BHPH Dealer THE
OFFICIAL
NIADA
PREMIER
SUBPRIME
AUTO
RESOURCE
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AUGUST
2017
MAGAZINE
ITY R O I R P P IS A TO
A
SUPPLEMENT
OF
USED
CAR
DEALER
PAGE 08
MAGAZINE
F E AT U R E S C O L U M N S 08 Cover Story
If you knew exactly when and where lightning were to strike, you would be sure to avoid it. Unfortunately, that’s not the case, and you don’t want to be caught holding the lightning rod when it does. NIADA Dealer 20 Groups moderator/consultant David Brotherton discusses federal advertising compliance.
A D V E RT I SERS AUTOZONE ....................................................................................9 CLIFTONLARSONALLEN ...............................................................12 DEALERRE ................................................................................... 10 DEALERSOCKET ........................................................................ IFC INTERACTIVE FINANCIAL MARKETING................................... 16, 18 PASSTIME.................................................................................... 13 PERITUS ......................................................................................15 PROACTIVE DEALER SOLUTIONS ...................................................5 SPARTAN FINANCIAL PARTNERS....................................................7 STARS GPS................................................................................... 11
ONLI NE
www.niada.com/bhph_dealer_magazine.php
Click on ads that link directly to advertisers’ websites. For advertising information, please contact Troy Graff at troy@niada.com.
4 Editor’s Message
Where is the BHPH industry? Where do we go from here? BHPH DEALER editor in chief Chuck Bonanno takes a look ahead.
6 Best Practices
NIADA Dealer 20 Groups moderator/consultant Mark Dubois offers tips to ensure compliance when it comes to GPS and SID usage in an industry wrought with regulation.
12 BHPH Advocate
Shaun Petersen, NIADA’s senior vice president of legal and government affairs, advises to take notice and give notices to ensure you protect your customers’ privacy.
14 Best Practices
What’s the benefit of going A.P.E.? LearnToLead president Dave Anderson outlines the importance attitude, passion and enthusiasm have in excelling consistently in any endeavor.
16 Management
Customer relationship management is essential in any business, and even more so in BHPH. NIADA Dealer 20 Groups moderator/consultant Mark Dubois explores components to strengthen your business in the ultimate CRM program.
Magazine Layout: Christy Haynes
19 Industry Perspective
eet new NIADA Dealer 20 Groups moderator/ M consultant Justin Osburn as he offers perspective through the story of a giraffe and the Ritz.
AUGUST 2017
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EDITOR’S MESSAGE
BHPH: WHERE DO WE GO FROM HERE? Looking Ahead
BY CHUCK BONANNO
Buy Here-Pay Here used to be such a simple business. When I began my BHPH career nearly 30 years ago, we provided basic transportation to “unbankable” customers. We took little risk and collected our payments weekly in cash. Customers were grateful to have transportation and we filled a void in auto finance. Fast forward to 2017. We find ourselves one of multiple providers of transportation needs, taking significant risk and doing so for much longer terms to keep payments affordable. The average risk – cash in deal – at the onset of loans has risen from $2,000 in 2001 to more than $6,000 in 2016. Wholesale prices have risen every year, down payments available have remained static and income levels have risen very slowly in this market space. That has led to a need to stretch terms, which creates a need to warrant the vehicles and provide maintenance programs to keep customers’ cars running. There is also evidence of payment fatigue, as customers get tired of paying for the same vehicle over a very long term. BHPH dealers need to pay attention to term lengths as they underwrite to keep customers interested and cars running. BHPH has always been based on relationships. The best BHPH operators provide a loan servicing experience that results in a high percentage of repeat and referral customers. That has proven to be a challenge over the past few years as banks, finance companies and credit unions are originating loans to those customers. Our challenge is to win customers back as they find themselves working with companies that do not value the long-term relationship, can’t help with vehicle issues and are not prone to work with customers when problems arise. BHPH dealers need to continue providing great customer service during the term of the loan to maximize repeat and referral business. There has been a lot written about a “subprime bubble” and a general feeling subprime financing will retreat in the near future. I’m not sure I agree.
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Many large banks have retreated from deep subprime, but other lending institutions and companies continue to fill any void left by their retreat. I advise dealers to create a strategy in which they are prepared to do business as if subprime lenders are never going away or contracting. If dealers are prepared for that, they will still be ready to take advantage if the subprime auto lenders do retreat. BHPH dealers are shifting away from traditional media to digital forms of advertising. They are also becoming more aware of the power of social media. There is a shift in consumer shopping habits, and dealers need to be engaged in that shift. Websites are no longer a portal to the dealership. The online presence has become the dealership showroom. A consumer can shop for literally thousands of vehicles from a desktop or mobile device. The future of car shopping is digital. The next step is online purchasing. Dealers will need to offer that service to compete in the future. Used vehicle acquisition is a bright spot for our industry even though prices have risen and will probably continue to do so. The ability to buy cars without all the legwork is today’s reality, thanks to online auctions, simulcast proxy bidding and online wholesale sites. Also, vehicles are better built today. That is good for dealers and very good for customers. The challenge is finding the cars people want and making sure they are fit for long-term loans. The only downside in the vehicle department is how complicated cars have become. Electronics and computers make repairs more challenging and expensive. The need for capital in the BHPH world has never been greater. The average dealer puts more than $6,000 on the street every time a car is sold or leased. If a dealer sells 30 cars per month, the capital needed to replace those vehicles runs more than $180,000 per month. Couple that with an average of $3,000 per car in overhead – which totals $90,000 for 30 units – and a dealer must collect more than $270,000 per month just to have cash flow. The challenge is a lack of capital providers and there is no sense that will change dramatically in the future.
THE FUTURE OF BHPH IS STILL UNCERTAIN AND THERE ARE MANY OBSTACLES TO OVERCOME. BUT DEALERS WITH SUFFICIENT CAPITAL, A GOOD MARKETING STRATEGY, A GREAT CUSTOMER BUYING AND LOAN-SERVICING EXPERIENCE, AND THE KNOWLEDGE THAT NO MATTER WHAT WE DO TODAY, CHANGE WILL BE NECESSARY IN THE FUTURE, THERE IS GREAT OPPORTUNITY TO NOT ONLY SURVIVE BUT TO THRIVE. Dealers with lines of credit will need to take care of the line and, in turn, take care of the senior lender. When faced with any adversity, dealers need to act fast and smart to fix problems. Compliance is still an important issue and will continue to be with scrutiny of the industry increasing. Please do not think a change in the executive office in Washington changes anything in our world. It has always been a best practice to not only be compliant but to go above legal requirements when lending and servicing loans and leases. It is just good business. Besides, most compliance issues come from our state capitols, attorneys general, plaintiff’s attorneys and consumer advocates. The challenge is the lack of understanding of how we help consumers by lending where no one else dares. We need to be vigilant and active in our state associations, and we need to educate both elected and appointed officials. The future of BHPH is still uncertain and there are many obstacles to overcome. But dealers with sufficient capital, a good marketing strategy, a great customer buying and loanservicing experience, and the knowledge that no matter what we do today, change will be necessary in the future, there is great opportunity to not only survive but to thrive. Chuck Bonanno is editor in chief of BHPH Dealer.
BEST PRACTICES
GPS AND SID USAGE Tips to Ensure Compliance
BY MARK DUBOIS
I recently attended a webinar hosted by the law firm Hudson Cook. The webinar focused on important regulations and compliance pertaining to GPS and starter interrupt devices. The information was excellent and the webinar demonstrated once again the value of continuing education in our world of evolving trends and complex issues. It’s not just the Consumer Financial Protection Bureau that has enforcement and supervisory authority for GPS and SID usage and implementation. Enforcement authority is handled by the CFPB, the FTC and state attorneys general and financial regulators. Supervisory authority is handled by the CFPB and state regulators. That means certain states might have different rules governing the use and implementation of the devices. When it comes to public enforcement actions, debt regulators are cracking down on violation of privacy regulations. Are the devices being used in a manner that infringes or violates a person’s privacy? Another area is violation of state repossession laws, such as repossessing a vehicle prior to the right to cure period expiring. Debt regulators are also cracking down on general disclosure issues. A creditor must disclose in writing the manner, method and timing of how the device will be used. There is currently no federal law expressly permitting or prohibiting GPS or SID technology. However, many laws impact the use of the devices by regulating the creditors that use them. The term “repossession” is seldom, if ever, defined by state law in a manner that clearly includes or excludes the use of starter interrupt technology. During the webinar, there was a discussion on what is a repossession, what is not a repossession and what is considered “constructive” repossession. The consensus by the presenters was the new legislation in Nevada regulating GPS and SID, which took effect July 1, is “a big mess.” The new regulations apply to creditors and long-term lessors of consumer contracts and includes a laundry list of new rules for GPS and SID use that go well beyond current
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regulations in other states. New regulations have also received Senate approval in New Jersey (Assembly Bill 756). Other states, including California, Connecticut, Kansas, Maine, Missouri, Iowa, Maryland and Michigan, have enacted uniform versions of the Uniform Consumer Credit Code. Other pending legislation, in Oregon and New York, could cut much deeper. The point is, dealers in all states need to stay informed and stay active with their state and national associations to prevent aggressive and unfair GPS and SID regulations from being approved without input from our associations and government representatives. To keep this all in perspective, the presenters left us with eight best practices for use of GPS and starter interrupt devices: Have written disclosures: A creditor must ensure it provides a consumer with a written disclosure indicating what type of technology is installed on the vehicle and how it will be used. Use trained installers: Only trained installers should be used to install or remove the devices. Use devices in accordance with state-specific cure provisions: A creditor should be aware of and provide any state mandated right to cure notices and adhere to any waiting periods prior to the time the creditor disables a vehicle. Do not charge for installation and/or use of devices: If a dealer charges for the installation or use of the technology, such as air time, that charge must be treated as a finance charge. Most retail installment contracts are not designed to accommodate prepaid finance charges. Provide override codes: To avoid the risk of customers claiming their vehicle was disabled in an inconvenient or dangerous situation, conservative creditors will offer consumers a code or the ability to restart the disabled vehicle once during each pay period for 24 hours. Maintain written policies concerning installation and use: A creditor should have clear written policies and objective credit criteria regarding the installation and use of the technology. Track, resolve and audit complaints for root cause: Data generated from complaints should
WHEN IT COMES TO PUBLIC ENFORCEMENT ACTIONS, DEBT REGULATORS ARE CRACKING DOWN ON VIOLATION OF PRIVACY REGULATIONS. ARE THE DEVICES BEING USED IN A MANNER THAT INFRINGES OR VIOLATES A PERSON’S PRIVACY? be organized, retained and used as part of a creditor’s overall complaint management program and compliance management system. Complete your due diligence and monitor your service provider: A creditor should treat the GPS/SID provider as a higher risk service provider and ensure the provider complies with federal consumer financial law, protects the interests of consumers, and avoids consumer harm. Mark Dubois is a moderator for NIADA Dealer 20 Groups and an auto industry veteran with more than 35 years of experience. He can be reached at mark@niada.com
REGULATORY
YOU NEVER KNOW WHEN LIGHTNING IS GOING TO STRIKE
Don’t Be Caught Holding the Lightning Rod
One area dealers seem to need a lot of help in is federal advertising compliance. We aren’t trying to be deceptive – we are trying to effectively communicate in terms most relevant to the customer. Buy Here-Pay Here consumers are very concerned with things like cash at delivery, periodic payments and low down payments. So we strive to lead with ads that answer our customers’ desire for information. There is nothing wrong with that in theory. It’s how it is often done in practice that can lead a dealer squarely into the crosshairs of the FTC, CFPB and state attorneys general. The Truth in Lending Act and Regulation Z, in effect since 1969, are designed to protect consumers. They specify disclosure requirements for both lending and advertising. But it is in advertising where many dealers seem to have stopped worrying about the details. Compliant advertising doesn’t mean you can’t advertise down payments or periodic payments. It means if you use what is called a “trigger term,” the law requires you disclose the rest of the trigger terms in the deal in a clear and conspicuous manner. Trigger terms are: the amount or percentage of any down payment, the number of payments or period of repayment, the amount of any payment and the amount of any finance charge. If you use a trigger term in your advertising, you must also include the amount or percentage of the down payment, the terms of repayment and the annual percentage rate. Basically, if you use one, you must disclose them all. If you provide a variety of financing options, you are allowed to use examples of typical transactions as long as the examples contain all of the required terms and are identified as examples. The Consumer Leasing Act and Regulation M say pretty much the same thing about lease advertising. The trigger terms for a lease are the amount of any payment and statements of any capitalized cost reduction, or that none is due, prior to or at delivery. If you use one, you have to disclose the entire deal to remain compliant. You’re also not allowed to use the term
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“annual lease rate” in your advertising. You must disclose: • A statement that the transaction is a lease. • Total amount due at signing. • The number, amounts and due dates or periods of scheduled payments under the lease. • A statement of whether a security deposit is required. • A statement that an extra charge may be imposed at the end of the lease where the lessee’s liability, if any, is based on the difference between the vehicle’s residual value and its realized value. When you offer a range of leased vehicles, it’s acceptable to use examples of typical transactions as long as the examples are representative of what is available and contain the required terms. Again, examples must be labeled as examples. In either case, you should not count on general disclaimers to keep your advertising compliant. Disclaimers must not contradict, confuse, unreasonably limit or materially modify a principal message of the advertisement. Fine print must be clear, conspicuous and in close proximity to the ad’s main text, and disclaimers should explain the main message of the ad. It should also be written in clear language. Many states, as well as the FTC, prohibit dealers from advertising free goods or services conditioned on the purchase or lease of a vehicle. You can, however, generally offer free items for coming in or taking a test drive. Electronic advertising on websites and/or social media is covered by essentially the same rules. Facebook and Craigslist are where I see the most issues with that, as the compliance culture has really not caught on with some dealers. Let’s face it – it is much easier to get caught online. The FTC, CFPB and some states’ attorneys general have teams of data miners looking through online advertisements for violations. These regulations aren’t new. They just weren’t enforced strongly in the days before Dodd-Frank. Now the FTC is awake and looking for violators. Don’t be the dealer thinking lightning won’t strike. You may just find you were holding a lightning rod.
B Y D AV I D B R O T H E R T O N
MANY STATES, AS WELL AS THE FTC, PROHIBIT DEALERS FROM ADVERTISING FREE GOODS OR SERVICES CONDITIONED ON THE PURCHASE OR LEASE OF A VEHICLE.
David Brotherton is a moderator/ consultant for NIADA Dealer 20 Groups. He can be reached at david@niada.com or (941) 371-7999.
BEST PRACTICES
IT’S WHAT SMART DEALERS DO! Reinsurance as a Tool for Success BY TIM BYRD
You know those dealers, the ones who seem to do everything right? They are car dealer entrepreneurs – dealers committed to their craft. They’re not just trying to make a buck, but striving to be a service to their communities. More than used car salesmen, they are transportation experts. Those dealers are committed to doing things the right way, providing products and services above the fray of the average used car lot. How do they do that? Attention to detail. That’s the description of every craftsman. Small daily improvements are the key to staggering long-term results. Those dealers surround themselves with the right people and give their employees the leeway and vision to make the right things happen. Smart dealers set themselves up to win. They acquire tools that help them toward success – tools such as reinsurance.
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WITH A DEALER-OWNED REINSURANCE COMPANY, YOU HAVE NATIONWIDE WARRANTY COVERAGE, PAID FOR BY YOUR CUSTOMER. ACCOUNTED AS A DEALERSHIP EXPENSE, IT SAVES YOUR DEALERSHIP TAX DOLLARS. IT OFFERS A NEW PROFIT CENTER THAT IS INCOME TAX-FRIENDLY, NOT TO MENTION A GREAT CAPITAL RESOURCE. Reinsurance puts you in the driver’s seat to be a better, more profitable dealer. Reinsurance allows you to take better care of your customers by doing what is best for them and your dealership. It is a customer-funded mechanism that doesn’t punish customers when their car breaks down. Rather, it creates an atmosphere of understanding and an attitude of, “We will take care of that for you.” Reinsurance keeps customers on the road, happy and making their payments. It’s more profitable because the earned premium not used to pay your customer’s claims becomes underwriting profit for the dealer/stockholder. For example, do you find yourself writing large checks to a third-party warranty company? Let’s say you send them $50,000 in a year, or a month. Your customers have $20,000 in claims. That leaves $30,000 in underwriting profit – the third-party warranty company’s profit. With car dealer reinsurance, you would be the one with the $30,000 underwriting profit. Why not have a system in which no matter where your customers’ vehicle should break down you have a plan and the money to get them back on the road? The beautiful thing is, with reinsurance your customers continually and painlessly reserve for unexpected breakdowns. For BHPH dealers, your dealer-owned reinsurance company provides premium finance for your customers’ warranties. Therefore it does not require you to pay the full price of the warranty up front, which would deplete your lending pool. A prorated portion of the warranty cost is collected from the customer’s payment and forwarded to your reinsurance trust account. That provides a constant stream of reserve to ensure when problems arise there is a well-funded system in place. Problems are taken care of, your customers stay on the road and they continue making payments. There are also tax benefits to owning an admin obligor reinsurance company. I am not a CPA, but I know some good ones. They tell me reinsurance companies are small property and casualty companies, and small property and casualty insurance companies with less than $2.2 million in annual net premiums may elect to be taxed
only on investment income under Internal Revenue Code 831(b). Distributions are taxed at the dividend rate. Those corporations are C-corporations, unlike S-corporations or limited liability corporations, for which income flows through to the shareholders annually. Those 831(b) C-corporations allow the shareholder a more long-term approach. If a distribution is not desirable, you can retain the money in your reinsurance company, or you or your other business entities may borrow money from your reinsurance company. 831(b) corporations make great retirement programs. Earned reserve can be invested in stocks, bonds or other
securities within the trust account. With a dealer-owned reinsurance company, you have nationwide warranty coverage, paid for by your customer. Accounted as a dealership expense, it saves your dealership tax dollars. It offers a new profit center that is income tax-friendly, not to mention a great capital resource. That’s why it is easy to say: Reinsurance – it’s what smart dealers do. Tim Byrd is founder and president of DealerRE. He is an auto industry expert with more than 25 years of experience. Tim can be reached at www.dealerre.com or by calling (804) 824-9533.
AUGUST 2017
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BHPH ADVOCATE
TAKE NOTICE AND GIVE NOTICES Protect Your Customer’s Privacy No one would dispute we are smack dab in the Information Age. Everywhere you turn, your information footprint is right behind you. Internet cookies track which websites you have visited. Your personal identifying information is magnetically tattooed on your credit card. We can transmit that information with the snap of our smartphone, and companies often share it to generate a larger customer base. With the ease of obtaining information and the free flow thereof, it is no wonder identity theft is the nation’s fastest growing crime and the No. 1 category among complaints received by the Federal Trade Commission. Over the past 15 years, there has been a concerted effort by government regulators to ensure consumers’ information is as protected as possible. That includes letting consumers know whether their information is shared and how they can opt out. The Gramm-Leach-Bliley Act requires financial institutions to provide consumers with an initial notice of their privacy policies. It also requires financial institutions provide their customers with an annual notice of those privacy policies
BY SHAUN PETERSEN
every year the customer relationship continues, unless certain requirements are met. The notice must describe whether the financial institution shares consumers’ nonpublic personal information and, if sharing occurs, how consumers can opt out of certain types of sharing. For purposes of the law, financial institutions include automobile dealers. In an effort to assist financial institutions and provide consistency among the information consumers receive in privacy notices, eight federal regulatory agencies created a model form financial institutions can use to comply with the initial and annual privacy notice requirements. The instructions for using the forms and the model form builder can be found at www.federalreserve.gov/bankinforeg/ privacy_notice_instructions.pdf. Providing a privacy notice is required at the time of collecting a consumer’s personal information. But think beyond compliance with the legal requirements to the customer relations benefits that can come by your delivery of that document. When a consumer hands you a driver’s license for that initial test drive and you provide the consumer with a privacy
policy informing him how you will use and protect that information, the bonds of trust begin to build immediately. Not only have you complied with the law, you might also have helped yourself close a deal. In my past reviews of dealerships, most do a good job complying with the initial privacy policy disclosure. Where dealers frequently fall short is in providing the annual privacy notice. Dealers assigning retail installment contracts to a finance company – third party or related – can take a deep breath. They will not have to provide an annual notice because that customer is no longer their ongoing customer. Payments are made to the finance company and the finance company becomes responsible for sending the customer its privacy notice. But Buy Here-Pay Here dealers are not off the hook when they continue to hold the paper. They are required to send their privacy policy to their customers on an annual basis. So, for you BHPH dealers and your related finance companies, I suggest picking a particular date each year – Jan. 15, June 1, Dec. 25 or any other date – to send the annual notice, and stick to it every year.
BHPH CONVENTION SESSIONS AVAILABLE ONLINE NIADAconvention.TV
NIADA’s Convention & Expo featured a wealth of dealer education, including a number of BHPH-focused sessions. Tune in to NIADAconvention.TV to view all the BHPH education sessions!
Sessions include:
• R einsurance for the Independent Dealership
• H ow to Recruit and Retain the Best in BHPH
• B uy Here-Pay Here to Lease Here-Pay Here
• B usiness Analysis Results: How to Improve Your BHPH Model
• R estore & Relaunch: Inventory
Acquisition and Reconditioning
• G PS/Starter Interrupt Panel: Best Practices
• R each Your BHPH Customer Through Digital Marketing and Social Media
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Don’t let a customer’s recent purchase deter you from that date. For example, if you decide Aug. 1 is your date for sending your annual privacy notices and you sell a car July 10, your customer will receive an initial privacy notice July 10 and an annual notice just a few weeks later. As a result of recent legislation passed by Congress, financial institutions – including BHPH dealers – are not required to provide an annual privacy notice if the financial institution satisfies two requirements. First, the institution must not disclose the consumer’s nonpublic personal information in a manner that would trigger the consumer’s right to opt out of such a disclosure. The types of disclosures that do not trigger an opt-out right include disclosure to non-affiliated service providers that perform services for the institution, subject to certain requirements; disclosure to service providers as necessary to effect, administer or enforce a transaction requested or authorized by the consumer or in connection with maintaining or servicing the consumer’s account; disclosure to protect the confidentiality or security of the financial institution’s records pertaining to the consumer, to protect against fraud and for institutional risk control purposes; and disclosure as specifically permitted or required by law.
AS A RESULT OF RECENT LEGISLATION PASSED BY CONGRESS, FINANCIAL INSTITUTIONS – INCLUDING BHPH DEALERS – ARE NOT REQUIRED TO PROVIDE AN ANNUAL PRIVACY NOTICE IF THE FINANCIAL INSTITUTION SATISFIES TWO REQUIREMENTS. The second requirement institutions must meet to avoid sending the annual privacy notice is to not have changed policies and practices with respect to the disclosure of nonpublic personal information to non-affiliated third parties that were disclosed to the consumer in the most recent privacy notice. Those changes could make it easier for you to comply with the annual requirement, but either way, comply you must. As identity theft increases, regulators will ratchet up efforts to ensure consumers are receiving the notices on time. Don’t let them get you for failing to do something that ultimately will increase your credibility with the customers you are trying to court. Shaun Petersen is NIADA’s senior vice president of legal and government affairs.
AUGUST 2017
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BEST PRACTICES
GOING A.P.E. FOR ATTITUDE, PASSION AND ENTHUSIASM It’s an Inside Job
In September 2017, my 14th book, Unstoppable, will be released. In it, I discuss four types of performers: undertakers, caretakers, playmakers and game changers. I also outline the steps to elevate one’s personal and business life to game changer status. The eighth chapter is titled “Go A.P.E.,” and outlines the importance attitude, passion and enthusiasm have in excelling consistently in any endeavor. Here’s a sneak preview from that chapter. Use it to evaluate and elevate your own level of attitude, passion and enthusiasm, and to inspire more in others. Attitude, passion and enthusiasm are “inside jobs.” While one person can alter the mood of another based on how they treat them, one’s prevailing attitude, passion and enthusiasm starts from within. They are also critical success factors that help lift one to unstoppable status and are greatly triggered by your personal why. Lesser performers require excessive external stimulation to
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elevate their attitude, passion and enthusiasm. It seems every day they need to be hugged, burped, coddled, cajoled, begged, bribed or pumped up to deliver anything beyond baseline work. If that describes you or someone on your team you have work to do. For the sake of perspective, consider the definition of each of these three vital traits. Attitude: “A settled way of thinking or feeling about someone or something, typically one that is reflected in a person’s behavior” (Google). The odds of someone changing another’s “settled way of thinking” are remote. In reality, attitude is a choice. While you cannot control what happens to you, you can choose your response. And the quality of your career and life will depend greatly on the quality of that choice. Stoppable people choose the wrong response to setbacks, disappointments, rejection, defeat or failure. Then they wrongly blame someone or something for “giving” them a bad attitude.
B Y D AV E A N D E R S O N
Be thankful no one or nothing has the power over your life to open your head, shove in a bad attitude and leave you to suffer. You get to choose your thinking, your attitude and how you will respond – and the game changer wouldn’t accept anything less. Passion: “A strong feeling of enthusiasm or excitement for something, or about doing something” (MerriamWebster). Feelings of enthusiasm and excitement caused by external stimulation are short-term spikes that fire you up for an instant and fade just as quickly. It is the excitement and enthusiasm birthed from within, from one’s why, that burns consistently and intensely over time. No one can make you passionate about someone or something. Real passion comes from the heart out, not from the external in. Passion is not something you seize, it is something you are seized by. Enthusiasm: “Intense and eager enjoyment, interest, or approval” (Google). The origin is the Greek word “enthousiasmos,” meaning one is “possessed by a god, inspired” (Google).
To be enthusiastic then, in essence, means you are filled with God. While passion and enthusiasm are similar, the “eager enjoyment” aspect of enthusiasm makes it stand alone. That is the mindset to make the best of any state you are in – to not only be enthusiastic when things go well or when you have the wind at your back, but to enjoy the challenge of learning the lesson, leaving a comfort zone, making a change, taking a risk and accepting coaching that hurts because you know it will make you better. People with the right attitude, passion and enthusiasm magnify exponentially whatever talent and skills they have. Those lacking any of these three qualities drastically marginalize whatever talent and skills they have. CHECK YOUR BIRTH CERTIFICATE On your birth certificate you will not find, “Has great attitude, passion and enthusiasm” listed anywhere. Nor will you find the words negative, lifeless and indifferent. Nope, these are states you create for yourself, from within yourself, based on how you choose to see life, the philosophy you create and embrace, and what you decide to make of your one opportunity on this planet. That is both great and bad news. The great news is living an unstoppable
life anchored in right attitude, passion and enthusiasm is within your control. No one can prevent you from becoming those things, or cause you to become unlike those things. The bad news is if you have been accustomed to traversing through life as a sniveler – blaming other people or things for why you have the wrong attitude, or no passion and enthusiasm – you are going to have to toss that crutch away and emotionally grow up so you can achieve your fullest potential as a human being. To sum it up, the bad news is it is all on you. The great news is it is all on you. It all depends on how you choose to look at it. Those aspiring to become unstoppable and live their life dominated by the game changer mindset understand choosing to see this reality as great news or bad news is one of the easiest choices they will ever make. In case it hasn’t sunk in yet, you own your attitude, passion and enthusiasm. To become an unstoppable game changer, reflect and take steps on the following points: • Knowing how much it will affect your attitude, passion and enthusiasm, have you clearly defined your compelling why, your bold purpose for doing what you do each day? Is it in writing? Are you reviewing it each morning to help get focused and in the zone? The why
fuels attitude, passion and enthusiasm. • As you review the definition of attitude, what about your “settled way of thinking” must change for your attitude to improve? Might it involve blame, excuses, a focus on external conditions, the ease with which you are offended, your philosophy toward work ethic and doing all you can, or what? • As you review the definition of passion, what must you start doing and stop doing to increase your excitement and enthusiasm for what you do each day – despite external conditions that might seem to conspire against you? • As you review the definition of enthusiasm, where can you increase your sense of enjoyment in areas where you are currently prone to get out of your zone – setbacks, rejection, a lost sale, a bad game – by focusing on how you can become better and more unstoppable as a result of it? You can rest assured that as a leader your level of attitude, passion and enthusiasm will set the pace for the team. Your speed is their speed – for better or for worse. Dave Anderson is president of LearnToLead.
AUGUST 2017
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MANAGEMENT
BUY HERE-PAY HERE: THE ULTIMATE CRM PROGRAM Components to Strengthen Your Business
The Buy Here-Pay Here business can be the ultimate customer relationship management program. By definition, CRM refers to the methodologies and tools that help businesses manage customer relationships in an organized way. For small businesses, customer relationship management includes processes that help identify and target your best customers, generate quality sales leads and plan and implement marketing campaigns with clear goals and objectives. Here’s how those three CRM components can strengthen your BHPH business. IDENTIFY AND TARGET YOUR BEST CUSTOMERS One of the most important components of any business is identifying and targeting your best customers. That is especially true in the BHPH business. Doing business with credit-challenged customers who are generally not good money managers is a risky business in itself. Experiencing loss ratios of 25 to 30 percent can be an intimidating factor for anyone. In addition, delinquencies and chargeoffs are a fact of life in operating a BHPH business.
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Very few BHPH loans perform without some form of payment difficulty during the term of the loan. Since many BHPH customers live paycheck to paycheck, the slightest change in their income stream, such as the loss of hours at their job, presents challenges to making their car payment. Successful BHPH dealers do everything they can to work with customers to keep them in the car and making their car payments, and provide some form of payment arrangement when the customer is unable to make a payment in full or on time. Those BHPH dealers make repossessing the vehicle the last option. By working with your customers through the tough times, when making a payment in full and on time is difficult, you are cultivating a customer relationship based on trust, flexibility, understanding and a high level of customer service. The objective of any BHPH loan is to make the customer successful in paying off the loan. To the extent you can help the customer along the bumpy road to paying off the loan, the better the customer relationship becomes. In addition, customers become more valuable to your business by demonstrating
BY MARK DUBOIS
their ability to keep their promise and make good on any payment arrangements you make with them during the course of the loan. GENERATE QUALITY SALES LEADS Many BHPH dealers don’t advertise to any great extent in traditional advertising channels. BHPH dealers who treat their customers with respect and demonstrate a willingness to work with those who experience difficulty making a payment in full or on time benefit greatly from repeat and referral business. Some dealers boast about customers who have paid off six or seven vehicles with their store, or that the dealer has financed vehicles for many of their customers’ friends and family. An extension of identifying and targeting your best customers is identifying and targeting the friends and family of your best customers! A repeat or referral customer is a valuable asset to any business. Many BHPH dealers put a great deal of thought and effort into rewarding customers who pay off their loan or refer a new customer. CONTINUED ON PAGE 18
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While there is no guarantee a customer referred to your business will pay off a car loan any better than a regular customer, the person that provided the referral can sometimes deliver valuable assistance when trying to contact the referral customer should he become difficult to locate. One of the most effective ways to grow your loan portfolio is “organic growth,” which is identifying and targeting your best customers and rewarding them for repeat and referral business. PLAN AND IMPLEMENT MARKETING CAMPAIGNS WITH CLEAR GOALS AND OBJECTIVES Customer relationship management tools include software and browser-based applications that collect and organize information about customers. For instance, as part of a CRM strategy, a business might use a database of customer information to help construct a customer satisfaction survey or decide which new product its customers might be interested in. Technology plays a huge part in operating any successful business. It not only aids in identifying and targeting your best customers, it also reduces the cost of reaching your customers and improves the efficiency and effectiveness of the delivery method. Something as simple as a monthly newsletter to your customer base can
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provide important information about your business. It can be used to announce changes, new products or new staff, and also provide invaluable testimonials from current customers. All that can be delivered by email at little or no cost. Most dealer management software programs have some form of customer data mining capability built in. In many cases the challenge is figuring out how to implement the program in your DMS. In today’s business environment, if you don’t already have a strong Internet presence to advertise and promote your BHPH business and provide an online method to be contacted by potential customers, you run the risk of becoming extinct. In designing or evaluating your CRM program, remember a great deal of its success will revolve around the customer experience delivered at your store. In evaluating your CRM program, objectively answer these four questions: • How are customers treated by your staff? • How do customers feel when they do business with your store? • What is it like to be a customer at your business? • What do you do to distinguish your customer service from other businesses in your market?
In a recent survey, some of the top retailers offered their advice on how to achieve success in delivering exceptional customer service. • Provide customer service that distinguishes your business from your competitors. • Solicit and use testimonials from your satisfied customers. • Deliver on your customer service promises. In many ways the BHPH business is the relationship business, not the car business. Successful BHPH dealers will do everything they can to work with customers to keep them in the car, making their payments. The result is a relationship with your customers that extends beyond the life of the loan to the customers’ realization that you helped them through the tough times they experienced paying off their loan. From the start of the loan you are cultivating a long-term relationship, the opportunity to generate repeat and referral business, and the chance to identify and target your best customers to successfully grow your loan portfolio for years to come. Mark Dubois is a moderator for NIADA Dealer 20 Groups and an auto industry veteran with more than 35 years of experience, including sales, management, recruiting and training, e-business, marketing and BHPH management. He can be reached at mark@niada.com.
Going the Extra Mile
While preparing for a breakout session on retail dealership sales fundamentals for the recent NIADA Convention and Expo in Las Vegas, I sifted through online stories detailing excellent customer service. I ran across an article by Chris Hurn in The Huffington Post, recounting his family’s experiences encountering both excellent and average customer service. I was so intrigued I looked Chris up and scheduled a call with him.
This is the unforgettable story about a giraffe and going the extra mile. While Chris was in California on a business trip, his wife and two children stayed at a Ritz Carlton in Florida for a few days. Their son had a security blanket named Joshie that consisted of a giraffe head attached to a small blanket. When the family returned home, they discovered Joshie had been
BY JUSTIN OSBURN
left behind at the Ritz. Their son had a difficult time going to sleep that evening so Chris told a little white lie that Joshie was not lost, but had decided to stay at the Ritz for an extended vacation. Following many tears, his son finally went to sleep and Chris called the Ritz to ask about Joshie, They said they would look around. A few hours later they called Chris with great news – Joshie had been found! Chris offered to pay for shipping, but the Ritz insisted on returning the prized stuffed animal at the hotel’s expense. Before getting off the phone, Chris told the loss prevention rep he had fibbed to his son that Joshie was on an extended vacation. He asked the rep if he would mind taking a photo of Joshie in a poolside chair to show his son the great time Joshie had. A few days later, a box arrived at the family home. Inside was not only the safely returned Joshie, but also a box full of Ritz Carlton merchandise. Under those items was a binder. Chris opened it to find photo after photo of Joshie. Joshie was lying by the pool, playing golf, getting a massage and much more. Needless to say, Chris and his wife were blown away by the extra effort the Ritz team exerted to give their son a happy ending. But the story didn’t end there. A few years later, the family returned to the Ritz Carlton. In a casual conversation with a worker at the spa, their daughter mentioned her brother had once left his security blanket giraffe in that very hotel several years before and told the story behind his return. The worker was in disbelief. She knew exactly who they were – all the hotel workers knew of Joshie and spoke about him on a regular basis.
Chris’s daughter then informed the spa worker the happy ending took a nosedive when her little brother left Joshie at a different hotel and he had not been heard from since. A few hours later, there was a knock on the hotel door. A Ritz Carlton representative was standing there with two bags to present the family. Inside the first bag was a stuffed giraffe named Jessie. The attached note said, “We have recently heard that Joshie is vacationing around the world. This is his cousin Jessie. Joshie told Jessie if he wanted a great place to live with lots of hugs, he should come live with you.” The Ritz couldn’t leave out the daughter and provided many fun extras for both children. Chris and his wife were once again amazed at the effort the staff made to ensure their family had a memorable experience. I was captivated by the story. I couldn’t help but ask before we got off the phone, “Chris, I am sure you have bought a lot of cars over the years. What is your impression of the sales process in general?” Chris paused and replied, “Honestly, I hate it. I feel like the salesman is only interested in selling me a car and doesn’t care about what I want or need.” I thanked Chris for taking the time to share his story with me and hung up the phone. The rest of the afternoon I couldn’t help pondering what it takes for us to evolve a distasteful experience in the eyes of the general public to a more fun and positive experience. We know most buyers dread the old sales methods. We have the research that paints a very clear picture of what steps are not only obstacles but are actually annoying. With online selling and increased technology entering the used car industry, it is past time for all dealers to take a hard look at their processes. Are your steps to a sale in place because that’s the way it has always been? Do we all need to take a lesson from the Ritz? I would love to hear and share your stories about how you are moving the sales process toward a “wow” customer experience. You can write 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. He can be reached at justin@niada.com.
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INDUSTRY PERSPECTIVE
THE RITZ, A GIRAFFE AND A GREAT EXPERIENCE
BHPH BOOTCAMPS GET YOUR TROOPS IN SHAPE
To register & for more information, visit www.niadabootcamps.com, email diann@niada.com or call 888-906-2705. 22
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P BHPH MAN
COMPETI AGEMENT TECHN TION. IQUES DE SIGNED T C P O L L E C TI O TOPPL O N S E THE TR A I N I N MONTHL G DE C L A Y PAYME RI NG WA NT REPO P HARD NOS R ON OU S S E S S TS TA NDI I O E N D S T . R AINING E NG PUSH YO XPERTS UR OPER WHO AR ATIONAL P ONE DAY I EN’T AFR L I M I T S AID TO . WAY TO NTENSE WORKSH PROFITA BILITY HE OPS GUARANTEE D IGHTS NE VER BEFO TO SWEAT YOUR RE IMAG INED.
October 10-12 Dallas, TX DAY 1: COLLECTIONS BOOTCAMP Collection Changes and Opportunities, Customer Retention, Alternative Communication Methods Relationship Building, Objection Handling, Providing a Road-Map to Your Day DAY 2: MANAGERS BOOTCAMP Identify Key Drivers, Industry Benchmarks, Inventory Management, Expense Allocation, Pricing, Management, Hiring Practices DAY 3: SALES TRAINING BOOTCAMP Lead Management, Prospecting, Day-to-Day Activities, Accountability, Telephone Sales Techniques, Facts about the BHPH Business, Developing Consistent Repeat & Referral Business, Underwriting Procedures AUGUST 2017
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