEGAL & LEGISLATIVE

Legal Opinion

By Tom Hudson

No Insurance Coverage for Alleged Violations

S

onic Automotive, Inc. sued its insurers, Chrysler Insurance Company and Great American Assurance Company, for indemnification and defense costs arising from third-party lawsuits against it. One of those lawsuits alleged violations of the Florida Deceptive and Unfair Trade Practices Act arising out of Sonic’s “intentional scheme to pack or stuff Etch into vehicle sales and leases,” and another lawsuit alleged violations of the North Carolina Unfair and Deceptive Trade Practices Act and the South Carolina Dealers Act for the same conduct.

So, what’s the deal here? A dealership engages in what the

Here’s what happened.

The U.S. District Court for the Southern District of Ohio granted summary judgment for the insurers.

The court found that the plaintiffs in both lawsuits alleged intentional, rather than negligent, conduct.

The court also found that the relevant insurance policy language provided coverage for “all sums an ‘insured’ legally must pay as ‘damages’ arising from an ‘occurrence’ because of an alleged or actual negligent act or ‘error or omission’ by an ‘insured’ occurring during the policy period of this policy and resulting from … a civil violation of any federal, state or local statute that regulates specific disclosures required to complete … [c]onsumer financing agreements [and/or] [c]onsumer leasing agreements.”

In other words, Sonic’s policy insured against negligent acts,

Sonic’s policy insured against negligent acts, not intentional acts. Because the lawsuits and the settlements were based on Sonic’s intentional acts, the court concluded that the insurers had no duty to defend or indemnify Sonic. plaintiffs call “intentional” conduct, then sues its insurance companies for indemnification and defense expenses arising from the suit. Will that actually work?

“No!” is the answer, loud and clear, from a federal trial court.

12 | DEALER BUSINESS JOURNAL May 2014

not intentional acts. Because the lawsuits and the settlements were based on Sonic’s intentional acts, the court concluded that the insurers had no duty to defend or indemnify Sonic.

The opinion is noteworthy for

its description of the underlying lawsuits, as well. The allegation in the underlying suits that the dealership “packed” or “stuffed” the etch product into leases and sale transactions makes you wonder exactly what the dealer’s challenged practices were.

One of the suits alleged that “Sonic dealerships marketed and sold aftermarket products including Etch ... as part of an overall integrated marketing and sales program.” The plaintiffs further alleged that Sonic “engaged in a uniform corporate policy of including the Etch product as a non-optional aftermarket product in sales and lease agreements.” Finally, they alleged that Sonic acted “in bad faith” and engaged in “uniform deceptive and unlawful” practices.

But these descriptions in the opinion were a bit sketchy, and we don’t know all the details of Sonic’s program.

The other suit alleged that Sonic “engaged in a policy to withhold the actual [Etch] price ... by designing and operating a computer system that omitted these terms from customer contracts.” It also alleged that Sonic had a “practice and policy to charge whatever price for [Etch] it [could] to the customer to swell the monthly payment up.” The plaintiffs further alleged that Sonic’s violations of Florida’s unfair and deceptive acts and practices law “were willful and intentional because the non-disclosures resulted from an established policy to avoid alerting customers of the actual price charged ... by use of a computer DealerBusinessJournal.com

program designed to omit the printing of the purchase price on contract documents.”

We have heard of dealer programs that involve applying the etch products to all vehicles on the lot and then pressuring buyers and lessees to accept the product at closing. If the customer resists strongly enough, the dealership doesn’t charge for the product, but the etching remains on the vehicle (although other features of the etch program, such as a payment from

the etch company of the buyer’s deductible in the event there is a loss, will not be available). The court’s description doesn’t give us enough detail to determine whether Sonic’s program involved these features.

If the “etch salesman” has come calling and has urged you to set up a program like the ones we’ve heard about, your first step ought to be to call your trusty lawyer and find out if the program would be subject to the sort of attack that

Sonic faced. Sonic Automotive, Inc. v. Chrysler Insurance Company, 2014 U.S. Dist. LEXIS 48431 (S.D. Ohio April 8, 2014) Tom Hudson, Esq. (tbhudson@hudco. com) is the author of several compliancerelated 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®. Reach him by phone at (410) 865-5411 or visit www. counselorlibrary.com.

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...Your Success Is Our Business

May 2014 DEALER BUSINESS JOURNAL | 13

LEGAL & LEGISLATIVE

General Counsel

By Debra Dawn

Ten Steps to a (Hopefully) CFPB Approved Customer Complaint Procedure

O

ne of the items on the CFPB’s checklist is enforcement of a customer complaint log.

A customer complaint is any item regarding the purchase or financing of a vehicle that the dealership receives and any item that is the subject of repeat customer visits or phone calls regardless of whether satisfactory resolution is achieved.

In addition to establishing the log, the dealership must also set up a written policy setting forth specific mechanisms for handling complaints. In addition, each employee must be trained in how to handle customer complaints on behalf of the dealership and one individual (the Customer Complaint Manager) must have overall responsibility for overseeing the complaint procedures.

A sample customer complaint procedure would include the following items: 1. Every customer complaint must be routed to the Customer Complaint Manager.

2. Each complaint must be entered into the central log system.

3. A separate file must be opened for each entered complaint. The date on which the complaint was received must be carefully

14 | DEALER BUSINESS JOURNAL May 2014

noted both on the log and in the file.

4. An investigation must commence within 24 hours of receiving the complaint. The Customer Complaint Manager should obtain copies of all pertinent documentation which may include payment history, collection notes and repair orders.

5. The Customer Complaint Manager should interface with all individuals who have interfaced with the complaining customer.

be informed as to the expected date the matter will be resolved.

8. A written response should be drafted and sent to the customer or complaining agency explaining the dealership’s position with regard to the issues.

9. If management concurs, a loaner vehicle should be made available to the customer and a Loaner Agreement signed prior to delivery of the substituted vehicle.

10. Upon satisfactory resolution of the matter, a close out letter should be sent to the customer and the complaint log should be updated showing the date of resolution.

6. As soon as the initial investigation is complete, the Customer Complaint Manager should initiate a phone call to the complainant.

The CFPB requires dealerships to In this call, establish a customer complaint the customer log as well as set forth a written should be provided with policy on specific protocols for the name and handling complaints. direct phone number of the With these procedures in place individual at the dealership and enforced, CFPB compliance responsible for addressing with regard to this threshold the complaint. The customer matter should be assured with little should be asked verbally to resistance from the agency. expand on the reasons for the complaint and suggestions for Debra Dawn is Leedom Group’s General resolving the matter should be Counsel and Compliance Director Debra obtained.

7. As soon as practicable after the initial call, the customer should

Dawn has formed AUTOLAW Group to assist dealers in all facets of dealership compliance. debra@leedomgroup.com

DealerBusinessJournal.com

L EE

JUNE 3, 2014

S

E

UP

DALLAS, TX

D

O M GR

S

BOOTCAMPS

O

BOOTCAMPS

BUY HERE-PAY HERE

MINAR

Manager’s Boot Camp

Presented by: Chuck Bonanno

ials! r e t a M w e *N

Keeping your managers up to date in today’s fast-paced and competitive market is essential. This one-day seminar will immerse your management team in the most current processes, procedures, technology, compliance and industry benchmarks to help you keep your competitive edge.

JUNE 4, 2014

Collections Boot Camp

Presented by: Chuck Bonanno

Staying abreast of proven technology and techniques is essential to keeping your collections team performing at a high level. Your collections managers and account representatives will receive training on how to best keep your customers current and how to collect the money instead of the car. This seminar is a can’t-miss opportunity for collection professionals.

JUNE 5, 2014

Sales Training Boot Camp

Presented by: David Brotherton

With more purchase and financing options available to the BHPH/LHPH consumer today, a passive approach to sales isn’t going to get it done. This seminar will highlight the prospecting tools and proven sales methods that will give your sales team an edge over the competition.

REGISTER TODAY!

www.twentygroups.comMay•2014800.966.8733 DEALER BUSINESS JOURNAL | 15

...Your Success Is Our Business

LEADERSHIP & TRAINING

Learn to Lead

By Dave Anderson

Ten Tips to Retain Talent

A

t a Fortune 500 business conference in 2003 a moderator asked Indra Nooyi, now Chairperson and CEO of PepsiCo: “As a leader, what keeps you awake at night?”

Without a second’s pause Nooyi replied, “Retaining my talent.”

Any leader wishing to measurably grow their organization is wise to list the same concern at the top of their list. Following are ten tips to retain talent; there is actually good and bad news. The good news is that these are principles, and if you follow them you will succeed in your employee retention endeavor; the bad news is these are principles, and if you ignore them your organization will suffer immediate consequences.

Hire right If you don’t hire people with the character and competence to achieve your objectives they’ll most likely fail and leave; or they’ll fail and you’ll fire them. Either way, you won’t retain them and will incur an incredible toll in areas like these: wasted time and resources, lower morale, broken momentum, squandered opportunities, lost personal credibility and a diminished customer experience.

Lead by example Good people won’t let their potential rot on the vine as they suffer under

16 | DEALER BUSINESS JOURNAL May 2014

selfish, corrupt, or incompetent leadership. If they do hang around to endure your tenure at amateur hour they may comply with you but won’t commit to you. According to a Gallup poll the number one reason people leave an organization is to escape a lousy manager. This is precisely why my company will not train a sales team before we’ve trained their managers. We believe it’s foolish for dealerships to take live eggs, stick them under dead chickens and then complain because they don’t hatch.

Develop the talent in your charge If have good people and you don’t train, coach and mentor them you don’t deserve them; in fact, you deserve to lose them and in time you will. And while they do stay you don’t deserve great results from them because you’re expecting a prize without first paying the price to develop the human capital in your charge. As a leader you have an obligation to take the human capital you’ve been entrusted with and make it better than it is today.

Set clear expectations Good people want to know what success looks like; what they need to learn, what they’re supposed to do, where they’re supposed to be and by when. Keeping them guessing demotivates them and causes them to work longer and harder, but without the laser-like focus necessary to excel. Create the clarity necessary to focus and motivate your team and you’re far more likely to retain them.

Offer fast, frequent, honest feedback Once expectations are set good performers want to know how they’re doing; if they’re great tell them and if they’re failing tell them that too and show them how to turn things around. Feedback is the breakfast of champions and the majority of workers say they don’t get enough of it, and when they do get it, it’s too late to make much difference. Eliminating gray areas with fast, frequent, honest feedback builds performance and helps retain your talent.

Hold them accountable for results Don’t fall for the politically correct, “hug and burp them” philosophy that people want to be coddled and resent accountability. Solid players only resent accountability when you’ve never set clear expectations in the first place. Human beings need the discomfort of accountability to focus, engage and grow to their potential. If you truly care about your people you’ll hold them to a high enough standard to bring out their best.

Inspire with mission and vision Good people don’t just want a job, they want a cause; they yearn to be part of something special, and to make a difference. Think about it: people quit jobs, but they die for causes because causes engage and inspire them. That being said, it’s the leader’s job to create and cast a unifying mission and vision that brings a team together and lends DealerBusinessJournal.com

more meaning to the workplace.

Vision-driven organizations attract and retain winners because the winners like to be where the action is, where something special and bigger than them is taking place.

On the other hand, visionless organizations are infamous for having a majority of their team members bring their hands to work while they check their heads and hearts at the door. What a shame, because you’re paying for all of it.

Engage them with a meaningful purpose and direction and you are far more likely to retain them.

Empower them If your best people don’t feel challenged, trusted, or that they’re growing into new responsibilities you’re likely to lose them, it’s just a matter of time. Empowering them with broadened latitude and discretion in order to stretch their abilities and make them more valuable are essential retention tools.

By finding ways to make your people less dependent on you, you’ll elevate their morale and growth and find yourself more effective as you do not have to personally make every decision, solve all the problems, and have every idea. One of the best leadership lessons of all time is that you can’t do it alone; this principle also helps you retain talent as they are empowered and unleashed to contribute to the dealership at a higher level.

Engage them High performers like to feel let in on things, and want an opportunity to ...Your Success Is Our Business

contribute their ideas to enhance the organization’s welfare. While vision, mission, values and performance expectations are the top leader’s to define, engaging your team for their ideas on how to reach the vision and become more effective in their roles and better-serve customers, works retention-magic. People support what they help create, but they want to weigh in before they buy in. Adopting a philosophy that “none of us is smarter than all of us” and making clear that any idea is a good idea until you find the best idea communicates to your team that you understand leadership is a dialogue and not a monologue. Engaging them in this manner ensures you get far better insight and ideas than had you tried to figure everything out by yourself and then dictate a plan no one commits to.

Reward them fairly Three key retention tools have nothing to do with money, scheduling or benefits: the opportunity to become part of something special; the opportunity to become more as a human being; and the opportunity to make a difference. The aforementioned strategies in this article help address these vital needs.

In addition to these “heart” issues, you must also be fair with the “head” issues: pay for performance.

If you pencil-whip people every time your withering ego gets bent a bit because you think they’re making too much money you will lose them, and rightfully so. At LearnToLead we

have a small staff and are extremely picky about whom we hire, but we pay very well and absorb 100 percent of benefit costs for our associates: health, dental, vision, life, AD&D, long-term disability and pension. I understand this isn’t for everyone, but my philosophy is that I want my teammates to be totally focused on their work and not worried about what is covered for them and their families and what isn’t. It works for us; we’re a 15 year old company that grew sales and net profit over 50 percent higher than last year, and have attracted talent from far larger, deep-pocketed organizations.

By following these ten rules for retention you’ll create a culture that not only retains your best talent, but also attracts talent from other organizations. As the voice in the movie Field of Dreams repeated over to Kevin Costner, “If you build it they will come”; the same holds true in your dealership. When you build the right culture the eagles will come; and even better, they’ll stay.

Dave Anderson is President of LearnToLead which provides in-person and virtual training to many of the world’s best dealerships. Dave speaks to dealer groups over 125 times each year and has given seminars in 15 countries. He has spoken at eleven NADA Conventions and is the author of twelve books. Follow Dave on Twitter @ DaveAnderson100 and visit his website at learntolead.com for free articles and videos on sales and leadership.

May 2014 DEALER BUSINESS JOURNAL | 17

FEATURE ARTICLE

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DealerBusinessJournal.com

W

Five trending technology strategies that can help you sell more cars.

e are living in a culture that has been inundated with constantly evolving technology. The new smart phone you bought last week, is probably already out of date.

Google is getting closer to developing a selfdriving car. Scientists say that there could be a manned mission to Mars by the year 2030.

On a smaller scale, the ease and access to revolutionary technology that affects our daily life has never been greater.

The possibilities for the future are endless and exciting and, for entrepreneurs who know how to stay ahead of the curve, economically rewarding. Is your dealership ready?

Continued on Page 20.

...Your Success Is Our Business

May 2014 DEALER BUSINESS JOURNAL | 19

FEATURE ARTICLE TECHNOLOGY continued from Page 19

Video email Video email is the new email. The numbers on video email effectiveness are quite impressive. Email marketing provider Implix found in a recent survey of users, that including a video in an introductory email increased the click-through rate by 96 percent, or nearly twice as many people clicking through to your website when you include a video in your email. A survey by The Forrester Marketing group found that including a marketing or explainer video in an email increased clickthrough rate by 200 to 300 percent. Clearly, attaching videos to email gives your message extra marketing power that not many other strategies can match.

There are several applications that auto dealers could find themselves using video emails for. A customer sends an email inquiry about a particular vehicle on your website. Instead of a phone call or a generic email response, walk out to the car and record a friendly, brief video introducing yourself, highlighting a few features of the car and inviting the customer to come by to see it and find out more. Another scenario could be a husband that stops by the lot and is interested in a vehicle, but needs to talk about it with his wife.

Sending a follow-up video email to the potential customer and his wife pointing out some of the favorite features he saw earlier engages the couple, even though they are not physically on the lot.

Video emails need to be small enough in size to not take too long to send or download, so the quality does not have to be high-definition. Typically a smartphone or tablet video recorder works well and most come with

Video is one of the most influential mediums customers are connecting with today. An Implix email marketing survey found that video email increases the click-through rate by 96 percent, meaning twice as many people will click through to a website if video is included in email. pre-programmed settings and apps for capturing video that can be rendered for email or even text. Ad-libbing a short video may seem intimidating at first, but with a little practice can soon feel as comfortable as greeting a potential customer for the first time on the lot or speaking with them on the phone.

There are a number of video email services available that have the capability of sending mass campaigns. There are also providers who tailor their products specifically to the auto industry and provide professional templates and formatting. For one-to-one communication, most mobile devices easily allow you to send a compressed email from your saved files, linked cloud storage or installed app.

chat and text Ninety percent of American adults have a cell phone. Nielsen polls have shown that text messaging has surpassed phone calls as the primary means of communication for the past few years. It is safe to say that a phone call may not be the best way to connect with customers anymore, and the time has come to look at more customer-preferred ways to gain leads and make a sale.

This is where the idea of chat and text comes into play. Customers are very used to seeing the “chat with a representative� button on web commerce sites small and large and they are more satisfied when using it. BoldChat, a leading live-chat service provider for businesses, surveyed customers in 2013 and found 20 | DEALER BUSINESS JOURNAL May 2014

Online chat and text options are quickly becoming preferred methods of communication with customers.

DealerBusinessJournal.com

that 65 percent of online shoppers have participated in a live chat and 21 percent prefer it. The same study found that 94 percent of those shoppers say they were “very satisfied” or “somewhat satisfied” after their chat experience. The growing number of shoppers who prefer to chat, and are more satisfied with it, signals the opportunity for proactive dealers to incorporate chat into their internet strategy.

There are many chat service providers that can provide the framework and logistics to make chat work in your dealership. Once you have chosen one, and have it up-and-running there are a few best practices to consider. To begin, there should be enough employees who have been designated to answer chats for prime effectiveness. The more people you have answering chats, the more customers you will serve.

Chat providers can step-in and help with overflow chat requests, however, ideally your dealership would answer chats in-house. When answering a chat, the best way to build trust with the shopper is to treat it like a traditional phone inquiry and give them your name and information. In return, you would ask or their name and, at some point in the conversation, their contact information. From there, let the customer lead the conversation and be ready to answer their

questions or comments, just like you would if they had called. You probably will not close the sale on the chat so do not look at it as a sales pitch. Instead, be ready to answer questions, provide additional information when applicable and glean the information you need to turn the chat into a true lead that you can follow-up with by email or phone (find out which the customer prefers) and move the customer further down the sales process.

The same best practices can be applied for dealerships who also want to include text as an option for inquiries. Many of the same chat providers can also help facilitate text services, giving your customers one more way to choose to connect with you at their comfort-level and convenience. Provide text numbers on your website (think of all the mobile users who are viewing it and can connect with one tap) as well as on your marketing materials and ads. With an estimated 97 percent of people saying they read a text message within 15 minutes and 84 percent responding within an hour, according to Nielsen research, the most successful text leads will be the ones that receive near immediate responses and are able to convert the momentum of the text inquiry into an actual phone call or an appointment in person on the lot.

virtual test-drives Hopefully by now you have fully embraced the idea of producing video overviews of your inventory for your web pages and third-party sites. If you haven’t then you should. Google reports that 84 percent of online car shoppers plan to watch automotive videos the next time they shop for a car. So, how can you differentiate your video from everyone else, make it engaging and encourage the customer to come in to see the vehicle for themselves? What about a virtual test drive? Go one technological step further than those all-important exterior and interior shots, by recording a test-drive from various points-of-view within the vehicle and narrating the feel, sounds and features of the ride.

The equipment to make these “virtual” test drives has never been more accessible or affordable. The popular “GoPro” video cameras offer high quality at a low-cost, ranging anywhere from $199 to $399 depending on the product. There are several accessories that can be used for these cameras that allow them to be worn or mounted, recorded remotely and more giving them the ...Your Success Is Our Business

New technology and better cameras allow dealers to create the engaging, informative video customers crave. versatility and production capabilities that come close to high-end professional equipment.

The franchise industry has just released its take on the virtual test drive, with the unveiling of WheelsTV’s Dealer Video Showroom. The concept of this new innovation is to provide a custom designed video/ Continued on Page 22.

May 2014 DEALER BUSINESS JOURNAL | 21

FEATURE ARTICLE TECHNOLOGY continued from Page 21

microsite that emulates the dealer’s site and features interactive video covering the dealer’s new car year/ make/model inventory. After taking the virtual test drive, the next step is for the customer to click-through to the dealer’s main site and view inventory, check out specials or contact the dealer. During its Beta testing, the Dealer Video Showroom’s click-through rate was nearly 22 percent, which is over 10 times the industry

average, solidifying the appeal of a virtual test drive for potential car shoppers. Though the DVS is not currently available for independent dealers, it can provide inspiration for dealers who want to create their own virtual test drives. Log on to www.wheelstv.net and see the showrooms created for the dealerships who were a part of the testing.

“showrooming” strategy Have you heard of “showrooming?” This is the term given to the newer phenomenon of customers using their mobile device while at the dealership to simultaneously shop competitive inventory.

Unfortunately, it is not that uncommon these days to be talking with a customer face-to-face, and watch them pull out a smartphone, log-on to a site like Autotrader. com and find another dealership within a 20 mile radius that has the same vehicle with similar features and price.

In fact, the practice has become so commonplace that Cars.com commissioned a survey in conjunction with Placed, a leader in location-driven insights and mobile ad intelligence, to get a bigger picture on the effects of showrooming, how frequently it is happening and what dealers can possibly do about it. The study showed that 63 percent of auto shoppers researched and shopped online while at a dealership. It’s safe to conclude then that shoppers are making decisions in real time about which vehicle to buy, how much to pay and which dealer to do business with, making showrooming the new reality of car sales. The most frequent showrooming comparisons being made were with pricing and inventory on a competitor’s lot (25 percent and 22 percent respectively, according to the survey).

Dealers who understand this behavior can work to keep mobile shoppers on their physical lot (and off the competitors virtual one) by providing

Sales teams must prepare for showrooming customers who use mobile technology to shop competing inventory and offers while on the dealer’s lot. continuing engagement with the customer as well as being prepared. Do your due diligence by regularly showrooming yourself with competitors. Be ready with alternative inventory options, price-matching offers or being able to explain to shoppers the reasons for price variables, especially between your unit and a competitor’s. It does not have to be a price-war to no-profit final sales, but you must master the ability to easily explain why and how the price is set at your dealership. Focus on selling your dealership’s unique value and being open and transparent with customers

surprising “showrooming” stats The Cars.com/Placed survey on customer’s use of mobile devices while on a dealer’s lot is interesting. Check out these statistics:

51%

29%

17%

16%

Shopping Price, Payments and Offers

Checking inventory at other dealerships

Reading vehicle and dealer reviews

Seeking advice or verifying information

22 | DEALER BUSINESS JOURNAL May 2014

DealerBusinessJournal.com

who have questions as the result of real-time research.

Set the stage also by taking a look at the mobile version of your website and making sure it is user-friendly and can provide shoppers with the coveted research and information they are looking for without having to go somewhere else to find it. The more engagement they have on your site means there is a lesser chance they will find themselves browsing someone else’s.

On-the-lot strategies for courting showroomers might include offering free wi-fi access to customers

and equipping sales staff with tablets and technology they can use to go alongside shoppers and build trust.

Transparency will assure shoppers they are getting a fair deal and an excellent experience, which will also work to your favor. The same Cars.com/Placed survey found that 24 percent of shoppers have found their way to a particular dealership because of positive customer reviews. Posting positive testimonials on websites, social media and third-party sites can help sway a new customer your way.

MOBILE WALLETS The technology for mainstream mobile wallets is not a reality for most businesses, yet, however the ease and access of mobile and alternative methods of payments has never been greater. It is predicted that by 2016 the M-commerce industry will process over $800 billion globally. Add to that the ability to specifically target and track marketing and sales trends among customers, and the mobile wallet becomes a viable technological advance that is hard to ignore.

Mobile wallets are an extension of the idea of paying online. In the early days of the internet, e-commerce was an untapped world and shoppers and retailers alike were skiddish about the idea of paying for a product or service with intangible products like cash or check. As online confidence grew, so did the notion of buying and selling in the brave new digital world.

Today, shoppers give little concern to supplying credit card information on a secured shopping site, or using a service such as PayPal to complete their transaction.

Mobile wallets, then, include Apple iOS and Android applications that hold a variety of financial services such as bank accounts, credit cards and loans. They also store coupons, store reward and loyalty cards and tickets/boarding pass information. The services can be accessed through social media, QR codes, emails or mobile apps. It is transferred into the mobile wallet to be redeemed at the desired retailer by scanning a barcode or keying in the information.

Both aspects of the mobile wallet, its ability to make and receive payments as well as store discounts and special offers from retailers, make it an interesting idea.

You may have already used these types of services with department stores, restaurants or online retailers. The technology is available for dealerships, there just needs to be a plan in place to use it. ...Your Success Is Our Business

Mobile wallets provide new ways of tracking customer sales trend data as well as connecting with them in specific locations and experiences.

If your dealership has a service center, you could issue coupons for oil changes and tire rotations. You could also use the mobile wallet instead of more traditional marketing campaigns like direct mail specials or in conjunction with electronic ones like email event reminders and inventory updates. There is also new technology referred to as “geo-fencing” which is specialized software that allows users to designate a set of geographical boundaries that can trigger the release of certain coupons or messages, like when a customer drives onto your dealership’s lot or maybe even onto a competitor’s. These coupons and offers can also be tracked to see which are most effective and develop targeted marketing for different customer profiles.

While the technology to set-up a mobile wallet is readily available, the programming is complex and requires the use of knowledgeable vendors to make them work. Given the impact of the mobile revolution and the eye-opening statistics of use and marketing loyalty, it may be worth the investment today to capture sales in the future.

May 2014 DEALER BUSINESS JOURNAL | 23

LEADERSHIP & TRAINING

Employee Relations

By Rick Resinger

Going “One on One” with Your Team

A

re you a manager or a leader?

Most people will answer that they are a leader but spend most of their time with vendors, reports, inventories and process compliance; we manage processes and inventory but you lead people. So how much of your day is spent with the members on your team? The main duty we have as a leader is to make our people better. An important tool in helping our people improve is

doing a frequent “one-on-one” performance improvement plan. The problem with most leaders today is that they were led by managers and not true leaders so they have no role models to emulate and don’t know how to use this important tool. So what is the process of conducting a good “one on one”? A good “one on one” has four components and should be done in the following order.

PERSONAL MATTERS: Start out every review finding out what is going on with them personally. It isn’t just about business; we are dealing with people who have fears, feelings and frustrations. People don’t care what you have to say until they know how much your care. Knowing how a team member is feeling about outside influences could explain under performances as well as being a motivator to help improve

performance or a reason to hit stretch goals.

PRAISE: People no matter their experience, position or age desire recognition and the best way to recognize someone is to give them sincere praise. All too often managers spend the day pointing out what people are doing wrong; leaders catch people doing things right. The quickest way to establish positive work habits is to praise and recognize people when they are exhibiting those habits, especially if that praise can be given in front of their peers.

IMPROVEMENT: As leaders we owe it to our team to show them the areas in which they need to improve. By not being brutally honest with people we could be denying them the opportunity to get better. This honesty is often not shared because of not wanting to hurt people’s feelings but this “compassion” in the long run is actually cruel because you allow your team to labor in

The main duty we have as a leader is to make our people better. An important tool in helping our people improve is doing a frequent “one-on-one” performance improvement plan.

24 | DEALER BUSINESS JOURNAL May 2014

DealerBusinessJournal.com

mediocrity and not reach their full potential. When pointing out the areas of improvement be prepared with precise examples, we want to have a business meeting and not just a discussion of generalities.

Finally remember to be critical of the actions and not the person. We don’t want the meeting to become adversarial but to become advantageous for growth.

FOLLOW UP: If you are doing a performance meeting with a salesperson, find out how you can help them generate more business. A leader doesn’t say “Go” a leader says “Let’s Go!” Pick the phone up and make some calls for your team mate; by making these calls with them you can show them how you want it done as well as showing you care and you want them to succeed.

Finally, set a time up for following up with them to measure the progress that they have made in the areas that you agreed upon that needed improvement and be sure to keep that appointment.

These “one on ones” should be conversational in nature and can be done over a period of time with those who are performing well and are just trying to reach the next levels. These meetings need to be scheduled and have a game plan; when done the leader should be exhausted because they aren’t easy!

Many average performers can grow into outstanding performers if given the opportunity, support and training.

Rick Resinger is the Director of Training and Recruiting for the Champion Auto Group a family owned dealership group consisting of six dealerships in southeastern Michigan. Rick has been selling cars since 1988 and has been in management for 24 of those 26 years. He can be reached at rresinger@champion-chev. com or follow his blog at rickresinger.wordpress.com ATTENTION DE AL ERS H IP L E ADERS :

Let our training leaders are able to review your operation and provide an action plan to help your dealership achieve benchmark performance. ...Your Success Is Our Business

www.twentygroups.com

Phone: 888.874.7579

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BUSINESS OPERATIONS

Business Basics

By Robert N Parnas

Flexible Spending Accounts

B

HPH organizations are often inundated with health insurance plan and retirement plan information but not with Flexible Spending Account information.

BHPH operators should perform due diligence and consider whether Flexible Spending Accounts make sense for their operations. The due diligence would need consideration among other items the structure of the companies and related entities, employee turnover and other employment patterns as well as plan administration costs.

The information below is intended to provide a general conceptual framework of the subject matter. You should seek professional consultation in evaluating and determining whether such a plan(s) are appropriate for your organization.

A Health Care Flexible Spending Account or Health Care FSA is one of the tax-advantaged financial accounts established by an employer for the benefit of their employees. A Health Care FSA allows an employee to set or designate a portion

26 | DEALER BUSINESS JOURNAL May 2014

to contribute up to $2,500 per household. One disadvantage to the employee using an FSA is that funds not used by the end of the plan, subject to IRS provisions, are forfeited by the employee, typically referred to as “use it or lose it.” However, in accordance to the provision of the Obama Affordable Care Act, an employee may carryover up to $500 into the next year. The disadvantage to the employer is that employees can receive full reimbursement by the employer on the first plan day and could terminate employment, before the employer receives the elective Health deferrals. Non-elective Care contributions can be Flexible made not affected by the limit. Also, the Spending limit does not apply to Accounts health savings accounts, allows health reimbursement employees arrangements, or the employee’s share of to the cost of employerdesignate sponsored health a portion insurance coverage. of earnings The employee may not have a health to pay for care FSA if enrolled qualified in a High Deductible expenses.

Health Plan (HDHP) with a Health Savings Account (HSA).

However if enrolled in a HDHP with a HSA, the employee may be able to enroll in Limited Purpose FSA. These

of earnings to pay for qualified expenses as established in the cafeteria plan, such as for medical expenses and for dependent care or other expenses. The funds deducted from the employee’s pay into an FSA generally reduces the employee’s taxable income, resulting in potential income tax savings. Also such amounts are not subject to payroll taxes, which results in payroll tax savings for both employer and employee.

Currently, employees may elect

DealerBusinessJournal.com

FSAs may be used to reimburse dental and vision expenses, regardless of the deductible.

Dependent Care Flexible Spending Accounts can be established to fund dependent care expenses for eligible dependents while you and your spouse are at work. Typically, this is for child care for children under the age of 13, but may include individuals who or physically or mentally unable to care for themselves as well as parents/ grandparents who live with the employee. The dependent care FSA is federally capped at $5,000 per year, per household. Married spouses can each elect an FSA with the total combined elections cannot exceed $5,000. At tax time, all withdrawals in excess of $5,000 are taxed. The expense amount incurred by the employee must be supported to the extent allocated to the plan otherwise the excess is taxable. Tax benefits to the employer and employee and related risks are similar to referred to in the Health Care Flexible Spending Account above, with one exception. Unlike medical FSAs, dependent care FSAs are not “pre-funded”; employees cannot receive reimbursement for the full amount of the annual contribution on day one. Employees can only be reimbursed up to the amount they have had deducted during that plan year.

There are other types of Flexible Spending Account plans for non-employer sponsored premium reimbursement and parking and transit expense reimbursement and other items.

In a nutshell, the organization should evaluate FSA’s with professional assistance and determine if they make sense for the organization. FSA’s can provide valuable tax savings benefits to your company and your employees and therefore deserves consideration.

Robert Parnas, CPA, is Principal Dealerships, CliftonLarsonAllen LLP and can be reached at robert. parnas@claconnect.com.

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Also follow us on: May 2014 DEALER BUSINESS JOURNAL | 27

BUSINESS OPERATIONS

Skip Tracing

By Alex Price

Super Charge Your Search Engine

A

nyone who was alive in the late 80’s remembers the movie character who enlightened us on the glories of greed: he was the corporate raider with the slicked back hair, designer shirt sleeve rolled up to accommodate the blood pressure monitor on his arm, chomping a Cuban cigar while clocking a racing pulse fueled by the latest stock quotes.

Gordon Gekko (brilliantly played

by Michael Douglas) is the Wall Street speculator who relied on illicit insider-trading information to amass his fortune. Despite the movie’s intent to be a morality lesson about the evils of excess, Gekko’s fantastically cool mastery of the treacherous world of money inadvertently served to inspire generations of wannabe stock traders. In the movie, the eager lap-dog character of Bud Fox begged for any crumb of wisdom at the foot of his master, so Gekko famously fed him one of my favorite lines from the movie: “The most valuable commodity I know of is information...”

It was information that built his fortune, and it was information that brought him down. SkipTracers know that their livelihood survives on information. To assemble his information in the 80’s, the character of Bud Fox had to be content with a cell phone the size of a brick, and wall charts manually constructed on paper

28 | DEALER BUSINESS JOURNAL May 2014

with colored markers. In the field of skip-tracing today we can get swept out to sea in virtual waves of information. It’s not just the Information Age; it’s the I-CanHave-it-NOW Age! At no other time in our history has information been so available.

How many of you can remember the days when your television simply stopped broadcasting at midnight, as if the world stopped turning? Now we have news stations spewing more than we ever needed to know 24/7/365. If there is a fire half way around the world, we know about it within minutes of the first flame igniting.

With so many sources of information, (websites, cell phone apps, tablets, etc.) I want to cover an often misused, under-explored tool: search engines, such as Google, Yahoo and Bing. My dear friend Michele Stuart is the single best Internet Profiler in the business today. If you ever have a chance to attend a class of hers, please do yourself a favor and attend. Bring pen, paper and turn that cell phone off. You won’t be sorry. If you are not able to see her in person you can also attend one of her webinars at www.rsig.com.

In this article, I want to cover some search techniques that you can add to your tool chest to help you expand your results. I will use Google as an example, but these ‘Wildcard’ tips will work on any search engine.

Wild Card Name Searching • Use the whole name to get a broadcast search. Remember

you can use, or not use, their middle name or initials to alter the results.

•

Reverse the order on the name of the person that you’re searching for. In addition to searching the standard format of John Smith, try Smith John.

Oftentimes names appear in last-first sequence, as is standard business practice on list documents.

•

If you are getting too many results, try using “Quotes” around your search term to narrow your findings: “John Smith”, or “Smith John”.

•

Narrow your findings further by including the reason for the search and/or the location. For example: “John Smith Arrest Mobile Alabama”.

•

Check Google Images for any pictures of your subject. Also try Google Video. A picture is worth a thousand words.

Now when you’re on the street, you’ll know what to look for.

•

Respect that space bar. Use the space bar when there should be a space. Also try the search without spaces to alter the results and perhaps find something different.

•

Use the wildcard star ( *) search symbol, located above the number 8 on most keyboards, for proximity searches.

DealerBusinessJournal.com

•

•

Use the Tilde symbol ( ~), located to the left of the number 1 on most keyboards, for synonyms. Use it between two names, after the name, etc.

Placement of the Tilde symbol will alter the results.

Google at times can be a great resource for cell phone and email searches, because many people place this information in their profiles on social networking sites such as Facebook and Twitter.

Remember most people have more than one email: one for professional use, such as john.smith@acme.com , and one for personal use. Our personal emails can be quite creative. An example could be: Hotlovr101@hotmail.com (the

skip we’re hunting happens to think highly of his own abilities!).

Now consider the fact that people are creatures of habit: they like to use the same passwords for everything, drive the same way to work and school, eat at the same restaurants, etc. Knowing this, I like to Google the first part of the subject’s email address—the part preceding the ‘at’ symbol. Using our ego-maniac’s email prefix of ‘HotLovr101’, may reveal that he uses this moniker as a user name for many of his online social networking sites, his blog posts, etc.

When using search engines, the possibilities are endless for you to locate information of value.

Remember, there are millions of

lists, websites, documents, and so much more on the World Wide Web. By using super-charged wildcard techniques on search engines, you vastly increase your chances of finding unknown details that just wouldn’t appear on a standard credit application.

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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May 2014 DEALER BUSINESS JOURNAL | 29

BUSINESS OPERATIONS

Customer Communication

By Greg Wells

Five Keys to CRM Success in the Showroom

Y

our CRM tool is a valuable piece of technology in your dealership. It may also be the most underutilized tool you have. Lack of training and no accountability considerably hinder your ability to leverage your CRM for success.

Managers who do not hold employees accountable for proper CRM use are guilty of management malpractice.

BDC’s and some salespeople are very adept at using the CRM’s features. These employees usually enter data correctly, prevent duplication and perform the tasks the CRM assigns each day.

To many managers the CRM seems complex. There is simplicity to be had when you dumb it down.

There are a handful of simple tasks to perform every time your team interacts with a customer.

I have seen some common denominators in the truly great CRM dealerships. Not coincidently, these are dealerships that get more than their share of the market and have a lower than average cost per sale.

Here are 5 keys to CRM success in the showroom. Follow these guidelines and your CRM tool becomes an accelerator of your business and leads to a more effective use of the CRM, a more efficient sales staff and BDC. 1. The Sales Managers are the experts. They know the CRM as well as or better than anyone in the dealership. After all, it is called Customer Relationship Management.

The Sales Managers are knowledgeable about the campaigns, integration with other systems and

Your CRM tool is an amazing piece of technology. Learn to use it. Proper use of your CRM makes you look smart and will make you more effective and efficient in managing your store’s opportunities.

30 | DEALER BUSINESS JOURNAL May 2014

reporting. The Sales Managers in great CRM stores don’t expect any one working with or for them to do anything they don’t do themselves.

2. The Sales Managers track data collection and set acceptable standards. They track data collection as closely as they track sales, gross and expenses. The input of data is the lifeblood of the CRM tool. If you have a BDC, data is the fuel that powers everything the BDC does.

They hold salespeople and BDC Agents accountable for logging all customers.

When sales and BDC staff enter new customers, the Sales Managers accept nothing less than 90% addresses, two phone numbers 80% of the time, an email capture rate of 75% and notes 100% of the time. Some even require a 25 word minimum in the notes.

3. The Sales Managers edit and/ or inspect the showroom status of every showroom visitor. CRM’s are results based and status based when it comes to creating tasks. These Sales Managers also understand that the accuracy of useful reports depends on this kind of attention.

The Sales Managers want to be able to pull a list of customers who test drove a certain model in the last 60 days. They can target market those customers when the manufacturer announces that “till the end of the month” rebate. They want to know that sold customers are getting sold follow up and unsold customers the follow up they need.

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4. Great CRM stores have Sales Managers that rank unsold showroom traffic. It may be as simple as yellow and green. The customers ranked green are the ones salespeople and/or the BDC needs to get back on an appointment basis. Green customers can buy! This way Sales Managers don’t rely on the salesperson or BDC to decide who should be followed up and who should receive a courtesy thank you call but there is really nothing to rehash. Those are the customers they rank yellow.

5. Finally, the Sales Managers in great CRM stores do not tolerate duplication. In fact they hate it. Why? Because it makes the dealership look like they don’t know what they are doing. Customers get two or three letters and emails saying the same thing.

One of the worst things that can happen is a sold customer receiving offers caused by a duplicate event in the CRM. I saw a case recently where a customer got an email a few days after they took delivery asking them to “come back in, we have independent appraisers on site and can give you more for your trade.” It reminds me Chris Bermans’ Monday Night Football gig “COME ON MAN!” Your CRM tool is an amazing piece of technology.

Learn to use it. Proper use of your CRM makes you look smart and will make you more effective and efficient in managing your store’s opportunities.

Your salespeople become better because you can actually monitor, measure and coach them based on their behavior instead of just looking at last month’s sales and telling them they need to do better.

Commit to these 5 keys and you’ll sell more cars. You will be focused on all of your business and not just the business in front of you at any given time.

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. ...Your Success Is Our Business

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May 2014 DEALER BUSINESS JOURNAL | 31

BUSINESS OPERATIONS

ReInsurance

By Tim Byrd

Being Brilliant in the Basics Equals Superior Service

I

recently had the great fortune of listening to two great speakers back-to-back at the BHPH World Conference in Las Vegas: Chuck Bonanno and Dave Anderson.

Both of whom are car business experts and trusted friends.

One thing that we three agree on as the most sound of business practices is Love your customer. If you are reading this article you are certainly in the car business and most likely in the Buy Here-Pay Here business. However, if you don’t make a concerted effort to always do the right thing and treat your customer with the utmost respect, then please get out of the car business. You are stinking up the place.

For those still with me, here is some advice from a guy who has more than 25 years in this wonderful business and the friends he listens to: Make a

32 | DEALER BUSINESS JOURNAL May 2014

positive difference in your customer’s life. There are plenty of people who try and take advantage of the BHPH customer. I hear that in collections, around 18 to 20 percent are the problem people.

That means that nearly 80 percent are trying really hard, despite their hardships, to do right by you.

There are things that you can do which will make a difference in the lives of your customers. Your customer is the most important part of your business. They are not an interruption, they are the purpose. What if you treated them that way? Remember, you provide transportation to a segment of our population that are predominantly low-wage earners, whose lives depend on their car to get to work, school, church, etc. You depend on their steady payments to stay in business.

I know, you’re thinking “Hey, I’m pretty good at what I’m doing.”

I want to

help those who want to be great!

The enemy of great is good, so says my friend Dave Anderson.

So, how do you become Great in this business? Dave Anderson says, “Be brilliant in the basics.”

Chuck Bonanno says, “Provide world class service.” Tim Byrd says, “Love your customers.” These are the building blocks to building a great business.

My expertise is in the reinsurance business. Why reinsurance? It’s what smart dealers do. It provides the tools necessary to help you be a great dealer. To help keep your customer in reliable transportation. To be the dealer that doesn’t just sell the customer their next car but their next 10 cars. Your customer may not remember the great features on their car or how much they paid, but what they will remember is how you treated them!

Reinsurance helps you provide world class service without going broke doing it. In fact, you can improve your profit while doing it.

Statistics show that one third of failed relationships with BHPH customers is over mechanical breakdown. They are sold a car, it breaks down, and they cannot afford to fix it.

In case you are wondering, in most cases this is your fault as a dealer. If they financed the car with you for 24 DealerBusinessJournal.com

months, serviced the car and made their payments, don’t you think it should run for at least 24 months?

Now, I am not naive. Cars break.

Don’t you be naive. When they break, the payments are going to stop, unless you fix their cars and get them back on the road. As Chuck says, “Customers don’t pay for cars that don’t run!”

Consider how much it costs to get a customer in the door the first time. Consider that payments are the lifeblood of this business. Then if your attitude is still “too bad, so sad” your current system is costing you a fortune. You might can fix that with reinsurance.

Reinsurance allows the BHPH dealer to warranty their vehicles by establishing a nationwide, customer-funded mechanism to make sure that there are always funds available to fix those vehicles, without going broke. It’s not a third party service contract, which costs you in the long run more than the repairs. It is your own warranty company.

Why not have a system in place that no matter where your customer drives that vehicle, should they breakdown you have a plan and the money set aside to get them back on the road and making their payments. The beautiful thing is they are the ones reserving for it. Your reinsurance company will provide premium finance for your customer’s warranty. Therefore not requiring you to pay the full price of the warranty up front, which would deplete your lending pool.

A prorated portion of the cost of the warranty is collected ...Your Success Is Our Business

from the customer’s payment and forwarded to your reinsurance trust account. This will provide a constant stream of reserve to ensure when problems arise there is a well-funded system in place.

Problems are taken care of and your customers stay on the road and keep making payments.

Another great tool your reinsurance company can provide is Debt Cancellation Coverage.

Debt Cancellation Coverage covers your collateral. By providing Debt Cancellation Coverage at the time of purchase, your collateral is never without coverage. Customers love it because it saves them time and money by eliminating the need for outside coverage from the insurance company. They will still need Liability Insurance required by the state. You will no longer have to make collection calls for the insurance company or be at the mercy of the insurance adjustors.

In the event of a total loss, you keep the car, not the insurance company, to scrap or whatever the situation calls for, but you are in control.

Let’s not forget about another wonderful benefit to having a Dealer-owned Reinsurance Company--capital! Your Dealerowned Reinsurance Company will provide a great capital resource. By owning a reinsurance company, you will provide your BHPH business with the tools needed to succeed and maintain control. The premium from your Warranty and Debt Cancellation Coverage provide the capital you need to take care of problems that

arise. Additionally what is not used to pay claims becomes the profit of the stockholders. Profit can be taken by the stockholders as a dividend distribution or can be loaned to your affiliated companies. There are tax friendly benefits to having an administrator obligor program as well.

Now, I know many great dealers that will tell you that this is a no-brainer. They will tell you that their single biggest regret is that they should have started a Dealerowned Reinsurance Company years before they did. The great thing about these dealers is they love to share with others and no one more than with their Twenty Group friends. These dealers are providing World Class Service.

When a customer calls in with a problem, they tell them, “No problem. Come on down, we can fix that.”

What a much needed relief reinsurance and its tools bring to your business. Make a difference in the lives of your customers. Be a better dealer. As my mentor Zig Ziglar said, “You can get everything in life you want, if you will just help enough other people get what they want”.

Tim Byrd is Founder and President of Tim Byrd & Associates, Inc., DealerRE is a managing agency located in Gloucester, Virginia. An Auto Industry Expert on Dealer Owned Reinsurance Companies, BHPH Operations and F&I Development. A 25+ year veteran of the car business, Tim is a trusted advisor to many car dealers.

May 2014 DEALER BUSINESS JOURNAL | 33

BUSINESS OPERATIONS

Online Strategy

By Dani Sherrod

Does your Dealership Have an Internet Identity?

W

hat happened to the “good ‘ol days?” When we could grab a yellow book and find a business listing? When customers could go to the auto dealership section and find your dealership name, address and phone number?

Well those days are gone, gone, gone. The Yellow Pages have been replaced with search engines where you type in the word, phrase or exact name and the search engine serves up the closet match to your typed suggestion. The new Yellow Pages are Google, Yahoo, Ask and Microsoft. An internet technology company called comScore, Inc, a leader in measuring the digital world, recently released its monthly comScore qSearch analysis of the U.S. search marketplace. Google Sites led the explicit core search market in August with 66.9 percent of search queries conducted.

Interesting enough Google also offers dealers a Google Places page, which acts as a yellow book type of listing for consumers to contact you. The Google search engine will query its own listing before anything else, so EVERY dealership should have a fully managed Google Places account.

This Google Places account will host your internet identity; this is the ongoing process of authoritatively updating and

34 | DEALER BUSINESS JOURNAL May 2014

verifying dealership listing information for Local Search.

It enables dealerships to certify, enhance, update and continually improve their local business listings for distribution to authorized local search platforms.

In order for the dealership to be put on the map, you must establish your identity by taking ownership of your listing, follow these simple steps: First, type in your main dealership phone number to the Google search engine.

Second, you will see your listing at the top of the page and to the right you will see the map, with more information.

Third, look under Map and address and you will see the question “Are you the business owner?” in very light grey letters… click it.

Fourth, Click on button that says, “Edit my business Information.” Make sure the information you type is the correct mailing address as well as the correct phone

number to the dealership. Google will verify the information, so if it is not correct you will have to redo it, which is very time consuming.

This process will have to be repeated with all the major search engines to ensure that no matter what browser your customer uses your dealership will have a prominent listing. Some examples of other search engines are: Local Yahoo, Ask City, Microsoft, Yellow Pages.com, Bing Local, Local.com, and WhitePages.com.

The key is to make sure your dealership internet identity is prevalent on all search engines, many of the query bots already have most of your information on the listings, but as you will notice, some of the information will be wrong. It is easy enough to get the correct information updated. A mental note must be made to check these listings once a month to make sure your competition has not got into your listing and changed vital information to try and steal away some of your customers. These sites are not policed, so each dealership must check each listing every month to keep from losing your internet identity to the competition.

Dani Has been in the retail automotive Industry for 16 years and has been a National Sales and Marketing Executive with Showcase Publications, Inc. since May of 2011. She is well published in many Automotive Blogs and regarded as a consultant to cutting edge IT Companies and Dealer Groups. She can be reached at dani@autoshopper.com.

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May 2014 DEALER BUSINESS JOURNAL | 35

INDUSTRY NEWS

Technology Update Electric Vehicles Do Not Have Mass Appeal, Yet

A

s the country celebrated Earth Day last month, Cars.com reviewed fluctuations in hybrid and electric vehicle (EV) sales. The company found hybrid sales are down 16 percent year-over-year, while electric vehicle sales are up almost 22 percent.

“EVs are in the very early stages of becoming mainstream, and the nearly 22 percent increase from last year, compared to an essentially flat market, indicates growing consumer acceptance,” said Jesse Toprak, chief analyst for Cars.com, an automotive digital marketing company. “Price points for many pure EVs are getting closer to where it makes sense financially for consumers.

The biggest limitations for growth in the EV segment are battery costs and range, and the lack of proper infrastructure. Many consumers living in metropolitan areas would like to get an EV, but aren’t able to for reasons like not being able to charge it in their apartment complex garage or lack of nearby charging stations. Ultimately, mass adoption will require sufficient infrastructure to be in place, and we aren’t quite there yet.”

Top electric vehicle sales yearto-date include the Nissan LEAF, Tesla Model S, Chevrolet Volt, Toyota Prius PHV, and the Ford Fusion Energi. The Mitsubishi I-Miev saw the most significant decline, but a new version is expected to be released later this year. Declines were also seen in the Tesla Model S and Chevrolet Volt.

“It appears the increased fuel efficiency of regular gas engine vehicles, as well the rising popularity of pure EVs has made a dent in

36 | DEALER BUSINESS JOURNAL May 2014

demand for hybrids,” said Toprak.

“Some early adopters are now opting for EVs because they feel hybrids aren’t as eco-friendly as the pure EV alternatives available. Regardless, hybrids are here to stay and are still the most practical option for the majority of environmentally conscious consumers.”

Without taking into account ramp-up of new vehicle entrants, Top 10 Electric Vehicle Sales Make/Model Nissan LEAF Tesla Model S* Chevrolet Volt Toyota Prius PHV Ford Fusion Energi Ford C-Max Energi Ford Focus Electric smart ED Chevrolet Spark EV Porsche Panamera S-E EV Industry Total

the Lincoln MKZ, Hyundai Sonata, Lexus CT200h, and Kia Optima Hybrid are leading the hybrid segment with the biggest increases thus far in 2014. The most significant hybrid model drops include the Chevrolet Malibu Hybrid, Toyota Highlander Hybrid, Ford C-Max Hybrid, Toyota Prius V, Toyota Camry Hybrid, and Toyota Prius Liftback.

YTD 2014 5,184 3,800 3,606 3,296 2,211 1,633 406 405 272 254 21,881

YTD 2013 3,539 4,900 4,244 2,353 414 1,166 419 2 - - 17,963

Year over Year 46.5% -22.4% -15.0% 40.1% 434.1% 40.1% -3.1% 20150.0% N/A N/A 21.8%

YTD 2014 25,518 9,606 8,833 8,782 6,001 5,677 4,000 3,933 3,616 3,19 101,906

YTD 2013 34,981 10,266 9,865 12,434 8,525 4,256 3,245 8,511 3,125 4,039 121,111

Year over Year -27.1% -6.4% -10.5% -29.4% -29.6% 33.4% 23.3% -53.8% 15.7% -20.9% -15.9%

*Estimated sales

Top 10 Electric Hybrid Sales Make/Model Toyota Prius Liftback Ford Fusion Hybrid Toyota Prius C Toyota Camry Hybrid Toyota Prius V Hyundai Sonata Lexus CT200h Ford C-Max Hybrid Kia Optima Hybrid Lexus ES Hybrid Total Industry Hybrid Sales

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May 2014 DEALER BUSINESS JOURNAL | 37

INDUSTRY NEWS

Technology Update Automated Systems No Substitute for Driver Engagement

A

dvanced driver assistance systems (ADAS) offer a significant opportunity to reduce collisions, improve traffic flow and enhance driver convenience.

However, motorists may not fully understand the operation and limitations of these technologies. AAA’s research found that the assumptive gap poses a risk for distracted drivers. Although the adaptive cruise control and autonomous braking systems performed as described in the owner’s manuals, motorists unfamiliar with these devices may not be prepared for instances when the technology does not engage.

“There are significant benefits to this technology, but these systems have limitations, and multitasking drivers could be caught off guard by relying too heavily on safety features,” says John Nielsen, managing director, AAA Automotive Engineering and Repair. “The benefits of these systems could easily be outweighed if motorists are not familiar with their operation or lessen focus behind the wheel. Technology is not a substitute for an alert, engaged driver.”

The National Highway Traffic Safety Administration’s New Car Assessment Program highlights crash-avoidance technologies “to help consumers buy a safer car.” These systems can alert a driver to a potential crash, adjust the vehicle’s pace to maintain a pre-set speed, and even brake independently to avoid a collision. Automakers are ramping up ADAS deployment to maximize safety benefits, increasing motorist exposure to autonomous systems.

To better understand how adaptive cruise control and autonomous braking function, AAA conducted test-track simulations consisting of a variety of typical

commuting scenarios. Overall, the simulations demonstrated that adaptive cruise control did a good job of maintaining a specified following distance when traveling behind slower-moving vehicles in a highway setting. However, autonomous braking systems did not always recognize obstacles, provide a warning signal or engage the brakes to slow or stop the vehicle. AAA’s research team also observed that: • Adaptive cruise control systems performed best when following more closely than AAA’s recommended three-second rule.

• Tracking a vehicle at highway speeds while navigating a mild curve was unexpectedly difficult, but improved when following distance was reduced.

• The ability to recognize obstacles varied between vehicles. The owner’s manuals for these vehicles warn that the systems may not recognize or react to motorcycles, a stopped vehicle, traffic cones or other obstructions.

Automakers have noted system limitations in owner’s manuals; but there are many indications that motorists often do not fully read the manual.

Television commercials highlight capabilities without any indication of system limitations, and that input is the primary source of motorist knowledge about what these systems can do. AAA suggests safety gaps could be reduced if automakers enhance communication to make clear and obvious the limitations of these systems and motorists become thoroughly familiar with all the technology in their car including advanced driver assistance systems before operating the vehicle.

Vendor Update KBB.com Named Online Auto Shopping Brand Of The Year

F

or the third year in a row, KBB.com is awarded Online Auto Shopping Brand of the Year in the Harris Poll EquiTrend® study, announces Kelley Blue Book www.kbb.com, the only vehicle valuation and information source trusted and relied upon by both consumers and the automotive industry.

The Harris Poll Brand of the Year is awarded to the highest ranking brand in its category of Brand

38 | DEALER BUSINESS JOURNAL May 2014

Equity, which provides an understanding of a brand’s overall strength and is determined by a calculation of quality, familiarity and purchase consideration. KBB. com achieved the honors by exceeding its competitors in its ability to establish a substantial connection with consumers in elements such as the brand’s ability to meet expectations, to be trusted, to be relevant to consumers’ lives, and to elicit positive emotional reactions.

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May 2014 DEALER BUSINESS JOURNAL | 39

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