independent automobile dealers association
ALABAMA
THE OFFICIAL MAGAZINE OF ALABAMA INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION
FEBRUARY/MARCH 2018
DESIGNING A SUPERIOR MEET AND GREET Crafting and Reviewing the Play PAGE 14
DALLAS, TEXAS Permit No. 2079
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W W W. A L A B A M A I A DA .O RG
MANAGEMENT GAMEPLAN | BY SCOTT BERGERON
BURNING TRACKS TO INSUFFICIENT SALES PERFORMANCE DATA How to Successfully Integrate a KPI Tracking System
As your flight prepares to take off, how would you feel if you knew the pilots were only handling some of the items on their pre-flight checklist? While not a literal matter of life and death as it could be on an airliner, dealerships crash and burn every year because they fail to track critical sales performance data on every salesperson. Many focus on the number of done deals without tracking how many sales may have been left on the table. Insufficient daily tracking of such key performance indicators as number of clients contacted, number of test drives, and number of callbacks can make a vast difference in a dealership’s annual revenues. KPIs are the critical information needed to maximize time and make course corrections before molehills turn into mountains. It also can make a major difference to someone’s career and a dealership’s employee retention. If not held to a high accountability protocol, a salesperson can fail to make the grade and move on. Much like a football team without high performance standards that are constantly reviewed and improved, an entire sales team can flounder. There’s nothing worse than getting to the end of the month and realizing someone isn’t getting a paycheck, or is getting one they can’t live on. It’s bad for the rep, management, and the dealership as a whole. You need to know right away when someone is missing their numbers. Despite all these reasons to develop comprehensive KPIs and require each sales team member to be accountable to them, it often doesn’t happen. Why not? Reasons – or excuses – include the following: • Lack of time. Most of us feel overwhelmed much of the time. “One more thing,” even if it can make the difference between dealer success and failure, can feel like too much. • Lack of willingness. Particularly in smaller, independent dealerships, “seat of the pants” is the prevailing sales philosophy. Freewheeling sales teams exhibiting typical instinctive entrepreneurial traits succeed or fail based mostly on personality, charm, and intuition. While these are all important strengths, it’s vital to complement them with reliable adherence to objective tracking standards. Using the football analogy again,
the greatest players possess a healthy dose of talent coupled with strict adherence to objective measurements and observations. Dealer sales reps are no different. • Lack of follow through. Sometimes a dealership – and its employees – will become enamored with a “shiny new technology toy” to set up and track KPIs that may be bundled into a CRM. However, much like a young child getting a new toy, after the initial glow fades so does the follow through. The KPI tracking system gets relegated to the shelf, where it gathers dust instead of valuable information. • Lack of decisiveness. In other cases, the problem is inability to decide what KPI system to use because there are so many choices that decision-makers have a “deer in the headlights” type reaction trying to assess the best solution for them. They default to making no decision at all. • Lack of patience. Some KPI systems can be unwieldy to set up and implement. They can disrupt normal routines, require a lot of handholding, and generally be a pain to use. This is not the recipe for success. • Lack of budget. This is often the biggest challenge. While some KPI solutions are extremely cost-effective, others – particularly the largest and most well-known – require a substantial money commitment. Often, it’s just easier to justify not using the system because of cost. What is the best way to find and integrate a KPI tracking system, and use it consistently? • Research options. Unlike some technologies that are very complex and costly, KPI tracking solutions can be very economical, easy to use, and simple to complete on a daily basis. This isn’t rocket science. Look for the key criteria you need, then marry those criteria to a system that meets your needs. • Make it a habit. High-producing leaders promote success by making sure everyone on the sales team knows what is expected of them. Regular inspection processes ensure the sales machine is firing on all cylinders. Tracking and reviewing everyone’s KPIs every day, then making changes as needed to improve numbers, must be a commitment made both by management and individual team members. • Use it as a teaching and coaching tool. With this objective data, sales managers can help individuals improve their performance. If a salesperson isn’t entering the data, a manager can go directly to the person and find out why, then provide direction to make sure it happens. It can be a case of forgetting, a cry for help, or even defiance of the whole system. Top performers especially may avoid completing their daily tracking because they believe they’re above it and the rules don’t apply to them. But they should. • Make it fun, as much as possible. KPI tracking can be done as salespeople go
T O P P E R F O R M E R S E S P E C I A L LY M AY AV O I D C O M P L E T I N G T H E I R D A I LY TRACKING BECAUSE THEY BELIEVE THEY’RE ABOVE IT AND THE RULES D O N ’ T A P P LY T O T H E M . B U T T H E Y SHOULD. through the day on their smartphones, tablets, laptops, or desktops, in real time. The entire process can take as few as five minutes to finish – so it’s not like completing mounds of paperwork for a homicide investigation. • Make it a regular monthly appointment. In addition to daily tracking and adjusting, schedule an end-of-month session to review KPI statistics, goals, and desired changes based on the results. To make it even more compelling for individuals to comply, sales managers can review each salesperson’s results with the entire team present. This “peer pressure” can help make sure everyone is accountable, and allows top achievers a showcase for their good work. Remember, it’s about way more than the number of done deals. Former dealer executive Scott Bergeron is the founder and principal at Daily Gameplan (www.dailygameplan.com), a sales team performance company. Daily Gameplan’s “Red Book,” cloud-based CRM, and direct consulting have been used in thousands of dealerships throughout the United States. Bergeron can be reached at 303.918.3169 or scott@dailygameplan.com.
www.alabamaiada.org February/March 2018
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INSIDE INSIDE
06.............................................................A Year in Review 08.............................The MLA and How it Affects Dealers 10................................ Why Your Dad Said Never Assume 12...................................... How to Sell High-Tech Vehicles 13................................................ Insurance Auto Auctions 14............................ Designing a Superior Meet and Greet
WHAT’S NEW
NIADA ACQUIRES NABD
NIADA has acquired the National Alliance of Buy Here-Pay Here Dealers. The acquisition was finalized in December. Look for details in upcoming NIADA publications. See you at the NIADA/NABD convention June 18-21 in Orlando!
ADVERTISERS INDEX
Ace Motor Acceptance...................................................7 AmTrust Financial.........................................................IFC ARA GPS.........................................................................4 AutoZone.........................................................................9 DAA Dealers Auto Auction Group, LLC...........................5 Manheim.......................................................................11 NextGear Capital...........................................................12 STARS GPS....................................................................13 VAuto...............................................................Back Cover
OFFICE
NATIONAL INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION WWW.NIADA.COM • WWW.NIADA.TV 2521 BROWN BLVD. • ARLINGTON, TX 76006-5203 PHONE (817) 640-3838 The Alabama Independent Automobile Dealers Association is published bimonthly by the National Independent Automobile Dealers Association Services Corporation, 2521 Brown Blvd., Arlington, TX 76006-5203. Periodicals postage paid at Dallas, TX and at additional offices. POSTMASTER: Send address changes to NIADA State Publications, 2521 Brown Blvd., Arlington, TX 76006-5203. The statements and opinions expressed herein are those of the authors and do not necessarily represent the views of AIADA or NIADA. Likewise, the appearance of advertisers, or their identification as members of NIADA, does not constitute an endorsement of the products or services featured. Copyright © 2018 by NIADA Services, Inc.
Troy Graff • troy@niada.com EDITORS
Jacinda Timmerman • jacinda@niada.com Andy Friedlander • andy@niada.com
Doug Birdyshaw 31 South Auto Mart Decatur
Tony Richards 2nd Chance Auto Sales Raymond A. Shunnarah Montgomery Birmingham Motors Birmingham Jeanne P. Smith A & J Auto Sales Tamelia Dixon Prattville Browns Auto Sales Mobile Chad Alexander Alexander Auto Sales Bruce Carpenter Addison Carpenter’s Enterprise LLC Pinson Derwin Perry Another Chance Auto Tim Yarbrough Sales Charles Yarbrough Clanton Motors LLC Boaz
Joe Mason Grace Automotive LLC Mobile
Stephen D. Tollett Pristine Motorcars LLC Newton
Yoni Nenaker Joy Car Sales LLC Birmingham
Wendy and Willard Waldrop Rocket Auto Sales LLC Cullman
Chris Ledbetter Ledbetter’s Body & Frame Chris Sells Shop Inc. S & S Enterprises S LLC Ranburne Greenville Larry McHeard P & M Auto Sales Pleasant Grove
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Bryan Cooper Huntsville Tim Duke Birmingham
President Elect Chad Tillery Jemison cktillery@hotmail.com
Executive Director Randy Jones
Jay Saul Jasper
Vice President Robert Case Hartselle robertsautosales1@ live.com Secretary/Treasurer Roderick Underwood Bessemer roderickunderwood@ hotmail.com
PRINTING
Nieman Printing
February/March 2018
Robert McKinney Paragon Dealer Services Inc. Northport
Chairman of Board Pokey Brimer Oxford pbrimer6@gmail.com
Christopher Hanley • chris@niada.com
AIADA
Christopher Faucette Bibb Auto Group Brent
President Todd Oden Birmingham Dpip.ptp@aol.com
MAGAZINE LAYOUT
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Jason Williford/Melissa Williford Automotive Dot Com LLC Fort Payne
BOARD OF DIRECTORS
NIADA HEADQUARTERS
STATE MAGAZINE MGR./SALES
NEW MEMBERS Welcome
ASSOCIATION NEWS
120 Vulcan Road Birmingham, AL 35209 Phone: (205) 942-1000 Fax: (205) 942-3565 Website: www.alabamaiada.com To become a member of AIADA, please call (800) 239-2423
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ASSOCIATION NEWS
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DIRECTORS Barry Searcy Muscle Shoals John Dunn Sylacauga Lance Turner Anniston Willie Colvin Tuscaloosa
Randy Crump Jasper Kelly Steely Hoover Jerry Giles Tuscaloosa Roderick Underwood Bessemer
Randy Little Satsuma Erek Yarbrough Pleasant Grove Chris Mundy Columbiana Chris Mullinax Hoover Ricky Young Boaz Patrick Graves Moody
Tuesday at 9:00am 877.232.0259
Wednesday at 2:00pm 615.217.2848
Thursday at 9:00am 423.499.0015
Thursday at 9:00am 901.480.4250
Thursday at 9:30am 251.348.8855
ASSOCIATION NEWS | BY RANDY JONES
INDUSTRY NEWS
A YEAR IN REVIEW Executive Director’s Message
COX AUTOMOTIVE NAMES EXECUTIVES Mark F. Bowser & Jessica Stafford
We hit the ground running in 2017, with a well-planned agenda. We took on the issues that faced our Alabama dealers. Then we joined forces with other state associations from across the nation to take on the issues in Washington, D.C. It was a challenging year for the automotive dealer, but our National Independent Automobile Dealers Association met the many changes in governmental rules and laws that affect our dealers head on! We now have a better chance to grow our dealerships in 2018. This year will stand out as the year that showed us how important all the independent automotive dealers associations are to each dealer in every state, and how powerful we are as a group. This will be our second year for the Auction Discount Coupon App. We had a goal for 2017 to reach $11,000 in dealer auction coupon discounts and we are now at $14,150! We look for 2018 to grow with even more auction discounts!
A L A B A M A L E G I S L AT O R S W O R K E D WITH AIADA TO MAKE AL ABAMA A BET TER PL ACE FOR OUR CUSTOMERS AND DEALERS. This was achieved because of our auctions. The auctions know a successful dealer will continue to buy vehicles from their auctions. The Auction Discount Coupon App will pay for their AIADA membership, plus the AIADA yearly convention. Education is the key to our dealers’ success. Our AIADA conventions are among the top-rated dealer conventions in the nation. Our Ladies Auxiliary does awesome work on the dealers’ behalf to help serve the needs of our community. These ladies also do a great job in branding our dealers’ names, showing our communities how much we care and the active role we play in the community. This year was a record year for Make-A-Wish Alabama. Come out to our auctions and join in – we can always use the help. Alabama legislators worked with AIADA to make Alabama a better place for our customers and dealers. The issue surrounding safety recalls has been one of our greatest problems. Manufacturers are facing this problem head on, building replacement parts to fix most of the problems. But some vehicles still don’t have a fix, and these vehicles are still on American highways, sometimes finding their way into our inventory. In July we held AIADA’s 49th annual convention. We planned for a convention you could not afford to miss. Our vendors sponsored all the workshops. For example,
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our compliance workshop cost $470 to attend but this expense was covered by the vendors! We had the FTC’s senior attorney at the convention. She covered what is expected from us as dealers to stay within the FTC guidelines regarding the new buyer guide. We had several other workshops with various topics. All in all, we offered education to help your business grow. We were blessed to have great weather and the largest convention in our history. The Ladies Auxiliary raised a record amount of cash from their auction. Thanks for all the donations from members, corporate sponsors and our many vendors. In mid-July, Todd Oden took over as state president and Pokey Brimer moved to chairman of the board. We owe Pokey a great deal of thanks for all he did in his term as president. He helped move AIADA to an “all new level.” Todd has great plans and we all are very excited. He will be working hard to bring us even more! November elections in Alabama were noticed across the nation. This brought a lot of attention to our state. Being involved in this process is an extremely important part of our business, and we must maintain these friendships with Washington and Montgomery. This is an election year, and we must take a very active role, showing our concern in helping Alabama residents and Alabama businesses. We all have the same goal: To make Alabama better for both businesses and residents. In September we traveled to Washington, D.C., with the largest group of independent dealers in our history for NIADA’s National Policy Conference. We worked on everything from the tax plan to recalls and upcoming bills. We spent several days on Capitol Hill meeting with Congressmen and Senators. Also, we raised over $75,000 for NIADA’s PAC fund. This is one more important reason to become a member of the AIADA. When we are representing the dealers of Alabama, the larger percentage of dealers we have the more influence we have in Washington and Montgomery. In 2017, Alabama’s automotive industry was turning heads across the nation. Your association was noticed more than ever expected. Thanks to all the dealers, auctions, and vendors for making this happen.
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| BY USED CAR NEWS
Cox Automotive named Mark F. Bowser executive vice president and chief financial officer, effective Dec. 4. Bowser will assume leadership of the Finance and Strategy teams, as well as several corporate functions. In addition, Bowser will have responsibility for NextGear Capital. Over his 30-year career, Bowser has been responsible for a portfolio of diverse strategic areas including finance, operations, sales, marketing and business development for several Fortune 500 companies. He has held an extensive number of senior-level financial positions including accounting, financial analysis, and mergers and acquisitions at various companies. In addition, Cox Automotive recently named Jessica Stafford senior vice president and general manager of Autotrader. Stafford will lead the business and work cross-functionally across product, sales, marketing and operations. Stafford joined Autotrader in 2007 as an associate manager of digital marketing before moving to various other marketing positions within the company, including her most recent role as vice president of marketing for Cox Automotive’s portfolio of brands in the Media Solutions Group, which includes Autotrader, Dealer.com and Kelley Blue Book. Greta Crowley will take over as vice president of marketing for Cox Automotive’s Media Solutions Group. Crowley previously led all media efforts for Autotrader and Kelley Blue Book, managing the consumer marketing team. She developed and directed all digital and traditional media programs, including search engine marketing and optimization, social media, mobile marketing, TV, radio, out-of-home, broadcast integrations, analytics, agency management, sports partnerships and sponsorships with other large corporations.
LEGAL MATTERS | BY JEFF INGRAM
DEPARTMENT OF DEFENSE GOES ON THE OFFENSE The MLA and How it Affects Dealers
The Department of Defense has issued new interpretations of its Amended Rule interpreting the Military Lending Act. The Amended Rule became effective October 3, 2016. Although the interpretation is now effective, the interpretation is a statement of the DOD’s “preexisting interpretations of an existing regulation,” i.e. the DOD considers the interpretation effective as of October 3, 2016. This new interpretation has serious implications for automobile dealers. Previously, dealerships were largely exempted from the MLA. Below is a summary of the important provisions of the MLA, how the MLA will affect dealerships going forward, and recommendations for dealerships to deal with these regulations. What is the MLA? The MLA is a consumer protection statute designed to limit the costs and terms of credit for military members and their dependents. The statute is located at 10 U.S.C. § 987. The applicable regulations are located at 32 C.F.R. § 232.1 - 232.13. It is designed to provide protections relating to consumer credit transactions, and is generally enforced by the CFPB. The MLA applies to “consumer credit” extended by a creditor to a “covered borrower.” These terms have special definitions in the MLA and are described below. Who is a “covered borrower”? A covered borrower is a “covered member” or a “dependent of a ‘covered member.’” A covered member is anyone on active duty (as long as the period of active duty is not specified as 30 days or fewer), and active guard and reserve duty. Dependents of a covered borrower include any of the following: • A spouse. • A child or unmarried person residing in the same household in the covered member’s legal custody who is: o Under 21. o Under 23, enrolled in a full-time higher learning institution and dependent on the covered member for more than half of the child’s support. o Incapable of self-support because of mental or physical incapacity that occurred while under 21 or under 23 and enrolled in a higher learning institution and is dependent on the covered member for more than one half of the child’s support. • A parent or parent-in-law who is dependent on the covered member for
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over half of his or her support and residing in the same household. The MLA also applies to dependents of a deceased service member if at the time of the service member’s death the service member was a “covered member” and the dependent met the requirements discussed above. What is “consumer credit”? Under the MLA, “consumer credit” means credit offered to a covered borrower for personal, family, or household purposes that includes a finance charge or is payable by written agreement in more than four installments. There is an important exception to the MLA for dealerships: “Any credit transaction that is expressly intended to finance the purchase of a motor vehicle when the credit is secured by the motor vehicle being purchased” is excluded from the MLA. Historically, this has generally allowed dealerships to ignore the MLA. How does the new DOD interpretation affect dealerships? The DOD has “clarified” its interpretation of the motor vehicle exception to the MLA. Where a credit transaction includes financing for the motor vehicle, as well as costs directly related to that vehicle, the transaction is exempt from the MLA. The DOD provided the following examples of related costs that qualify for the exception: • Optional leather seats. • Extended warranty/service contract for the vehicle. • Negative equity for a trade. Under the new interpretation, the DOD “clarified” that “a credit transaction that also finances a credit-related product or service rather than a product or service expressly related to the motor vehicle… is not eligible” for the MLA exception. Examples of these ineligible items include: • Guaranteed Auto Protection insurance. • Credit insurance premiums. • “Cashout” financing. Based on this new interpretation, if a dealership sells a vehicle, financed by a covered service member or dependent, and the purchase includes financed GAP or credit insurance, the dealership must comply with the MLA. What does the MLA require? The MLA has several stringent requirements that could directly affect a dealership. For example, under the MLA, the creditor must disclose not only the APR, but also the Military APR (or “MAPR”). The MAPR cannot exceed 36 percent, and must include as a part of the finance charge fees for GAP, credit insurance, etc. Because the MAPR includes additional items from the APR, it should be calculated and disclosed separately. In addition to the MAPR, the creditor must make all required Regulation Z disclosures, and must provide a clear
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UNDER THE ML A, “CONSUMER CREDIT” MEANS CREDIT OFFERED TO A COVERED B O R R O W E R F O R P E R S O N A L , F A M I LY, O R H O U S E H O L D P U R P O S E S T H AT I N C L U D E S A F I N A N C E C H A R G E O R I S PAYA B L E B Y WRIT TEN AGREEMENT IN MORE THAN F O U R I N S TA L L M E N T S . description of the payment obligation (i.e., a payment schedule). In connection with the MAPR, a creditor must also make a disclosure substantially similar to the following at or before the credit transaction: “Federal law provides important protections to members of the Armed Forces and their dependents relating to extensions of consumer credit. In general, the cost of consumer credit to a member of the Armed Forces and his or her dependent may not exceed an annual percentage rate of 36 percent. This rate must include, as applicable to the credit transaction or account: The costs associated with credit insurance premiums; fees for ancillary products sold in connection with the credit transaction; any application fee charged (other than certain application fees for specified credit transactions or accounts); and any participation fee charged (other than certain participation fees for a credit card account).” The MAPR disclosures and the repayment obligations must be made both in writing and orally. To satisfy the oral requirement, the creditor can establish a toll-free telephone number. The telephone number must be provided on the credit application, and available prior to completing the credit sale. The MLA also prohibits the following practices relevant to a dealership: • The same creditor and same borrower rolling over or refinancing consumer credit.
• Restricting or waiving the covered borrower’s legal rights under any state or federal law (i.e., participating as a member of a class action). • Requiring the covered borrower to sign an arbitration agreement. What are penalties for violating the MLA? Any contract that violates the MLA is void from inception. Reading the current interpretations and regulations strictly, any installment contract with a “covered borrower” that includes financing of GAP or credit insurance, and otherwise violates the MLA (including arbitration, incorrect interest disclosures, etc.) is potentially void. However, the DOD has clarified that an arbitration agreement that contains a “savings clause” that excludes borrowers where prohibited by law, does not result in the contract being void. There are criminal penalties for violating the MLA. A knowing violation of the MLA is a misdemeanor, punishable by fine or imprisonment for not more than one year, or both. Any person injured by a violation of the MLA can bring a civil action in any appropriate United States district court. The
action must be brought within two years of discovering the violation, but no later than five years from the violation. Civil penalties include actual damages – not less than $500 – per violation, punitive damages, equitable or declaratory relief, costs and attorney’s fees. To defend against a civil claim, the creditor must show the violation was not intentional, but was the result of a clerical error, miscalculation, computer malfunction, programming error, or printing error. The creditor must show it had in place procedures reasonably adapted to avoid these errors. What should a dealership do? • First, and most importantly, a dealership should obtain information from any customer purchasing GAP or credit insurance about potential qualification under the MLA, and then perform a search that qualifies under the “Safe Harbor.” • To take advantage of the MLA’s “Safe Harbor,” a creditor may “conclusively” determine if a consumer is covered by the MLA by using a DOD database. • The “Safe Harbor” search must be done at the time of the purchase or 30 days before, and a record of the search must be placed in the deal file.
• An Alabama dealership may consider not selling ancillary credit products, such as GAP and credit insurance, to service members and dependents. • Some dealers may consider selling GAP outside of the finance contract (for a cash payment, or using a part of the down payment). The DOD interpretation specifically refers to financing for credit products. However, Alabama’s GAP waiver law states a GAP waiver agreement “shall be part of, or a separate addendum to, the finance agreement.” It is possible that the DOD/CFPB would consider GAP as a part of the finance contract, even if it is purchased separately for cash. For this reason, the practice is likely not advisable. • If the dealership wants to sell these credit products to a service member or dependent as a part of the amount financed, the dealership needs to be sure it complies with all the requirements of the MLA. The dealership should check with its DMS provider to be sure all necessary disclosures can be provided. This includes proper disclosures of the MAPR, and a “savings clause” in the contract or arbitration agreement that creates an exception where prohibited by applicable law.
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MANAGEMENT MATTERS
| BY TIM BYRD
ASSUME
Why Your Dad Said Never Assume Do you assume your employees are saying and doing the right things in their communication with your customers? Do you assume your salespeople have some great reasons why a potential customer should buy from your dealership rather than the store down the street? Do you assume outside third party warranty and insurance companies will ensure customer wellbeing after the sale? Dad said, “Never Ass-u-me!” In 1994, after working for insurance companies, selling cars, managing F&I, and doing F&I training and dealer development, I started a little company called Tim Byrd & Associates, now DealerRE. With all my years of experience, I have studied, worked and observed some basic tenets for car business success. Funding for my work in F&I training and dealer development came through the sale of vehicle service contracts and other F&I products. These F&I products provide great additional profit for car dealers. Combining that with reinsurance, a great training program and sales system is extremely important for any dealer’s long term, consistent success. Through my experiences I have geared my company to help you, the independent dealer, be the best you can be. Here are three ways you can stop assuming and start making a difference in your dealership. Start with Ethics The basis for all great businesses is great ethics. Do the right thing!
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We recently partnered with the College of Automotive Management to provide a free ethics course for all our clients. As Dad said, we should never assume our employees know the do’s and don’ts when it comes to communicating with our customers. Of course, along with that comes the need to know laws pertaining to our business through a good compliance course. Add a Great Reason to Buy from You Certified pre-owned is certainly one of the most proven ways to attract customers and sell cars. Sixty-five percent of car buyers begin their search looking for certified. Certified pre-owned cars sell 40 percent faster than the same, non-CPO car. For significantly less than they would expect to pay for a current model, consumers buying “certified” are drawn to the security of a pre-inspected, warrantied car and the simplicity of having their dealer pre-screen their car for hassle-free shopping. Current statistics prove CPO continues to be one of the fastest and most reliable growth areas in the car business. CPO cars sell faster, for more money, with better advances than non-CPO cars. Having CPO cars also helps you easily establish a sales system. When your salesperson goes out on the lot with your customer, CPO gives them the advantage of selling more value and less price. Also, if you split your inventory into categories such as CPO cars, warrantied non-CPO cars, and as is or budget center cars, customers tend to gravitate to where they perceive the best value for their budget. CPO can also be incorporated into a branded “Advantage Program” with other customer-driven incentives to add to the appeal of doing business with you!
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Not a Cost of Sale but Building a Capital Resource It starts with reinsurance. Why reinsurance? Reinsurance puts you in the driver’s seat to be a better, more profitable dealer. It gives you ultimate control to do what is best for your customer and your dealership. Reinsurance increases your profitability with a return on investment better than any other single endeavor available to you in the car business. Having a reinsurance company offers you much more than a fantastic CPO program. Depending on your needs, you can sell your own vehicle service contract or any number of other attractive products. Just so you are clear on this, let’s say you are selling a vehicle service contract you bought from a third party. You send them $50,000 and they spend $20,000 on claims. There is a $30,000 underwriting profit – their $30,000 underwriting profit. In contrast, let’s say you are selling your vehicle service contract. You send in $50,000 and $20,000 is paid out to benefit your customers. There is a $30,000 underwriting profit – your $30,000 underwriting profit. And this is just one of the many products you can reinsure. You can be a better, more profitable dealer who sleeps well at night knowing your employees are doing and saying the right things, your customer incentives are second to none and you are building a capital resource to fund your dreams. Don’t assume a good future, make one! Tim Byrd is founder and president of managing agency DealerRE. A nearly 30 year veteran of the car business, Tim is an auto industry expert on dealer-owned reinsurance companies, BHPH operations, and dealership and F&I development. Tim can be reached at www.DealerRE.com or by calling 804-824-9533.
MARKET WATCH | BY BRIAN GEITNER
HOW TO SELL HIGH-TECH VEHICLES WITHOUT A PHD FROM MIT Practical Guidelines It’s tempting in auto retailing to think of vehicle technology as just bells and whistles. Sure, tech features sweeten the deal, but they probably won’t make or break the sale. Right? According to Autotrader’s 2016 Auto Tech Study, 48 percent of consumers think vehicle technology is more important than either vehicle body style or brand. For nearly half of consumers, those “bells and whistles” matter more than the actual vehicle type. So a dealership sales process should account for that. Turn Tech into Profit For decades, Baby Boomers have dominated the car-buying market. But while boomers still have sizable buying power, Millennials are now the generation to watch. Half of Millennials say they’ll buy or lease a car in the next 12 months. And because Generation Y is predicted to buy 40 percent of all new vehicles sold over the next 10 years, that age group of 20- and 30-somethings’ preferences will shape the market for years to come. Technology is one of the biggest selling points for Millennials when deciding what vehicle to buy. They’ve grown up with tech. They expect it in every aspect of their lives, from their phones to their homes to their cars. They’re not willing to compromise. Nearly 60 percent of Millennials would switch vehicle brands to get the technology they want and 55 percent are willing to spend extra to get the technology they want. The average Millennial will pay $2,617 more for his or her ideal tech features. Let’s play out those numbers. Say a dealership sells just 20 cars a month to Millennials. Multiply those sales by the $2,500-plus Millennials are willing to pay for the right technology. That’s more than $600,000 a year in additional revenue. So how can you claim this potential profit? Fortunately, you don’t need Silicon Valley experience to be a tech-savvy salesperson. Here’s what you actually need to do. Make Technology Look Easy Being a knowledgeable salesperson is more important now than ever. Although most consumers plan to research the latest technology before shopping, 44 percent still don’t know what features they want when they take a test drive. And that’s where salespeople come in. They should feel comfortable explaining the latest tech features of any vehicle and making those features look easy to use. A
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third of consumers say they’d walk away from a purchase if the vehicle’s in-car technology seemed too difficult to use. Older salespeople shouldn’t be afraid to ask Millennial colleagues for help. They grew up with advanced technology, so using these features – and talking others through them – is second nature to them. Combine that insight with a veteran’s sales knowledge and he or she is unstoppable. Get Hands-on Experience A great test drive is important, but 31 percent of Millennials say it doesn’t offer enough time to master vehicle technology. That skyrockets to 61 percent for older generations. Regardless of age, 35 percent of consumers would like to learn about vehicle technology either from a dealership staffer or a dealership-hosted class. That means dealership people must get up to speed. Before you can teach something, you have to know it yourself. So during downtimes, dealership personnel should roll up their sleeves and try out advanced features of the vehicles in stock. Once they know their way around, they should consider offering regular classes to consumers who want extra guidance. This support system can motivate hesitant consumers to invest in a more sophisticated vehicle. Find Differentiators Which features and options should be emphasized during the sale? That’s a tricky question, because consumers have different expectations. For example, 60 percent of consumers think features such as Bluetooth, keyless entry and blind spot detection should come standard. Emphasize connectivity and entertainment features. Forty percent of consumers’ wish lists include wireless device charging, telematics and interactive dashboards. These features aren’t as commonly available as other tech options. If a vehicle has them, it provides something out of the ordinary, something many consumers will be willing to pay for. By knowing consumer needs and getting comfortable with the latest vehicle features, car salespeople can sell more vehicles – no computer science degree needed. Brian Geitner is president of Cox Automotive Media Solutions Group, overseeing Autotrader, Kelley Blue Book and Dealer.com. For more information email info@coxautoinc.com.
INDUSTRY SPOTLIGHT
| BY IAA STAFF
INSURANCE AUTO AUCTIONS Proud Member of AIADA Insurance Auto Auctions is proud to be a member and sponsor of AIADA since 2010. We have worked with the association for a number of years. In addition to sponsoring events and conferences, we – like AIADA – pride ourselves on helping independent dealers across Alabama. Our remarketing team in particular works very closely with AIADA. The remarketing team at IAA specializes in the promotion and sale of aged, high mileage, lightly damaged, fleet/lease and dealer trade-in vehicles. We currently operate three branches in Alabama – Birmingham, Huntsville and Dothan – in addition to running two lanes at sister auction ADESA Birmingham. Our expansive footprint and efficient, centralized operations reduce cycle time and cost associated with the disposition of remarketing inventory while consistently delivering strong retentions for our sellers. IAA operates more than 170 auction facilities in North America.
IAA AUCTIONS:
IAA Dothan 15994 US Highway 431 N Headland, AL 36345 Auctions held every Tuesday at 10:00 a.m. IAA Birmingham 1600 Highway 150 Bessemer, AL 35022 Auctions held every Wednesday at 9:00 a.m.
IAA Huntsville 16326 Ennis Road Athens, AL 35613 Auctions held every Monday at 9:00 a.m. ADESA Birmingham 804 Sollie Drive Moody, AL 35004 Auctions held every Wednesday at 8:30 a.m.
W E H AV E W O R K E D W I T H T H E A S S O C I AT I O N F O R A N U M B E R O F YEARS. IN ADDITION TO SPONSORING EVENTS AND CONFERENCES, IAA is a trusted leader across the country with over 30 years of vehicle auction experience and innovation. Our live and live-online auction model generates a healthy, competitive auction environment. While live auctions take place, online buyers can join in the bidding through realtime audio broadcasts using IAA’s exclusive I-Bid Live Internet bidding platform. This option offers our buyers flexibility, making it easy to participate in any of our auctions. We invite association members to stop by one of our three branches on auction day. The IAA team also encourages you to register to buy or sell with IAA. We offer a great program to liquidate repossessed vehicles, trade-ins, aged inventory or slightly damaged vehicles, and can sell vehicles with most title types. We also offer a $50 off seller fee coupon in the AIADA coupon book this year. Please contact us at 205-640-2231 to register to buy or sell with IAA. We will be able to assist you with any questions you have regarding any of the Alabama locations. IAA is proud to be a member of the AIADA, and we look forward to continue strengthening our relationship with the association!
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RETAIL READY | BY JUSTIN M. OSBURN
DESIGNING A SUPERIOR MEET AND GREET Crafting and Reviewing the Play Recently I was on an airplane and the lady next to me struck up a conversation. She asked what I did for a living and I told her I consulted independent auto dealers. She became very inquisitive about the car business. She quickly offered her fear of car shopping and told me about her recent experience that turned into a nightmare. I asked her what emotions she felt when thinking about driving onto a car lot to purchase a vehicle. She said, “Fear of being screwed.” This information is nothing new. However it is the building block of how critical an effective meet and greet can be to our prospects. An additional BHPH fear from the prospect is fear of getting turned down. Our first impressions and ability to gain trust set the sales process up for success or failure. While there are certainly dealerships full of sales professionals who open with a competitive meet and greet, there are some that struggle to offer a consistent and superior greeting to prospective buyers. Why? Why do some nail it time and time again while others struggle to get even one sales professional on the team to conduct a first-class meet and greet? Here are a few steps your dealership can take to improve the overall execution of the meet and greet on the lot, right now! Leadership must decide the expectations of the meet and greet. Team members do not usually wake up each morning and say, “Self, today I am going to have a horrible day and do everything I can to be disruptive and not follow my manager’s instruction.” Actually, most team members come to work each day willing to follow great leaders and the tactics that produce results. A pitfall easy to overlook is no structured script or direction for the sales team to learn, practice and perfect their meet and greet. A critical step to improvement is the leadership deciding, with clarity, how the meet and greet should be conducted and then teaching and coaching the team members to replicate that vision with repetition and practice. Consider regular, short sales meetings each morning. This gives the leadership an opportunity to see who is at work, who is not, who is late and who came dressed for success as well as get a pulse of the team’s attitude for the day and offer some quick and structured practice. Coach the sales department on how to run “the play” of meet and greet. When team members are confused or
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A PIT FA L L E ASY T O OV ERLOOK IS NO S T RUC T URED SCRIP T OR DIRECTION FOR THE SALES TEAM TO LEARN, PRACTICE A N D P E R F E C T T H E I R M E E T A N D G R E E T. don’t know what to do, it’s human nature to do nothing, to stand still in the confusion. This is very apparent when a sales team member demonstrates hesitance to take an “up.” They are not sure what to do. You could fire them, or yell, or, worse, quietly remain bitter toward them as you both drown in failure. An alternative approach is to coach them how to run “the play” of meet and greet laid out in the first step. Then, rehearse it with them until they demonstrate perfect practice. If a mystery shopper walked on to your lot today and was greeted by the sales team, what would it sound like? Evaluate what works and does not work. If there is a well-crafted meet and greet plan and the team is demonstrating perfect practice, leadership should consistently encourage feedback on what parts of the play work and which parts could be improved. In football, a coach draws up a play and shows it to the team, then they practice all week and run the play in the next game. Certainly it doesn’t end there. The coach and the team are interested if the play resulted in big yardage, short yardage or even a loss of yards. They watch film after the game to review how the opponent responded to the play and what parts worked or did not work. If the play lost yards, it is not necessarily
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scrapped. Perhaps the blocking assignments need tweaking, a different player needs to touch the ball or the play needs to be run in a different situation. Once leadership at the dealership has drawn up a meet and greet, shown it to the team and rehearsed it, there should be a review with the team after it is has been used to see if it needs to be tweaked, changed up and/or improved. What are the results? What is the goal of a meet and greet and how do leadership and the team know if it was a successful play or not? The goal of a meet and greet should be to offer a great first impression, open up the ability to build rapport and ultimately move the prospect to the next step in the sales process. What is the next step? Can your leadership and team answer that question, consistently? Tip: A great opening question: “Hi, my name is Justin. Have you been to our dealership before or is this your first time?” I’d love to hear creative plays your team is running on the meet and greet. Typically a sincere and prepared opening has great results. For a few more opening questions that work, email me at justin@niada.com. Justin Osburn is a moderator, consultant and trainer for NIADA Dealer 20 Groups, offering more than a decade of experience in retail and Buy Here-Pay Here executive management.