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S A L E S M AT T E R S COMPETING WITH FRANCHISE DEALERS AND COMING OUT ON TOP How Converting Sales to Service Can Help You Sell Cars page 12
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WHAT’S NEW
New PassTime Series on niada.tv Get more from your GPS! There is a new video series on niada.tv that identifies how PassTime GPS tracking solutions facilitate higher rates of return on financing based upon improved customer payment performance. It also discusses PassTime’s wireless GPS telematics products. Check out this new series and much more at niada.tv!
06 LOST ART OF THE SWITCH 08 RETAINING WOMEN IN SALES 10 NIADA CONVENTION 12 COMPETING WITH FRANCHISE DEALERS 14 D OES YOUR DEALERSHIP VALUE ITS INTERVIEW PROCESS? 18 CFPB’S PROPOSED CONSUMER ARBITRATION RULES ADVERTISER’S INDEX
ADESA........................................................... IFC Autotrader ........................................................ 5 Black Book.....................................................IBC Dealership Valuation Services ...........................14 GM Financial ..................................................... 7 Lobel Financial.................................................. 3 Manheim....................................................... 8,9 Manheim Pennsylvania..................................... 13 NextGear Capital ......................................... 11, 12 PassTime......................................................... 15 Paymaxx Pro ....................................................16 Spireon ............................................................16 VAuto..................................................Back Cover
OFFICE
For information on how to become a member of AIADA, please contact Dave Warkentin at (602) 246-1498, aiada@aiada.net or www.aiada.net.
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For advertising information contact: Troy Graff (800) 682-3837 or troy@niada.com. Arizona’s Independent Dealer is published bi-monthly by the National Independent Automobile Dealers Association Services Corporation. 2521 Brown Blvd., Arlington, TX 76006-5203; (817) 640-3838. 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 individual authors and do not necessarily represent the views of AIADA or the 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 © 2016 by NIADA Services, Inc. All rights reserved. Visit the NIADA website at www.niada.com. State Magazine MGR./Sales Troy Graff • troy@niada.com Editors Jacinda Timmerman • jacinda@niada.com Andy Friedlander • andy@niada.com Magazine Layout & Graphic Artist Chantae Arrington • chantae@niada.com Art Director Christy Haynes • christy@niada.com Printing Nieman Printing
4 INDEPENDENT DEALER / AUGUST/SEPTEMBER 2016
4 ESSENTIALS FOR BIG SALES IN THE DOG DAYS OF SUMMER
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INSIDE
SALES MATTERS / BY BRENT CARMICHAEL, NCM ASSOCIATES
>> The Right Plan for Summer Profit
THE DOG DAYS of summer are here. The typical BHPH dealer will sell 30 to 35 percent of their annual units in the first three months of the year. They will also realize about the same percentage of their annual profit in the first quarter. So, if you got off to a slow start this year, summer could be the only way to salvage your annual sales. However, it’s going to be a lot harder. But you can profit in the summer – with the right plan. Good sales in the summer are no different than selling in the first-quarter heydays. It just requires more focus and drive because your customers have less money and can be harder to find. The four steps I outline below will give your team the skills and focus to make sales, even in the most challenging months. Step One: Develop the right skills. The first of the key ingredients, and most important, is simply training. Well-trained salespeople can sell any time of year. Set up a training schedule to get your team on point. Both phone training and basic sales skills training should be done weekly, at a minimum. Specifically, address how to overcome objections. Role playing is a good way to accomplish this. Educate your staff on how to set effective appointments by recording and reviewing the calls. Lot traffic is at a premium during the dog days, so make sure your people know how to handle effectively what opportunities they do have. Step Two: Keep up appearances. Appearance is critical. Now, I’m not necessarily talking about your employees’ appearance, which should always be neat and professional, but your overall lot appearance. Over my many years in the business and as an executive conference moderator with NCM Associates, I’ve discovered the No. 1 reason BHPH customers choose a dealership is that it looked good when they drove by. Let’s take this at face value and make sure your lot is the best-looking one in town! Fortunately, improving your lot appearance isn’t difficult. Make sure it is always neat and orderly. Arrange vehicles evenly and with a good mix of colors and styles. Don’t have them face all four directions of the compass! Host a lot party or rodeo at least once a week to force yourself to keep the lot fresh. And don’t forget the cars themselves. You should consider the vehicles on your lot as your mannequins and treat them the way a fine department store treats theirs. Keep them fresh,
neat, clean and always ready to sell. That goes for overall lot appearance as well. A fresh coat of paint and some weed killer can do wonders. Step Three: Entice your customers. Successful dealerships understand you can’t just wait for clients. Good marketing brings people to your lot, so develop a plan that offers attractive incentives. Summer is a time when repeat and referral programs really pay dividends. And it is also a good time of year to focus on referrals, not just with your customer base but with outside companies and people as well. If you are not already paying referrals to non-customers, it’s something you should give some serious consideration to. I can assure you some, if not all, of your competitors are doing it. Marketing also extends to your web presence. Make sure your website is up to date. Read through your “About Us” sections and any testimonials – do you need to make changes? Review your employee introductions – has anyone left or been promoted? Do the photos need to be replaced? Reviewing photos is of particular importance if you display inventory. I was on a dealer client’s website the other day and the inventory photos had snow on the vehicles! It’s also critical you check any advertised specials. You don’t want someone stopping in for a deal that’s no longer current! Step Four: Get your message out. If you want to make the most of the dog days of summer, make sure people know about you. In this very competitive industry, advertising in some form or fashion is a must. The two most popular advertising media are, of course, television and radio. And, contrary to popular belief, use doesn’t drop off in the summer. Advertising is only effective when it reaches the right folks with the right message. When promoting in these channels, remember to advertise to your customer, not yourself. Chances are your buyers watch different television stations than you do and may even listen to different radio stations. Select ad placements where your clients are watching and listening. If you aren’t certain what media your customers are using, survey both new and existing customers to gauge their entertainment preferences. In other words, just ask them. Moving past traditional media, there are many options in social media to get your message out. I won’t go into them here, but I recommend you get the basics. As you can see, the formula for selling in the dog days is the same as selling in the heydays. Although there are usually fewer opportunities, you can capitalize on what you have when you pay more attention to detail. And it doesn’t need to be expensive – the two most important items outlined above are the least expensive. With the right mix of training, lot maintenance, and marketing and advertising, I know you can keep the dogs at bay. Brent Carmichael is the executive conference moderator at NCM Associates. This article originally appeared on NCM’s Up to Speed blog (blog.ncminstitute.com) and is reprinted with permission.
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MANAGEMENT GAMEPLAN / BY SCOTT BERGERON
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THE LOST ART OF THE SWITCH >> Bring the Pendulum Back
6 INDEPENDENT DEALER / AUGUST/SEPTEMBER 2016
Sales managers need to train
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BACK WHEN car deals were far easier, and customers didn’t spend six months selfdiagnosing their needs, the ability to switch a prospect out of one car into another was commonplace and done with virtually every deal. Today, switching prospects from one vehicle to another can almost be considered a lost art. Re-focusing on it, though, can bring your dealership more deals. Historically, switching vehicles was a natural part of the sales process. Today, customers are more rigid in their quest, and to them, it’s often more about finding the “exact perfect vehicle.” Prospects walk in armed with loads of online research information about vehicle history, equipment, trade-in and retail values. But often they haven’t accurately assessed the value of their trade-in or calculated their monthly payments. That’s when forward momentum stops going forward, and the deal starts going sideways. The Swinging Pendulum – from Too Pushy to Too Cushy Traditional used car salespeople often were branded as being too pushy, too money motivated, and far too aggressive in their efforts to make a sale. Today’s pendulum, in many cases, has swung too far the other way. Reacting to a prospect who seems to know it all, many sales reps have basically adopted an order-taker mentality instead of being a value builder and solution provider. Part of this is a natural aversion to the used car stereotype. Part of it is salespeople or the sales process being allowed to become too soft. Here’s a typical scenario: A prospect walks in with an inflated idea of trade-in value, and little or no idea what their actual monthly payment will be. The prospect has researched trade-in value based on retail versus wholesale, and perfect condition compared to actual condition. Other than perhaps a ballpark guess, the monthly payment is an unknown. In some cases, the salesperson may overhear comments about payments or terms, but may choose to still let it go to the finance office – where it can, and in many cases does, blow up. Where’s the sweet spot? Bring the pendulum back toward the center. Just because a prospect has done research and is somewhat knowledgeable doesn’t mean he or she doesn’t need or want an “expert” to help guide the process. A major key to successfully finding that middle ground is knowing and asking the right questions, and if need be, switching the prospect to another vehicle that makes more sense. Switching it Up Salespeople need to be well aware of their “switch car inventory” ahead of time. Rules
their people to do similar investigation, so they can learn to spot hot button motivators, as well as building value in benefits. Just segmenting by generation (e.g., millennials) won’t do it.
of the road include: 1. Training the sales force on switching. During your sales meeting, sales manager(s) should go through their inventory with their sales team and train what’s new on the lot, the hot cars from auction, the perfect switch vehicles – such as cars sold at auction for well below Blue Book and that allow the dealership to essentially get the deal done when trade values are upside down. This gives the sales rep, and the dealership, much better odds at making a deal happen. 2. Training/retraining the sales team on taking charge and being tuned in. Can you tell how to spot a green-pea on the lot? They’re the ones being led by their prospects instead of the other way around. Sales managers need to make sure their team is controlling the deal, not being led down the wrong path by a prospect who seems to know “exactly what they want,” but in the real world isn’t even close to reality for payment and terms. During the initial introduction phase, salespeople should always work towards keeping the prospect as flexible and open to suggestions as possible. As smart as today’s prospects are, it’s always a good idea to remember most only walk into a dealership or purchase a car every four to five years. Salespeople and managers work deals bell to bell nearly every day. So you and your team’s opinion should be taken as expert advice, especially in terms of deal structure. You know what’s going to work and what’s not. The key is having enough rapport and trust built to be able to efficiently lead the deal. This level of competence must extend to making sure walk-ins, rarer these days, are helped as soon as possible. I walked into a dealership a few years ago wearing my worst blue jeans, and a tank top covered in dried paint. I had finished my Saturday work around the house and was
ready to go buy my dream car. I was looking for a certified pre-owned Porsche 911. I was on the lot for at least 20 minutes. There were several salespeople available, but no one acknowledged me. Being from the car business, I really wanted to see if pre-judging still existed just from the clothes I chose to shop in. I did finally get help, and yes, I bought the car. But the first impression is still something people put a lot of stock in. 3. Understanding the marketplace. When I visit a town, I make it a point to find prevalent radio stations to get an idea of what, how, and who they’re advertising to. It gives me a quick snapshot of potential audiences for cars – whether it’s young “Kardashian types” or highly educated, more affluent prospects. If I were working at a used car dealership in that town, I would attempt to determine right away what station(s) a prospect tunes in to – which may provide some valuable intel about how to switch and sell a car. Sales managers need to train their people to do similar investigation, so they can learn to spot hot button motivators, as well as building value in benefits. Just segmenting by generation (e.g., millennials) won’t do it. No matter what traits predominate, at the end of the day it still comes back to buying from people they like and can identify with. A salesperson who can listen, build rapport and truly be an expert can switch when need be, or build the value up on the first choice so it makes sense to spend a little more. 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 Books and cloudbased CRM have been used in thousands of dealerships throughout the United States. Bergeron can be reached at 303.918.3169 or scott@dailygameplan.com.
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NOW IT IS A MUST >> How Can We Do A Better
Job Retaining Women In Sales?
DEALERSHIPS CURRENTLY REPORT that women represent just 25 percent of face to-face positions. But that small number is powerful: Within four months of reaching that percentage, dealerships typically experience as much as 35 percent gain in overall vehicle sales, new and used, and a substantially increased used car turnover. Less numbers-driven, but just as important, those dealerships also see
an increase in desirable employee statements regarding company loyalty and goals toward longevity. How did they do it? Simple: They brought women into their sales, service and management positions and found ways of retaining them. It’s simple: Attracting women yields high results. Considering 85 percent of all automotive purchases are either directly made by women buyers or directly influenced by them, if we are not responding to this statistic, then our dealerships are missing the boat. Totally. ROI is a key driver in how we consider the physical programs and offerings we put forth to the consumer in our efforts
Explore new technology.
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MANAGEMENT MATTERS / BY JODY DEVERE
Employ marketing specialists comfortable with women’s needs. Eliminate procedures we have utilized just because we have always done so.
to entice them to visit our facilities. We do recognize Internet information access has affected profit margins, margins inflated by consumer ignorance as to how much flexibility in costs existed. The fact is we just cannot make the margins we used to, and have to find ways of addressing our concerns as survival efforts. Playing the numbers game of total sales for a month will eventually be passed with the money lost in potential profits. The bottom line is we must place our investment monies into areas of concentration that will bring us returns that will not only keep us in business but by their very nature help us grow in our financial viability, viability that is attractive to women who may be considering this industry as a workplace. Roadblocks to attracting women. Here are some reasons why we are not attracting women at this point: 1. Traditional resistance. Many organizations still are thematically maledominant and have programs in place that do not have interest to the new womendriven market. “What was good for my dad is good enough for me” is the motto above the entrance of many empty and abandoned dealerships. 2. Reluctance to trying new programs. Management and owners may not have the desire or courage to try new programs. Or they may be lazy. 3. Equitable pay and work programs. There need to be considerations for family needs and even part or adjusted time participations. Traditional long hour work periods do not work. 4. Knowledge and expertise. Existing dealership management may simply not have either or both of these to design and implement marketing to attract and hire women, or initialize training and financial or equitable incentive programs to make this happen. 5. Necessary minimal monetary investments. Many management personnel simply may not want to make these investments.
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must address the elimination of restrictive traditional procedures we may have in place. 5. Encourage our educational systems to step up to the plate, and support local and regional programs. We need realistic training at design, management, service, finance and especially sales. This must happen at all levels of the industry. Today’s women are time-constrained, pragmatic, comfort-conscious, and heavy into efficient and consistent communication with their employers. They are extremely effective at communicating within their own social groups and pay little attention to advertising. They are direct with their customers, and women are especially effective at establishing a meaningful rapport that translates into return business
transactions built upon trust. If we wish to survive, let alone prosper, we cannot wait any longer. Let’s do everything we can to attract these valuable women employees, and provide them with the incentives to keep them with us. The time is now, not tomorrow. Jody DeVere is an internationally recognized speaker, trainer, often quoted industry pundit and spokesperson for the automotive industry on the women’s market. As CEO of AskPatty.com, she provides automotive education to women consumers and an interactive online Certified Female Friendly certification training program for automotive retailers on how to attract, sell, retain and market to women. This article originally appeared on NCM’s Up to Speed blog (http:// blog.ncminstitute.com) and is reprinted with permission.
6. Difficult economy conditions. Many organizations lean on this often-perceived statement as an excuse. This is not an excuse. 7. Negative reputation: Previous poor treatment and lack of respect. The dealership’s experience has left a bad taste in many women’s mouths. Women are still greeted on the sales lot with detestable statements such as, “Is your husband with you today?” With such disrespect, it’s not surprising that women don’t consider dealership work as a viable option. 8. Failure to address the needs of female millennials. Times are different. Women in this largest group of consumers want to be in organizations that “feel good” to their basic drives, other than just to climb through positions or achieve high income solely. They want to have better communication with their administrators and are most often prefer working “with” them, as opposed to “for” them. So, how do we fix this, and not only bring talented women into our organizations but keep them there as well? With sales consultant turnover figures ranging from 72 percent to 80 percent, the highest turnover rate is women at a shocking 90 percent. Turnover among millennials is presently at 54 percent. It is obvious we are doing a lot of things wrong. Here are some realistic solutions to retain women: 1. Get off our butts and try new methods. Explore new technology. Employ marketing specialists comfortable with women’s needs. Eliminate procedures we have utilized just because we have always done so. 2. Re-examine possible positions that can effectively interest and challenge women. Conduct non-traditional interviews that ask what these interests might be. 3. Re-evaluate compensation incentives and adjust them. Consider not just the primary needs of full and part-time women, but their family and personal needs as well. 4. Take a new look at our models. We
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AUGUST/SEPTEMBER 2016 / INDEPENDENT DEALER 9
ASSOCIATION NEWS ///
ASSOCIATION NEWS /
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NIADA CONVENTION RECAP >> Reinvention Creates Success for 70th Annual
NIADA Convention and Expo
FROM THE VENUE TO THE CONTENT , the 2016 NIADA Convention and Expo was all about reinvention. While the theme of “Success By Reinvention” was created with the idea of helping dealers thrive in the rapidly changing used car business, it fit the industry’s biggest event just as perfectly. NIADA celebrated its 70th annual Convention in a new venue – the recently renovated Mirage, which provided a larger yet more intimate setting – as well as a sold-out 60,000-square foot Expo Hall with more than 170 exhibitors and the most extensive dealer education agenda in history, featuring more sessions on more topics than ever before. It also included more attendees than ever before. The 2016 Convention obliterated the event’s attendance record, sailing past the previous mark, set in 2006 at the Las Vegas Hilton, by a staggering 24 percent. The number of dealers and first-time attendees both rose by 30 percent or more. “I got what I came for,” said Sean Schuetz of Klass Motors in Santa Ana, Calif. “I wanted to learn new ways to take my business to the next level, and I’ll be spending the next several months implementing what I learned at my dealership. It was the most informative convention I have attended.” While the education is always the focus, there was, of course, a
lot more happening. Kris “Tanto” Paronto, one of the heroes of the infamous Sept. 11, 2012 terrorist attack on the U.S. diplomatic mission in Benghazi, Libya, told the harrowing story of those 13 hours in a gripping keynote address that left the overflow crowd standing and cheering. Paronto discussed courage and handling adversity and crisis situations, as well as the decision of himself and his CIA Annex security team to speak out about what happened that night in the face of conflicting reports from government and media that told a different story. Attendees also had a chance to celebrate, dance and loosen up at the Cigars and Martinis and Margaritas welcome reception in a lush, tropical setting at poolside, and at a disco-themed closing party following the crowning of Florida’s Scott Lanier as the 2016 National Quality Dealer. In addition to the NQD ceremony – webcast live as always on NIADA.TV – the previous night’s National Leadership Awards Banquet introduced new NIADA president Billy Threadgill as well as honoring NIADA scholarship recipients and the winners of awards for the top performers within the association and the used vehicle industry. “I can honestly say my experience was far above and beyond my expectations,” said Daniel Johnson of LiteHouse Auto in Lakewood, N.Y., a first-time attendee. “We will not miss a Convention from here on out.” The 2017 NIADA Convention and Expo will be back at The Mirage and is scheduled for June 12-15, 2017. Save the date and don’t miss your chance to be part of the used vehicle industry’s biggest event of the year!
SALES MATTERS / BY DEALERSOCKET
COMPETING WITH FRANCHISE DEALERS AND COMING OUT ON TOP >> How Converting Sales
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to Service Can Help You Sell Cars
DEALERSOCKET’S DAR for Fall 2015 cites two primary problems independent car dealers face. One is used car sales and the other is repair services. Why are these issues for independent dealers? This finding is based on an independent dealer’s ability to convert used car sales to repair services, which correlates with customer satisfaction and retention. How do you convert sales to service? You must change customer perception. Almost all business is judged by the strength of the customer service department. You need to change consumer buying habits. DealerSocket reports for independent dealers only 30 percent of sold customers brought their vehicle back to the dealership for service within the first year. The average percentage of repeat customers is only 20 percent. They examined a Chrysler Jeep dealer and discovered the average sold customer who brought their vehicle back to the franchise dealer for service during the first year of ownership was 80 percent while the customer retention rate was 44 percent. How do they do it? According to DealerSocket, they have established a two-step process unique to their group and region. They introduce all new customers who purchase a vehicle to the service department at the time of delivery by scheduling their first oil change. Once the customer is in the service department, they created a program they call Platinum Plus. Every time a customer spends money in the Service Drive, 15 percent of dollars spent goes towards the purchase of their next vehicle. This has proven to increase retention in service. Converting customers who bought vehicles from the sales department into service customers is the formula for increasing customer holdings. The cycle of customer sales purchase to customer repair service, coupled with a 2-5 year trade-in is the pattern every dealership seeks to obtain. How does an independent dealer compete with the larger franchise? DealerSocket surveyed consumers and found 75 percent say where they purchase their vehicle is influenced by negative online reviews. Your online presence matters and there are ways to make it work for you. DealerSocket proposes several solutions: • Data mining or data discovery is the process of analyzing data from different perspectives and summarizing it into useful information. This information can be used to increase revenue, cut costs, or both. 12 INDEPENDENT DEALER / AUGUST/SEPTEMBER 2016
Every time a
customer spends money in the Service Drive, 15 percent of dollars spent goes towards the purchase of their next vehicle. This software is an analytical tool often used by retail, financial, communication and marketing organizations. It enables companies to determine relationships among internal factors like price, product positioning, or staff skills to external factors like economic indicators, competition, and customer demographics. This allows you to properly position your business and possibly increase customer sales and retention. Customer relations management software keeps a customer database with phone numbers and email addresses, so you can schedule follow ups, appointments, and email blasts that allow you to continually reach sold and prospective customers. • Schedule your customer’s first oil change before they walk out the door and send a reminder before the appointment date. This is an excellent way to build a sales/service cycle. • Examine sales trends, including the retail sales outlook, trends by vehicle type, web based and device driven sales, and the online shopper and how they’re utilizing your website. Traditional marketing processes are irrelevant in light of today’s online marketplace. The DealerSocket DAR for Fall 2015 summarizes their report the following way: Increase customer retention by: • Integrating sales and service processes. • Building trust and communicating the value of the service department within the first year of selling a vehicle. • Utilizing data mining software. Grow revenue by: • Implementing appointment confirmation processes. • Focusing on used car opportunities. • Decreasing spending on traditional advertising. • Creating a digital shopping experience that drives consumer engagement.
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MANAGEMENT MATTERS / BY KEVIN BAUMGART
DOES YOUR DEALERSHIP VALUE ITS INTERVIEW PROCESS?
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>> Be Prepared for the Right Hire
BY THE TIME a candidate reaches the interview stage, it’s clear they have grabbed your attention as a potential hire for your dealership. The interview process is an irreplaceable component of your dealership’s overall hiring strategy. It’s also the point at which both the employer and job seeker determine if it’s worth their time to move forward with the process. What’s at Stake for Employers? Taking the time to speak with a candidate in person is critical to determine if someone is a good fit for the role. It’s also an integral part in persuading top talent to work for your dealership. Research from LinkedIn found that 87 percent of job seekers said a great interview experience would make them reconsider a job offer even if they have initial doubts. In a competitive job market, this can make the difference between hiring an all-star and a dud. Conversely, 83 percent of candidates say
a negative encounter during an interview will erode their interest in a position. Getting the interview process down to a science begins far in advance of the inperson visit. Employer Due Diligence You will want to use the early stages of the hiring process to get as much information about the applicant as possible to ensure you’re making the right decision by inviting them in for an interview. Hiring technology has come a long way in enabling auto dealers to evaluate job seekers before they ever step foot in the dealership. Employers should take advantage of tools that test hard skills, soft skills, culture fit and aptitude. Based on the results of these evaluations, you’re able to better gauge whether they meet – or even exceed – the requirements established in your job description. This adds insight that employers can use in conjunction with resumes and applications to make informed judgments about applicants and if they should bring them in for an interview. Once you’ve completed these critical steps, you need to make sure you are prepared to meet the candidate inperson. How to Prepare for the Interview No detail is too small as you prepare for the interview. Consider what type of impression you’ll leave after you’ve
invited a candidate to talk about a specific position and you forget their name, the job they applied for or refer to past work experiences belonging to another applicant. This is the candidate’s first impression of what it would be like to work at your dealership. It’s important to get it right. You should also have your interview questions prepared in advance and in front of you when you sit down for the interview. Be sure to have questions that will help you effectively identify whether the candidate can perform all necessary tasks defined in the job description. Addressing your priorities up front and asking questions about measurable criteria will help you determine their ability to do well in the role. At the end of an interview is a great time to allow candidates to ask questions, which helps set expectations for the candidate and the interviewer. If you are prepared for this exchange in advance, it is easier to sell top talent not just on the role, but also on your dealership as a place to work. As much as the employer is judging the candidate, the potential new hire is also forming opinions about working for the dealership, and a great impression will win over allstar candidates. An Extensive Process The interview is the singular component in hiring that carries the most weight for both the employer and candidate. It’s crucial you have a rock-solid process in place – built on strong intel about each applicant – that will make the encounter productive and illuminating for all parties involved. Kevin Baumgart is VP of Business Development at Hireology. He has spent his entire 15-year career in sales and sales management for entrepreneurial and start-up companies. This article originally appeared on NCM’s Up to Speed blog (blog.ncminstitute.com) and is reprinted with permission.
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MANAGEMENT MATTERS / BY KEVIN BAUMGART
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TECH ENABLED DEALERSHIPS NEED TECH-SAVVY EMPLOYEES >> Remain Competitive in Today’s Industry
WHAT DO MILLENNIALS and technology mean for the future of your auto dealership? The truth of the matter is you’re going to need both if you want to remain competitive in today’s industry. The Impact of Technology on Auto Dealerships One of the biggest changes forcing dealerships to shift the way they sell cars is customer behavior. According to an article from Fortune magazine, customers now make fewer than two visits (1.9 to be exact) to a dealership before making a purchase. Online shopping is the main culprit. Because of the free flow of information on the web, car buyers are more inclined to research their auto purchases at home or on the go using their computers and mobile devices. They’re no longer so dependent on salespeople for information about specific cars. As a result, some auto dealerships are equipping their sales team with greater technology, like tablets, to facilitate customer interactions and close deals in the showroom. Unfortunately, you can’t just arm your sales team with tablets and expect them to be effective at selling in a new way. This is a significant shift, and your employee base has to be comfortable with approaching the customer and engaging them with a piece of technology. Most dealers are targeting Millennials to work on the sales floor for this reason alone. There are many benefits to having technology on the floor accompanied by tech-savvy employees: • It gives the sales team instant access to information when customers have questions to which they may not know the immediate answer. • It initiates the sale on the floor instead of having to wait until customers are in the back office. • It helps build early credibility and trust if your customer sees the
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employee as a reliable source. • It will improve the level of professionalism and drive positive impressions of the store. Providing a mix of access to this type of technology and tech-savvy employees is one way auto dealerships can remain competitive. Millennials are a Perfect Fit for Technology Enabled Dealerships While the common stereotype you see of Millennials is a group of people who constantly have their smartphones at the ready or are scrolling through their preferred social media feeds, this generation is exceptionally adept at technology. They were born into an era of innovation that made digital technology one of the primary ways people experience the world. As a result, the generation has been groomed to reach for technology – mobile devices in particular – when searching for the answers to questions. According to the Society of Human Resource Management, Millennials are highly collaborative and make research-driven decisions. What’s more, according to a recent study from PricewaterhouseCoopers, 78 percent of Millennials believe access to technology makes them more effective in their roles at work. Thus, the technology your auto dealership implements is a major contributing factor when Millennials are considering employers. In fact, six in 10 Millennials say the quality of technology a business has was important during recruitment. However, it’s increasingly likely Millennials will utilize their personal technology if the tools they have in the workplace limit them. Meanwhile, employers are also creating or updating their IT policies to adapt to Millennials’ technology needs – for instance, providing smartphones as an employee benefit. Technology and Millennials go hand in hand, especially at your dealership. Whether it’s informed consumers arriving at your dealership with buying research saved on their smart devices or tech-savvy employees who understand your customers, technology surrounds this generation and is paramount to delivering a positive buying experience. Kevin Baumgart is VP of Business Development at Hireology. He has spent his entire 15-year career in sales and sales management for entrepreneurial and start-up companies. This article originally appeared on NCM’s Up to Speed blog (blog.ncminstitute.com) and is reprinted with permission.
AUGUST/SEPTEMBER 2016 / INDEPENDENT DEALER 15
SAFETY WATCH /
BMW RECALLS VEHICLES FOR CHILD SEAT RISK
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>> May Increase Risk of Injury BMW OF NORTH AMERICA
LLC is recalling certain model year 2011-17 X3 sDrive28i, X3 xDrive28i and X3 xDrive35i vehicles manufactured July 2, 2010 to April 14; 2015-17 X3 xDrive28d vehicles manufactured March 10, 2014 to March 31; and 2015-17 x4 xDrive28i, X4 xDrive35i and X4 xDriveM40i vehicles manufactured March 3, 2014 to April 15. The affected vehicles have lower anchor bars for securing child restraint seats that may become damaged when using the European-ISOFIX-type, rigid-style connector, child restraint system. Damaged lower anchor bars may increase the child’s risk of injury in the event of a crash. BMW will notify owners, and dealers will weld a reinforcing bracket to the lower anchor bars and the vehicle body, free of charge.
16 INDEPENDENT DEALER / AUGUST/SEPTEMBER 2016
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AUGUST/SEPTEMBER 2016 / INDEPENDENT DEALER 17
LIFTING THE HOOD ON CFPB’S PROPOSED CONSUMER ARBITRATION RULES
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>> How it Might Affect You
BY NOW, YOU’VE READ about the Consumer Financial Protection Bureau’s proposed new rule affecting consumer arbitration agreements. The headlines are all about its proposal to prohibit consumer arbitration clauses from blocking consumers’ ability to join class action lawsuits. A lot has already been written about that point. But there are a few details that will help round out your understanding of the proposal. So let’s look under the hood at the proposed rule and how it might affect you if it becomes final. 1. Ban on prohibiting consumers from joining a class action lawsuit. This is the main point you’ve heard about. Arbitration provisions are often part of the retail sales contract or are separately executed to cover a motor vehicle credit sale. They commonly give either party the right to require the other to arbitrate a future dispute rather than resolve it with a civil lawsuit. That means, for example, if a buyer files a civil lawsuit or joins a class action civil lawsuit, the dealer can require the buyer to resolve the issue through arbitration. If the CFPB’s proposed rule is finalized, consumer arbitration agreements could no longer allow a dealer/creditor to require a buyer to arbitrate instead of filing or joining a class action lawsuit. If the proposed rule becomes final, consumer arbitration agreements entered into after the effective date will require the following provision: We agree that neither we nor anyone else will use this agreement to stop you from being part of a class action case in court. You may file a class action in court or you may be a member of a class action even if you do not file it. Dealers will need to modify their consumer arbitration agreements to include the new provision and to make the text consistent with new limitations. Of course, the other option is for dealers to simply stop using consumer arbitration provisions. 2. Arbitration class actions. The proposed rule does not seem to prohibit consumer arbitration provisions that prevent buyers from creating or joining a class-wide arbitration proceeding. Consumer arbitration agreements commonly prohibit class action arbitration proceedings, so those provisions could remain unchanged. 18 INDEPENDENT DEALER / AUGUST/SEPTEMBER 2016
3. Paying for consumer arbitration. In the past, the consumer arbitration process was criticized for potentially being more expensive for consumers than small claims courts or other civil lawsuit alternatives. If it was more expensive, the prospect of arbitration might cause some consumers not to pursue their claims. The cost of arbitration has been raised in lawsuits to argue that an arbitration agreement should not be enforced. Today, many consumer arbitration agreements provide the dealer will pay most or all of the arbitration filing fees, arbitrator’s fees and other arbitration costs. In addition, arbitration organizations like the American Arbitration Association and JAMS have adopted consumer arbitration rules requiring the dealer to pay most or all of the costs of arbitration. The CFPB’s proposed rule does not regulate who pays for consumer arbitration. Since claims will probably be subject to arbitration organization rules anyway, it’s not likely dealers will change their contract terms on who pays for arbitration. Dealers will probably continue to bear much of the costs of consumer arbitrations. 4. Required reporting of arbitration results. If the proposed rule becomes final, in any arbitration action that results from a consumer pre-dispute arbitration agreement, the creditor must provide the CFPB with certain information about the claim and results of arbitration. The CFPB plans to use the information as part of its research on the topic. 5. Timeline from proposal to final rule. The CFPB is seeking public comments on its proposed rule. Comments must be submitted within 90 days of the date the proposed rule is published in the Federal Register. If the amount of early media attention is any indication, the CFPB will likely receive a number of comments. It will then take some time to analyze the comments and consider any edits to the proposed rule. The proposed rule specifically provides that if it is finalized, it will become effective 211 days after publication of the final rule in the Federal Register. Putting these steps together, if the CFPB publishes a final rule, it probably will become effective no sooner than May 2017. The CFPB’s proposed rule is receiving a lot of attention in the auto finance marketplace. Most of the attention is on the proposal that dealers can’t use an arbitration agreement to prohibit consumers from joining a class action lawsuit. Much will continue to be written about that specific item. But remember the other details will help determine whether the engine of consumer arbitration agreements will continue to run or end up on the scrap heap. Chip Zyvoloski is a senior attorney for indirect lending at Wolters Kluwer. For more information, please visit www.wolterskluwerfs. com/indirect.
INDUSTRY PERSPECTIVE / BY DALE POLLAK
REFLECTIONS ON MY FIRST NIADA CONVENTION >> Pleasantly Surprised
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COMPLIANCE OVERDRIVE / BY CHIP ZYVOLOSKI
I HAD THE PRIVILEGE of attending my first National Independent Automobile Dealers Association convention [in June] in Las Vegas. Quite honestly, I wasn’t sure what to expect, but I was pleased to discover many similarities with my experiences at 47 National Automobile Dealers Association conventions for franchise dealers. First, many of the dealers I met are as astute and keen about their business as many franchise dealers. They understand the wholesale and retail marketplaces are changing fast, and they are wisely seeking new ideas, tools and ways to make their businesses more profitable and successful. Second, like many franchise dealers, the independent dealers are deeply committed to their businesses. It’s their money on the line every day. They are hands-on, pragmatic operators, some of whom are likely to pick up a wrench or a chamois cloth to get a car ready for retail. Third, I was struck by the family nature of the event itself. I met dealers, their wives and their children on the NIADA floor – a reminder that many, if not most, dealers of all types are by their nature a family affair. Finally, I was pleased to be a part of Cox Automotive’s impressive presence on the NIADA floor – a testimony to our commitment to serve independent dealers as we collectively transform the way the world buys and sells cars. My hat’s off to NIADA’s Steve Jordan, CEO, and Joe Lescota, director of dealer development, for hosting an enlightening, productive and well-run event. This year’s NIADA convention may have been my first, but it most definitely won’t be my last. Dale Pollak is the founder of vAuto and an executive with Cox Automotive. This column was published on his website, www.dalepollak.com, on June 18.
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