C A ROL IN AS INDEP ENDEN T AU T OMOBIL E DE A L ERS ASSOCI AT ION F E B R U A R Y / M A R C H 2 0 17
AUTO DEALER NEWS
S TAT E A F F I L I AT E
MAGAZINE
We Patty Stanley Stanley We Proudly Proudly Congratulate Patty On NAAA Hall Hall of of Fame Fame On Her Her Induction Induction to the NAAA Patty Stanley Stanley is is a a trailblazer trailblazer and Patty and an an icon icon of of this this industry. industry. Weare are thankful thankful to to work work with her, and We and for for the the Stanley Stanleyfamily, family, and are are so so pleased pleased to see her and her take take her her place place among among the leaders leaders of of the the automotive automotive remarketing the remarketing world world as asthe the newest inductee inductee in in the the NAAA newest NAAA Hall Hall of of Fame. Fame.
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INSIDE
06......................................... Improve Your Online Reputation 10................................................ NIADA Government Report 12...............................................The Growing Need for BHPH 19................................Embracing the #Hashtag Generation 20............................................. When Good Recon Goes Bad 24...........................................Eliminate Waste in Advertising 28.....................................................The Importance of Value 32................................Hiring the Most Important Sales Role
WHAT’S NEW
CMD Dates Announced
Class dates for NIADA’s industry leading Certified Master Dealer program have been announced for the upcoming year! Look for a class coming to your area! Dates include Feb. 9-11 in Portland, Ore.; May 15-17 in Atlanta; Sept. 12-14 in Dallas; and Dec. 11-13 in Tampa, Fla. Visit www. niada.com or contact Diann Flanders at 888-906-8283 or diann@niada.com for more information.
ADVERTISER’S INDEX
Ace Motor Acceptance ........................................................15 Auto Use................................................................................ 22 AutoZone............................................................................... 20 Black Book................................................................................3 BMW Group Direct ..................................................................9 CARFAX................................................................................... 5 CarMax Auctions ...................................................................18 Carolina Auto Auction...........................................................IFC Charleston Auto Auction......................................... Back Cover Greensboro Auto Auction....................................................... 7 Manheim ................................................................................11 Manheim Pennsylvania..........................................................13 NextGear Capital....................................................................17 NIADA CPO ............................................................................21 Spireon ...................................................................................19 STARS GPS.............................................................................23 VAuto.................................................................................... IBC
OFFICE
5643 Harrisburg Industrial Park Dr. Harrisburg, NC 28075 Phone: 704-455-2117 or 1-800-432-4232 Fax: 704-454-5567 www.theciada.com CIADA is a non-profit 501(c)6
NIADA HEADQUARTERS NATIONAL INDEPENDENT AUTOMOBILE
DEALERS ASSOCIATION WWW.NIADA.COM • WWW.NIADA.TV 2521 BROWN BLVD. • ARLINGTON, TX 76006-5203 PHONE (817) 640-3838 The Carolinas Independent Automobile Dealers Association is published bimonthly by the National Independent Automobile Dealers Association Services Corporation, 2521 Brown Blvd., Arlington, TX 76006-5203. Periodicals postage paid at Dallas, TX and at additional offices. POSTMASTER: Send address changes to NIADA State Publications, 2521 Brown Blvd., Arlington, TX 76006-5203. The statements and opinions expressed herein are those of the authors and do not necessarily represent the views of CIADA or NIADA. Likewise, the appearance of advertisers, or their identification as members of NIADA, does not constitute an endorsement of the products or services featured. Copyright © 2017 by NIADA Services, Inc.
SAFETY WATCH
FORD RECALLS SEDANS FOR SEAT BELTS May Fail to Properly Restrain
Ford Motor Co. is recalling 603,392 model year 2013-16 Ford Fusion vehicles manufactured Nov. 2, 2012, to July 31, 2014, and 2013-15 Lincoln MKZ vehicles manufactured Nov. 14, 2012, to July 31, 2014.
In the event of a crash, heat from the deployment of a seat belt pretensioner may cause a front seat belt anchor cable to fail. If the driver or front passenger seatbelt cables cannot properly restrain the front seat occupants, they would be at an increased risk of injury. Ford will notify owners, and dealers will apply a protective coating to the seat belt cable, free of charge. Remedy parts are expected to be available by the second quarter of 2017. Ford’s number for this recall is 16S42.
EXECUTIVE COMMITTEE Immediate Past Chairman Luke Godwin Godwin Motors Inc. Columbia, SC
Chairman
Will Davis G & B Auto Louisburg, NC
CIADA STAFF SC Vice President
Executive Director
NC Vice President
Controller
Treasurer
Education & Membership Services
Darryl Jackson Crown Automotive Sales and Finance Rock Hill, SC Steve Matthews Matthews Motors Inc. Clayton, NC
President
Darla Booher Deal Depot, Inc. Greer, SC
President-Elect
Kim Bradshaw 1st Nations Auto Sales Burlington, N.C.
John Brown 5643 Harrisburg Industrial Harrisburg, NC
Debbie Braswell
Kevin Pendergrass Carolina Auto Sales of Myrtle Beach Myrtle Beach, SC
Jenny Myrick
Secretary
Jayne Harris
Steve Wetmore McAdenville Motors Gastonia, NC
Education & Membership Services DRIS Insurance Martha Brown
MISSION STATEMENT The Carolinas Independent Automobile Dealers Association was organized in 1955 to assist members in enhancing their reputation in the marketplace, gain political influence and provide opportunities to interact with and meet other dealers for the purpose of sharing
business and marketing ideas. As a mature and long-standing Association, we are proud to maintain the ideals and principles set by the founders. But today, we offer more…far more. With a fulltime professional staff, modern technology and world class educational programs, we have become a strong,
effective and influential organization that exists for one reason only: To represent the independent, non-franchised automobile dealer! CIADA is the only not for profit association that represents the independent automobile dealer in the Carolinas with a National affiliation.
THE CIADA EXECUTIVE COMMITTEE
STATE MAGAZINE MGR./SALES
Troy Graff • troy@niada.com EDITORS
Jacinda Timmerman • jacinda@niada.com Andy Friedlander • andy@niada.com
MAGAZINE LAYOUT
Christy Haynes • christy@niada.com PRINTING
Nieman Printing
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AUTO DEALER NEWS February/March 2017
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Make it easy for your happy customers to write reviews. Implement a proactive, automated process with the help of online reputation management software like Grade.us. SOCIAL MEDIA BY KATHI KRUSE
RIGHT-NOW ACTIONS TO IMPROVE YOUR ONLINE REPUTATION It Pays Off
Online ratings are what brought me to digital marketing. It was 2008 and I could see the 4-way intersection of social media, online ratings, customer experience and dealership operations becoming the foundation to build a modern business. Online ratings are one of the first places people go when they’re looking for solid, trustworthy advice, so staying informed on the latest ways to improve your online reputation could actually increase business. I’ve stayed in touch with a lot of my colleagues from my days managing car dealerships. Back in 2008, one of my friends had moved to a BMW store in Orange County and I became a customer. One day after picking up my car from service, I decided to post a Yelp review. I discovered the dealership had a rating of 1.5 stars. Surprised (because I knew this dealer was a good operator and the store had high CSI ratings through the manufacturer), I decided to do a “mini market study” on my couch. There were 50 or so BMW stores in California at the time and, shockingly, I found all but about four had less than two stars on Yelp. I saw an opportunity to leverage my years of auto retail experience and bring value to companies who needed guidance with social media marketing. Now, social media and online reputation have merged. In fact, SEO, content marketing and social advertising all work together to provide dealers with lucrative ways to attract, engage and sell to their target customers. I’m a natural networker. Word of mouth referrals have always been my go-to source for finding trusted sellers, and online
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ratings sites are where most people turn today. • 90 percent of consumers read online reviews. • 88 percent trust online reviews as much as personal recommendations. • 86 percent will hesitate to purchase from a business that has negative reviews. • Customers are likely to spend 31 percent more with a business that has positive reviews. • 92 percent will use a local business if it has at least a 4-star rating. Reviews are Insanely Influential We live in what Forrester Research has dubbed “The Age of the Customer.” Empowered customers are more demanding than ever, and they have the ability to make or break your business. They don’t trust what you say about your product or service, and they really don’t trust your ads. Instead, they trust other people like themselves. I’ve seen numerous car dealerships that have over 400 reviews and a 2-star rating. To me, this would constitute a call to 911. When you’ve got a large amount of reviews and your overall reputation reads negative, that’s a consensus... not just the opinions of a few unhappy customers. Myth: My Reputation Can Take Care of Itself Online ratings and reviews have the potential to be the single most effective and rewarding marketing channel for small and local businesses, and yet most marketers and business owners do very little to foster and shape reviews because they assume it’s out of their hands. They take a wait-and-see approach – forever. RIGHT-NOW ACTIONS TO IMPROVE YOUR ONLINE REPUTATION Improving, protecting, and promoting the company’s online reputation should become part of daily operations. Negative reviews deter buyers. If you have even one negative review, it’s impossible to gauge how many sales you lost because of it. Use the following eight actions to improve your online reputation and give your store every chance to reach its revenue goals. Remove the obstacles that stymie reviews. Ninety percent of consumers read online reviews. Six percent write them.
Happy customers don’t often write reviews. They’ll say they forgot to, never thought to do so, got too busy or that it’s just too difficult. Make it easy for your happy customers to write reviews. Implement a proactive, automated process with the help of online reputation management software like Grade. us. This not only makes reviewing your business easy, it simplifies the tasks required within daily operations. Earn the privilege of a positive review. Every customer is looking for a “guide.” One of the most important things a guide does in a customer’s life is participate in their transformation. They help the customer become somebody better than they used to be. Rather than sell them products, you actually position your products as tools they can use to win the day. Positive reviews are a natural extension of your customer’s transformation. Respond to every review honestly, openly and with enthusiasm. Responding to online reviews is an art form. Positive reviews deserve acknowledgement. Respond to each one with a sincere note of thanks. If you’re familiar with the transaction or can do some behind-thescenes research, mention a detail the customer will remember. Everyone likes to feel important. When someone writes something negative about your business, it’s easy to become reactionary. Cooler heads always prevail so stand back, take a deep breath and give yourself time to regroup. Be open, honest and conciliatory. Be humble and offer to do whatever you can to solve the problem. Recognize that online reviews are a company asset. Happiness and enthusiasm about your company is a valuable advantage. A flock of glowing reviews greases the gears of search engines to greatly increase your authority in local search. Combined with the powerful word-ofmouth effect, positive online reviews deserve a place on your company’s balance sheet. After all, if you’ve put in the time and effort to improve your online reputation, positive reviews are worth their weight in gold.
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CONTINUED FROM PAGE 6 Acknowledge that software can help but it’s not a replacement for hard work. There are providers who promise to “manage your online reputation” but let’s get the facts straight. No one truly manages your company’s reputation but you and your staff. Software automates your process but that’s only if you have a process to begin with. Within your company are the seeds from which a stellar reputation blooms. Sustain your process by creating a review funnel, invite customers to provide feedback and recover unhappy customers before they vent online. Engage employees in your process. Customers are Googling salespeople. Reviews equate to online authority and when employees are mentioned it increases their value to the customer and the company. Trustworthy employees make the company appear trustworthy. When employees see their names in online reviews, it’s very powerful. Use this as a leverage point to engage them in the review process. Improve your sales process to build online reputation: • Establish WIIFM (what’s in it for me). • Inspire. • Motivate. • Recognize. • Incentivize. • Reward.
Craft the right message when inviting reviews. One of the benefits of using software to support your efforts to improve your online reputation is that it guides the customer through the review funnel with a simple choice of either, “I had a good experience” or “I had a bad experience.” If they choose “I had a good experience,” here are two examples of the right way to ask for a review: • “Our business is based on referrals and we’d really appreciate you sharing your experience with others online.” •“ Thank you for the awesome opportunity to serve you. We’d love to hear about your experience and no doubt, others would too.” If they’ve chosen the “I had a bad experience,” they will click over to a landing page that helps recover unhappy customers before they vent online. Here’s an example of the right message for this scenario: • “Thank you for alerting us to your bad experience. We don’t like bad experiences either. Please allow us make things right. We’ll contact you within 24 hours (often sooner) to find a solution that works for you! (and humbly ask how we could’ve done better).” Offer an incentive to engage. I don’t mean to suggest that you ever offer an incentive in exchange for a positive
review, a practice that is not only unethical, but violates the terms of service on many review sites… and may lead to FTC fines, getting banned, named and/or publicly shamed. However, you might offer a no-strings incentive to get customers a step further into your review funnel. For example, Grade.us clients can attach an offer to the landing page they drive customers to for feedback (NOTE: I’m not a paid endorser of Grade.us. There are other similar solutions available). The no-strings offer is simply a way of getting more people to the landing page. The offer – maybe a discount coupon or a free download – is available to anyone, whether or not they post a review. But making the offer available there, on a page otherwise designed to guide customers through the process of submitting a review, increases the odds of getting that review. Next Steps... The data shows taking the necessary steps to improve your online reputation pays off. Reviews are insanely influential. If you find you’re still not comfortable with rolling out an internal process to capture your happy, loyal customers’ feedback, contact me and I’ll be your Sherpa. Kathi Kruse is an automotive social media marketing expert, blogger, consultant, author, speaker and founder of Kruse Control Inc. Kruse Control coaches, trains & delivers webinars focused on integrating social media and online reputation management into dealership operations.
MANAGEMENT MATTERS BY CHRIS KAHRS
BUILDING YOUR BENCH STRENGTH Create Future Leaders Ready to Step In
Addressing personnel changes and challenges can occasion lengthy conversations. I’d say that the most often asked question is, “Where do I find my next manager?” As dealerships continue to experience rapid turnover and acquisitions – and promote good employees into management – many organizations struggle to find replacements for vacancies. Prepare for the unavoidable. It’s generally when they’ve lost an employee that dealers realize they have no one in their organization to assume that
particular role. Dealers are forced to search outside their organizations for a candidate who shares their business’ values, culture, work ethic and vision. This hunt can be exhaustive, and the process is disruptive to the daily operations of the organization. Why your team is critical. To use a sports analogy, each team has its starters suited up and ready to go for each game. When one of those starters gets hurt, a “bench player” is the next man up to assume that role. That bench player has been preparing for a scenario like this and is ready to perform. Yet in a lot of automotive organizations, there isn’t a bench player who has been coached to assume the role of the starter should there be the need. How to create a strong bench. Weak bench strength is a problem for a number of reasons. First, it means you must spend time and money to find an outside replacement. And, more important, that unnoticed bench player is likely to leave. I honestly believe one the greatest threats to
your dealership is for an overlooked bench player – one who is not being groomed for advancement – to leave. And they will. Sensing the lack of opportunity, individuals like this will typically depart for greener pastures should they have the opportunity, thus leaving your organization searching for yet another replacement. Here are my suggestions to improve your bench strength: • Train and educate from the top down to develop future organizational leaders. • Cross train for diversity. • Create peer-leader relationships. • Create a career path with clear and defined advancement opportunities. • Train, coach, motivate and encourage personal development. Filing managerial vacancies can be challenging for many organizations. However, you may already have an individual eager and ready to perform if given the opportunity. By building your bench, you can create future leaders from within your organization. Work on developing one to strengthen your overall talent pool. Chris Kahrs brings more than 17 years of experience to NCM, with extensive expertise in multi-facility management and dealer operations. This article originally appeared on NCM’s Up to Speed blog (blog. ncminstitute.com) and is reprinted with permission.
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WASHINGTON UPDATE
NIADA GOVERNMENT REPORT
July 2016, the CFPB issued proposals it was considering for a debt collection rule for third-party collectors. They are not intended to apply to a first-party creditor collecting its own debts. In the agenda, the CFPB said it will convene a panel of small businesses to consider rulemaking focused on companies that collect their own debts sometime in 2017.
Here’s a rundown of some of the latest governmental issues and activity affecting the used car industry from NIADA senior vice president of legal and government affairs Shaun Petersen and NIADA lobbyist Sante Esposito of Key Advocates.
DEPARTMENT OF JUSTICE Volkswagen settlement: DOJ, the EPA and the state of California announced a settlement with Volkswagen AG, Audi AG, Porsche AG and related entities regarding 3.0-liter diesel vehicles sold or leased with emissions defeat devices. For 2009-12 Volkswagen Touareg and Audi Q7 models, Volkswagen is required to offer to buy back the vehicles or terminate leases, and must also offer a modification to substantially reduce emissions, if one is proposed by Volkswagen and approved by regulators. For 2013-16 vehicles affected, including the Touareg, Q7, Porsche Cayenne and Audi A6 Quattro, A7 Quattro, A8, A8L and Q5, if VW demonstrates it can make the vehicles compliant with the certified exhaust emission standards, it will have to fix the vehicles and will not be required to buy them back. Volkswagen is also required to spend $225 million to fund projects that will reduce emissions of nitrogen oxide. Vehicle owners and lessees will receive updated information from Volkswagen, Audi and Porsche concerning their available buyback or modification options once the settlement is approved by the court. Information is also available at www.vwcourtsettlement.com and www. audicourtsettlement.com. Dealer arrested: A New Jersey auto dealer was charged with allegedly defrauding $2 million from more than 140 Russian citizens who were customers of his auto sales business. Sergey Kapustin, owner and president of Global Auto Group, Effect Auto Sales and G Auto Sales in Elizabeth, N.J., had Russian language websites that offered for sale luxury vehicles, including Mercedes and Lexus models priced below market value that could be shipped to Finland for easy delivery to Russian citizens – if they agreed to pay full price up front for the vehicles. Kapustin is Russian and his websites were geared to buyers in Russia, the Ukraine and other former Soviet republics who believed they were getting a “good deal” from a countryman who could be trusted to follow through once the purchase price had been paid. After the buyers wired the full price to one or more bank accounts controlled by Kapustin, he allegedly gave them a litany of excuses for delay in delivery. Allegedly, Kapustin had neither possession of nor title to the vehicles being sold.
Latest Government Issues and Activity
REGULATORY REPORT BY Shaun Petersen
CONSUMER FINANCIAL PROTECTION BUREAU On Dec. 1, the CFPB released its rulemaking agenda through Oct. 19 – before the election. The results of the election could have drastic impact on the agenda. Some of the highlights include: Arbitration rule: The agenda said the CFPB is reviewing and considering comments on its proposed rule banning pre-dispute arbitration agreements with class action waivers and is considering February 2017 as an estimated date for a final rule. Payday, title and deposit advance loans: The CFPB released a proposed rule in June. NIADA filed comments to express our position that the rule did not apply to retail installment contracts for purchase money security interests. Debt collection: In November 2013, the CFPB issued an Advance Notice of Proposed Rulemaking concerning debt collection, about which NIADA filed comments. In
On Dec. 1, the CFPB released its rulemaking agenda through Oct. 19 – before the election.
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At some point, the victim was offered a different, often inferior car, burdened with added shipping and storage costs. The victims often wired additional money in an attempt to rescue the car from storage. Many of the vehicles that did make it to customers were allegedly salvage or flood vehicles. DEPARTMENT OF LABOR Whistleblower rule: OSHA finalized its rule for handling retaliation complaints filed by whistleblowers in the automotive industry, which became effective Dec. 14. In accordance with legislation passed by Congress in 2012, motor vehicle manufacturers, parts suppliers and dealerships are prohibited from retaliating against employees who provide information about motor vehicle defects or violations of safety standards; file, testify or assist in any proceeding concerning alleged motor vehicle defects; or object to or refuse to participate in any activity that person believes is a violation of a safety standard. Retaliation includes firing, reduction in pay or hours, discipline or similar sanctions. Employees who believe they have been subject to retaliation have 180 days from the date of alleged retaliation to submit a complaint to OSHA. OSHA recordkeeping: A final rule that took effect Jan. 18 backs OSHA’s longstanding position that an employer’s duty to record an employee’s injury or illness continues for the full five-year record-retention period. The amendments in the final rule add no new compliance obligations and do not require employers to make records of any injuries or illnesses for which records are not already required.
LEGISLATIVE REPORT BY Sante Esposito
CFPB REFORM Rep. Jeb Hensarling (R-Texas) is talking about including his Financial CHOICE Act in the reconciliation bill Republicans are considering using to repeal Obamacare and introduce tax reform. Hensarling’s bill would rein in the CFPB’s authority by, among other provisions, making the bureau subject to the annual Congressional appropriations process, replacing its single director with a fivemember commission, requiring it to obtain permission before collecting personally identifiable consumer information and limiting its authority to prohibit consumer financial services or products it deems “abusive” and to prohibit the use of arbitration agreements. With the new Congress in session, all of the bills and the bills not enacted by the previous Congress have “died” and must be re-introduced – including a House-passed bill that would rescind the CFPB’s controversial 2013 auto financing guidance and specify a more transparent and accountable process. That bill’s language is included in the Financial CHOICE Act.
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& BHPH PERSPECTIVE BY DAVID ALGOOD
THE GROWING NEED FOR BHPH Benefits of Having a Properly Capitalized BHPH Dealership
CHART
YOUR COURSE
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AUTO DEALER NEWS February/March 2017
The Buy Here-Pay Here business can be a great resource to build wealth for multiple generations, while also increasing cash flow to withstand the economic ups and downs of the car business. In the past several years, banks and finance companies have been very aggressive in their purchasing of secondary customer contracts. However, this trend is now changing as the subprime cycle nears its end. In 2016 alone, many subprime banks and finance companies, including Go Financial, Dealer Funding, TAG Financial, Mark One and Santander, have either substantially reduced the purchase of contracts from independent dealers or completely discontinued originations. Any dealers who have put themselves in a position to rely solely on a retail financing source, or have chosen not to seek out additional capital, must adapt quickly and prepare themselves for the future. This article will lay out the basic benefits of having a properly capitalized BHPH dealership, instead of relying on retail financing sources in these turbulent times. The aggressiveness of the subprime market caused asset backed securities to see an increase in both delinquency and losses. According to CNN Money and Subprime Analytics, there has been a rise in both low down payment and extended-term loans, as well as loans to borrowers with no FICO scores. As of February 2016, asset-backed securities saw a 34 percent increase in losses. As the performance of the securities continues to deteriorate, the coming year will see a significant tightening in the subprime sector. According to Equifax, in 2016, 23.5 percent of all new auto loans were subprime borrowers, many of which were securitized. As several large players exit the independent dealer marketplace and securitization standards tighten, there will be a substantial reduction in the availability of credit in the subprime and deep subprime industry. This means that there is a huge base you should be prepared to capture as these secondary
customers come back into BHPH stores, making the business more attractive than ever for dealers. While many dealers realize there are numerous advantages to being in the BHPH business, most do not have sufficient capital to grow their portfolio as they wish. There are a couple of financial considerations that must first be understood. The days when dealers used to recapture nearly all the vehicle costs with the down payment and finance the profit are long gone. In recent years, the market has shifted dramatically with vehicle costs rising and down payments declining. According to Subprime Analytics, as of mid-year 2016, BHPH dealers have an average vehicle cost of $7,007 with a down payment of $727, leaving them with $6,280 cash in deal. Dealers have shifted to selling a newer and nicer vehicle with a lower down payment, which in turn creates a larger cash burden. This has created a significant financial barrier to enter or grow a BHPH operation. A dealer looking to enter the BHPH business will likely need between $500,000 and $3 million of working capital to fund a single lot operation doing 15-50 loans per month. For this reason nearly all BHPH dealers use a third party to fund a portion of their operation, often allowing them to lower their self-funding needs to less than $100,000. Whether you have been in the BHPH business for three generations or you are looking to start a portfolio, choosing the right capital partner who both understands the BHPH business and will provide financing to help you grow is vital to your success. The BHPH business can be extremely profitable. Many dealers are able to cover 100 percent of their credit losses with interest income, meaning they are able to make 100 percent of the markup on their car, which in many cases is $4,000-$5,000 per unit. If your store could benefit from additional sales with great margins then entering or expanding in the BHPH business may be for you. The BHPH business is an excellent choice for dealers who do not want their livelihood to be at the mercy of secondary banks. David Algood is the director of sales and marketing at AMAC, a rapidly growing finance company doing business in the Eastern half of the United States. Anyone wanting more information can contact AMAC at 704-882-7100 (ext. 7509) or visit their website at www.acemotoracceptance.com.
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MANAGEMENT GAMEPLAN BY SCOTT BERGERON
ELECTION PROVIDES INSIGHTS TO MORE EFFECTIVE CAR SELLING Technology Alone Isn’t the Holy Grail Donald Trump’s election proves that state-of-the-art technology, by itself, doesn’t provide all the answers. Based on the vote totals, the highly sophisticated, technology-driven polls missed the mark. In that same vein, relying on technology alone to sell cars isn’t the Holy Grail that some make it out to be. With all its bells and whistles, technology can be undone by people who deliberately distort their answers, provide incomplete/inaccurate information, or change their minds. Case in point: a dealer’s data mining shows that a prospect wants a red crossover SUV, and details the supposed preferences about everything from color to desired storage capacity. Acting on this profile, the sales specialist steers the prospect toward SUV crossovers on the floor. Suddenly, the would-be buyer bolts toward a fire-engine red two-seater convertible on the showroom floor, and wants to test drive it. We see it every day. What they say they want and what they buy are sometimes two different things. Ask away… then listen. Human decision-making is complicated, prone to whimsy and spontaneity, and can be influenced by factors that no technologydriven profiling will uncover. That said, what does it take to help ensure the sale – no matter what has gone before? Good questioning, listening skills and intuition all contribute. Properly done, this will both confirm what the prospect says he prefers and compare it to other feedback that might dictate a different recommendation. (Trump is credited with intuition and listening skills that told him what his audience wanted, and how to respond to “close the sale.”) For example, the prospect may “prefer” an SUV crossover because of its practicality and suitability for a growing family. But there’s another voice screaming for the excitement and freedom of having that hot sports car. A savvy salesperson will then throw out the technologically-driven “personal playbook” and become a good investigative reporter. Questions can be along the lines of: 1. What pressures have moved you in the direction of this SUV? 2. How many of those pressures exist because of the need to satisfy other people (e.g., family)? 3. If you were just buying for yourself, what direction would you go? 4. Is this vehicle going to be a primary
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AUTO DEALER NEWS February/March 2017
family car or serve as a backup, impacting reliance on it for multiple-person transportation? 5. How often do you need to haul goods? What types and volumes of goods do you haul? 6. Are you more interested in the car as dependable transportation, traveling or thrill-seeking? 7. How big a factor is safety? 8. How big a factor is MPG? 9. How big a factor is fast acceleration and overall power? 10. How big a factor is economy of ongoing maintenance? Obviously, these are just some basics. The key is to get a clearer idea of what the prospect’s priorities are, then confirm budget, assemble them into recommendations, and see what solutions you can provide to meet the needs and wants. Take into account both verbal and nonverbal clues. A key part of getting to clarity in terms of helping a prospect is listening very closely to how the answers are phrased, tone of voice, and emotions being conveyed. It’s also critical to watch body language. A prospect displaying openness and overt acceptance or guarded response and hesitation can be seen in basic body language gestures. To some of us old school car guys, all of this may sound elementary – because that’s how we came up through the business, before there were all the advanced ways to “figure out” prospects before they entered a showroom floor. Today, between order-takers who just answer questions without asking any of their own, and “know-it-alls” who presume to know their prospects’ total picture based on a digital profile asking confirming questions, these are highly important skills. Get creative with solutions. Once the salesperson has as full a picture as possible, provide ideas that can range from conventional to way out of the box. It may require looking beyond the obvious, including present inventory, to find answers that will resonate with a wouldbe buyer. In the example above, let’s say the salesperson determines the prospect really wants the sports car but is resigned to the more practical SUV crossover. Based on the intelligence gathered, the SUV meets most of the needs/preferences. But, what he really yearns for is the excitement of the convertible sports car that can go 0-60 in under four seconds. It’s easy enough to stop with the SUV. After all, it’s the better objective solution for the circumstances at hand. But, as we all know, car buying is also about the emotional thrill of adventure, open air, high speed, and whatever appeals to that prospect.
Why not wrap practicality and performance in a creatively structured “two-car deal?” Why not wrap practicality and performance in a creatively structured “two-car deal?” Find a used SUV crossover that meets the practical needs, and then move on to a sports car (likely older and lower-priced) for the “want” side of things. While two-car deals can be tricky, weigh all the options in the direction that suits your buyer’s ability, wants, and then needs, in that order. Technology itself can fool salespeople into only one solution. As your deal ebbs and flows during the “landing stage,” keep the ideas flowing in your head on how to best structure the deal that will work best based on abilities, wants, and needs. If the deal doesn’t necessarily work out with all your sales expertise, don’t be afraid of a tried and true process, known as the T.O., or turnover. A T.O., or manager introduction, can help move the deal along while the prospect is still there. There may be other options a manager or even another salesperson can think of that you haven’t. In any case, give the prospect a reason to return. Then follow up periodically when another option presents itself on the lot or a special deal can be offered based on other factors. Capture the conversation on a database. One area where technology can be extremely helpful is using a CRM, or other technology, and using it consistently. Get in the habit of recording information immediately after your contact’s visit, call, or email. A CRM is only as good as the information going in. If you prefer writing things down, the secret is in the consistency – even if it’s a 3x5 card. Combining this with post-visit intel can make a powerful follow-up, and creates more customers for life. Moral of this story: Salespeople who rely too much on technology and not enough on good interviewing skills and instincts will find themselves losing sales they could have won. Former dealer executive Scott Bergeron is the founder of Daily Gameplan.com, a sales team performance company. Scott can be reached at 303.918.3169 or scott@ dailygameplan.com.
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SALES MATTERS BY JOHN CHAPIN
ONE KEY FACTOR IN SALES SUCCESS OR FAILURE Tips for Success
While one could argue there are many factors determining sales success or failure, I find that 99 percent of the time, success or failure really comes down to one item. If you have this one item in place, success is virtually guaranteed. If you don’t, failure is virtually guaranteed. THE KEY SUCCESS FACTOR AND HOW TO ENSURE IT EXISTS AND THRIVES IN YOUR SALES PLAN We all know you need the basics: product knowledge, the ability to get in the door of qualified prospects, get attention, solve problems, get agreements, answer objections, present, close, and follow through, among other things. We also know your primary job is to produce… to sell. Other equally relevant truths that relate more closely to the key success factor are: • Sales is a numbers game. The more people you talk to the more business you’ll do. • The harder you work, the luckier you get. • The more calls you make, the faster you figure it out. • And, production cures all that ails you, or, as my dad used to say, “You could be in the middle of your worst sales slump ever… down, depressed, and hopeless and yet, if you simply found an order on the ground, one you had absolutely nothing to do with closing, but it was a good order that counted toward your quota, you’d instantly be back on top of the world.” That said, the one item that determines success or failure more than anything else is your activity level. Specifically, making the calls necessary to make the contacts, get the qualified prospects, and make sales necessary to exceed your quota. Every time I’ve seen someone fail in sales, it’s because they didn’t make enough calls to talk to enough qualified prospects. Every time. While I suppose there could be some other factor for failure, it would be the miniscule exception. One hundred percent of the time in my experience, I’ve been able to tie failure back to a lack of activity. Here are some tips to ensure you have the proper amount of activity in your sales day. Know your numbers. You have to have annual, monthly, and weekly goals and break those down to the daily activity necessary to make them happen. If you’re going to make $250,000, and each sale is worth $5,000, you need to make 50 sales, or roughly one per week. Based upon 50 sales, how many proposals
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AUTO DEALER NEWS February/March 2017
do you need to get out, how many people do you need to talk to, and how many calls do you have to make every day? You have to exceed your numbers. Once you know your numbers, you need to exceed them. We tend to underestimate the amount of time, effort, energy, money and, in this case, number of calls it will take to achieve a goal. As a result, increase your daily number by at least 20 percent. So if the number you came up with above is 50 calls a day, increase that to 60. You have to hit your numbers every day no matter what. Your most important task every day is to hit your numbers. Period. It is always more important than anything else you do. I’ve seen top salespeople make calls from airplanes, hospitals, police stations, and almost anywhere else you can imagine. I’ve also seen them make calls at night, on weekends, during holidays, and at all other times imaginable. Be consistent. Consistency keeps you sharp, builds the habit of making the calls, and keeps you in a good frame of mind. If your goal is 300 calls for the week, Monday through Friday, and you try to squeeze those calls into two or three days, you’ll become overwhelmed and you’ll have difficulty building the self-discipline that comes with daily, consistent action. Also, if you aren’t making calls every work day, your calls will have some rust on them. In other words, when you are doing anything other than making calls, your brain slowly starts to forget what to say and how to react to situations that arise during calls. So if you only make calls on two days during the week, there is a lot of time for your brain to start to “forget,” making you far less sharp and effective. One of the best ways to be consistent is to time block the same hours every day to prospect. Have someone hold you accountable. While you ultimately have to hold yourself accountable, it’s a good idea to also have someone else hold you accountable to your daily numbers. Preferably it’s your boss or manager, but it can really be anyone who you’ll feel enough pressure reporting to. Keep getting better. Read, watch, and listen to information and use that information to make your calls more efficient and effective. Use the phone and in-person calls to reach out to prospects. If you think email or social media is just as effective as a phone call or in-person visit for reaching out to prospects, you’re delusional. When you are attempting to do business with people, you have to call or visit in-person first. You can send an email, physical mail, LinkedIn request, or something else afterwards, but never as an initial contact to determine if they may be a qualified prospect. First, you can’t even be sure they got the email or social media message, and second, it’s weak and says you don’t have the
While you ultimately have to hold yourself accountable, it’s a good idea to also have someone else hold you accountable to your daily numbers. confidence in yourself or your product to have a live interaction. If you’re looking for a way to avoid the hard work of making live calls, stop it! Pick up the phone and/or get in the car and go talk to people. Lots of people. If you make the calls necessary to fill your pipeline with tons of qualified prospects, everything else will take care of itself. John Chapin is a sales and motivational speaker and trainer. He has over 27 years of sales experience as a number one sales rep and is the author of the 2010 sales book of the year: Sales Encyclopedia. For more information, visit www.completeselling.com or email johnchapin@completeselling.com.
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REGULATORY UPDATE BY USED CAR NEWS
FTC ISSUES REVISED USED CAR RULE Changes to Buyer’s Guide
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AUTO DEALER NEWS February/March 2017
The Federal Trade Commission has announced final amendments to its Used Car Rule. The FTC has sought public comments on a series of proposed changes to the rule, which requires car dealers to display a window sticker, or “Buyers Guide,” on used cars offered for sale. The guide discloses whether the dealer is offering to sell a used car “as is” (without a warranty), or with a warranty. If the sale is with a warranty, the guide discloses the terms and conditions, including the duration of coverage, the percentage of total repair costs the dealer will pay, and the vehicle systems the warranty covers. In states that do not permit “as is” used car sales, dealers must use an alternative guide that discloses whether the sale is with a warranty or with implied warranties only. In December 2012, the FTC sought public comments on proposed changes to the Buyers Guide as part of its systematic review of all of the agency’s rules and guides. In response to comments received, the agency sought comments on additional proposed changes to the Used Car Rule and invited comments on alternative approaches that public commenters proposed for the vehicle history disclosure and the “as is” statement. As announced, the FTC is revising the Buyers Guide by: • Changing the description of an “as is” sale.
• Placing boxes on the face of the Buyers Guide dealers can check to indicate whether a vehicle is covered by a third-party warranty and whether a service contract may be available. • Providing a box dealers can check to indicate an unexpired manufacturer’s warranty applies. • Adding air bags and catalytic converters to the Buyers Guide’s list of major defects that may occur in used vehicles. • Adding a statement that directs consumers to obtain a vehicle history report and to check for open recalls. The statement also instructs consumers to visit ftc.gov/usedcars for information on how to obtain a vehicle history report and to visit safercar.gov to check for open safety recalls. • Adding a statement, in Spanish, to the English-language Buyers Guide, advising Spanish-speaking consumers to ask for the Buyers Guide in Spanish if the dealer is conducting the sale in Spanish. • Providing a Spanish translation of the statement that dealers may use to obtain a consumer’s acknowledgement of receipt of the Buyers Guide. The amended rule, which takes effect Jan. 27, permits dealers to use their remaining stock of Buyers Guides for one year after the effective date.
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MANAGEMENT MATTERS BY ALISHA STEWART
EMBRACING THE #HASHTAG GENERATION
How to Retain Talented Millennials in the Workplace
Millennials get a bad rap. We’re called loud and opinionated, lazy and entitled… the list goes on. And employers seem wary of hiring us, especially given reports about our low loyalty, making it hard to find the right job. As a millennial employee, I have experienced the backlash of these assumptions, but I think a lot of our negative press misses the point: Our opinions may challenge your dealership, but we want to bring our passion for change and innovation to the workplace! And it’s going to happen. The truth is that we are the future of business, and by 2020 millennials will make up 50 percent of the world’s workforce. Here are a few suggestions to help your dealership retain your talented millennial employees and embrace the cutting-edge ideas that they bring with them. Pay us fairly and give us room to grow. Fair pay and growth opportunities are paramount to the retention of millennials. As a group, we expect to progress in your company – and achieve leadership roles –
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faster than Gen X or older groups. When we don’t achieve this, we leave. A business’s failure to offer advancement results in costly and constant turnover. While it may seem easy to take the cheaper route, there are many employers out there who will provide fair compensation and a clear career path, and millennials are eager to find them. Embrace social media in all aspects of business. We all know millennials live their lives online. Whether you’re looking to hire or looking to engage, I can’t stress enough the use of online tools that are available to you, and 99 percent of them are free! Let your employees write for the company newsletter or blog. Use LinkedIn and Indeed to recruit talent. Post employee recognition or business events on Twitter, Facebook, and Instagram. Other ideas include purchasing a custom Snapchat filter for company parties and hosting a weekly vlog on YouTube. The options are truly endless, and they all help your millennial employee feel engaged with your dealership! Allow us to use our voice. I’d say millennials have a deep desire or, more appropriately, a need to let our voice be heard and share our views. Why do you think we’re so active on social media? A few ways to encourage that: • Give us opportunities to lead in roles that bring active change to the company, such as seats on committees and inclusion in forums.
• Listen to us and be open to ideas! Just because something has been done a certain way for an extended amount of time does not mean it is the most effective or efficient way to keep doing things. Use our creativity to advance your business. • Allow us to be creative by embracing technology. • Let us be involved. Here at NCM, we have an Ownership Culture Committee that not only plans social events for the company but also participates in charity and giving back. Believe it or not, millennials do care about things bigger than themselves. Allowing them to give back and get involved will reap huge rewards in employee morale and culture. Alisha Stewart began her career at NCM Associates in September 2015. She graduated from California Baptist University in 2010 with a Bachelor of Arts degree in Communications and Public Relations. This article originally appeared on NCM’s Up to Speed blog (blog. ncminstitute.com) and is reprinted with permission.
February/March 2017 AUTO DEALER NEWS
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ACCELERATE
BY GWC WARRANTY
WHEN GOOD RECON GOES BAD Solve Your Recon Woes
Few things can be more of a headache for used car dealers than the reconditioning process. Far too often, it can lead to delays, forfeited front-end gross, poor relationships within your dealership and other consequences that ultimately hurt the overall bottom line. It sounds simple enough: Acquire vehicle. Prepare vehicle. Sell vehicle. So how can something so simple cause so many problems? It’s when good recon goes bad. You can solve your recon woes, however, by making small tweaks to your dealership that will have a tangible payout at the end. It’s all about culture. Too many times you hear stories of the back and forth between those acquiring the inventory and those getting it ready to go on the lot. Good recon starts when everyone stops pointing fingers. Cultivate a culture of collaboration. If you’re acquiring inventory, ask your service team what you should look for in a vehicle at
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auction. If you’re getting a vehicle frontline ready, ask about deadlines and find out why a specific turn time is so important. Don’t get overconfident. If you’re estimating how long it will take to recondition a vehicle, be honest with yourself. Time is money, and you can’t accurately appraise and price your vehicle if you’re building in five days of holding costs when it will really take 10. Having a trusting and cooperative culture will help everyone feel comfortable enough to be transparent with these types of details. Know the dollars and cents. It’s estimated that holding costs can range from $30 to $50 dollars per day. Take the average figure from that range ($40 per day) and do the math for what you spend regularly on reconditioning costs. At an average of six recon days for 40 vehicles a month, you’re looking at $9,600 per month in holding costs alone. At that rate, that’s over $115,000 per year. You can even think of this on a per vehicle basis. At that same holding cost, a vehicle that takes five extra days to recondition cuts a $3,000 gross profit into a $2,800 gross profit – all this without even factoring in the actual parts and labor costs of the reconditioning itself. Knowing these numbers will help everyone in the dealership be accountable for their role in reconditioning.
Communicate. It sounds simple, but so many reconditioning processes go bad when management, sales and service simply aren’t on the same page. Things like repair approval delays and misplaced vehicles can add days to the reconditioning process (see above for how much that costs you). Getting all your departments on the same page can help in this process. It can be as simple as creating a spreadsheet that tracks each vehicle’s progress. This way, you’ll be able to see where delays happen and quickly get your reconditioning back on the rails.
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ASSOCIATION NEWS
AUCTION NEWS
EDUCATION CLASS SCHEDULE
NATIONAL AUTO AUCTION ASSOCIATION NAMES NEW PRESIDENT Jerry Hinton Jerry W. Hinton was named National Auto Auction Association president during the NAAA Convention/NRC in Las Vegas. Hinton will lead the executive team of the association, which represents more than 300 member auto auctions and 100 associate members in North America, along with outgoing president Mike Browning. Hinton is the general manager of ADESA Portland, a position he held with Brasher’s Portland Auto Auction when it was acquired by ADESA in February 2016. A 28year veteran of the wholesale auto auction industry, Hinton has a bachelor’s of science degree in business and finance, an MBA and a law degree. His service to the auction industry spans decades. He has served on the association’s national board and currently sits on NAAA’s legislative
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and membership committees. Hinton has also devoted time to the Oregon Independent Automobile Dealers Association, including 12 terms as membership director and four terms as zone director. He has worked closely with the Oregon Dealers Advisory Committee, helping to pass automobile legislation. In addition to his industry related efforts, Hinton has participated in local government and been involved in his community. “Giving back to our industry, one that has given me so much, is important to me,” Hinton said. “I am honored to have been selected by my peers to lead our association this coming year, and I look forward to working closely with our professional association staff to assist our auction members, clients and our vendors.”
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REGULATORY UPDATE BY AUTOMOTIVE NEWS
U.S. PROPOSES V2V MANDATE TO AVERT CRASHES Technology has Significant Safety Potential
U.S. auto safety regulators proposed requiring all new vehicles to be equipped with vehicle-to-vehicle communication systems, citing the technology’s significant potential to reduce crashes. The proposed mandate, recently released by the Department of Transportation, would require all new cars and light trucks to have dedicated short-range communication systems that transmit and receive basic messages about the vehicles’ speed, location, braking and other data. DSRC systems allow cars to “talk” to other vehicles on the road and to infrastructure equipped with the systems, allowing drivers to “see” around corners and be warned of a potential crash. “This technology has enormous safety potential to prevent hundreds of thousands of crashes and save lives,” transportation secretary Anthony Foxx said. Under the proposal, automakers would be required to equip half of all new cars with the technology two years after the National Highway Traffic Safety Administration issues a final rule. Full penetration would be required within four years after the rule is final. U.S. officials have said the technology could potentially reduce non-impaired traffic crashes by 80 percent once fully deployed. Regulators signaled their intent to mandate V2V systems in August 2014. Under this most recent proposal, the DSRC systems would be required to use a common set of communications protocols to ensure all vehicles “speak the same language,” the DOT said. The proposal also contemplates the technology working alongside crash avoidance technologies like automatic emergency braking to help prevent collisions. The proposed rule also has privacy and security requirements, including 128-bit encryption on vehicle data transmissions. In addition, the department said it plans to soon issue guidance on vehicle-toinfrastructure communications. Saving Lives Last year, there were 6.3 million U.S.
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vehicle crashes. In October, NHTSA said U.S. traffic deaths jumped 10.4 percent in the first six months of 2016. The jump followed a spike in 2015, when road deaths rose 7.2 percent to 35,092, the highest full-year increase since 1966. The rule would not require vehicles currently on U.S. roads to be retrofitted with the technology. Foxx said owners couldn’t turn off the technology but could turn off warnings. The Alliance of Automobile Manufacturers, a trade group representing General Motors, Toyota Motor Corp., Volkswagen AG and other major automakers, noted the system is already
being tested. The group said it would study the proposal. Automakers are pushing to ensure that a portion of the spectrum reserved for connected vehicles is not used by other companies for other wireless device use. The U.S. Federal Communication Commission has begun testing potential sharing options. Separately, the Federal Highway Administration plans to issue guidance for vehicle-to-infrastructure communications, which will help planners allow vehicles to “talk” to roadway infrastructure such as traffic lights. Reuters contributed to this report.
February/March 2017 AUTO DEALER NEWS
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MARKETING MATTERS BY KENNY ATCHESON
ELIMINATE WASTE IN ADVERTISING Data-Driven Decisions
When consulting with a dealer, I usually find waste in their advertising. A multilocation dealer tends to have a bigger budget and may have more waste. That’s not always the case, but a multi-location dealer with a larger advertising budget sees media salespeople who are after his full budget. It’s how they get paid. I prefer to see dealerships with larger budgets spend their budget only if it’s working. This is why tracking and measuring as much as possible helps define what the budget actually is or should be. It may be fluid throughout the year, not just during tax time. The marketing director for the current winning presidential candidate said, “We used digital data to decide where to spend the budget offline.” Data-driven decisions remove human bias from budget decisions. Recently, we launched a new message with media to help dealers who are already using a program to generate new business before tax returns arrive. A dealer called
me to ask about it, and I said, “I expect it to work, but we are testing it. The data will answer that question.” At my recommendation, several of our larger clients have saved money on advertising by moving a portion of their budget to media and delivery that is more effective… and it’s trackable. For example, $20,000 per month may be reallocated to a different strategy, but I want to track effectiveness. We may find the last $5,000 of that spend is not working out because it is used to reach a potential customer base that is geographically too far away. So that portion of the budget is cut and the same or more cars are sold with less investment. Dealers with smaller budgets have their share of waste in advertising. The culprit is often the geographical area in which they advertise. Much of the time their radius is too large. There is a slight chance someone who lives 100 miles away will buy from them if given the chance, but they shouldn’t spend money trying to lure them in. That’s like management in a steakhouse spending good money on advertising targeting vegetarians just in case there is a chance they may come in for a fancy salad. Whatever you do, track and measure so you can tweak or cut it.
Kenny Atcheson is the president of Dealer Profit Pros and author of Marketing Battleground: How to Deploy an Army to Battle for Your Business. Kenny teaches workshops, speaks at conventions and 20 Groups, and his company offers several marketing and advertising programs. His website is www.DealerProfitPros.com.
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BHPH PERSPECTIVE BY KENNETH SHILSON
&
CHART
YOUR COURSE
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AUTO DEALER NEWS February/March 2017
OPPORTUNITY KNOCKS FOR BHPH IN 2017! Tips on How to Capitalize
It’s time to look forward and plan for this year. Recent performance data for the subprime auto finance market indicates that better days are ahead for independent BHPH operators who can capitalize on the opportunities. Recent data from Experian indicates through the third quarter of 2016, “installment finance contracts with deepsubprime consumers dropped 2.8 percent to the lowest level on record since 2011! Looking specifically at used vehicle financing, analysts noted that the subprime auto finance sectors saw an even larger decrease. Financing for consumers with deep-subprime credit dropped by 5.3 percent to 5.11 percent, the lowest Experian has seen on record since 2007.” This market change affects deep-subprime customers who prior to 2014 purchased BHPH vehicles from independent operators but subsequently bought and financed them from franchise dealers, independent finance companies and credit unions. The recent market change now allows independent operators to regain that lost market share. The third quarter Experian report shows that lenders reduced loans to subprime and deep-subprime risk tiers while increasing loans to consumers with better credit. Although the credit unions continue to aggressively grow market share, the other competitors have tightened underwriting standards and are focusing on consumers with better credit scores. Independent operators can benefit from the aforementioned market change by regaining market share lost during the last three years if they are positioned to do so. Here are the important things they will need to prosper in 2017 and beyond: •C apital availability to fund future growth. • A proper business model to “keep the new deals sold” over the life of the installment contracts. •T o rebuild their “bond” with previously lost customers and use the web and social media to find new ones. •T o participate in dealer education to avoid underwriting and collection mistakes that reduce profitability and create costly compliance problems. •T o carry inventory that provides affordable transportation to credit impaired customers on reasonable terms. Here are the best ways to get the items needed to succeed: •C apital to fund portfolio growth should come from collections, equity or from borrowings under lines of credit or by selling previously originated contracts. Dependence on borrowed capital or by
liquidating existing portfolios reduces an operator’s financial flexibility and should not be relied upon. “Keeping contracts sold” and collecting payments is more important than just increasing originations. •T he best way to evaluate your existing business model is to study past bad debt losses. This analysis requires you to look “under the hood” of your portfolio at year-end when all chargeoffs have been recorded. To understand what performance metrics are needed and ways to utilize this information to make better underwriting decisions visit www.subanalytics.com and watch two free videos on its homepage. •T he best way to rebuild customer relationships is to contact past customers via mobile, web and social media technology. You may find that those customers are unable to afford the vehicles sold to them by your competition and are seeking more affordable transportation! •D ealer education is needed to become familiar with market and regulatory changes and to avoid making compliance mistakes. At the NABD National BHPH conference May 23-25 at The Encore in Las Vegas the program will focus on “the changing world of BHPH” and the best ways to meet new challenges. Legal and regulatory updates will also be included in the conference agenda. The more you learn, the more you will earn! •E fficient systems are needed to grow portfolio profitability. During the last three years many independent operators reduced overhead due to reduced sales. Instead of restoring these previous overhead levels, implementing new and improved technology for underwriting, collections and inventory sourcing is a better alternative. Operators can see and evaluate the new technology at upcoming educational conferences. •S ourcing, acquiring and reconditioning good inventory has always been challenging. However, the aforementioned market changes have reduced competition, increased supply, and caused wholesale prices to decline. New technology is available to broaden inventory sourcing options and increased repossessions enhance availability. Independent operators cannot regain lost market share immediately. BHPH portfolios are best built over time and not overnight. In the new year, operators are encouraged to benefit from competitor’s underwriting mistakes, not repeat them. Good luck! Kenneth Shilson, CPA, (Ken@kenshilson.com) is president of Subprime Analytics (www.subanalytics.com) and NABD (www.bhphinfo.com).
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MANAGEMENT MATTERS BY GEORGE GOWEN
THE IMPORTANCE OF VALUE Unveil the Value of Service and Parts
We all know a customer will buy a product or service when the value exceeds price. Unfortunately, automotive dealerships hide the value that the service and parts departments bring. Here’s how you can change that. Recognize the value of “free.” Grocery stores commonly show the customer how much they “saved” on every receipt. That builds additional value to the price they paid for groceries. For some reason, dealerships comp services but, unlike the grocery store, never let anyone know about it. Here’s an example: Almost every dealership I know requires a multi-point inspection (MPI) for each repair order. This check builds trust and helps sell needed services. But what is the “value” to the customer for that service? None. However, if you show on the repair order that the MPI has a $49$149 value that we provided at “no charge,”
it does means something. After all, the service has actual value, and we should let customers know it. Here’s another example. Many dealerships charge a diagnostic fee, using the information to explain the nature of the problem and how much the repair will cost. Along with the diagnostic work, you probably do a complete inspection of the entire vehicle and don’t charge for it. You should mention this value to your customer. Always offer a deal. While we’re looking at other industries for inspiration, let’s consider restaurants. I’ve been to many establishments that promote a special that includes the appetizer, salad, entrée and dessert. You’re told that you’ll get a special value by ordering the components as a group versus ordering them individually. The reality is that people will take advantage of the “deal” even though they likely would not have ordered all the items separately. You can apply the same principle to service menu items. The best performers on menu sale penetration show the value of the combined services versus doing those services individually. But if you offer a “30k Service” for $400 without explaining the value of the individual services, all they will see is the $400.
Imagine the penetration level if you showed that all the services in the “30K Service” would separately cost $530! If the menu item is “only $400,” the customer just saved $130 by purchasing it. The same advice goes if you provide a car wash, loaner cars, or any other services: Always make sure the customer knows the value. And, no matter what, make sure the value you provide exceeds the price. This article originally appeared on NCM’s Up to Speed blog (blog.ncminstitute.com) and is reprinted with permission.
MARKET WATCH BY USED CAR NEWS
AUTOTRADER NAMES TOP TECH
Trending Auto Technology
With new automotive technology constantly emerging and 2017 model-year vehicles now flooding dealer lots, the editors at Autotrader recently named their Must-Have Automotive Technology for 2017. Automakers like Mercedes-Benz, Tesla and Volvo are rolling out self-driving systems that can put many autonomous features together in one advanced package, appealing to even the most die-hard auto enthusiasts, especially when it comes to the more boring parts of driving like commutes or long highway trips. While Tesla’s Autopilot may currently be among the most advanced (and
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AUTO DEALER NEWS February/March 2017
better-known) of these systems, several other automakers offer an impressive look at the future, including Volvo’s Pilot Assist system. Formerly only seen on ultra-high-end sports cars, adaptive suspension is making its way into other models, allowing you to custom tailor your car’s suspension based on the experience you want to have, with modes like “comfort” and “sport.” For drivers who often find themselves critiquing a car’s ride, or for those who spend a lot of time on rough roads or driving tight corners, the ability to change your driving experience with the push of a button can be well worth the cost. Many new vehicles now offer a suite of autonomous safety tech, including lane keep assist, automatic forward collision braking and adaptive cruise control - and the great news is that these systems are getting more affordable and are no longer only reserved for pricey luxury cars. Affordable new compact models like Honda Civic, Hyundai Elantra and Mazda Mazda3 all feature impressive autonomous safety tech features. Say goodbye to the little sticker on the corner of your windshield that reminds you of your next oil change - now many cars deliver this information and more in a handy app, making it easier to keep track of everything. Some automakers like Hyundai even have the Hyundai Assurance Car Care
App, which not only tells you when your vehicle needs its next service, but it can even schedule it for you. Gesture control is the wave of the automotive future. It allows you to control various features of your vehicle using gestures instead of pressing a button, touching a screen or using voice commands. Currently BMW is the only automaker to offer this feature (and only on its high-end 7 Series), but expect this to reach more vehicles in the coming years. Huge screens seem to be replacing many gauges and buttons in the cockpit of new cars, operating similarly to a smartphone with ultra-sensitive touch and the ability for details to be reconfigured. While some may worry about the future reliability of such screens in lieu of simple buttons, experts praise the more clean presentation and easier-to-use infotainment systems versus former complex controls or tiny buttons. Electric drivetrain technology is now becoming more widespread and delivers not only the obvious fuel-economy benefit, but also performance benefits. Modern exotic sports cars like the Acura NSX, BMW i8, Porsche 918 Spyder and LaFerrari all feature electric drivetrains. For everyday drivers, features ranging from fully electric to plugin gas/electric hybrids mean several options for the driving masses.
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ACCELERATE
BY GWC WARRANTY
4 INVENTORY SOURCES YOU MAY NOT BE PROFITING FROM Explore the Possibilities All the talk about gross profits, reconditioning costs and turn times is dependent on the inventory you acquire. You attend auctions. But so does every other dealer you’re competing against. To step out from the rest and inject new profitability into your dealership, you could explore new inventory sources you haven’t tried before. It may be difficult at first and there may be some growing pains, but the payoff could be worth your while. Trade-Ins Most buyers will have them, but do you have a strategy for trades? By knowing what inventory brings you the highest gross and turns the fastest, you can build a simple game plan. Look to wholesale cars that might sit on your lot, and only hang on to the ones you know will move quickly and for a higher cost. But first, you have to go back and do your homework to see what has worked for you in the past.
PRODUCTS & SERVICES BY USED CAR NEWS
ROUTEONE AND MAXIMTRAK COME TOGETHER Acquisition to Innovate the Vehicle and F&I Sales Process
RouteOne has acquired the assets of MaximTrak and its related business and will operate MaximTrak through its whollyowned subsidiary RouteOne Holdings. This will bring together two long-time partners to deliver a seamless vehicle F&I sales process. The vehicle purchase process has undergone fundamental changes in recent years, and will continue to do so with increasingly rapid speed. Consumers and dealers alike expect consistency and seamless transition across all physical and digital sales channels. As a result, both RouteOne and MaximTrak have been pursuing aggressive strategies to innovate the sales process on behalf of their respective customers. RouteOne and MaximTrak’s complementary strategies have now come together to deliver on the vision of a complete sales and F&I solution that meets OEM, dealer and consumer needs – any time, any place, and on any device.
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Key facts: • MaximTrak will be operated by RouteOne Holdings, a wholly-owned subsidiary of RouteOne. • MaximTrak leadership and team members remain in place, and continue to operate from the MaximTrak PA offices Wayne, PA. • Justin Oesterle and Jim Maxim, Jr. will operate as the senior management team of MaximTrak. • RouteOne and MaximTrak serve 1,400plus finance sources, 18,000-plus dealers, 130-plus dealer service providers, 80-plus aftermarket insurance providers, and 10-plus OEMs. • RouteOne and MaximTrak employ approximately 400 people with offices in Michigan, Pennsylvania and Canada, as well as local staff in major markets. • Directly and through partnerships, RouteOne and MaximTrak have customers in the U.S., Canada, Puerto Rico, and Mexico. • RouteOne and MaximTrak product integration began prior to the acquisition and will now be further developed and strengthened on an expedited basis. • RouteOne was founded in 2002 by Chrysler Financial (now TD Auto), FMCC, GMAC (now Ally), and TFS. • MaximTrak was founded in 2003 by the Maxim family. “RouteOne has had a long and successful relationship with MaximTrak, and we share very similar cultures, values and DNA,” said RouteOne CEO Justin Oesterle. “We are excited
New Online Sources Yes, this may be scary if you’ve never tried it, but it won’t be long before one of your competitors takes the plunge into the online market. Some dealers are starting to stray from the traditional auction by experimenting with services for consumers and manufacturers to post cars for sale online. Once you get a feel for the services and sellers you can trust, this new inventory source could be a major advantage in your market. Network with Other Dealers This can be effective with dealers both in your market and elsewhere. Different cars sell better for different dealers. It could be a matter of financing options or VSC coverage or simply geography and demographics. Know what sells for you and what sells for your friends in the business. You can potentially offload trades that won’t perform to your liking and acquire inventory you can sell more quickly and for a higher premium than the dealer who currently has it. Factory Off-Lease Programs Looking for low-mileage, wellmaintained, popular vehicles? Checking into factory off-lease programs could be just the business boost you need. Investigating this inventory source could change the way your inventory looks, attract new clientele and create new channels of business for your dealership.
to have made this acquisition happen as we believe it creates significant value for all our customers at the OEM, finance source, provider, and dealer levels. “It also creates strategic and economic value for RouteOne’s owners: Ally, Ford Credit, TD and Toyota Financial, all of whom supported the investment. I, and the entire RouteOne team, welcome MaximTrak to the family. We look forward to doing great things together for the industry.” MaximTrak President Jim Maxim, Jr., said, “The entire MaximTrak team is excited and energized by the growth opportunities that this transaction represents for our customers, employees and key stakeholders. Like RouteOne, MaximTrak is an established, innovative leader in the F&I space. “Where RouteOne excels in the finance elements of F&I, we excel in the ‘I’ side of the equation and in developing technologies that optimize the dealership process and ultimately dealer profitability through F&I product sales. Together, with our combined scale, talents and product lineups, we will be able to provide a complete digital workflow from initial customer contact and first pencil to finance, aftermarket and eContracting across online, mobile and in-store channels. With that, our emphasis will be on helping our customers deliver a buying experience they control and one that consumers actually want.” For more information, visit www. routeone.com or www.maximtrak.com.
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Hiring the right individual for a service advisor position will yield lasting benefits, including an increase in repair order count, CSI and owner retention.
MANAGEMENT MATTERS BY ADAM ROBINSON
HIRING THE MOST IMPORTANT SALES ROLE Service Advisors There is no question a successful dealership has both skilled technicians and knowledgeable salespeople to maintain profit margins. But an oft-overlooked – and equally (or arguably even more) important – component is the service advisor. When people take their cars to a dealership, the service advisor is the first face they see. The service advisor quarterbacks the entire service experience and serves as the critical link between the customer and the work. This dynamic means service advisors have a heavy influence on customer experience, which can either keep them coming back or drive them away. While a basic understanding of how cars work is essential to helping the customer navigate their needs, communication skills are even more crucial in ensuring the customer has a positive experience and feels confident about the work and service your dealership provides. Critical conversations between the advisor and customer include such topics as explaining invoices, deciphering warranty coverage, explaining necessary or suggested additional repairs and providing the customer with updates on the progress of the work. All these conversations require someone with good people skills as well as excellent car skills. Here are key elements I recommend to identify quality service advisor candidates and how to hire them.
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Recognize the Traits of a Solid Service Advisor As mentioned above, a service advisor is the first face your customer sees and the person with whom they communicate the most, if not exclusively, throughout their service experience. A good service advisor should possess the following traits: • Mechanical knowledge and ability to articulate. Because the service advisor is the one to communicate with the customer from start to finish, it is important they understand the industry enough to be able to answer questions, suggest options and explain the process to a customer who may otherwise be unfamiliar with the work needed. Additionally, the service advisor should be able to relay the information without overusing technical jargon, making it simple for every customer to follow and understand. • People skills. The service advisor should have the ability to read and adapt to different customers’ communication preferences: some like a plethora of details while others prefer to be in and out. The service advisor must also possess good listening skills to clearly understand what the customer needs or wants and be able to relay that information correctly to the technicians doing the work. • Integrity. In addition to communicating information between customers and technicians, service advisors have a responsibility to provide the client with accurate information that is in their best interest, instead of using every interaction as an opportunity to upsell extra work. A service advisor with honesty and integrity will quickly earn the confidence of your customers, ensuring they look to your dealership as a trusted place of business, returning for additional needs and sending friends and family your way. Also, a good service advisor will provide updates or call customers back in a timely fashion, keeping them looped in every step of the way.
Things to Consider When Hiring a Solid Service Advisor Now that you know what to look for in a service advisor, there are some factors to keep in mind when you’re considering hiring one. For starters, consider how your dealership and employment brand will appeal to women candidates. Half of your customers are women, so having at least one female service advisor on staff will help you better connect with that demographic. Consider advertising the job with a title other than “service advisor,” so as to appeal to a larger number of applicants. Alternate titles can include customer service representative, service secretary or customer service associate. While technical knowledge is beneficial, you might consider advertising the position with “no experience required” to welcome applicants who have all the other necessary skills without potential bad habits that will require much more aggressive retraining to break. Lastly, consider the number of service advisors your dealership needs to meet demand and give your customers the full attention and service required. Benefits of a Solid Service Advisor Hiring the right individual for a service advisor position will yield lasting benefits, including an increase in repair order count, CSI and owner retention. It will also increase your technicians’ productivity, resulting in a boost of customer loyalty. A service advisor typically touches a customer five times more than a sales person, making proper candidates for this position a crucial component for your dealership’s success. Preparing for 2017 means staffing up with skilled service advisors who can create a lasting, positive impact. Adam Robinson is the co-founder and CEO of Hireology and a noted recruiting industry expert, speaker, and author with over 20 years of experience in the field of hiring and selection management. This article originally appeared on NCM’s Up to Speed blog (blog.ncminstitute.com) and is reprinted with permission.
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SAFETY WATCH
NHTSA SPEEDS UP AIRBAG RECALLS New Requirements for Automakers
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AUTO DEALER NEWS February/March 2017
The National Highway Traffic Safety Administration issued an amended order to continue the acceleration of recall repairs for millions of U.S. vehicle owners affected by the Takata air bag inflator recalls. The Amended Coordinated Remedy Order sets requirements for when automakers must have replacement parts available for customers and sets progress and completion deadlines for replacements of the defective parts, which have been responsible for 11 deaths and approximately 180 injuries in the U.S. The Amended Coordinated Remedy Order issued to Takata and the 19 affected automakers requires replacement parts to be obtained on an accelerated basis and made available first to the riskiest vehicles. The order sets new requirements for automakers to certify to NHTSA when they have obtained a sufficient supply of replacement parts to begin repairs, and requires automakers to coordinate consumer messaging using best practices identified by NHTSA, the industry and the independent monitor of Takata and the Coordinated Remedy Program. This action builds on the Coordinated Remedy Program initiated in November 2015, incorporating the additional tens of millions of inflators recalled or scheduled for future recall since that date, most of which were included in the May 2016 recall expansion. There are currently 46 million recalled Takata air bag inflators in 29 million vehicles in the United States. Under the Amended Consent Order issued to Takata in May 2016, automakers will be required to recall additional inflators over the next three years, affecting approximately 64 to 69 million inflators in 42 million 11/21/16 9:45 AM total recalled vehicles. Ultimately all frontal Takata inflators using non-desiccated phase-stabilized ammonium nitrate will be recalled.
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