Dealer Business Journal, November 2013 by Dealer Business Journal

WHAT YOU SHOULD

KNOW ABOUT COLLECTIONS 10 Things Every BHPH Dealer Needs to Consider Page 14 Forecasting for 2014 Page 6

As Is Versus Warranties Page 26

Selling to the Special Finance Customer Page 34

FULTON, MO PERMIT NO. 38

PA I D PRST STD U.S. POSTAGE

...Your Success Is Our Business

November 2013 DEALER BUSINESS JOURNAL | 1

2 | DEALER BUSINESS JOURNAL November 2013

DealerBusinessJournal.com

Contents

November 2013

LEGAL & LEGISLATIVE

By Tom Hudson

General Counsel 14 10 Things You Should Know About Collections Rules and best practices for starting the collections process with a customer.

By Debra Dawn

LEADERSHIP & TRAINING Learn to Lead 18 Your Role as a Catalyst Learning how to step up your role as a daily leadership catalyst. By Dave Anderson

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BUSINESS OPERATIONS

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Online Optimization 22 5 Calls to Actions That Boost BDC Sales Make your website work at optimum levels with help from a BDC.

By Greg Wells

Facility Upgrades 24 Smart Ballast Technology Drives Energy Saving Solutions for Dealers How changing out exterior lighting can save energy costs and enhance the look of your dealership.

By Christopher Crawford

Warranty Options 26 As-Is or “We’ll Take Care of That?” Decide which way you will lean, As Is or standing behind the sale.

By Tim Byrd

Page 6

Smart Staffing 28 Cross Employee Utilization and Training Take a deep look at the processes and people you have in place.

Forecasting and Budgeting for 2014...

...Your Success Is Our Business

LER 2013 DEA

CORNER OFFICE FRONT LINE BHPH BOOT CAMP IMPROVING PROFITS Industry News

PRST STDGE U.S. POSTA

Legal Opinion 12 Wanna Be a Football Player? Compliance takes practice and effort.

4 6 8 10 36

ULD OU SHO WHAT Y BOUT

N, FULTO NO. 38 PERMIT

Volume 10, Issue 11

IN EVERY ISSUE

By Robert N. Parnas

Business Basics 30 10 Things I’ve Learned In Business Reflecting on a fifty year career at J.D. Power.

By James “David” Power III

SALES & SERVICE Sales Advice 34 The Entitled Mutt: Selling the Special Finance Customer Who Wants it All Getting in the mindset of today’s subprime customer.

By A.J. Ager

Female Perspective 38 Smarter Selling to Women—Appeal to the Senses! Speak to women by speaking to the five senses.

By Jody DeVere

November 2013 DEALER BUSINESS JOURNAL | 3

LEEDOM GROUP

Corner Office Give Thanks This Month . . .

his month we obviously recognize one of our major national holidays – Thanksgiving. It is a time to slow down a bit, enjoy time with friends and family and reflect on that for which we are thankful. Many of us are fortunate to participate in an industry which is most rewarding; where we have a chance to earn an attractive living, sell a product that is one of the symbols of America—the automobile—and enjoy the good life. Some of you reading this probably had an outstanding year. Others perhaps, not so much. In either case, you can probably find many things to be thankful about. As you reflect on the year think about what went right and what went wrong. How can you continue what went right into next year and how do you fix what went wrong? How do you learn from those mistakes and continue your success in the automobile business? Recently I was working with a dealer group and I was struck by how much they really did well—not just good, but extremely good. The main reason for this high level of performance was that they trained for it and they expected it! I often hear dealers I meet say “my team just isn’t that capable.” Perhaps it is time to change your expectation and set a different standard. Our business is becoming more competitive and costly each and every day. Whether it is impacted by other dealers in our market that continue to improve or by outside forces like increased regulation, it simply costs more and takes more effort to succeed. As you have some “downtime” between now and the end of the year truly assess your business and determine “what should we be doing differently?” and “how do we compete at a higher level next year?” I believe that more and more dealers are being forced to think this way and it is simply another thing to be thankful for—the opportunity to be challenged! As President of the Leedom Group, I want to personally thank each of you for your support during 2013. We are very grateful for that. Whether you are a Twenty Group member, a consulting client of the Leedom Group, a partner of PayMaxx Pro or a sponsor or exhibitor of one of our premier industry events we appreciate the opportunity to work with you to continuously improve our business. It is truly a pleasure to work with those that are passionate about our industry. We look forward to a continued relationship in 2014. This is another issue packed with great information to help you analyze and assess your business. Feel free to interact and email our guest columnists and ask questions. Each month we receive dozens of email interactions with these experts and contributors. They love to hear from you! So now I invite you to read on and have a great finish to 2013. Happy Thanksgiving!

dealer BusinesS JOurnal

A L e e d o m G r o u p P u bl i c a t 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

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 November 2013

DealerBusinessJournal.com

...Your Success Is Our Business

November 2013 DEALER BUSINESS JOURNAL | 5

LEEDOM GROUP

Front Line

By Chuck Bonanno

Forecasting & Budgeting for 2014

t’s that time of year again. The holiday season is a time to spend with family and loved ones and it is also a time to reflect upon the events of the past year and look to the future. Did we achieve our goals both personally and professionally? What went right this year? What went wrong? Did we forecast our revenues correctly? Did we stick to our budgets? Did we set goals for 2013? Did we have a plan to reach those goals? Are we prepared for 2014? Have we made a 2014 resolution to create a sales forecast and budget? Whether we had a plan for 2013 or not, now is the time to prepare for next year. Now is the time to forecast sales and revenues for next year. Now is the time to create and implement a budget for 2014. In these uncertain times it is more important than ever to plan for the future and not just “accept” it. The time we spend now planning for next year can pay big dividends next year. The goal of this process is to retain maximum profits in the year 2014. The process itself is fairly simple. We need to forecast sales and revenues with a certain degree of accuracy and then budget accordingly so that we can

achieve net profit goals. So where do we begin? First we begin by forecasting or predicting unit sales, gross profit margins, cash collections, and finance charge income and charge offs. We use historical data and incorporate all external factors that may affect next year’s business. We then spread unit sales by month over the entire year. If we apply our gross profit target to those sales, we can determine our operational gross profit as well as project our direct (selling) expenses. As BHPH dealers, we also have to forecast how well our portfolios will perform. Forecasting our portfolio growth or liquidation, our cash collections, our finance charge income and our net charge offs will allow us to determine the level of expenditures needed to manage our portfolio. Our historical data will serve as the basis for our forecast of how our portfolio will behave next year. This part of the process is the most difficult to complete because we inevitably want to be optimistic about the future but be advised that a conservative approach will work best. It is much easier to modify our forecast if business exceeds our projections than if these

6 | DEALER BUSINESS JOURNAL November 2013

projections fall short. The second half of this process is preparing a budget. The first budgeting item is direct or selling expenses. These include items such as advertising and promotion, sales commissions, transportation & freight, vehicle maintenance, floor plan interest and policy work. These items should fall right in line with your sales forecast. If sales rise, these expenses also rise and if sales fall we expect these expenditures to fall as well. The next budgeting item is fixed expenses. You may see rents rise, utilities rise, taxes rise and insurance premiums rise so take that into consideration when budgeting. These items are essentially fixed, hence the name, and there is usually not a lot of room for cost cutting. The two areas where you must control costs to maximize the net profit of your operation are your personnel expenses and operating expenses. Operating expenses are the dayto-day expenses that can nickeland-dime you to death such as telephone, postage, office supplies etc. Evaluate your spending in these areas line by line and ask yourself if you received maximum value for every dollar spent. If Continued on Page 9

The process itself is fairly simple. We need to forecast sales and revenues with a certain degree of accuracy and then budget accordingly so that we can achieve net profit goals. DealerBusinessJournal.com

...Your Success Is Our Business

November 2013 DEALER BUSINESS JOURNAL | 7

LEEDOM GROUP

BHPH Boot Camp

By David Brotherton

The Law of Unintended Consequences

ost people look forward to fall. The air turns crisp as summer green fades to brilliant yellows, oranges, reds and browns. Football is on everyone’s mind. It has always been my favorite season. That is, until I became intimately involved in collections and realized that collectors do not consider the holidays to be the most wonderful time of the year. I’ll paint a familiar picture: Delinquency and charge off have been steadily increasing for most of the past year and those of us with credit facilities are facing increased pressure from losses and ineligible receivables and their impact on the borrowing base. Add to that the problems of having to compete with

Christmas for our customer’s dollars and the expectation that if a customer falls behind, they can catch up with their taxes and…you get the idea. Another problem is that our best, most consistent paying customers are often getting cars elsewhere and are often unceremoniously dropping our car off like last week’s garbage. Losing your best customers to the competition is the financial equivalent of eating your seed corn. We are losing the very customers that are most responsible for positive, consistent cash flow, who know our product the best, and are most likely to have repurchased with us. Now all of that flies out the window when they become someone else’s customers. How do we keep our customer’s accounts on track through the holidays and beyond? And, just as importantly, how do we keep our best customers OUR best customers?

change for us and our customers that technology brings that must be considered as well.

GPS/PAD We have seen the advent of sophisticated GPS/PAD systems that fully integrate with our DMS at price points that make it difficult not to embrace. This technology works so well and so seamlessly at this point in its product cycle that I have a hard time imagining not having access to it. Our industry has embraced this technology to the point that it has become ubiquitous and, frankly, expected by our customers. The cultural change this has brought is that our business has become far more transaction based rather than customer based. Let me say that this is not necessarily a bad thing. Payment Assistance Device technology can be a big boost to collections during the holidays. It can help you carry more accounts per collector because, in part, of the discipline that it teaches the customer. It has Technology has and will made a huge difference continue to make significant for dealers around the improvements in productivity country. It is designed to reduce the amount of in our business model but needed collection activity it is the cultural change for and it does its job well.

us and our customers that technology brings that must be considered as well. Let’s consider the unintended impact technology has on our business model. Technology has and will continue to make significant improvements in productivity in our business model but it is the cultural 8 | DEALER BUSINESS JOURNAL November 2013

ACH/Recurring Auto Debit PCI-compliant payment processing options are available to a degree never seen in our industry. We are able to provide the highest levels of electronic payment processing and automatic payment options available anywhere, in DBJWeb.com

any industry, and we should be proud of the capabilities available for servicing our customer base. Automatic payments can make a huge impact on your earliest delinquency and, when combined with PAD technology, can make it increasingly unlikely to have to regularly collect payments from the vast majority of our customer base. This isn’t a bad thing either. This situation is tremendously preferable to the alternative where we have to collect everyone and don’t have the resources to do so. On-Line/Remote Payment Options On-line and remote payment options (like Pay Near Me, for example) make it easy for customers to make their payments without having to come all the way to the dealership to do so. This technology is hugely efficient and is a blessing to someone who is out of town but still needing to pay on time. Unintended Consequences Here’s the catch: Technology

has reduced our customer interactions. We don’t talk to our customers as much. We don’t see them. We are able to utilize a wider lending radius because of the improved servicing options available today. The unforeseen result is that our customers don’t feel connected to us. Here’s a true story for you to consider: When my sales team brought me a repeat customer deal, I use to tell them that if I didn’t recognize the name, they must be a good customer. In retrospect, that was a bad assumption, but I did not yet have the experience and maturity to recognize it as such. You still have to talk to your customers regularly or reduced delinquency will not result in lower losses. Customers will still give up on service issues and repayment. They will still lose their jobs, have life-status changes and get bored with the car. If we have let our outstanding technology do all of our communicating, the customer has no reason to feel loyal to us

at all and will likely jump when the first salesperson at another dealership says they can get them into a newer vehicle. I’m not saying scrap all of the technology and go back to the pre-digital days. That’s silly. We have excellent technology available. These tools can make everyone’s life easier but technology doesn’t replace the need to maintain relationships with our customers. We have made it easy to buy from us and pay us. We’ve also made it difficult to talk to us, so why should they try? Let’s remember that this business is about people first and foremost. Let’s go out of our way to contact our customers, thank them for their business and update their contact info. Be as aggressive in customer service as we are in collections and you’ll see a longterm benefit to your portfolio. David Brotherton is a consultant and Twenty Group moderator with the Leedom Group Contact him at davidb@leedomgroup.com

FORECASTING AND BUDGETING continued from Page 6

your supply room looks like Office Depot, something is wrong. Personnel expenses are typically the largest so evaluate every employee, their position and their duties. Review your benefits package and eliminate overtime. Once you have determined these budgeting items for next year and matched them with your sales and revenue forecast you should have a clear picture of your projected net profit. If you don’t like what you see, now is the time to address it. At this point, go back through every budgeted item to determine ...Your Success Is Our Business

cost cutting needs and make the cuts now. It is much easier to address these cuts now than to make the inevitable deep, painful cuts next year. When you are satisfied that you are as trim as you can be, then, and only then, should you revisit your sales and revenue forecasts to see if you can modify these numbers upward. Lastly, you must revisit your forecast and budget each and every month during 2014, analyze results and make revisions to the budget and forecast for the remaining months. If you review and revise

your forecast and budget on an ongoing basis, you will be taking a proactive approach to your business and will not wake up next October or November crying, “What happened to my business this year?” Chuck Bonanno is the executive vice president and senior partner of the firm, Leedom and Associates, LLC. He is an Executive Conference Moderator of Buy Here-Pay Here and Automotive Finance Twenty Groups. He is a nationally recognized speaker, author, industry trainer and consultant. chuck@twentygroups.com.

November 2013 DEALER BUSINESS JOURNAL | 9

LEEDOM GROUP

Improving Profits

By Jay Prassel

Taking it to the Next Level

s we prepare to close on 2013, some dealers are looking for answers and ideas to improve the profitability of their used vehicle department. Regardless of exactly what that “next level” may be for your dealership, you will need a welldefined game plan. Benchmark dealers, and their managers, look for solutions, not excuses. If you are not satisfied with your current results, we can help. Leedom Group offers a comprehensive one-and-half-day Used Vehicle Academy for new car and independent dealers. In this workshop used car managers, general managers and dealers will experience proven techniques, ideas and best practices to achieve

up, you’re probably being outmanaged by your competition. How well have you, and your dealership, utilized the tools that are available? Inventory management systems can assist in appraising and analyzing market conditions such as market days supply, pricing and stocking levels. They can also help locate the places to acquire the right Inventory Management Inventory management is the key to maximizing profits and the dealers with the discipline to set and implement best practices will experience great results. We’ll discuss solutions and share best ideas to eliminate, or at least reduce, these issues. Market Based Pricing & Market Days Supply. How well are you pricing your vehicles based on the days supply in

The technology used and needed in today’s business environment has grown at such a fast pace that if you’re not keeping up, you’re probably being out-managed by your competition. benchmark results. This academy will cover some of the myths about used vehicle inventory and eliminate the roadblocks such as 30-day stocking level, pricing, reconditioning, sell your way out, aging and staffing. The technology used and needed in today’s business environment has grown at such a fast pace that if you’re not keeping

your market? Vehicles with a higher day supply will need to be priced at “less than market price” to compete with the saturated market. We will also develop a Bucket List, based on days in inventory, to adjust prices to market. Action Plans One cannot hope to succeed without first developing and

10 | DEALER BUSINESS JOURNAL November 2013

implementing a plant of action. Here are some of the basics we’ll cover: • Acquiring Inventory. Cars are hard to find and are over book? • Buyers typically go to the same auctions and expect different results. • Certified Vehicles • As Is Vehicles • Late model – High Mileage Vehicles Yes, it has become more difficult to find the right inventory. We will share best ideas and practices to help improve getting the right inventory. We will review the quality of your inventory. • Define overvalued inventory • Dollar amount • What caused it? • We will share best ideas/ practices from benchmark dealers and develop Action plans. Key metrics to look at: • Dollar Days Supply • Unit Days Supply • Inventory Turns • Return on Investment We have worked with dealers to help them understand how these four key metrics are calculated by utilizing proven worksheets. Staffing & Recruiting It has never been easy to build a great sales team and it must be an ongoing process. Most dealerships do not have the “horsepower” to achieve their forecasted sales. Utilizing our worksheet, we will DealerBusinessJournal.com

Buy Here-Pay Here From page 8 digest the first one. You have to look at reports, see what is available and see the integration for yourself. This is the most critical point in the relationship where it’s time to make a commitment. Training Willthe your provider sendaverage people to you to install and train? How Reconditioning take salesperson’s much support is included? With the high cost monthly sales for the last 90 days

CONFUSED ABOUT

COMPLIANCE?

needs to eliminate any excuses for them not to buy! of acquiring vehicles, the and calculate how many sales can Benchmark dealers who want Fear of Change reconditioning turnaround beBeing produced. that can a more profitable used vehicle changing afraid ofFrom change is awe good thing when considering your DMS solution. person in your organization will time is vital tohave the success and determine if weEvery needsingle additional operation have a game plan. Is to start zero.many. Everything will be different.profitability Speed and effiof ciency the department. staffback andathow We often ready? COMPLIANyours CE A UDIT: will dropthat in the short-run andthe youaverage may have to doWe a lotwill of double-entry discuss ways to improve find even though You deserve to have a better to ensure that the data is maintaining its integrity and the new DMS is the process to 48 to 72 hours, in monthly sales per salesperson are . . year in 2014. See you soon at our . s working as advertised. Accounting integration won’t be the same, etc. uptcieUsed Vehicle Academy. r k n most cases. Benchmark dealers above benchmark, the dealership is a Knowing all of this means you should not make this sort of decision B ns... cavalierly: it is a big deal to change systems and you to make areneed doing it bysure having a structured under staffed. gulatio e R . . ing. is the Leedom and nsPrassel that theDo newwe features worth the price. process with total buy-in from all...LiceJay have are Salesperson departments. Performance Standards set? Associates Vice President, Directors... Growth Plans m .Forof We will cover the entire Is Does thereyour a structured training of Operations. Jay has 37..years DMS have new functionality in mind? Are they enfrom wet program in place? Has the pay automotive experience and has hancing reporting, integration or analysis? Your process DMS needs to mechanical, be in a position to grow with you. Do last you want an innovator bay andand dryindustry bay operations. Your plan been reviewed in the worked with over 300 dealerships as or are ed with a follower leader (read more expensive here) reconditioning needs to exceed year? Is compensation within theyou satisfi a profit improvement consultant and AsBenchmark? I said before, our business runswill on data. that only data isthe captured, competition but also Action Plans be Hownot Twenty Group moderator. interpreted, utilized and analyzed is absolutely critical to growing your your customers expectations. It developed to achieve our goals. jay@leedomgroup.com business and maintaining your competitive advantage. This is the most

LEEDOM CAN HELP.

critical system you will make in your business.

...Your Success Is Our Business

Debra Dawn • 800.966.8733 • debra@leedomgroup.com • leedomgroup.com

September 2013 Dealer Business Journal 19 November 2013 DEALER BUSINESS JOURNAL | 11

LEGAL & LEGISLATIVE

Legal Opinion

By Tom Hudson

Wanna Be a Football Player?

uying a football won’t make you a football player. And buying F&I compliance tools or forms from a reputable forms supplier won’t make you compliant with the laws that apply to your operation. Achieving compliance in your F&I operations requires genuine effort and hard work. So many times, when I’m done with a presentation at a dealer conference describing some new legal threat against dealers, a dealer will come up to me and say, “Tom, can’t you just give me a form to solve that problem?” I could give the dealer a football, but it won’t turn him into Peyton. I can give the dealer a form, too. A good form – one that complies with federal and state law. But that doesn’t always solve the compliance problem. The deal jacket reviews we do for dealers have convinced me that there’s no substitute for a dealer actually going to compliance school. We see forms that comply with state and federal law until the dealer actually fills in the blanks, creating violations where none existed before. Perhaps the dealer decides that he will add an “administrative fee” or “documentary stamps” to the amount financed in the retail installment sales contract, without

bothering to determine whether such fees are permitted or regulated by state law. Or the dealer will use a complying form with another form that is inconsistent with the complying form, again, creating a problem where previously none existed. Perhaps the dealer uses a complying window sticker and buyers order, with both documents describing the sale as an “as-is” sale, but also offers a written warranty. The concept of an as-is sale and a warranty don’t go together, so combining the forms (each of which is in compliance in and of itself) in this way doesn’t work. We haven’t figured out yet how to bore a hole in a dealer’s head and pour in the knowledge a dealer needs to stay on the right side of the law. Until we do, a dealer has a couple of choices. Either the dealer can hire the compliance chores don by a lawyer, always a pricey proposition, or the dealer can “go to compliance school.” By “go to compliance school,” I’m not actually referring to a school. As far as I know there is nothing like a brick and mortar compliance school for dealers. And I don’t believe that even Northwood University, which offers a course of study for dealersto-be, has a study track devoted to

12 | DEALER BUSINESS JOURNAL November 2013

compliance. Heck, I don’t know offhand of any law school that offers specialized classes in the area of vehicle sales, financing and leasing. Which isn’t to say that there aren’t some good training tools available for dealers. One of the best is a course offered online by the Association of Finance and Insurance Professionals. AFIP’s course is as comprehensive as any I know of, and the completion of the course results in a certification from AFIP of the student’s successful training. AFIP also offers refresher courses that permit those who are AFIP certified to renew the certification periodically. So don’t just buy a football. Join a team, get yourself a playbook and start going to practice. 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®, a monthly report of legal developments in all states for the auto finance and leasing industry. For information, call (410) 865-5411 or visit www.counselorlibrary.com.

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Advertiser Index ADVERTISER PAGE Advantage Funding 29 A.R.A. GPS 11 AUTO LAW GROUP 35 Autoraptor.com 37 CAR Financial 19 CLIFTONLARSONALLEN 13 COUNSELOR library 32 Dave Anderson 27 dealercenter 7 DealerRE 29 finance express 15 SECURITY AUTO LOAN 2 SFG FINANCE 33 SPARTAN FINANCIAL 5 Sterling Credit Corporation 23 TAX REFUND SERVICES 25

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Calendar JANUARY Jan. 7, 2014 Jan. 8, 2014 Jan. 9, 2014 Jan. 14-15, 2014

Manager’s Boot Camp, Houston, TX Collections Boot Camp, Houston, TX Sales Training Boot Camp, Houston, TX Used Vehicle Academy, Sarasota, FL

FEBRUARY Feb. 4-5, 2014 BHPH Training School, Sarasota, FL Feb. 6, 2014 LHPH Training School, Sarasota, FL MARCH March 11, 2014 Manager’s Boot Camp, Chicago, IL March 12, 2014 Collections Boot Camp, Chicago, IL March 13, 2014 Sales Training Boot Camp, Chicago, IL APRIL April 14-16, 2014 20th Annual BHPH World Convention Las Vegas, NV April 23-24, 2014 BHPH Training School, Sarasota, FL JUNE June 3, 2014 Manager’s Boot Camp, Dallas, TX June 4, 2014 Collections Boot Camp, Dallas, TX June 5, 2014 Sales Training Boot Camp, Dallas, TX ...Your Success Is Our Business

JULY July 9-10, 2014 BHPH Training School, Sarasota, FL AUGUST Aug. 5, 2014 LHPH Training School, Sarasota, FL SEPTEMBER Sept. 2, 2014 Sales Training Boot Camp, Atlanta, GA Sept. 3, 2014 Manager’s Boot Camp, Atlanta, GA Sept. 4, 2014 Collections Boot Camp, Atlanta, GA NOVEMBER Nov. 3-5, 2014

BHPH SuperGroup, Sarasota, FL

DECEMBER Dec. 1-3, 2014 Dec. 9-11, 2013 Dec. 18, 2013

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

Find out more about these events and more online at www.TwentyGroups.com. November 2013 DEALER BUSINESS JOURNAL | 13

LEGAL & LEGISLATIVE

General Counsel

By Debra Dawn

10 Things You Should Know About Collections 1. Determine whether you are subject to the FDCPA If you are a first party collector, you are not subject to the Federal Debt Collection Practices Act (FDCPA). The term “first party collector” means you must be collecting your own debt. If your dealership has an RFC and the RFC initially entered into the contract with the customer, the RFC is collecting its own debt and is not subject to the terms and conditions set forth in the FDCPA. If, however, the dealership assigns the contract to the RFC and then the dealership attempts to collect the debt on behalf of the RFC, the dealership becomes a third party debt collector subject to the terms of the FDCPA. There are four key provisions in the FDCPA: (a) Do not misrepresent yourself; (b) Do not harass your customer; (c) Do not disclose any information to a third party; and (d) Place the following disclosure in all correspondence with the debtor: “This is an attempt to collect a debt and any information will be used for that purpose.” However, just because your dealership may not technically fall under this statute does not mean that you can repeatedly call customers at all hours or be verbally abusive. Violating the key prohibitions of the FDCPA can expose you to liability under the Unfair and Deceptive Trade

Practices Act (UDTPA). This is a federal statute. In addition, virtually every state has its own version of the UDTPA which you can simultaneously violate. This means that good business practice calls for adherence with the major provisions of FDCPA even if your dealership is not technically subject to that law. 2. Provide written notice of default Although state laws can vary, sending at least one final default letter explaining in detail what will happen once the vehicle has been repossessed. A well drafted legal demand letter can sometimes encourage payment, especially since both the buyer and co-buyer need to be notified. A default letter sent to a co-buyer can put pressure on the primary borrower that no number of collection calls can achieve. 3. You do not need a license to repossess your own vehicle If the individuals you send to repossess the vehicle work for the corporate entity that owns the vehicle, you do not need a license to repossess it. For dealerships with many repossessions, establishing in-house towing capabilities may be worth looking into. This is especially true insofar as any repossession company your dealership hires is your agent. This means that their actions in repossessing the vehicle may be imputed to your dealership. Furthermore, if any acts are criminal in nature, your insurance

14 | DEALER BUSINESS JOURNAL November 2013

policy will not cover either the damages or cost of defense. 4. You can collect in bankruptcy if the debtor assumes or reaffirms the debt and subsequently defaults Many dealers believe that once bankruptcy is filed, collection and/or repossession is no longer a viable option. This is far from true. Regardless of whether your customer filed Chapter 7 or Chapter 11, if the debtor assumes or reaffirms the debt and then defaults, you are free to collect on and/or repossess the vehicle. A Chapter 7 Reaffirmation Agreement must be in writing and the terms approved by the court, while assumption of the debt occurs via confirmation of the Chapter 13 bankruptcy plan. Once either occurs, the vehicle is outside the scope of bankruptcy protection. In addition, if the debtor does not agree to assume or reaffirm the debt, you can file a Motion for Relief of Stay with the bankruptcy court. If this Motion is granted, you will be permitted to repossess the car while the bankruptcy is still pending. 5. After repossession, you must send notice to the customer before resale All states require dealerships to provide notice to their customer of their intent to sell the vehicle. This notice provides a statutory time period within which customers have an opportunity to redeem the vehicle. Each time you repossess, a Continued on Page16 DealerBusinessJournal.com

...Your Success Is Our Business

November 2013 DEALER BUSINESS JOURNAL | 15

LEGAL & LEGISLATIVE COLLECTIONS continued from Page 14

notice and opportunity to redeem must be given unless you have an honest belief that the collateral is endangered (ie. the vehicle is leaving the country) and the provisions of the Retail Installment Sales Contract give the dealership this right. 6. In order to pursue a deficiency balance, you must follow certain procedures. Many dealers operate under the misapprehension that, if they sue, they can recover the exact dollar amount they would have received if the customer never defaulted. This is not accurate. First, any monies received must be credited to the account. This includes: (a) any payments from buyers and cobuyers; (b) Any proceeds received

Many dealers operate under the misapprehension that, if they sue, they can recover the exact dollar amount they would have received if the customer never defaulted. This is not accurate. from the sale of the vehicle; and (c) Any pro-rated insurance refunds or credits. Second, additional monies owed by the customer must be added to the debt. This includes: (a) Collection expenses; (b) Towing; (c) Costs of resale (such as detailing or auction expenses); and (d) Attorney’s fees and costs. The total may be more or less than the yield of the original payment stream. If you intend to collect a deficiency balance, the car cannot be sold back to the dealership. It must be disposed of at auction or sold

to another dealership in an arm’s length transaction. Only through an arm’s length transaction can fair market value be determined. 7. If you are recording outbound or incoming collection calls, be aware of state wiretapping statutes that require one or two party consent In order to record incoming or outgoing calls, and your dealership is in a one party consent state, you must obtain the consent of your employees before you can record any collection calls. In order to avoid any question of whether consent was properly obtained, this consent should be in writing and a copy kept in the employee’s personnel folder. If you (or your customer) are located in one of the states where all party consent for wiretapping is required, not only must you obtain the consent of your employees, but you must also have the permission of the customer. This applies to both incoming and outgoing calls. For incoming calls, consent may be properly obtained by a recording stating, “This call may be monitored for quality control purposes.” For outgoing calls, however, no recording is usually present. This means that collectors must be trained to make the disclosure statement BEFORE commencing any conversation. If the customer declines to give permission to record, the call must be terminated. 8. If you record collection calls, neither credit nor debit card numbers may be recorded. If your collectors are successful in obtaining phone payments, the account numbers utilized by the debtor may not be recorded. This means you have to either provide collectors with a way to

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stop recording when the account numbers are being provided or, in the alternative, set up one single non-recorded line and forward all payments to that extension. 9. Single ACH payments must be confirmed either by a simultaneous recording or a follow-up letter Pursuant to NACHA rules, single ACH payments that are not made over a recorded line (with the recording containing not the entire bank account number, but only the last four digits) must be confirmed by sending a letter to the customer who authorized the transaction. This is not the case for recurring ACH debit entries where written consent for continuing payments is provided in advance. 10. Obtain a power of attorney from your customer at contract inception to avoid insurance collection issues If you provide an insurance Power of Attorney form (POA) from your customer at the commencement of the deal, the dealership has the ability to negotiate with an insurance company on the customer’s behalf. This procedure guards against the customer negotiating an insurance settlement and cashing the check without the knowledge and/or approval of the dealership. This POA enables you to negotiate the best deal for an individual transaction regardless of whether a claim is made against the policy of the customer or that of a third party. Debra Dawn is Leedom Group’s General Counsel and Compliance Director Debra Dawn has formed AUTOLAW Group to assist dealers in all facets of dealership compliance. debra@leedomgroup.com DealerBusinessJournal.com

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November 2013 DEALER BUSINESS JOURNAL | 17

LEADERSHIP & TRAINING

Learn to Lead

By Dave Anderson

Your Role as a Catalyst

he dictionary defines catalyst as “a person or thing that makes something happen.” Rarely is it that such an economy of words so accurately describes the expected role of any dealership leader on a day-in, day-out basis. The bottom line is this: leaders get paid to make things happen both personally, and through each team member. No high-value leader goes to work each day to wait for something to happen, or to watch it happen, and then wonder at day’s end, “What happened?” Unfortunately, many low-value leaders do this often, waiting until the month’s final five days to find some heart, guts, urgency and demonstrate leadership. In fact, many dealerships are burdened with one or two “pretenders with titles”, who we can only assume jumped into the leadership gene pool while the lifeguard wasn’t looking. These cultural infections will eventually destroy your business if you let them. There are three laws of physics that, when understood and applied, greatly aid leaders in their role to act as a daily catalyst. To avoid the potential boredom inherent in any discussion of physics, I’m presenting the paraphrased layman’s term versions of these three important laws: 1. Objects in motion tend to stay in motion; objects at rest tend to stay at rest. 2. Things naturally wind down, rather than up, unless outside energy is applied. 3. Entropy increases, or things get worse, over time in a closed system. But if you bring in a new source of energy, entropy can be reversed. Considering law number one, you can easily substitute the words “salespeople” or “managers” for “objects” and see this law routinely lived out on an average dealership Tuesday, Wednesday or Thursday in the early stages of a month. Considering law number two, it is the leaders who must assume the role of “outside energy” necessary to cause activity, momentum and results to wind up on days when they’d normally slide back. This must be a daily discipline, and not a role they assume only when time is running out, or the numbers are down. Too many leaders wait for energy to come from the outside

18 | DEALER BUSINESS JOURNAL November 2013

in order to stir up momentum within their team: a new ad, incentive program, or better inventory. This passive approach is a trait inherent in leadership amateurs and ensures an organization will never approach its fullest potential. As for law number three, there are a number of daily leadership strategies that can serve as new, consistent sources of fresh energy to stave off or reverse entropy. Following are three simple, but highly effective examples: 1. Early morning “war room” meetings. These should last no more than 15 minutes and do the following: • Review yesterday’s results versus objectives. Acclaim good performances, discuss shortfalls, confront problems and make adjustments. • Discuss today’s daily goal, and the plan to get there. Assign individual duties to team members to make it happen. • Remind the team of the vision, values and mission that unifies them. Encourage them to look out for one another, and to look for ways to make the customer say “wow” throughout the day. This meeting should be repeated when a new shift begins. At companies like the Ritz Carlton these gatherings are called pre-shift huddles and have been instrumental in building their unique, high performing culture over the decades. 2. Daily management “wander-arounds” periodically during the day. Schedule time to put aside the paperwork and engage in people-work by regularly getting in the trenches to observe, coach, support, give feedback and engage team members and customers alike. You can’t expect to create energy and make positive things happen relying on memos, voicemails or email. I’m often astonished by leaders whose daily habits suggest they think it entirely possible to sit their way to the next level while polishing a chair with their rear end. 3. Schedule and consistently conduct one-onone coaching sessions. These developmental disciplines give you the chance to listen to, coach, reinforce, focus and challenge each team member on an individual basis. One-on-ones should be scheduled on your calendar and conducted distraction-free. DealerBusinessJournal.com

In addition to deliberate infusions of energy fueled by war room meetings, consistent daily wander-arounds and scheduled one-on-one coaching sessions, your dealership should have set cultural assets that naturally create focus, motion, and energy on an ongoing basis. These assets should include, but are not limited to: • Clear, written, well-communicated performance standards; both for expected daily activities and monthly forecasts. • Clear, written, well-communicated core values and a unifying mission statement that create clarity for expected daily behaviors and serve as a decisionmaking filter for each team member. • Strong accountability for both performance standards and core values. This includes preestablished consequences for failing to perform chased up-to-standards; a vehicle. progressive discipline is effective In addition to ramping up its marketing, TrueCar is now looking in this regard. at a related though as yet relatively untapped market — independent • Highly structured with heavy to focus dealers. Potter said TrueCardaily has routines always had theaability provide on daily activity expectations. It’s incumbent upon this service to independent dealers, but now the company is gearing up. It purchased booth for the independent dealer trade show leaders toa new create a structured framework for their circuit and was a sponsor at the June National Independent Automoteam members to keep them focused on productive bile Dealer Association Convention and Exposition. actions and to ward off complacency. Executing this “The total loss product we have fits in very well with used veresponsibility addresses allunit three of the leadership hicles since the average total loss runs between $8,000 and physics listed previously.typically have the lower-cost $12,000,” Potterlaws noted. “Independents units fit well with replacement vehicles.” • that Let’s conclude with five quick questions to assess Because TrueCar can easily workleadership with franchise dealerships’ your effectiveness as a daily catalyst: DMS systems, the pay-per-deal model works best in states 1. Are you more prone to think, “What can Ithe make where it’s allowed. Fragmentation among DMS systems among inhappenrequires for myateam today?”, or “Imodel. wonder what can dependent dealers subscription-based Pricing the team will do today?” on a daily basis? range from $299 to $2,500 a month depending on the volume of inventory2. at the dealership. What percentage of your day do you spend with “At the“stuff NIADA showpeople? our booth was literally overcrowded,” ” versus Potter said. “Dealers know about us, and were excited to learn we 3. How much energy, urgency and momentum had a product available for them. We will continue to roll out our in your department on an average product lineexist to independents at various events across theTuesday country.” or Thursday; 8th,and 10th or 12th of atomonth? The company is also the testing getting ready roll out nationally4. a private-party to private-party andbetter private-party to dealer Are you leaving your people than you vehicle purchase Thehow ideamuch came of about the military foundprogram. them, and theirfrom growth can members inbe their affi nity portfolio who often have to move attributed to market conditions, versus yourfrom base to base or get deployed overseas. They very much like the idea involvement as their leader coach? of being ablepersonal to put their vehicle on the site and sell itand quickly, easily 5. If I started to work in your department today, and get a fair price, Potter said. “Would-be sellers are asked answer about in 50writing: questions recould you should metothe following garding the your vehicle,” he said. “Was the vehicle smoked in? Are the departmental vision, mission, core values, headlamps fogged? We ask for a Carfax or AutoCheck and as well as my performance expectations on adealers and other private individuals can purchase the vehicle.” daily, monthlysetting basis?and another member It’s done in anweekly online and auction-like deficient tonity these questions comprise of theirAny credit union oranswers other affi partner can purchase the vehicle or ablueprint used car manager can buy your for stepping up it.” your role as a daily The program has runand for aligning three months a beta test and leadership catalyst, yourinleadership styleseveral hundred vehicles were sold. Potter said the program will with the laws of physics to elevate your dealership.roll out na-

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tionally soon. “We don’t like to even use the phrase ‘lead-generation’ about Anderson president LearnToLead. He is an ourDave service,” Potterissaid. “We of prefer the term ‘introduction.’ It does international 1,000 leadership more accuratelyauthor reflect and whatspeaker, we do.giving We introduce the buyer to the presentations the past decade in 14 countries. Call they are seller and detail over the parameters of the price of the vehicle interest in. It’s worked forlearntolead.com, hundreds of thousands of sales and 818.735.9503, e-mail well dave@ or visit www. now we’re getting ready expand.” learntolead.com. FollowtoDave on Twitter @DaveAnderson100. ...Your Success Is Our Business

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20 | DEALER BUSINESS JOURNAL November 2013

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November 2013 DEALER BUSINESS JOURNAL | 21

BUSINESS OPERATIONS

Online Optimization

By Greg Wells

5 Calls to Action That Boost BDC Sales

ave you ever thought of your BDC as the staff of your virtual dealership? Like Flo in the Progressive commercials, real people in a virtual space for the purpose of making it easy for your customers to do business with you? In essence, that’s what your BDC agents are; the cheerful and helpful person on the other side of that “Get EPrice” button. He or she is the patient and helpful unseen person operating the other keyboard in the chat session. The downright awesome people-person answering the phone when the website number is dialed. By the time the buyer arrives to your website and is ready to make contact, you can influence the whole customer experience by optimizing your website for that crucial interaction. The harsh reality is you may not get a second chance at that interaction. If your customer has a bad experience on your site, are they likely to come back? If you have to choose between maybe or probably not, you’re probably not liking your choices. Let’s start with your home page. I’ll refer to this good old analogy; Macy’s or the Dollar Store? Meaning does your website project a Macy’s feel? Figuratively speaking of course. Not Macy’s website but the feeling you get when you walk in to Macy’s. I mean did you have to buy every widget known to the industry

and put it on your home page. Pop ups, pop outs, sliders, videos, toolbars, chat windows, talking video apps and links to social media coming at you like sharks in a feeding frenzy. Which is exactly what they are trying to avoid by using your website instead of just pulling on your lot. The most popular website on the planet is Google. Check out Google’s home page and what do you see? A search bar and that’s pretty much it. Google offers hundreds of other features and products but they don’t blast you with everything on the homepage. From a BDC perspective there are 5 leads that are going to out perform all the rest coming from the website. Some should be on your home pages and others do better when located deeper in the site. Higher quality interactions lead to more appointments and more walk-ins. Guide customers to the calls to action that have the highest conversion rate. Rev up your BDC sales, improve the customer experience and sell more cars and service with these 5 simple call to actions: Your phone number. Have you hit *67 and called the number on the homepage of your website lately? Asked to speak to someone about a car on the website? If the call went straight through to a trained appointment setter with excellent communication skills, positive energy, knowledge of the car and the resources to help the customer with any of the shopping steps that may be in the way of a test-drive, good for you. I don’t mean that

22 | DEALER BUSINESS JOURNAL November 2013

sarcastically, I’m proud of you. You are leading the way in transforming our industry one customer at a time. Changing our reputation one ring at a time. If, on the other hand, you got put on hold without so much as a “please hold,” then waited...and waited to finally hear someone pick up and answer: “Parts, this is Joe,” then you may have a problem. It’s OK though. Customers will call back. It’s not like they can just click their mouse button and call the next dealer in their list of 3 to 5 dealers in their shopping scope. OK, that is sarcasm, but for Pete’s sake, answer the phone properly and get off to a great start with your customer! I see every ring of the phone as a chance to wow a customer. Just think, what if every time a customer called your store they hung up and thought, “wow?” How easy would that be to create with the right people, training and accountability? The phone number on your homepage is a quandary when it comes to mapping the call flow. You have a couple of choices in making this call a great experience for your customer. The number of rings to a main operator who screens the caller and only sends bonafide sales calls to the BDC or the BDC is your main switchboard. I prefer the latter. Even if it means locating your operator in the BDC, the smooth flow and handoff of website phone traffic may be the single most important interaction for your business. Live Chat. You really need Live Chat on your website. Live chat is a powerful communication booster DealerBusinessJournal.com

DealerCentric Unveils ID Scanner Technology

and can drastically improve website conversion. A properly staffed BDC is perfect for chat conversions. Again you haveSolutions, a choice.the Dedicated DealerCentric consumer fiBDCmanagement agents to operate chat ortoday nance system live innovator, launched ID Drive, a patent-pending IDAt scanoutsource it to the chat provider. nerleast technology that gives dealerships the one chat provider accurately most powerful protection against fake IDs and idenan 80% name, phone number tityboasts theft imaginable. and This makes the and ID email theft iscapture. now a national epidemic, decision easy. more criminals are You usingcan fakeeither IDs toachieve test-drive, andthose even outstanding buy, cars. Developed metrics in orpartnership you with AssureTec Technologies, an ID authenticacan’t. The key is dedicated chatters, tion technology firm, ID Drive is the first soluor someone else’s. tionyours that gives dealerships the same, state-of-the

art protection used by Homeland Security and I love the “Get E-Price” theE-Price. U.S. military. With one at ID Drive, dozens of combutton on scan the vehicle detail plexpages. tests for thousands of ID types are automatIt converts which is the ically performed, leading to instant validation or that matters. redonly flags measurement going up. But the dealer benefits don’t converting thatswipe, lead to an stopBut there: with that one a customer’s inappointment requires enabling formation is put into serious you action: it’s extracted,your purified andrep enhanced, can beprice pushed BDC to haveand a better intoora dealer’s CRM and finance systems. offer than displayed on the VDP. The customer, the vehicle, any pre-existing If the car isapp priced at $19,850 lead or credit data, the sales andand F& aI decustomer clicks the “Get E-Price” partments, and sales management are all elecbutton,connected fills out and the form tronically able toand communicate. So,waits whenfor thatyour test-driver thethey right deal reply,returns, what are structure can already be in place, shrinking

in leads is call immediately. The expecting? A lower price for sure. customer needs a hug quickly. Your So give your BDC something to website just told them their car is offer. Maybe a coupon for setting a notdata worth what on they owe.not They Priority Appointment or a pricing time-to-close by hours. is present a card, that need it’s valid. And a problem; we help grid “The that uses a percentage formula todayto know ID thieves hitting dealerships dealersit’s arenot forced to make time-consuming calls arecalculate super-sophisticated and so their technol-customers to organizations the DMV to verify idenin that like situation every to a lower price theis BDC ogy. Butcan dealer ID verification on weekends Let’sbut setmost up a cars timeare to bought give you agents calculate quicklyprocesses and aren’t”day.tities, said Pete MacInnis, CEO of DealerCentric. when these organizations are closed. It’s becashanoffer, help you find thescary probprovide speedy response to yourbarcode-a firm “With allathat endless photocopying, coming increasingly expensive, replacement vehicle and have customer. scanning and verification calling, they have re-perfect lem: some lenders are now requiring dealers to in writing that you deals. mained in the Dark Ages, powerless against thisa proposal buy back ready ID-theft-related costly problem. IDcan easily ID Drive’s Extreme Technology: ID Drive fast-growing and incredibly agree to. Credit application. The credit app Drive may be small and sit on a desk, but it’s the was created through an exclusive Your BDC works with leads auto retailis my favorite electronic lead for a most potent anti-fraud and test-drive security ing partnership with AssureTec Technologies, of all types sources. But these BDC byever far.invented What a for buying signal! solution dealerships.” which is and the ID authentication solution cho5 CTA’s will produce a close rate At AllCall, we get one out of three National & Dealership Epidemic: ID theft sen by the Department of Homeland Security, from 15% to 30% and you credit app customers the doorto the FBI,anywhere is an American epidemic.inAccording the Department of State, the NYPD and DMVs it has overtaken drug trade as the most cost-should nationwide. ID Drive you incorporates the world’s do everything can to get to meet with athe financial advisor, ly U.S. crime. According to an Open Security most powerful ID-scanning hardware your BDC structured, trained and and softestablish a line of credit and show Foundation report in 2013, more than 267 mil- ware and customizes it for auto retailers, so they revextreme up thetechnology sales withthey a BDC them the carsrecords that meet needs lion consumer havetothe need to fight weretheir exposed, and a re-ready website. and You can back against the fake ID wave. cord,the 60 banks million conditions. pieces of personal ID woundoptimized even delivery the same day. last year. “At DealerCentric we’re on a mission to up in take the hands of identity thieves, innovate that Masters, will make Inc. the test-driveAnd more dealerships are reporting that moreGreg Wells solutions began BDC to-sales-to-financing process radically fraudsters are presenting impeccable-looking in July, 2009 to help dealers set up more efTrade Evaluation. The What’s (fake) IDs for test-drives, and then driving off… ficient for both dealers and their customers,” maintain highly effective andcomponent in My Trade Worth lead comes in said. “ID Drive is a key or even successfully purchasing vehicles withandMacInnis profitable business development right behind the credit app in the what will ultimately be the first end-to-end dealthem. “customer is in transaction ership solution that bridges the gap between the The government requires mode” dealers to takecenters. steps to flag identity But dealerships use auto sales and financing processes, at the pint category. My advicefraud. on tradebarcode scanners, which can only verify that

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November 2013 DEALER BUSINESS JOURNAL | 23

BUSINESS OPERATIONS

Facility Upgrades

By Christopher Crawford

Smart Ballast Technology Drives Energy-Saving Solutions for Auto Dealers

isible from miles away, auto lots around the country glow like beacons in their quest to attract customers and provide needed security. Auto dealerships necessarily generate tremendous amounts of light, but much of it is lost, shining upward into the night sky or spilling into areas outside the lots’ perimeters, consuming copious amounts of energy in the process. Today we are witnessing the greening of an industry: many of our leading auto dealerships are adopting sustainable practices that include more energy-efficient lighting sources, and in the process are finding that they can gain customers, reduce costs, and create positive brand recognition. Energy is the third-largest overhead expenditure for auto dealers nationwide, therefore curtailing energy costs is one of the most profitable measures a dealership can take to increase efficiency and save money. Lighting alone accounts for 40-50% of total energy consumption, but with recent advances in the industry, lighting retrofits have become an accessible, valuable way for dealerships to cut costs and eliminate waste. The National Automobile Dealers Association (NADA) began publicly advocating for energy efficiency by endorsing

the US Environmental Protection Agency’s Energy Star Challenge in 2006, which encourages members to reduce their energy use by 10%. By doing so, the EPA estimates that the participating 20,000 members would save an annual total of $193 million and reduce greenhouse gas emissions by 1 million tons. Since NADA endorsed the Energy Star campaign, more than 500 dealers have begun participating. The interest in lighting retrofits continues to grow as the lighting industry evolves and businesses take advantage of the significant savings available. In the Spring of 2013 one such dealership, OC Infiniti of Westminster Ca., began researching retrofit options. The Metal Halide systems they were using had begun to degrade, causing variations in color and noticeable reductions in light output. Their team of designers and facility executives carefully investigated the many products currently available for exterior and lot lighting retrofits. Following extensive research, and a test install of the CeramaTek® kit from Global Energy & Lighting, the choice was simple. OC Infiniti manager Ken Kaiden remarked, “We investigated all options available to us, including fluorescent and LED, and chose the 315W CeramaTek® products for our retrofit. It provided the greatest light output, and highest light quality, with the most energy savings of any of the options presented.” OC Infiniti replaced their 1,000W Metal Halide systems

24 | DEALER BUSINESS JOURNAL November 2013

with 315W CeramaTek® kits. Each lamp delivers 50,000+ hours of consistent, uniform light, and an outstanding Color Rendering Index that accentuates color and visibility similar to upgrading from a regular television to high-definition: the increase in clarity is dramatic. CeramaTek® retrofits are done within existing fixtures, requiring only an adaptor to install, thereby saving the dealership the added expense of purchasing new fixtures and keeping the old fixtures from ending up in landfills. With a remarkable ROI of 1.6 years OC Infiniti has reduced their wattage load by nearly 70%, achieved an annual energy savings of 60%, and reduced their carbon footprint by 113 tons. Manager Ken Kaiden writes, “The lots look fantastic with the new lights. Everything is much crisper and sharper, and our cars have never looked better at night. We truly believe the enhanced lighting will help with sales. It’s hard to believe this could be accomplished while still saving almost 70% on our energy consumption.” Christopher Crawford is a poet and student at Boise State University, and a technical writer for Global Energy & Lighting. He has worked as an editor and publisher for BSU’s Ahsahta Press, an educator with Idaho’s Log Cabin Literary Center, and is studying English and business at Boise State University. He can be reached at ccrawford@gel-usa.com. DealerBusinessJournal.com

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BUSINESS OPERATIONS

WarrantyOptions

By Tim Byrd

As-Is or “We’ll Take Care of That?”

he Judge sits to decide, which is it? Was the car sold AS IS or as the salesman said, “We go over every car with a fine tooth comb, believe me if you have a problem we’ll take care of that.” I meet with dealers all the time who tell me they sell all their cars “AS IS.” I have seen very expensive cars, $30,000 SUV’s with “AS IS” marked on the Buyers Guide. Would you advise your mother to buy that? In most cases the dealers are so concerned that they are going to have to pay to fix something they have opted for an AS IS policy on ALL their vehicles. There are dealers out there who just sell bad cars, which is why the Used Car Salesman ranks right up there with lawyers and politicians. The actions of a few reflect badly on us all. There are many problems with the AS IS mentality, and my good friend Jim Radogna with Dealer Compliance Consultants, has outlined many of those pitfalls in his article Used Car Warranties: What You Don’t Know CAN Hurt You. In his article he talks about Express Warranties Payments are the life and Implied blood of Buy Here Warranties. Very interesting Pay Here. What do stuff. As he says: you think is going to “Now I’m all for happen the minute the dealers protecting car breaks down and themselves, but unfortunately, the customer can’t automotive law afford to fix it. is not that simple and “protecting yourself ” can be far more challenging than just slapping an As-Is guide on the window.” Jim further states: “Rarely a day goes by without a dealer somewhere receiving a letter or lawsuit regarding an alleged breach of warranty. The federal MagnusonMoss Warranty Act, the Uniform Commercial Code (UCC) and various state laws (including used car Lemon Laws) all govern warranties on motor vehicles. Breach of warranty claims are extremely common and can lead to

26 | DEALER BUSINESS JOURNAL November 2013

serious legal consequences for a dealer. If you want to keep the CFPB (Consumer Financial Protection Bureau), the FTC and other government agencies out of your business, I suggest you listen. Most of you reading this article are in the Buy Here Pay Here business. I hope that each of you belong to a 20 group. As iron sharpens iron, so does one man sharpen another. If you are a member of a 20 group and have at sometime sold all your cars AS IS then you have already been chastised by your moderator and fellow 20 group members. There is a reason this is a bad idea. First off, when you sell all your cars AS IS you give the appearance to the CFPB of a history of selling bad cars that you are unwilling to stand behind, to take advantage of some poor unsuspecting consumer— whether true or not. Second, you are in the Buy Here Pay Here business. Payments are the life blood of Buy Here Pay Here. What do you think is going to happen the minute the car breaks down and the customer can’t afford to fix it? You don’t have to be a car business expert to figure that one out. Maybe you like lots of repos and side notes. The CFPB is going to love you. The point is if you are going to be a successful Buy Here Pay Here dealer, and you want to stay out of trouble in today’s and tomorrow’s BHPH market, you better take good care of your customers by taking good care of their car. There is a way to do that without costing you profit, or at the expense of your cash flow. I have been in business now for nearly 20 years and the car business for nearly 30. So, if I may give some advice to you younger dealers who want to make this business part of your life; ALWAYS DO THE RIGHT THING. That includes providing a warranty on your cars, because standing behind the sale is the right thing to do. The problem with warranties comes down to money and common sense: 1. You can give your customer warranty, like a 30 day or 1000 mile 50/50. If it falls in half the customer gets both pieces Please! 2. You can fix problems as they arise, and Murphy’s law dictates that the largest number of problems will occur on your slowest month. An UNKNOWN, REOCCURING EXPENSE. Your favorite business planning type strategy, UNKNOWN. DealerBusinessJournal.com

Industry News

AutoTrader.com SetsaNew Record 3. You can buy Vehicle Service Contract (VSC) from For Smart Phone Visitors to Site a third party. Give it to every customer. Wait, we are ATLANTA — More shoppers than ever visited AutoTrader.com talking BHPH. would justrecord be putting out more hisfrom a smart phone in July,You setting a new in the company’s money you haven’t collected yet. $600 warranty X tory. Over 2.1 million unique visitors interacted with AutoTrader.com from a smart phone during the month, which represents a 60 20 = $12,000. Wow, that would put a dent in yourpercent increase year-over-year. lending pool. Not to mention, “Who has claims AutoTrader.com’s mobile properties include a robust mobile site control”?? $144,000 per year and NO control? So, and a car shopping app for iPhone and Android phones. put outour all research this money, it’s notofcovered andin the car “Weyou know from that usage the Internet customer quitshas making theirsubstantially—even payment. Sound in the shoppingthe process in general increased last two years—and the proliferation of mobile devices has given conbusiness strategy? sumers the ability online andapproaches get the information they need anytime, These are thegocommon to this major problem. anywhere,” said John Kovac, vice president of marketing at AutoTradSo, the simple solution many dealers have adopted is er Group. “The increasing role of mobile in the car shopping process is is AS Andand now are back where we quiteeverything evident in our siteIS. traffic, wewe expect that trend to continue.” started. In addition to the 60 percent increase in mobile traffic, the number of visitors the to core AutoTrader.com site also increased unique Let me directtoyou a little sanity. Ownership, 13 percent year-over-year in July, bringing the total just over 17.7 Control, Profit. Simple, Safe, Secure–dealer to owned million unique visitors. That is an increase of 17 percent over the same resinusrance company! time last year. The strong traffic in July led AutoTrader.com to a fifth straight month with double-digit increases across all key metrics. The Tim Byrd is Founder and to President of Tim Byrd site & has been continued double-digit growth the AutoTrader.com driven by a multifaceted media strategy, as well asagency the overall health Associates, Inc., DealerRE is a managing located in of the automotive Gloucester,industry. Virginia. An Auto Industry Expert on Dealer “With the increases in traffic that we’ve seen throughout 2013, Owned Reinsurance Companies, BHPH Operations and it’s clear that consumers are returning to the car shopping process in F&I Development. A 25+ year that veteran of the car business, droves, and the strong sales numbers automakers have been postTim is a trusted advisor to many car dealers. ing month after month indicate that those shoppers are turning into buyers,” Kovac said.

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September Dealer Business Journal November 2013 DEALER BUSINESS JOURNAL2013 | 27

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BUSINESS OPERATIONS

Smart Staffing

By Robert N Parnas

Cross Employee Utilization and Training

ross employee utilization and training provides many benefits to BHPH operations. Some of the benefits may be considered as follows: • Seeks to utilize capacity from employees that have availability during certain periods to reduce overall staffing needs. • Mitigates the risk of the organization having operations issues during employee absences. • Enhances employee professional growth and development, proving more flexibility to the organization. • Demonstrates added trust in personnel’s performance, possibly increases employee’s self-esteem, ownership and pride in their work. • Possibly helps with employees becoming complacent and bored with their jobs. For example, some employees where task driven, but perhaps lack work during certain intervals may stretch out their work to “make their job last”. • A “new set of eyes” may provide insight or different ideas to certain operational or procedural matters in the organization. Regardless of the above, Many BHPH operators are expanding their business by adding locations, etc. and therefore, may obtain synergies by being able to use capacity and cross train and utilize other employees to absorb the additional volume. Conversely, some BHPH operations have downsized in certain departments and have done the same. For many businesses,

operations continually change and need to adapt their personnel to meet the needs of the business. With an environment of constant change, BHPH operators should consider taking a step back and reviewing certain business processes and functions and who is doing them in a Kaizen or related effort. Kaizen is a Japanese word that identifies with improvement or change to the best that focuses on continuous change of processes (The Toyota Way). The BHPH operator would identify selected processes in a focused effort in the organization. Documentation of who performs the processes, when they are performed, how much time it takes, the reason it is being performed, etc. should occur in a detail and focused effort. To do this effort properly, the focus may just begin with a handful of processes. The focus needs to be a very detail and an unhurried process. For example, one process may encompass what is normally mailed to the organization, who receives such mail, what happens after that. Another process would be the receipt of the different forms of payments and walking the process from “cradle to grave”, including the people involved. With most businesses, procedures and personnel performing it has evolved in some cases without the entire process being evaluated. Now is the time to step back and evaluate this. In my world, we have seen accounting processes and the individuals performing it change over time. Often, we are noting the cross utilization of employees in different functions. In some

28 | DEALER BUSINESS JOURNAL November 2013

cases, we are seeing benefits to the operation, but on the other side, we are seeing some issues where accounting and finance internal control is now jeopardized as people are being cross utilized performing incompatible duties. Buy Here Pay Here (BHPH) owners often feel that their internal controls over cash disbursements and cash receipts are adequate to prevent theft. Common responses by owners or key managers include that they have office managers or others that reconcile the cash account which have no access to cash, that they personally review bank statements and that they personally sign or have a trusted designated check signer review and approve a significant amount of the operation’s invoices. While these responses may be good, there is much more which should be considered. Although there are no “full-proof ” systems, some information and other considerations are provided below when evaluating internal controls over cash disbursements. Often assistance can be provided from professionals to review and evaluate your processes to enhance your internal controls. Many would view key controls over cash receipts, cash disbursement, computer controls and controls over financial reporting. Cross training and cross utilization of employees is great and can either enhance accounting internal control or diminish it. We see instances where it is weakened and the organization did not immediately recognize it. Weakening accounting internal DealerBusinessJournal.com

ditional regulations and cover your business before it becomes an issue.

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

controls increases the risk of fraud. Please consider the following: • Consider doing a Kaizen By Jeffeffort Karg and go through key processes over Passtime time in aUSA structured effort. Pay to detail.driven This world, shouldusing not be In attention today’s technology GPSa “rushed” to track assets and Collection technology to help customers make their payments and asprocess. sist• in vehicle recovery is common practice in the asubprime In connection with the above, obtain focusedfinance and BHPH space. mindset that youinare just asadditional if While improvements theevaluating technology,processes lower prices, and from the outside to provide advice featuresyou havewere madehired utilizing technology for asset management andon trackstructuring system. ing mainstream, it hasthe also increased the need to fully disclose these systems the consumer. • toObtain outside professional assistance as necessary. Informing the consumer of the how it operates,and and how it • Look for opportunities to device, increase efficiencies will be used by the lender, is essential to maintaining a good customer exof excess incompliance the organization. perienceutilization for the consumer andcapacity addressing and liability con• Look at why you are doing processes. Focus on what cerns for the lender. you are trying to achieveyour andargument the mostagainst efficient And if you are not disclosing, it isand likely: either theeffective customerway will object the device and you will lose a sale or the to “gettothere”. customer will tamper withoftheaccounting device if they know itcontrols is in vehicle. Even • The importance internal that being said, there are two distinct reasons that you should be fully disbe understated and should be considered in closingcannot these devices to your customers: thisaeffort. Look for waysand to ENHANCE internal 1. It’s good business practice, controls byyour utilizing capacity. 2. accounting It’s the best way to lower liability as a lender against potential legalHopefully action regarding the device this helps spur some thoughts. Evaluation the use ofseems a GPStotracking First off, disclosing and formulation of processes be vitaland/or to Collection Technology device is a good business practice. businesses improvements to suchutilizing may give you One of theand single best ways to succeed these devices is to competitive advantages. disclose the device to the customer. Disclosing the device in a positive

way can help get “buy-in” from the customer, which can reduce the likelihood they will become Many technology providers offer Robert Parnas, CPA, is delinquent. Principal Dealerships, CliftonLarsonAllen written disclosure forms for lenders to have customers sign LLP and can be reached at robert.parnas@claconnect.com.at the time

of installation. These documents provide information about the devices, how they operate and what responsibilities the customer has in relation to the devices. Additionally, a benefit of disclosure is the psychological aspect that affects a customer who knows a device is installed on their vehicle. This is a powerful tool. When a customer knows their vehicle has a GPS device that can determine their location and/or prevent them from driving if they do not stay current on their loan, they have good incentive to make payments. If you don’t disclose the device, this psychological tool disappears. The method of disclosing is also important. Many device provid™ ers offer written disclosure forms that can be used. A signed consent from the consumer is the best way to ensure that the customer understands and agrees with the use of a device. A recent, independent survey study -addressed the issue of disclosure. Ninety-four percent of the asurvey respondents indicated that they use written disclosure forms from device providers. The use of disclosures improves the customer experience and leads to referrals and repeat business. Not “leaving your customers in the dark” can create a better, long-term customer if they are treated with respect and fully informed of their obligations and the consequences if those obligations are not met. I know what you are thinking: you will lose customers if you tell them about the device. However, the study has found that customers rarely object to the installation of the device whatsoever. Specifically, when responders to the survey were asked if customers object to the installation of a device as a condition of their financing/leasing, 99 percent answered no or infrequently. Only 1 percent answered that their customers object to a device as a condition of financing. So, disclosing is a good business practice, and customers rarely Turn to page 27

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BUSINESS OPERATIONS

Business Basics

By James “David” Power III

10 Things I’ve Learned in Business

fter fifty years working with a range of companies—as well as founding and running my own company, J.D. Power and Associates—I have observed a good deal, and come away with a few thoughts about how to have the best shot at success in business. The businesses I’ve seen grow, adapt, and thrive are the ones that keep a focus on satisfying customers by listening to them, anticipate their needs and desires, and maintain their organizations’ prioritizing of these principles. Whether I’m speaking with business school students or seasoned executives, I find that my advice incorporates ten basic lessons I’ve learned throughout my career. 1. Listen—to your customers, your employees, and your stakeholders. I have witnessed too many car manufacturers move further away from achieving satisfied customers by refusing to listen to them. One example that sticks in my mind is that of Peugeot back in the 1980s. They were trying to broaden their appeal and expand their share of the American car market, but they were unwilling to listen to customer complaints about difficulties starting their advanced fuel-injected cars. Peugeot was an early adopter of fuel injection, and American customers were “flooding” the engine by pumping the gas, something that was necessary in conventional engines at that time. Customers saw this as a quality issue, but rather than hearing this as a problem, they held fast, confident that fuel injection was superior from an

engineering standpoint. No doubt they were right, but by not listening and adapting to their customers they lost them, and by the early 1990s they had to abandon the American market. 2, Remember who the client is. In a B2B world it is the organization or business you serve, not just the guy or gal sitting across from you. This is important from two perspectives. It is critical that you not serve the desires of the representative assigned to work with you to the disservice of the organization. On the flipside, you must feel empowered to not let that person become an obstacle to the organization receiving the information necessary to take full advantage of your services. I frequently encountered a situation where the person assigned to work with us put up roadblocks to information reaching further up the chain of command because it undermined his own position within the organization. I worked around this by sending letters directly to top leaders or using the press to get out the critical information, knowing that it was only when our message could not be ignored that true change for the organization could occur. 3. Empower your employee to be curious, to do the right thing for the business, to speak up. You need the right kind of leadership and a strong culture to make it work but there is nothing more valuable. At J.D. Power, if an employee came up with an idea, they owned it. This

30 | DEALER BUSINESS JOURNAL November 2013

engendered tremendous initiative and loyalty, and may have been one of the greatest keys to J.D. Power’s lasting success. 4. Relationships matter, but they need to be built on a bedrock of respect and trust, not just friendships. I never approached business relationships as requiring glad-handing or wining and dining. In the beginning, I simply couldn’t afford it, but as J.D. Power’s success widened, I found that true relationships with executives came from providing them with the clear, actionable information they needed to do their jobs, not time on the golf course. 5. Have empathy, be kind. Of course this applies to all of the individuals in your own organization who come together to provide the support you need to run your business—from your CFO to the cleaning crew. It’s a Golden Rule in my book. I found that it inspires employees to show that you care about them enough to acknowledge them, and ask about their families. Another example is with regard to my clients. Sometimes you don’t agree with what they are doing, or you know that they are in an unwinnable the position. I felt a compassion for them and always tried to make sure that our information was there to help them. 6. Be willing to look at situations from unusual directions to seek the “truth.” Don’t be afraid to take Continued on Page32 DealerBusinessJournal.com

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November 2013 DEALER BUSINESS JOURNAL | 31

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BUSINESS continuedhere fromand Pagedeep 30 subprime automotive dealers have Buy here-pay long sought a lead-generation service specifically for their customer base and have often been disappointed, a new service a counter-intuitive position in order but to generate betterwill offer up unique, targeted specifi cally for ideas. TheInternet-generated Jesuit education leads I received at the College of their location and not offered up to anyone else. the Holy Cross provided a basis in questioning the status DriveNowNetwork.com was tested in Little Rock, Ark. and Tulquo, a trait thatlast hasyear’s served well.and is a new endeavor by Bill sa, Okla., during taxme season, Neylan, CEO of TRS TaxMax, the popular tax refund for use as a vehicle downpayment tax believe preparation rm based 7. Accept change. Iand really thatfiyou need in toTampa, Fla. In fact, TaxMax often credited with pulling automotive anticipate changes,isbe flexible, and move withthethe trends. taxbuying season into the fourth quarter of the current year. We are in the Information Age today. The rise of theSuch major players in the buy here-pay here marketplace as America’s CarMart Internet and itsasimpact retailing is thedealers most recent and J.D. Byrider well ason several thousand use the program ways companies must adapt to toexample estimateofathe consumer’s tax refund based on in theorder customer’s last check stubs. are then able to secure down payments ussurvive, butDealers there has never been a timelarger when change ing refund whenunderway. it arrives, usually by mid-to-late January. wasthenot actively Neylan said the idea spontaneously generated from the number of people who visited the TRSTaxMax.com Web site looking for a 8. Stay to your Part your brand means to true put their futurevalues. or current taxofrefund to workisaswhat a downpayyou are—and, at the core, what you are is made up ment on a vehicle. “We values. were looking at allyou theseare leads decidedor thean mix was perof your Whether an and individual fect to provide toyou dealers refund program services,” organization, mustusing keepour your compass aligned to Neylan said. the virtues that guide you. At our company, I really felt The program is simple and dealers should highly value both the that weand kept organization on thein“Three I’s”: will pricing thethe guarantee that no focused lead generated their market Independence, and said. Integrity. be sold to anyone Impact, else, Neylan Consumers using popular search engines like Google or Bing or9.Yahoo! using keys words “tax refund” “W-2” andof“downpayFind information and like inspiration in the work ment” will fi nd the DriveNowNetwork. Consumers areofasked a fill others. I have long been a student of the writings out a few basic contact information questions. Once the form is sent, Walter Wriston, W.the Edwards Deming, the TaxMax dealer Peter in thatDrucker, area is sent lead within five minutes. and“Dealerships Alvin Toffler. Their observations are still compelling can select their radius for the leads at 10 miles, 30 miles and Neylan stead of insight paying per today, as70 aremiles,” myriad otherssaid. who“In can offer andlead, dealers pay a flat fee $999 the full year and pursuits. they get the TaxMax perspective thatofwill be for invaluable to your program at their dealership for free, which costs $300.” TaxMax uses a Web portal that dealers sign into online. Drive10. Don’t “torture thewill datapopulate till it confesses.” Don’t bethey can NowNetwork.com leads into that portal, and blind allportal but the news you want to hear. system. then usetothe likegood a CRM tool, allmay within the TaxMax “The conversion rate for these leads was very strong,” Neylan Consciously or unconsciously interpreting information said. to 20 percent of the closed thepast same day. that “Fifteen comes across your desk in aleads way were that supports Because our leads arrive so quickly, consumers are often still decisions rather than illuminates needed improvements online when they get a call.” is short-sighted and won’t bring you closer to the satisfied Neylan was quick to point out while the demographics of those customers who will ultimately dictate your searching for tax refunds for auto purchases tendsuccess. to the lower end of the economic spectrum, it by no means is only a service for buy herepay andten subprime dealers. here These principles guided me through a successful “Today, most consumers are strappedI for cash andwho with tax reand satisfying career. The individuals dealt with funds averaging near $4,600, people from all walks of life look to put shared a similar view of business invariably had the the program to work for them.” respect of clients anddealers colleagues, and the Neylan said many still confuse themarkers old wayof of dealer tax preparation andrealized tax refund services with the new program success were forestimating them as well. TaxMax has brought to the marketplace. “Dealers are not required to fill out any complicated forms or tax information or estimate taxes,” Neylan said. “Our proprietary system asks three basic questions, Daveare Power is the J.D. Power and Associates. which entered intofounder fields onofour Web portal. Our system then genStories from fifty years in the auto industry are erates an estimate within seconds, along with the paperwork necessary to secure dealers refund is sent shared in thethe new book,portion Power:when Howthe J.D. Power III to the consumer. Became the Auto Industry’s Adviser, Confessor, and “Most dealers believeFor taxmore season begins in January or February Eyewitness to History. information, visit www. but we have pulled the season into October and November.” davepowerbook.com. Reach TaxMax at (866) 642-4107 or via email at trs@taxrefundservices.com or visit its Web site at www.taxmax.com. DealerBusinessJournal.com

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SALES & SERVICE

Sales Advice

By A.J. Ager

The Entitled Mutt: Selling the Special Finance Customer Who Wants it All

K, I realize that the title of this article might be offensive to many industry professionals. However we all know what I’m talking about. I know many dealers who have gotten out of the sub-prime business because of the mindset of many of today’s subprime customer. It is more important than ever to get through to these customers so that you get the deal and no other dealer. These customers are everywhere and the ability to get them done is something more and more dealers can do. How do you snare these customers? Here are five things that help you do that. Simple. Keep things simple for the customer. Keep your message simple. Make sure they know what you are attempting to do and what you are going to need from them. The more complicated the message, the less the message makes it through. Needs. Know what your customers needs are. Think of everything you find out about your customer as a bullet that you are loading into a huge gun that later you are going to fire to get the deal. Ask questions and listen. In fact listen twice as much as you ask. The customer wants to hear themselves talk not you, but by asking questions you stay in control of the deal. If you know their needs and everything about them, it will help with the selection process, the rapport building process, and the close.

Assurance. Listen to your customer. Empathize with your customer. Reassure them by repeating back what you have heard even if you are telling them something they don’t want to hear. I still believe in the classic Feel-Felt-Found. It is amazing how effective this still is. You understand how they feel, other customers of yours have felt the same way, and what they found was that by doing (whatever you want them to do) they ended up better off. This is extremely effective when it comes to switching customers to what they can get bought on as opposed to what they want. Rapport. The key to everything here is to spend time with the customer. Before you can sell a customer on a car, or a credit plan, or a payment, or a down payment, you have to sell them on doing business with you. They have to like and trust you to want to do business with you. Many people grab a subprime customer and quickly grab an application, then run the credit, tell them a car to buy and when the customer balks they then tell the customer to leave. Whether you have a dedicated subprime department or a blended staff, the key should be spend enough time with each customer to sell yourself, the dealership, and then the program. Efficiency. This is a huge key. You have heard of the old adage of not letting the ‘ether’ wear off. Be prepared and have a good process and procedure. Know what kind of

34 | DEALER BUSINESS JOURNAL November 2013

stipulations you are going to need. Ask for them early. Look at the stips to make sure you catch something before a bank does. Know what to look for. Make sure you can get a customer in and out of your business office quickly. I have seen a number of deals go south over the years because the customer had too much time to think about it, or wonder around the lot, or get to talk to a third baseman on the phone. If you can’t get your customer in and out of the business office in less than 45 minutes you have to take a giant look at your process. Of course the key to all of this is to take the time to do these things with your customer. They know there are a number of dealers at there and they are usually looking for the easy way to what they want (aren’t we all) and it’s your job to prove that your process, your place, your customer service is the best way to go. Now armed with the knowledge go out and snare yourself the best month ever! A.J. Ager is the General Manager at Wilcoxson Buick Cadillac GMC in Pueblo, CO. He has been a leader in Special Financing and Team Bulding for the past 15 years at both Franchise and Independent Dealerships. He has founded many online Special Finance websites including New Wave Funding and Colorado Credit Zone. A.J. also has a production company he has used to market many of his prgrams. He can be contacted at AJAger@wilcoxsonauto.com DealerBusinessJournal.com

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November 2013 DEALER BUSINESS JOURNAL | 35

36 | DEALER BUSINESS JOURNAL November 2013

DealerBusinessJournal.com

INDUSTRY NEWS

Vendor Update Finance Express LLC Announces their Worklist Design Tool Called Queues

inance Express, the leading provider of web-based financial services and technology for independent auto dealerships, announced today that their new WorkList feature has been released. WorkLists (a.k.a. queues) have been typically utilized by FEX Buy-HerePay-Here dealers to manage and collect due accounts. FEX has now enhanced and expanded the application of this valuable tool to the Dealer’s entire operation - sales, inventory and notes receivable. Worklists, leveraging the power of our report engine, essentially provide dealers the ability to create on screen customized reports that are continually refreshed and interactive - meaning you get quick oneclick access to “what you would typically do next” while working in a sales, inventory or account receivables

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WorkList. Traditionally, a dealer would print a list of data, call customers, post payments, and make notes, but these list are static and quickly become less efficient. With WorkList, you still perform the same tasks, but it’s all in real time and customized to the way you work. Whether it’s working past due customers, managing aged inventory or calling on customer prospects, your options are endless with worklists. “Finance Express remains on the cutting edge of technology. It’s important that we stay abreast of what the dealer is looking for and needing in this technology driven age”, says David Huber, President and CEO of Finance Express. David went on to say, “we feel the new worklist feature just complements our other products and will provide more efficiencies for our dealers.”

November 2013 DEALER BUSINESS JOURNAL | 37

SALES & SERVICE

Female Perspective

By Jody DeVere

Smarter Selling to Women – Appeal to the Senses!

he independent auto dealer is always among tough competition. Other dealers across town with flashy ads and powerhouse advertising budgets drive a very hard bargain and often claim the volume award when it comes to new car sales. How can an independent auto dealer stand out among its peers to appeal to consumers on the same level – in particular, how do you reach the females? Women are the majority purchasers of all automotive items in North America today, so if you’re looking to step up your sales figures, you’re going to need to reach women. Today, we’re going to focus not on the cars, on the marketing approach, or even on the price – no, we’re going to start as simple as it gets: with your customer’s senses. Eyes. We’re always told to not judge a book by its cover, but when it comes to customers, and female customers in particular, looks matter. Start with the outside. How’s your curb appeal? Does your location look clean, professional, and up-to-date? See that your building looks warm and welcoming, or women will drive right by. Replace run-down signage with new, friendly displays and communicate specials clearly in clean, eye-catching designs. Moving inside – don’t forget that the female customer takes looks into account here, too. A clean

and well organized showroom is a good start, a comfortable waiting area is another step in the right direction, and a spotless bathroom is the icing on the cake. If you have space that could stand to be reinvented, consider adding extras like a cafe or reading nook – little touches like this go a long way with customers, particularly females. Ears. Now, I’m not going to tell you to silence your air wrenches. Auto shops do make noise – no, the sound I’m talking about is your telephone etiquette. Do you have a telephone answering script that you expect employees to use, or is any mumbled greeting of “Main Street Auto” good enough? Here’s a hint: It’s not good enough for the women. A proper telephone greeting has four main ingredients: Thanks for calling, the name of the business, an introduction, and an offer to help. “Good morning, thanks for calling Main Street Auto, my name is Roger, how may I help you?” This simple adjustment shifts the tone of the customer’s telephone experience, you’ll find, and will make her much more likely to pursue a business relationship with you. For bonus points, learn her name and use it, even on the call. For instance: “Okay, I can help you with that – could I get your name please?” … “All right, Nancy, let me see what I can find for you. You said you’re looking for a preowned minivan, right?” These little adjustments become like a habit once you get into the swing of using them, and the results you will see may surprise you.

38 | DEALER BUSINESS JOURNAL November 2013

Nose. I’ll keep this one brief, because I think the details speak for themselves. Automotive businesses, by their nature, frequently don’t smell great. Taking steps to ensure your showroom, waiting area, and definitely the restroom smell clean and neutral are as important as the looks of these areas. Plus: don’t forget your customers’ cars! Using paper floor mat covers and spraying the vehicle with a neutral, natural odor eliminator will create a more pleasant after-purchase experience. Mouth. I’m not talking about taste here – I’m talking about word of mouth. Generally speaking, if a woman has a bad experience at a retailer, she won’t complain to the manager. She’ll complain to her friends. Bad word-of-mouth can spread like wildfire, and will most definitely impact your bottom line. Conversely – going the extra mile to make your female customers feel comfortable, welcome, and taken care of will certainly be something she wants to talk about. A satisfied woman customer will pull no punches when it comes to her buying experience, and her friends will trust her advice implicitly. Attending to the other items listed here will decide whether she tells her friends to avoid you at all costs, or to “Go to Roger at Main Street Auto, he really went out of his way to help me!” Jody DeVere is the CEO & president of AskPatty.com. Contact her via email at jdevere@askpatty.com.

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