CIADA
INSIDER
State Affiliate
MAGAZINE
C O L O R A D O I N D E P E N D E N T A U T O M O B I L E D E A L E R S A S S O C I AT I O N JANUARY/FEBRUARY 2017
QUALITY DEALER
OF THE YEAR CONGRATULATIONS, TSG AUTO! DALLAS, TEXAS Permit No. 2079
PAID
PRSRT Standard U.S. Postage
VISIT US AT W W W.CIADA.ORG
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INSIDE 06............................................. Building Your Bench Strength 08................................................... Quality Dealer of the Year 12..... Right-Now Actions to Improve Your Online Reputation 15..........................................................Security Starts Within 16.....................................................Phone Ups that Show Up 18 ....... 4 Inventory Sources You May Not Be Profiting From 20................................................ NIADA Government Report
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.
ADVERTISERS INDEX
AutoZone.............................................................................. 16 Black Book.............................................................................. 5 CarMax Auctions.................................................................. 18 Dealers AA of the Rockies................................................... IFC Dealership Valuation Services............................................. 15 Lobel Financial........................................................................ 3 Loveland Auto Auction......................................................... 14 Manheim.......................................................................... 10,11 Manheim Denver................................................... Back Cover Manheim Pennsylvania........................................................ 13 NIADA Certified...................................................................... 7 NextGear Capital.................................................................. 21 Spireon.................................................................................. 19 STARS GPS........................................................................... 17 VAuto...................................................................................IBC
OFFICE
For information on how to become a member of CIADA, please contact Todd O’Connell 950 Wadsworth Blvd., Suite 101 • Lakewood, CO 80214 303.239.8000 toddo@ciada.org
NIADA HEADQUARTERS
NATIONAL INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION WWW.NIADA.COM • WWW.NIADA.TV 2521 BROWN BLVD. • ARLINGTON, TX 76006-5203 PHONE (817) 640-3838 CIADA Insider 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 Insider 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.
STATE MAGAZINE MGR./SALES
Troy Graff • troy@niada.com EDITORS
Jacinda Timmerman • jacinda@niada.com Andy Friedlander • andy@niada.com MAGAZINE LAYOUT & GRAPHIC ARTIST
Christopher Hanley • chris@niada.com
SENIOR ART DIRECTOR / PRODUCTION MANAGER
Christy Haynes • christy@niada.com PRINTING
Nieman Printing
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FRONT RANGE CLASSES /
COLORADO INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION
Lakewood, Colorado Education & Training Center 950 Wadsworth Blvd., Suite 101 Lakewood, CO 80214
Pre-Licensing Certification Colorado state statute requires anyone applying for a used motor vehicle dealer’s license or a used powersports dealer’s license be certified through a pre-licensing course. This seminar is also offered to salespeople to be able to pass the New Mastery Examination Test. Class is held at least once a week. Check our website for dates.
Basic Title Training Class Join us to get updated information to learn the CORRECT way to fill out your paperwork at time of sale and other topics including title compliance, do’s and don’ts for titles and more. This class is held once a month for half a day. Call CIADA for information on these classes, or to get your forms and/or Dealer/Salespersons Bonds.
All classes are subject to change without notice. Please check our website www.ciada.org for any changes.
www.ciada.org • phone 303.239.8000
ENROLL IN THE CIADA LEGAL PROTECTION FUND NOW!
Is your dealership
PROTECTED?
CALL 303-239-8000 WITH QUESTIONS.
More than 65 of your fellow dealers have joined!
BOARD OF DIRECTORS OFFICERS President
Stan Martin Stan’s Auto Sales LLC 303-650-1011
Vice-President
Dan Berkenkotter Berkenkotter Motors 303-650-8754
Secretary
Dean Gunter Mile High Car Company 719-570-7800
Treasurer
John Lindberg Auto Warehouse 970-490-2886
Chairman
Dave Cardella Mountain States Auto Group 303-887-8977
DIRECTORS. Jim Bode J. Bode Used Cars, Inc. 303-366-1535
Tim Gaylord Gaylord Leasing Company Inc. 303-667-6188 Mark Weida Street Smart Auto Brokers 719-434-8443 Teshome Tesfaye Norfolk Motors 303-523-5814
Mike Whistance Country Truck and Auto 303-857-1281 Lucas Jozefkowicz Denver Autos, Inc. 303-573-1333
Past President / Directors Jim Bahne Bahne, Inc 720-934-9806
Mike Bonicelli Nevada Auto Sales 719-635-2533 Peppe DeMarco Highline Motors 970-206-9963
Roger Kirlin Roger Kirlin Auto Sales 303-526-7805 Joe McCloskey McCloskey Motors 719-594-9400 Dean Strawn AutoTrek 303-934-5600
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LEGISLATIVE MATTERS BY TODD O’CONNELL, CIADA EXECUTIVE DIRECTOR
The second bill addresses unlicensed sales or “curbstoning.” In many cases, these illegal sales lead to public safety issues and harm the integrity of the auto industry. This bill will allow better enforcement and provide stricter penalties for those violating the existing statute. Over the years, CIADA has been very Seems like every couple of years the successful in building and maintaining topic of allowing Sunday vehicle sales a strong working relationship with is brought up for legislative action Colorado’s lawmakers. In particular, at the Capitol. This year it originated the last couple of years much time and through the “Sunset” review process that is required for all state boards and effort has been put forth in educating commissions, and this year is the auto both political parties on the business concerns of the used car dealer. This industry’s turn. is only successful because of CIADA’s All of the legislators CIADA “strength in numbers” (largest statewide has contacted regarding “Sunday association representing the automotive Openings” understand that neither industry) and the ability to provide the independent dealer nor franchise some financial support to pro-business dealer want to be open on Sunday. candidates. The 30-day title bill that There are numerous reasons why it makes sense for dealerships to remain was signed into law last year is a prime example of what can happen when closed on Sunday, plus consumer bipartisan business support is developed. benefits are negligible and many CIADA’s Political Committee Fund potential buyers like to use Sunday plays an integral part in the entire to browse the lot. CIADA is actively process. These funds are carefully lobbying against allowing Sunday sales and will keep close watch as this used to help ensure the continued support of your business interests. Your issue progresses through the system. In addition, CIADA is again running contributions to the PC Fund are critical a couple pieces of legislation this year. to help protect the auto industry. This year when renewing your association One bill will help prevent dealers membership, please contribute the extra suffering potential financial loss $75 (or more) to make sure your industry when wrecked “total loss” vehicles remains vibrant and prosperous. get into the marketplace without Thank you and please contact me with proper disclosure with “clean” any questions. Colorado titles.
SUNDAY SALES ARE BACK CIADA Continues to Lobby
TITLE TRAINING JOIN US FOR A TITLE TRAINING COURSE DEDICATED TO LEARNING HOW TO BE A SUCCESSFUL TITLE CLERK, WHAT SHOULD BE INCLUDED IN YOUR DEAL JACKET, DOCUMENTS FOR THE COUNTY AND REQUIREMENTS AT THE TIME OF THE SALE.
CLASSES ARE 9-12 PM AND ONLY $99 FOR MEMBERS. FOR MORE INFORMATION, CALL CIADA AT 303-239-8000 OR VISIT CIADA.ORG.
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’
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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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ASSOCIATION NEWS
CIADA’S QUALITY DEALER OF THE YEAR Congratulations to TSG Auto
Tim Gruefe and his marvelous staff at TSG Auto excel in all of the qualifications required to be considered for Quality Dealer: service to industry, outstanding business operator and community service. They exemplify every attribute necessary to be tremendously successful. As a young man, Tim moved to Denver to begin his career selling cars at Bill Crouch Chrysler Plymouth. Twelve years later, he decided it was time to do it his way and opened Rocky Mountain Auto
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Brokers, concentrating mainly on wholesale but retailing a few cars as well. Because of the changes in the wholesale business, the technology in purchasing vehicles and economic conditions, Tim decided to go full retail in 2009, opening up TSG Auto in a warehouse and small lot in Parker. Even though the economy was not great in 2009, Tim was not worried. He considered it as an opportunity and challenge. TSG’s sales volume grew, along with the inventory, so in 2013 he moved to a new facility on 10 acres. Tim now employs over 55 people providing terrific customer service needed to succeed in today’s market. Tim never lost sight of how his success came from hard work, and vowed to
share his rewards with his community. Over the years, Tim has donated time and money to help others less fortunate. Some of his contributions go to the local food bank, help veterans suffering from PTSD, the local high school, and abused children. Contributions have also helped a Parker police officer injured in the line of duty and provided aid to a teen who suffered brain injuries in a car accident. Every year he donates a vehicle to a family in need. In addition, during the Thanksgiving and Christmas holidays, he adopts numerous local families, providing them with meals and gifts to brighten their holidays. CIADA is proud to have TSG Auto as their 2016 Quality Dealer of the Year and thanks Regis University for their partnership in judging this award.
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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.
And, no matter what, make sure the value you provide exceeds the price. 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.
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ACCELERATE
BY GWC WARRANTY
BANK MORE ON THE BACK END The Ultimate Customer Satisfaction Experience
So much of what you do on a day-today basis is to preserve your front-end gross. You act with discipline when acquiring inventory, you carefully manage reconditioning costs, you price your cars based on demand and market and you work to sell them in a timely fashion. But what are you doing to make more profit on the back end of your deals? Statistics show very few dealers offer service contracts on every sale. But why? Beyond the fact you can better protect your customers after the sale, there are countless benefits that put more profit in your pockets. Think about the extra commas in your bottom line if you apply the same effort to your back-end profits as you do to protecting your front-end gross. Nice mental image, isn’t it? It starts with having a process: Think 300 percent. That means you offer 100 percent of your service contract menu to 100 percent of your customers 100 percent of the time. That doesn’t mean you’ll end up getting every single customer to purchase a service contract. But if you can bump your penetration from 25 percent to 50 percent, you’ve just doubled your profits from the back end of deals. Not to mention the more service contracts you sell, the more you stand to get back in return. You get out what you put in: A portion of every service contract you sell is set aside in the event a claim is paid on that particular vehicle. Check with your service contract provider to see what portion of that reserve, if any, you can get back when the contract expires. GWC Warranty dealers who qualify for our Elite Dealer Program begin earning a portion of those reserves back when they reach certain service contract volume milestones. Create enough service contract volume and WealthBuilder dealers can qualify for up to 100 percent of their underwriting profits. Service contract volume isn’t the only driver of that profit center. Selling quality vehicles and focusing on reconditioning will help keep reserve accounts full, as fewer claims are paid from them. Up your game with upsells: When it comes to immediate profits, upsells to richer coverage levels with longer terms will help build up reserve account balances.
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If you’ve followed the first two steps of this process and you work in upsell opportunities, you’ll be offering better contracts more often, making more underwriting profits available and, perhaps most important, improving post-sale satisfaction, setting you up for long-term profitable benefits as well. Repeat, refer, rejoice: Where you stand to benefit the most from a standardized back-end profit approach is when it comes back to you on the front end. How does that work? Imagine the customer you protected for a longer
term with richer component coverage. Now think about how he’ll feel when two, three, four or even five years down the road, the service contract you sold is still saving him money on unexpected repairs. It’s the ultimate customer satisfaction experience, and one customers will tell family and friends about. So when their cousin, friend or colleague needs a quality vehicle, where will they go? You guessed it – they’re coming to you. And when they’re in the market for another vehicle, you can be sure they’ll start their search where their last one ended – on your doorstep.
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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 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
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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-the-scenes 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-of-mouth effect, positive online reviews deserve a place on your company’s balance sheet. After all, if you’ve put in the time
Improving, protecting, and promoting the company’s online reputation should become part of daily operations. CONTINUED ON PAGE 14 www.ciada.org
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the time and effort to improve your online reputation, positive reviews are worth their weight in gold. 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.
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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
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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.
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TECHNICALLY SPEAKING BY DAN DOMAN
SECURITY STARTS WITHIN Six Steps to Protect Your Dealership’s Data
According to data security firm Virtru, even as hackers become more and more sophisticated, much of the threat to your business actually comes from inside. The company notes that up to 28 percent of enterprise data security incidents come from inside an organization. They’re not saying any of your employees has malicious intent – though that is possible. What they are saying is your staff could be inadequately trained or your data security policies might be incomplete or not enforced. So here are six training and enforcement policies to help protect your dealership from possible threats: Strong passwords: While you’ve heard it before and it might seem obvious, enforcing strict password requirements – such as requiring a minimum of eight alphanumeric characters with symbols – and prompting users to change their passwords regularly are easy ways to protect against unauthorized access. A 2015 survey by TeleSign found 47 percent of people use passwords that are at least
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five years old. Don’t let your dealership’s employees be among them. Authentication: Require multi-factor authentication on every device that accesses your dealership’s data. The process requires users to register their devices to a particular user ID and password. Registering a device requires employees to select and answer a series of “security” questions not easily guessed by anyone but the employee. In the event a user name and password was compromised, a hacker would still be unable to access your dealership’s systems unless that device was authenticated to those credentials, adding another layer of security.
IP blocking: Use IP blocking to limit user access from only dealership-approved IP addresses. That helps prevent unauthorized access from remote or mobile locations. Implementing IP blocking is a great opportunity to review and audit your dealership’s policies regarding remote access to integrated dealer systems and appropriate purposes and use. Now that you have secured the devices that are coming into your system, focus on your dealership’s employees’ day-to-day use. Check your user permissions: Not every employee needs access to all of your dealership’s data. Assign employee permissions and access to specific dealership systems that suit your business processes and
the employees’ respective responsibilities. That will help control their ability to access personal and confidential customer data. Use your systems’ notification or activity alert tools: They can be configured to alert you of potentially suspicious employee activity, such as changes to a user’s “setup” or “preferences.” Run a report: Regularly run a user report to ensure all who have access truly need it. The reports should provide detailed information on users including dealer ID and dealer name (for dealer groups), user name, last successful login date, no user activity for more than 60 days, and admin. It is a sound security practice to check your user reports against your active employee list. You should never have an ex-employee authorized to access your systems. Secure dealerships are successful dealerships, and maintaining a secure dealership begins with fundamental security practices. By implementing the six practices explained here, your dealership will be well on its way to helping ensure the security of your customers’ information – and a successful future. Dan Doman is chief legal and privacy officer of RouteOne LLC (www.routeone.com), a joint venture created by Ally Financial, Ford Motor Credit Company, TD Auto Finance and Toyota Financial Services. He is responsible for managing the legal, governmental, privacy, and security affairs of RouteOne LLC.
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SALES MATTERS BY ALAN RAM
PHONE UPS THAT SHOW UP The Goal is Not Simply an Appointment
Every time I ask a group, whether it be dealers or salespeople, what the goal of a sales call is they tell me it’s to “set an appointment.” No, it’s not! Let me explain with two scenarios. Scenario A: You take a sales call. Everything goes great: You get a name, you get a number and, yes, the caller sets an appointment. You hear barking in the background, and you start talking to the caller about his dog. Now you’ve got some Golden Doodle-rapport. Unfortunately, that appointment does not show up. Scenario B: Someone calls and you get her name and number. That’s no problem – you again use the highly effective technique that I call “asking them for it,” which works just about every time. This customer will not set up an appointment no matter how hard you try. She just won’t commit. But later on that evening, she comes in and buys. Which would you rather have? And that’s not a trick question. Clearly Scenario B, right? But she didn’t
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have an appointment. So what? The goal of a sales call is not to set an appointment but to have someone actually show up at your dealership. SHOW-UPS COUNT, NOT APPOINTMENTS. There’s a big difference between setting up appointments and having people arrive. I’ve had plenty of salespeople come up to me excited because they just used one of my word tracks on a customer on the phone and it worked great. My question is always, “Did the caller show up yet?” If not, nothing has worked “great” yet. Not until they show. Now, I’m not telling you not to set up appointments, so relax. Of course you want to set up appointments. But let’s face it, nobody comes into your dealership because you got their name and phone number. “Hey honey, that salesperson at Friendly Kia just got our phone number! Let’s get down there!” MESSAGING MATTERS By the same token, nobody comes into your dealership simply because you set up an appointment. They come in because of everything else you say. What reasons are you giving customers to come to your dealership, other than to see you? If you can’t answer that question, you need to figure it out. Most telephone training in the automotive industry is simple:
1. Get their name. 2. Get their phone number. 3. Smile, because a smile can be heard over the phone – that is true, by the way. 4. Then set up an appointment they probably won’t show up for. You need to step up your game. To get people to come to the dealership, you must give them solid reasons to show up. The next time someone asks you what your goal on a sales call is, I want you to say: “It’s to get someone to actually show up.” Alan Ram is president of Proactive Training Solutions. This article originally appeared on NCM’s Up to Speed blog (blog.ncminstitute.com) and is reprinted with permission.
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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 multi-location 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.
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.
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. 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
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ACCELERATE
BY GWC WARRANTY
4 INVENTORY SOURCES YOU MAY NOT BE PROFITING FROM
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
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your homework to see what has worked for you in the past. 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.
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REGULATORY UPDATE BY USED CAR NEWS
FTC ISSUES REVISED USED CAR RULE Changes to Buyer’s Guide 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
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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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WASHINGTON UPDATE
NIADA GOVERNMENT REPORT
Latest Governmental Issues and Activity Here’s a rundown of some of the latest governmental issues and activity affecting the used car industry from NIADA lobbyist Sante Esposito of Key Advocates and NIADA senior vice president of legal and government affairs Shaun Petersen.
LEGISLATIVE REPORT By Sante Esposito
ELECTION IMPACT At press time, the full impact of the November elections on the legislative process was still unclear, as Congress deals with a unique situation in which the traditional model of government seems to have changed. On the positive side, everyone seems committed to working together, and when it comes to issues like reining in the CFPB, fending off efforts to ground recalled vehicles, supporting small business, etc., a Republican administration coupled with a Republican Congress is the best political scenario for NIADA. President-elect Donald Trump campaigned on repealing the Dodd-Frank Act, thereby dismantling the Consumer Financial Protection Bureau. If that is pursued a likely outcome is that the Democrats will push back and accept many of the CFPB reforms proposed in Rep. Jeb Hensarling’s (R-Texas) Financial CHOICE Act, making the bureau subject to the annual appropriations process, replacing the single director with a fivemember commission versus an executive director, revoking the 2013 auto finance guidance and more. With a coming change of party in the White House, Congress is expected to punt on the major legislative items, including S.2663, the Reforming CFPB Indirect Auto Financing Guidance Act, which would rescind the aforementioned 2013 guidance, during the lame duck session. The only must-pass bill is the continuing resolution to fund the government, likely until early next year.
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SALES OF RECALLED VEHICLES While Senate action on motor vehicle recalls is unlikely before the new Congress begins, NIADA continues to work with NADA, NAAA and other stakeholders and interested parties to ensure the issue is not raised in legislation during the lame duck session.
REGULATORY REPORT By Shaun Petersen
DEPARTMENT OF LABOR A federal judge in Texas issued a nationwide injunction that stops the Labor Department’s rule to extend mandatory overtime pay to more than 4 million salaried workers from taking effect. The rule, which was scheduled to take effect Dec. 1, would have doubled the maximum salary a worker can earn and still be eligible for mandatory overtime pay to $47,500. U.S. District Judge Amos Mazzant’s ruling agreed with a lawsuit filed by 21 states and a coalition of business groups that includes the U.S. Chamber of Commerce, which contended the rule is unlawful and arbitrary. Mazzant ruled the federal law governing overtime does not allow the Labor Department to decide which workers are eligible based on salary levels alone. The Fair Labor Standards Act says employees can be exempt from overtime if they perform executive, administrative or professional duties, but the rule “creates essentially a de facto salary-only test,” Mazzant wrote. CONSUMER FINANCIAL PROTECTION BUREAU Sales and production incentives guidance: In the wake of the recent Wells Fargo scandal, the CFPB issued a guidance document warning financial institutions that creating incentives for employees and service providers to meet sales and other business goals can lead to consumer harm if not properly managed. The guidance document offers examples of unfair, deceptive or abusive practices that could result from unchecked incentives, such as opening accounts without consent, misrepresenting benefits of products and steering consumers towards less favorable products or terms. The document is available at www.consumerfinance.gov/ documents/1537/201611_cfpb_Production_ Incentives_Bulletin.pdf Debt collection lawsuit: The CFPB and New York attorney general filed a lawsuit in federal court against several companies and individuals the regulators allege were engaged in a debt collection scheme. The lawsuit alleges the individuals operate a network of companies that harass, threaten and deceive millions of consumers across the nation into paying inflated debts or amounts they might not owe, falsely threatened legal action against consumers and falsely impersonated law-enforcement officials,
government agencies, and court officers. CFPB seeks rehearing: The CFPB has formally requested the entire Court of Appeals for the D.C. Circuit rehear the decision in PHH Corp case, in which the court ruled the structure of the CFPB was unconstitutional. In addition, 21 current and former members of Congress, including Sen. Elizabeth Warren (D-Mass.), Rep. Nancy Pelosi (D-Calif.) and former Rep. Barney Frank (D-Mass.) also filed a petition asking the entire court to rehear the case. PHH Corp has the opportunity to respond to the request before the court makes a determination on whether it will grant the CFPB’s request. FEDERAL COMMUNICATIONS COMMISSION Robotext enforcement: The FCC released an enforcement advisory reaffirming that text messages are regulated as telephone calls under the federal Telephone Consumer Protection Act. The TCPA requires “prior express written consent” for text messages used for advertising/soliciting and “prior express consent” for other types of text messages. Under the TCPA, “the term automatic telephone dialing system” or “autodialer” covers any equipment that has the capacity to store or produce numbers to be dialed and dial them without human intervention – but it does not need to have the present ability to do so. Under that provision, the FCC reiterated its position that the TCPA prohibits autodialed calls or text messages, as well as prerecorded calls, unless made with the prior express consent of the called party, to any telephone number assigned to a cellphone or other mobile device, unless the calls or text messages are made for emergency purposes; free to the end user and have been exempted by the FCC, subject to conditions prescribed to protect consumer privacy rights; or made solely to collect debts “owed to or guaranteed by the United States.” The FCC reminded businesses that contact consumers with an automated text message and claim they have prior express consent that they will need to prove they have consent. The advisory specifically states, “The fact that a consumer’s wireless number is in the contact list of another person’s wireless phone does not, by itself, demonstrate consent to receive robotexts.” The advisory said callers who inadvertently dial a reassigned number are not liable for the first call or message to a consumer who did not provide consent. But the FCC has noted businesses will be liable for any further calls or text messages to a reassigned number, regardless of whether or when the business learns of the reassignment. The guidance is available at http:// transition.fcc.gov/Daily_Releases/Daily_ Business/2016/db1118/DA-16-1299A1.pdf.
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PRODUCTS & SERVICES
BY DAVE MEYER, EXECUTIVE PRESIDENT, SPIREON GOLDSTAR GPS
PAID ADVERTORIAL
TIPS FOR A PROFITABLE TAX SEASON How to Make the Most of It
As more consumers find stronger financial standing, their purchasing power increases. However, their credit scores don’t always reflect the same progress. The end result is a massive pool of subprime and deep subprime consumers ready to buy cars this tax season. Even large lenders are relaxing their credit score requirements to attract the subprime market. It’s a pretty big indicator that there’s opportunity to go around, whether you’re a BHPH dealer or own a small franchise. It also shows that there’s a lot of competition out there. So, with more car loan options available to subprime buyers, how do you increase sales and make the most of tax season? If you’re smart and proactive you can bring in up to 50 percent of your annual sales in just 8-12 weeks. That’s money in the bank or money you can reinvest in your business by adding to your inventory.
As more consumers find stronger financial standing, their purchasing power increases. However, their credit scores don’t always reflect the same progress. Tips for a Profitable Tax Season 1. You need to be able to say “yes” to subprime and deep subprime buyers. With technology like GPS vehicle tracking protecting your assets, the inherent risk of serving this type of buyer is drastically reduced. Without it, you lose a large pool of tax season buyers. 2. Have a plan in place to secure every deal. Competition is on the rise and every customer who walks onto your lot is a golden opportunity. If your sales process is long and cumbersome, they’ll walk off the lot and you’ll be out of the sale. To make your sales process run smoothly, have GPS preinstalled on all of your vehicles to eliminate wait time for your customers. 3. Don’t let things slip just because sales are on a roll. While a buyer may have money for the down payment, it’s important they can also afford the payments. You want airtight underwriting guidelines from your applications to your follow-through on STIPs verifications. GoldStar’s Reference Genie can
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save you time by verifying work and home addresses without picking up the phone. 4. Remember that the sale is only the beginning and profits are only profits after they’ve been collected. Have policies in place regarding partial payments, at what point recovery becomes an option and if a GPS vehicle tracking solution should be used to support your collection efforts. 5. Think out of the box. If you hadn’t heard, the PATH Act is now a federal law. That means tax refunds won’t be sent out prior to February 15. Instead of letting the new rules delay your tax season surge, start now. Yes, now! You can get way ahead of the rule and your competition by partnering with a tax and technology professional who can estimate refunds for your buyers. Once you’ve determined the refund schedule, you can set up irregular or later payments based on when the refund will come in. Layer that with an
industry trusted GPS solution provider, and you’ll have peace of mind when it comes to your bottom line. At the end of the day, it’s all about maximizing your revenue while maintaining the peace of mind that your business and investments are safe. During tax season more than ever, the opportunity is there and the time is right. Don’t let the downside of selling to subprime buyers stop you from reaping the profits! A solution like GoldStar GPS can help minimize your risk with automated reference checks up front, and on the back end it has the ability to keep buyers current using in-vehicle payment reminders. Of course, you’ll also be able to find and recover assets when necessary. Say “yes” to more buyers with confidence this tax season and maximize your potential profit.
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