DEALER’S EDGE
I L L I N O I S I N D E P E N D E N T AU 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
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Dealer’s Edge
DEALER BEST PRACTICES
WHAT LENDERS WANT TO KNOW ABOUT YOUR DEALERSHIP Vendor Management P A G E 12
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SEPTEMBER/OCTOBER 2016 / DEALER’S EDGE 1
INSIDE WHAT’S NEW
2016 National Leadership Conference NIADA’s National Leadership Conference will be held September 26-29 at the Dupont Circle Hotel in Washington, D.C. Once again, the Leadership Conference will be combined with a Legislative & Regulatory Summit and Lobbying Day on Capitol Hill. This important event will help frame the NIADA Legislative & Regulatory agenda for 2016 2017 and beyond as NIADA’s legislative committee and association leadership meet face-to-face with legislators and continue their important work. For more information, visit www.niada.com.
06 WASHINGTON UPDATE 08 NIADA CONVENTION 10 T RADITION AND TRENDS NEED TO WORK TOGETHER 12 WHAT LENDERS WANT TO KNOW ABOUT YOUR DEALERSHIP 15 CASHING IN ON LEADS 16 WHAT TO POST ON FACEBOOK 22 S ECRET TO A SUCCESSFUL BHPH BUSINESS ADVERTISER’S INDEX
ADESA .............................................................. 7 AutoZone.........................................................17 Autotrader .................................................... IFC Black Book........................................................ 3 CarMax Auctions ..............................................16 Dyer Auto Auction.............................................18 Manheim.com ..............................................10, 11 Manheim Minneapolis........................................ 5 Manheim Pennsylvania..................................... 13 NextGear Capital........................................... 9, 12 PassTime ........................................................ 15 Protective ......................................................IBC Spireon ............................................................19 VAuto..................................................Back Cover Veros Credit .....................................................14
OFFICE
For information on how to become a member of IIADA, please contact Bruce Eklund at 800-987-6627 or lilcheeper5@aol.com.
NIADA HEADQUARTERS National Independent Automobile Dealers Association www.niada.com www.niada.tv 2521 Brown Blvd. Arlington, TX 76006-5203 phone (817) 640-3838
For advertising information contact: Troy Graff (800) 682-3837 or troy@niada.com. The Dealer’s Edge is published bi-monthly by the National Independent Automobile Dealers Association Services Corporation, 2521 Brown Blvd., Arlington, TX 76006-5203; phone (817) 640-3838. 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 individual authors and do not necessarily represent the views of The Dealer’s Edge, the Illinois Independent Automobile Dealers Association, or the National Independent Automobile Dealers Association. Likewise, the appearance of advertisers, or their identification as members of IIADA or NIADA, does not constitute an endorsement of the products or services featured. Copyright ©2016 by NIADA Services, Inc. All rights reserved. Visit the NIADA Website at www.niada.com. State Magazine MGR./Sales Troy Graff • troy@niada.com Editors Jacinda Timmerman • jacinda@niada.com Andy Friedlander • andy@niada.com Magazine Layout & Graphic Artist Chantae Arrington • chantae@niada.com Senior Art Director/Production Manager Christy Haynes • christy@niada.com Printing Nieman Printing
4 DEALER’S EDGE / SEPTEMBER/OCTOBER 2016
ASSOCIATION NEWS / BY BRUCE EKLUND
VETO THE BILL! >> Director’s Report
WHAT IS HOUSE BILL 4377? Why should we ask the governor to veto it? HB 4377 creates a mandatory 15 day warranty on all used vehicles with under 150,000 miles sold. The bill was submitted by state representative Rita Mayfield for the purpose of protecting the consumers of Illinois. Please look up the bill on www.iliada.org to see the entire bill and the current status of the bill. Synopsis as introduced: HB 4377: • Amends the Consumer Fraud and Deceptive Business Practices Act. • Removes provisions requiring all motor vehicle dealers to pay a percentage of certain repairs for powertrain components. • Adds provisions regarding used motor vehicle dealers and auction companies. • Provides that used motor vehicle dealers and certain auction companies may not exclude, modify, or disclaim an implied warranty of merchantability before the expiration of the 15th calendar day after delivery of the used motor vehicle or before the used motor vehicle is driven 500 miles after delivery, whichever occurs first. • Exempts the sale of antique and collector vehicles from the provisions. • Provides that an implied warranty of merchantability does not extend to damage that occurs after the sale of the used motor vehicle that results from certain conduct,
including: off-road use, racing, neglect, and failure to perform regular maintenance. • Sets forth remedies and defenses. You need to see for yourself what the House and Senate bills and amendments are and how they impact your business. Please, for the sake of your future and your business, become familiar with what has happened. Look it up. What can be done at this late date? Write, call and email the governor’s office and ask to have bill HB4377 vetoed. Following is the contact information. • Springfield: Office of the Governor 207 State House Springfield, Il 62706 Phone: 217-782-0244 • Chicago: Office of the Governor James R. Thompson Center 100 W. Randolph, 16-100 Chicago, Il 60601 Phone: 312-814- 2121 You can also voice your opinion on IL.gov. Thank you to the used motor vehicle dealers who provide excellent transportation to the citizens of the great state of Illinois. Keep on selling!
BOARD MEMBERS Chairman
Gordon Tormohlen Tormohlen’s Good People Automotive 1800 S Ihm Blvd Freeport, IL 61032 815-232-5543 goodpeople@aeroinc.net
President
Joe Mok G Motor Cars 2411 E. Oakton St Arlington Heights, IL 60005
Vice President
Eric Nelson Nelson Automotive Inc. 1801 S Busse Mt Prospect, IL 60056 eric@heycars.com
Treasurer
Lori Chignoli-Cora Chignoli Auto Sales 1850 Essington Rd Joliet, IL 60485 lori@chignoli.com
Secretary
Alex Tovstanovsky 8959 Hanslik Ct Naperville, IL 60564 (630) 631-2535
Executive Director
Bruce Eklund IL-IADA Headquarters 129 S Phelps Ave Suite 706 Rockford, IL 61108 (800) 987-6627
Czar
Dana Eklund IL-IADA Headquarters P.O. Box 7266 Rockford, IL 61125 (800) 987-6627 iiada302@gmail.com
Board Members
Paul Gluchowski Turner Acceptance 4454 N. Western Ave Chicago, IL 60630 (773) 290-5002 paul@turneracceptance.com
Ginger Higgins Integrity Motor Cars 1302 Sandyhollow Rd Rockford, IL 61109 815-397-5555 integritycars3@yahoo.com Brad McCorkle 4th Ave Auto Sales 4130 4th Ave Moline, IL 61265 (309) 736-7550 4thaveauto@gmail.com Paul Schmidt Nationwide Acceptance 3435 N Cicero Chicago, IL 60657 pschmidt@nac-loans.com
Amy Goodnight Lohman Companies 3901 15th St. Moline, IL 61266 (309) 764-8331 x 220 amy@lohman-companies.com
www.il-iada.org 800-987-6627 www.il-iada.org
WASHINGTON UPDATE /
NIADA GOVERNMENT REPORT
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 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 S.2663, Reforming CFPB Indirect Auto Financing Guidance Act The bill, which mirrors House-passed H.R. 1737, would rescind the controversial auto financing guidance action regarding dealer discretion on interest rates issued by the CFPB in March 2013 and provide a more transparent and accountable process for dealing with the issue. While H.R. 1737 passed the House by an overwhelming bipartisan vote, the Senate companion bill’s chance of being considered is considered remote at best. The bill faces opposition by Senate Democrats – particularly senators Elizabeth Warren (D-Mass.), Charles Schumer (D-N.Y.) and Richard Blumenthal (D-Conn.) – who fear it will open the door to other CFPB changes that will have the effect of “gutting” the bureau, and by the White House, which has threatened a veto. As part of a series of meetings with key legislators on July 11, NIADA legislative committee chairman Henry Mullinax, senior vice president of legal and government affairs Shaun Petersen and Key Advocates met with staff of Sen. Richard Shelby (R-Ala.), who chairs the committee that has jurisdiction over the CFPB, and requested the senator convene a meeting with the bureau and stakeholders to begin the process of resolving the issue administratively. H.R. 5485, Financial Services and General Government Appropriations Act, 2017 The fiscal year 2017 appropriations bill passed by the House in July includes provisions to curb the CFPB’s authority – among them, a provision that the CFPB would be funded through the annual congressional appropriations process rather than through transfers from the Federal Reserve as currently provided by DoddFrank in order to make the bureau more accountable. It would also require the CFPB to report quarterly to various House committees about funding, obligations made during the previous quarter and actions taken to achieve its goals, objectives and performance measures. The bill would limit the CFPB’s ability to regulate pre-dispute arbitration agreements – the bureau has already released a proposed rule restricting those agreements. And the bureau’s leadership would be changed from
6 DEALER’S EDGE / SEPTEMBER/OCTOBER 2016
a single director to a five-member board appointed by the President. Seeking support for this bill was NIADA’s primary focus issue during the July 11 meetings. In addition, NIADA’s team met with staff of Rep. Jeb Hensarling (R-Texas), chairman of the House Financial Services Committee, to support his draft bill, the Financial CHOICE Act, which includes similar reforms for the CFPB. REGULATORY REPORT Consumer Financial Protection Bureau The CFPB proposed an amendment to Regulation P to give financial institutions that meet certain conditions an exemption from the Gramm-Leach-Bliley Act requirement to deliver annual privacy notices to customers. The proposed rule says financial institutions are not required to deliver an annual privacy notice if they limit their sharing of nonpublic personal information to nonaffiliated third parties so the consumer does not have the right to opt out, and the institution’s policies and practices for disclosing nonpublic personal information have not changed from the most recent privacy notice provided to the customer. Institutions must still deliver to consumers an initial privacy notice and provide any opt-out disclosures required under the Fair Credit Reporting Act, which can generally be provided in the initial notice. Federal Trade Commission Settlement with Ohio dealer: The FTC approved a final consent order against Progressive Chevrolet Company and Progressive Motors, Inc., of Massillon, Ohio. The FTC charged the dealership deceived consumers with advertising that touted low monthly car lease payments and down payments but failed to disclose other key terms of the offers, such as credit score requirements and the fact that the payment did not include tax, title and fees. Refunds for bogus warranties: The FTC is mailing nearly 6,000 refund checks totaling more than $4 million to people allegedly tricked into paying thousands of dollars for bogus “extended auto warranties” through robocalls. The checks are part of the FTC’s efforts to collect on a $4.255 million judgment entered against Fereidoun “Fred” Khalilian and his company, The Dolce Group Worldwide, LLC. The FTC alleged the defendants, doing business as My Car Solutions, conned people by leading them to believe the company was affiliated with auto dealers and manufacturers and was offering to sell them extended auto warranties. In reality, no one received a warranty extension and people who tried to get their money back found it nearly impossible. Videos: The FTC released a series of online videos designed to help consumers through the used car buying experience, including financing, understanding add-ons and spotting deceptive car ads. Links to the videos can be found at www.ftc.gov/news-events/ press-releases/2016/07/ftc-mobile-friendly-
The FTC released a series of online videos designed to help consumers through the used car buying experience, including financing, understanding add-ons and spotting deceptive car ads.
videos-help-consumers-shop-cars. Department of Justice Used car dealer sentenced: Andysheh Ayatollahi pleaded guilty to conspiracy to commit financial fraud and filing a false tax return and was sentenced to 74 months in prison followed by four years of supervised release. According to court documents, Ayatollahi, a 50 percent owner of in the Car Store in Virginia Beach, conspired with others to defraud Navy Federal Credit Union by using individuals as straw buyers/borrowers to apply to NFCU for car loans because the actual buyers were not sufficiently creditworthy to qualify. Ayatollahi also submitted fraudulent car loan applications to NFCU with false supporting documents, made telephone calls to NFCU impersonating buyers applying for car loans, provided false employer telephone numbers to NFCU and impersonated the employer while verifying the applicant’s employment and wages, and fraudulently inflated the true purchase price of vehicles and split the excess with the buyers. In total, Ayatollahi fraudulently caused NFCU to issue 61 car loans with a total loan amount of more than $1.1 million. More than $850,000 worth of those loans went into default. Illegal repossessions: DOJ filed a lawsuit against the COPOCO Community Credit Union alleging that it violated the Servicemembers Civil Relief Act by repossessing protected servicemembers’ motor vehicles without obtaining the necessary court orders. DOJ claims COPOCO’s repossession procedures did not include any process to determine customers’ military status – such as checking the Department of Defense’s database – prior to conducting repossessions.
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ASSOCIATION NEWS ///
ASSOCIATION NEWS /
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NIADA CONVENTION RECAP >> Reinvention Creates Success for 70th Annual
NIADA Convention and Expo
FROM THE VENUE TO THE CONTENT , the 2016 NIADA Convention and Expo was all about reinvention. While the theme of “Success By Reinvention” was created with the idea of helping dealers thrive in the rapidly changing used car business, it fit the industry’s biggest event just as perfectly. NIADA celebrated its 70th annual Convention in a new venue – the recently renovated Mirage, which provided a larger yet more intimate setting – as well as a sold-out 60,000-square foot Expo Hall with more than 170 exhibitors and the most extensive dealer education agenda in history, featuring more sessions on more topics than ever before. It also included more attendees than ever before. The 2016 Convention obliterated the event’s attendance record, sailing past the previous mark, set in 2006 at the Las Vegas Hilton, by a staggering 24 percent. The number of dealers and first-time attendees both rose by 30 percent or more. “I got what I came for,” said Sean Schuetz of Klass Motors in Santa Ana, Calif. “I wanted to learn new ways to take my business to the next level, and I’ll be spending the next several months implementing what I learned at my dealership. It was the most informative convention I have attended.” While the education is always the focus, there was, of course, a lot more happening. 8 DEALER’S EDGE / SEPTEMBER/OCTOBER 2016
Kris “Tanto” Paronto, one of the heroes of the infamous Sept. 11, 2012 terrorist attack on the U.S. diplomatic mission in Benghazi, Libya, told the harrowing story of those 13 hours in a gripping keynote address that left the overflow crowd standing and cheering. Paronto discussed courage and handling adversity and crisis situations, as well as the decision of himself and his CIA Annex security team to speak out about what happened that night in the face of conflicting reports from government and media that told a different story. Attendees also had a chance to celebrate, dance and loosen up at the Cigars and Martinis and Margaritas welcome reception in a lush, tropical setting at poolside, and at a disco-themed closing party following the crowning of Florida’s Scott Lanier as the 2016 National Quality Dealer. In addition to the NQD ceremony – webcast live as always on NIADA.TV – the previous night’s National Leadership Awards Banquet introduced new NIADA president Billy Threadgill as well as honoring NIADA scholarship recipients and the winners of awards for the top performers within the association and the used vehicle industry. “I can honestly say my experience was far above and beyond my expectations,” said Daniel Johnson of LiteHouse Auto in Lakewood, N.Y., a first-time attendee. “We will not miss a Convention from here on out.” The 2017 NIADA Convention and Expo will be back at The Mirage and is scheduled for June 12-15, 2017. Save the date and don’t miss your chance to be part of the used vehicle industry’s biggest event of the year!
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MANAGEMENT GAMEPLAN / BY SCOTT BERGERON
TRADITIONS AND TRENDS NEED TO WORK TOGETHER
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>> Finding a Successful Blend
THERE’S A REASON traditions exist. They grow out of established, credible and time-tested circumstances. Trends, on the other hand, can be today’s hot attraction, which may or may not stand the test of time. How can a dealership capture the best of today’s trends and blend them successfully into a tradition-based program that drives more
sales on a consistent basis? CRM and Personal RelationshipBuilding There’s no question technology-driven Customer Relationship Management programs are firmly established as a trend. In all likelihood, CRM will become a tradition over time. But for now it’s still a relatively new and shiny toy many dealerships have embraced as a bedrock organizational and sales tool. CRM enables data mining about customers as well as regular communication with them. In essence, it can serve as the engine that drives relationship-building because it brings evidence-based intel to the table. Depending on the CRM used (and how consistently and completely it is adhered
to), salespeople can gain valuable information about buying history and preferences, and communication preferences. It’s gotten to the point where CRM can tell a dealership how often to communicate with a customer via email, and what not to do (e.g., overwhelm with too many emails that end up alienating the customer). But without tires the vehicle won’t move very far. All the technology-driven protocols in the world can only go so far toward the time-honored tradition of relationshipbuilding. This is the ability through interpersonal contact to establish and maintain trust, comfort and likeability with prospective and present customers. In the rush toward technology trends (e.g., Internet car-shopping and pricing tools), there’s a tendency to embrace the former and forget the latter. The truth is successful salespeople need both – the “scientific” piece that CRM systems can bring to the table and the “artistic” ability to develop rapport oneon-one. When the two work in harmony, dealerships get the best of both worlds. Buyers are “primed” by the CRM outreach that shows the dealership understands them and gives them useful information. In-person relationship-building then seals the deal. Here’s what can happen if the two aren’t working side by side: a prospective buyer walks into a dealership and is basically ignored by salespeople nearby because they’ve been schooled not to be too pushy or aggressive. (In some cases, it’s just plain laziness.) Armed with the amount of information available online, salespeople today too often assume a prospect will seek them out if interested. In the interim, they give them space. In reality, this is the worst way to proceed. It’s happened to me. I wound up feeling ignored rather than valued. Instead, a salesperson could have introduced himself/ herself and offered to help – without coming across as pushy. This would have set the tone for a pleasant and productive discussion and potential sale. Internet Shopping vs. Instinct Another “trend” (yes, many will say it’s
10 DEALER’S EDGE / SEPTEMBER/OCTOBER 2016
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The trend is no-haggle pricing.
The tradition is to play the negotiating game. Both are valid. It depends on buyer preferences.
they’ve achieved a lower price through negotiation, they won’t buy at all – or at least they will be reluctant. Here’s another perfect example of how trend and tradition can complement each other perfectly. The trend is nohaggle pricing. The tradition is to play the negotiating game. Both are valid. It depends on buyer preferences. So find out what those preferences are, then go one direction or another – or both. Read the prospective buyer carefully, then adjust as gut feelings dictate. If someone comes in and is adamant from the get-go about a firm price, so be it. If it’s unclear what their preferences might be, ask. (Then, have an option to fit their preferences. If they want to negotiate, be prepared to shift gears from one-price shopping.)
Then, of course, there’s the hybrid – a buyer who wants the firm price and wants to negotiate from there. Decide if/how to address this scenario. In short, prepare your salesforce to deal with all types of buyers. Because just as the U.S. is a melting pot of different ethnicities, so is the car buying population a melting pot of preferences. Those preferences can best be addressed by honoring both trends and traditions. Former dealer executive Scott Bergeron is the founder and principal at Daily Gameplan (www.dailygameplan.com), a sales team performance company. Daily Gameplan’s Red Books and cloud-based CRM have been used in thousands of dealerships throughout the United States. Bergeron can be reached at 303.918.3169 or scott@dailygameplan.com.
here to stay) is Internet-based car shopping and pricing. There’s no doubt the abundance of Internet information has led to much more savvy and educated buyers. This is great because it opens the door for a salesperson to build rapport based on instincts instead of just answering pedestrian questions about a potential car or sale. However, exercising those traditional instincts seems to be a lost art in too many dealerships. Salespeople often are cast as order-takers, there to follow through on customer requests. As with the CRM example above, this is leaving a big (some would say the biggest) piece of salesmanship on the salesroom floor. Instincts can be wonderful because they work at a level technology doesn’t. Properly tuned in, a salesperson can intuit buying clues just by observing a prospective buyer’s body language, movements, gestures and actions. For example, a prospect is viewing pricing information on a particular vehicle, then throws up his hands. That well could indicate frustration, or is it exhilaration? The alert salesperson will make sure to find out, and take the conversation in the direction it needs to go from there. While instincts themselves can’t be trained, awareness of when and how to use them can. This needs to become, once again, a key part of salesforce training – at the time of hiring, and periodically thereafter. Even if the new hire is a seasoned pro, the “hows” of exercising instinct may need to change depending on previous experience and current dealer aims. Iron-Clad Internet Pricing vs. Art of the Deal Following through on the trend of all things Internet, one-price-no-dickering shopping has become the rule, not the exception. Why? Yes, I know a gazillion surveys have said buyers don’t want to haggle or be hassled in the price-shopping arena, and that a oneprice policy makes them feel much more at ease and trusting. Well, that’s great for those people. But what about those who like to haggle? There are still many buyers out there who live for the art of the deal. If they can’t feel like
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SEPTEMBER/OCTOBER 2016 / DEALER’S EDGE 11
DEALER BEST PRACTICES / BY CHET HEUGHAN
VENDOR MANAGEMENT
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>> What Lenders Want to Know
About Your Dealership
VENDOR MANAGEMENT has become somewhat of a buzzword in the consumer lending industry, especially around auto lending. It has always been a financial institution’s responsibility and obligation to know who they are doing business with and how loan applications are reaching their institutions. The Consumer Financial Protection Bureau, however, has further emphasized financial institutions are responsible for the end product. This is to say that any negative actions taken by the dealer will become a problem for the lender. Within franchised dealerships the vendor management requirement is aided by a strong presence from the manufacturer. For example, a franchise dealer has certain covenants that require financial reporting, including minimum capital thresholds, required training and certifications. Franchised dealers also benefit from the monitoring of customer satisfaction surveys, detailed inventory tracking and industry benchmarks provided by other franchise dealerships selling the same brands. Independent auto dealers represent a unique challenge for many lenders. Independent auto dealers often vary in size, financial strength, operational models, inventory and experience. Unlike most franchise dealerships, independent auto dealers do not have the support of a franchise offering multiple checks and balances. It is easy to understand why lenders then tend to gravitate toward independent dealers that look and act more like a franchise dealership. As indirect auto lending has become more competitive and lenders struggle to increase yield, many have had to broaden their credit spectrum and move closer toward subprime lending or expand their dealer network outside their traditional relationships. To do this lenders have had to modify their dealer underwriting and dealer management models to fit smaller dealerships with more diverse revenue and sales models. In years past independent auto dealers had to meet the same minimum criteria for doing business with the lender as a franchise dealership, but times are changing. Many lenders have multiple programs and mitigate the risk of smaller dealerships with low working capital and minimal experience by using a third-party risk mitigation platform. With many of these platforms, small or new independent dealerships can gain access to the same national programs as large franchised stores. Lenders are able to serve independent dealers because thirdparty risk mitigation platforms are helping bring efficiency and transparency to the transaction. 12 DEALER’S EDGE / SEPTEMBER/OCTOBER 2016
For example, independent dealers may be subject to more frequent underwriting, additional verification steps and less direct access to loan underwriters. While there is more work on the dealer’s side, these steps also benefit the stores’ owners by helping identify fraud attempted by customers or rogue employees. The days of simply signing a lender’s dealer agreement and providing a few supporting documents to gain access to their retail financing program are drawing to a close. Lenders are being required to truly know and manage their dealer relationships. This means updating key pieces of data and underwriting each dealership on an annual basis. As an independent auto dealer it’s important to understand what lenders are looking for and be prepared to provide the documentation needed annually to avoid disruptions in your lenders’ retail financing programs. Lenders will be evaluating the dealer principals, the dealership itself and inventory. They will be looking at credit reports that indicate bankruptcies, tax liens, past-due accounts, and potential fraud or identity theft. In addition, lenders will check criminal history reports and verify addresses, property ownership, bank statements, business financial statements and tax returns. Lenders will also be looking at more subjective data such as references from your auctions, floor plan lenders, warranty providers and personal references. You should be prepared to provide proof of insurance, copies of bonds and licenses, and expect a yearly site visit and basic inspection of your facility. Lenders really want your business, but they must first know who you really are. Creating your own internal process for managing due diligence requests from lenders and thirdparty risk mitigation service providers will make this process easier and more efficient for you. Understanding what lenders are looking for and providing it in a timely manner goes a long way toward building a strong profitable relationship along with the ability to compete with your neighboring franchise stores. Chet Heughan is director of AppOne® Risk Mitigation Services and Indirect Lending for Wolters Kluwer. For more information, please visit www. wolterskluwerfs.com.
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MANAGEMENT MATTERS / BY KEVIN BAUMGART
DOES YOUR DEALERSHIP VALUE ITS INTERVIEW PROCESS?
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>> Be Prepared for the Right Hire
BY THE TIME a candidate reaches the interview stage, it’s clear they have grabbed your attention as a potential hire for your dealership. The interview process is an irreplaceable component of your dealership’s overall hiring strategy. It’s also the point at which both the employer and job seeker determine if it’s worth their time to move forward with the process. What’s at Stake for Employers? Taking the time to speak with a candidate in person is critical to determine if someone is a good fit for the role. It’s also an integral part in persuading top talent to work for your dealership. Research from LinkedIn found that 87 percent of job seekers said a great interview experience would make them reconsider a job offer even if they have initial doubts. In a competitive job market, this can make the difference between hiring an all-star and a dud. Conversely, 83 percent of candidates say
a negative encounter during an interview will erode their interest in a position. Getting the interview process down to a science begins far in advance of the inperson visit. Employer Due Diligence You will want to use the early stages of the hiring process to get as much information about the applicant as possible to ensure you’re making the right decision by inviting them in for an interview. Hiring technology has come a long way in enabling auto dealers to evaluate job seekers before they ever step foot in the dealership. Employers should take advantage of tools that test hard skills, soft skills, culture fit and aptitude. Based on the results of these evaluations, you’re able to better gauge whether they meet – or even exceed – the requirements established in your job description. This adds insight that employers can use in conjunction with resumes and applications to make informed judgments about applicants and if they should bring them in for an interview. Once you’ve completed these critical steps, you need to make sure you are prepared to meet the candidate inperson. How to Prepare for the Interview No detail is too small as you prepare for the interview. Consider what type of impression you’ll leave after you’ve
invited a candidate to talk about a specific position and you forget their name, the job they applied for or refer to past work experiences belonging to another applicant. This is the candidate’s first impression of what it would be like to work at your dealership. It’s important to get it right. You should also have your interview questions prepared in advance and in front of you when you sit down for the interview. Be sure to have questions that will help you effectively identify whether the candidate can perform all necessary tasks defined in the job description. Addressing your priorities up front and asking questions about measurable criteria will help you determine their ability to do well in the role. At the end of an interview is a great time to allow candidates to ask questions, which helps set expectations for the candidate and the interviewer. If you are prepared for this exchange in advance, it is easier to sell top talent not just on the role, but also on your dealership as a place to work. As much as the employer is judging the candidate, the potential new hire is also forming opinions about working for the dealership, and a great impression will win over allstar candidates. An Extensive Process The interview is the singular component in hiring that carries the most weight for both the employer and candidate. It’s crucial you have a rock-solid process in place – built on strong intel about each applicant – that will make the encounter productive and illuminating for all parties involved. Kevin Baumgart is VP of Business Development at Hireology. He has spent his entire 15-year career in sales and sales management for entrepreneurial and start-up companies. This article originally appeared on NCM’s Up to Speed blog (blog.ncminstitute.com) and is reprinted with permission.
14 DEALER’S EDGE / SEPTEMBER/OCTOBER 2016
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CASHING IN ON LEADS
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>> Do’s and Don’ts
URGENCY TO BUY HAS NEVER BEEN GREATER.
A Google/Polk study recently found 81 percent of car buyers make a purchase within three months of beginning their online search and 51 percent buy within one month of their first clicks. Furthermore, a Cars.com survey found online shoppers are three times more likely to contact a dealership by phone than they are to reach out via email or chat. What does that mean for you? It shows you need to be on your toes for each and every phone call that comes into your dealership. Here are some simple do’s and don’ts that will help you capitalize on Internet leads that find their way to your phone lines. DO’S • Have a process. Without a process, you’re just guessing. Make sure you answer the phone consistently, ask for names, provide your name and treat sales calls as the golden opportunities they are. A Marchex Institute study showed 53 percent of answered calls were from shoppers with a clear intent to buy. • Set an appointment. Don’t put the phone on the hook without putting
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something on the books. If you haven’t set an appointment for a customer to come look around the lot or test drive a car they saw online, you wasted your time and your customer’s. They called because something about your dealership caught their eye. Find out what it is and get them in the door to take a closer look. • Return calls promptly. Surprisingly enough, this may not be as simple as it sounds. Only about 20 percent of car shoppers begin their search looking at the brand they’re going to buy. You’re not the only dealer they’re looking at, but you could be if you’re the first to respond. DON’TS • Don’t try to sell a car over the phone. Best Mark placed test calls to dealerships around the country and found 91 percent of salespeople attempted to sell a car over the phone rather than set an appointment. Nothing sells a car better than seeing it in person. A sale over the phone is rarely effective. • Don’t wing it. Best Mark’s survey also uncovered the staggering fact that 95 percent of salespeople don’t have a defined road to an appointment. Like we said about creating a process, guessing at what will get your customers off the phone and in their next vehicle isn’t the most practical way to approach a lead. • Don’t wait for an email. Online shoppers are often searching on a cell phone or mobile device. They have easy access to a call button, plus we’ve already established they’re three times more likely
A Google/Polk study recently
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ACCELERATE / BY GWC WARRANTY
found 81 percent of car buyers make a purchase within three months of beginning their online search and 51 percent buy within one month of their first clicks.
to place a phone call than type up an email. If you think all your leads will land in your inbox, you could be sadly mistaken.
SEPTEMBER/OCTOBER 2016 / DEALER’S EDGE 15
SOCIAL MEDIA / BY KATHI KRUSE, FOUNDER CEO KRUSE CONTROL INC.
5 WAYS TO FIGURE OUT WHAT TO POST ON FACEBOOK >> Engage Your Customers and
Reach Your Goals
ONE OF THE most common challenges for independent dealers is social media. It’s actually a challenge for most companies simply because it’s a medium not well understood. Not to oversimplify it, but Facebook and other social channels are just another medium to connect with customers. If you think about the “traditional” media such as TV, radio, print, billboards, email and phone, they are all places where customers spend time, and it’s your job (through marketing and advertising) to attract them to your store. Once a dealer has decided to venture out into Facebookland, the first question that comes up is “What do I post on Facebook to attract more customers?” The answer is a simple one but not so easy to find. Engagement is king on Facebook. It drives everything. There are two types of Facebook engagement: organic and paid. Organic
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simply means you did not pay to promote your post. Organic is the best kind of engagement and it’s the hardest to achieve. Solid, original, high-quality content achieves organic reach and engagement. People like, comment and share, which builds more authority with Facebook’s algorithms. It’s key to pay close attention to what’s working and what’s not. You must learn through data how best to promote (pay for) your content to improve on what’s happening organically. But what do you do when you hit a brick wall for ideas? These five ways will help you figure out what to post on Facebook to engage customers and reach your goals. 1. It all begins with your why. If you’ve done the work to determine your true why – why you’re participating in this race, and why your customers choose you over your competitor – the search for what to post on Facebook gets so much easier. Simon Sinek said, “People don’t buy what you do, they buy why you do it. The goal is not to do business with people who need what you have. The goal is to do business with people who believe what you believe.” Without inspiration, motivation and passion to craft meaningful content, your Facebook page falls flat. Pro tip: If you’re new to determining your why, take a look at your online reviews. Look and listen for commonalities from what your customers are saying – that will help you know why your customers choose you.
2. Determine what your target customers want to know. Building relationships with buyers is how business gets done (with or without Facebook, right?). Knowing your customers’ interests and challenges helps you create content for your page that matters to them. Whether you realize it or not, there’s a story happening in the mind of your customer. They are the hero of their story, and when you actively participate in that narrative in a meaningful way (which Facebook is ideal for), you position your business within your customer’s story... and have a great shot at the sale! Pro tip: Begin to notice ideal customer experiences within your store and find a way to
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>>
Review your list
and discover you've just experienced what it's like to know what to post on Facebook.
document them. 3. Identify and develop your resources. Part of your plan for what to post on Facebook is sitting down and assessing just what it is you have available. Failing to identify and develop your resources makes it even harder to know what to post on Facebook. Answer these questions: • Who will produce our content? • Who’s in charge of our content? • Who will maintain our content? (Content is a business asset!) • Examine and describe what forms of content are most comfortable right now (written, images, audio, video). • What types of content do you want to
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focus on in the next 12 months? • What do you need to do to get there? 4. Encourage employee participation. Most dealers agree they need to A) produce more content and B) connect on a deeper, personalized level with today’s hyperconnected buyers. Shifting your internal processes to engage employees (especially salespeople) in content creation helps with both of these challenges. When you showcase employees as thought leaders in the automotive industry, the company receives more recognition online. Employees reap the benefit of their voices being broadcast, paving the way for more referrals, leads and sales. The company looks smarter because its employees look smarter. 5. Don’t make it too complicated. If you’ve been managing a Facebook page for a business, chances are one or more of these statements apply to you: •Y ou’re a current or potential customer of that store. •Y ou possess similar attributes to the customers you’re trying to attract. •Y ou have empathy for customers’ struggles and feel a connection. This means you are uniquely positioned to understand your customer (because they’re just like you). You have an idea of what would be valuable to post on Facebook and you need to give it wings. Try this: identify four to five Facebook pages you like and what it is about them you admire. Write down your answers.
Review your list and discover you’ve just experienced what it’s like to know what to post on Facebook. Those pages you identified are successful for the reasons that attracted you. They are the same or similar to the reasons customers like your page. Brainstorm with others within and without your organization to come up with a game plan to create content that elicits the same interest, excitement and belonging you feel when you visit those pages on your list. Pro tip: We all get busy and it’s nice to have one place to refer to our game plan. A content calendar helps you think through what to post on Facebook, gives you the room you need to plan your strategy and allows you to schedule posts into the future to save time. Fact: figuring out what to post on Facebook is a creative process. Not everyone is cut out for it, but those who are usually realize it’s fun once you get things in place. Don’t be afraid to test different types of content with your fans. This will build your self-confidence and motivate you to keep going. The answer to “what to post on Facebook” is simple, but not easy. Do the work, test your ideas and make good use of a content calendar. You’ll soon stop struggling, find the answers and become a Facebook superstar. 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.
SEPTEMBER/OCTOBER 2016 / DEALER’S EDGE 17
ONLINE MARKETING / BY KATHY R. TAFOLLA, LOBEL FINANCIAL
DOES YOUR CONTENT MARKETING STRATEGY INCLUDE VIDEO?
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>> Video Outperforms in Driving Conversions
VIDEO CONTENT is exploding across the Internet, in social media feeds and in social hubs. Given the growing quantity of visual content in newsfeeds on social media, you can capitalize on video marketing. Even more, you can shoot, edit and produce these videos inexpensively. How is this possible? 1. Write a script. 2. Record a voice over. 3. Use Adobe to create the graphics. 4. Get a video recorder for live video. 5. Use Adobe After Effects for video editing. 6. Add music using sound effects. 7. Publish.
You can also use PowerPoint to video edit if money is a factor and Adobe is out of your budget. Video content marketing allows consumers to satisfy their information and entertainment needs all at once. It’s also a great way for small business owners to compete with larger businesses. Video is unrivaled when it comes to reaching your target audience. YouTube reports over a billion viewers, almost one-third of the people on the Internet every day. Video content is straightforward, quickly shared and easily accessible. It’s easy to create a business channel where all of your video content can be found through an organic search. Since buying a car is a visual experience and your dealership website is primarily based on images, it makes sense to include video content as a way to build relationships with customers. You’ll make personal
connections through your website and build prosperous business connections in the process. Some examples for you to consider are: • Stories from customers. • A fictional series. • Personal stories. • Documentary style videos. • An interview. All of these ideas will help your customers connect to your dealership. This can be a fun and exciting way to not only brand your dealership but engage existing and new customers as well. In content video marketing storytelling is crucial. It’s effective because people love stories and they connect to authentic human experience. It creates an emotional investment. Content can be defined as experimental as much of it is based on trial and error. You post content and track it through Google Analytics to see how it’s ranking in the search engines. You want to know how many website visitors are clicking on it and how long they’re staying on the page. Most B2C business owners know content marketing is the most commercially important part of your digital marketing campaign. Why? The object of content marketing is to help and inform consumers. It is to show people your business knows the industry and their expertise is credible. Mastering a video content marketing campaign will help you build relationships with your customers before they step foot on the premises. Content tells people why your products are good and how it benefits them. For dealerships this might include financing options, reliability, and what sets you apart from the competition. Content allows the consumer to view your offerings, and if presented well, compels them to buy from you. Online marketing reports indicate content videos outperform other content types in driving conversions. Videos increase consumers’ understanding of products and services and website visitors are more inclined to purchase a product after watching a video. Moreover, you can expect to see a rise in interactive and personal video content to help turn viewers into leads.
AUCTION NEWS /
BBB WARNS ABOUT PUBLIC AUTO AUCTION
>>
>> First Marshall Auto Auction
THE BETTER BUSINESS BUREAU serving Chicago and Northern Illinois is alerting consumers about First Marshall Auto Auction LLC, located at 398 E. Sibley Blvd. in Harvey, Ill. The public auto auction holds an “F” rating from the BBB. This rating is due to the company’s number of complaints, failure to respond to all complaints, failure to resolve all complaints and an underlying pattern of actions causing consumer complaints. In the past year, 23 complaints from consumers have been filed against First Marshall Auto Auction with the BBB. The company has not responded to six of these complaints. Three complaints have not been resolved. As of the end of June, the BBB had not received a response from First Marshall Auto Auction concerning the pattern of consumer allegations. 18 DEALER’S EDGE / SEPTEMBER/OCTOBER 2016
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INDUSTRY NEWS /
SAFETY WATCH / BY AUTO REMARKETING STAFF
GWC WARRANTY WELCOMES NEW DEALER CONSULTANT TO CHICAGO
TOYOTA RECALLS 482K HYBRIDS
>> Jeff Janus GWC WARRANTY, provider of used vehicle service contracts and related
finance and insurance products sold through automotive dealers, is proud to announce the arrival of a new dealer consultant in the Chicago area: Jeff Janus. With Janus’ presence in the market, used car dealers on the north side of Chicago now have a dedicated resource to help them sell more cars with the assistance of GWC’s service, products, training and technology. Janus, a graduate of Illinois State University, joins GWC Warranty with seven years’ experience in the automotive and sales industries. Janus’ track record of outstanding customer service is a natural fit for JEFF JANUS GWC Warranty, where every employee is dedicated to providing best-in-class service to dealers and end customers that helps avoid post-sale dissatisfaction and protects dealers’ reputations. Since 1995, GWC Warranty has helped protect more than 1.5 million drivers from costly, unexpected out-of-pocket repair bills by paying more than $375 million in claims to date. This longstanding record of excellence has earned GWC an A+ rating from the Better Business Bureau and designation as a Motor Trend® Recommended Best Buy for Independent Dealers. In addition to these honors, in 2016, GWC Warranty was once again named a Bronze Level Corporate Partner of the NIADA and recognized in SubPrime Auto Finance News’ SubPrime 125. For more information about GWC Warranty please visit www. GWCwarranty.com.
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>> Curtain Shield Air Bags
TOYOTA MOTOR SALES USA ANNOUNCED
recently it is conducting a safety recall of approximately 482,000 vehicles to correct an issue with the curtain shield air bags. The action by Toyota is unrelated to the ongoing Takata airbag recall. Included in the campaign is the Toyota Prius from the 2010 through 2012 model years, the Toyota Prius Plug-In Hybrids from the 2010 and 2012 model years as well as the 2011 and 2012 Lexus CT 200h. The automaker explained the involved vehicles are equipped with curtain shield air bags (CSA) in the driver and passenger side roof rails that have air bag inflators composed of two chambers welded together. The OEM indicated some inflators could have a small crack in the weld area joining the chambers, which could grow over time and lead to the separation of the inflator chambers. “This has been observed when the vehicle is parked and unoccupied for a period of time,” officials said. “If an inflator separates, the CSA could partially inflate, and, in limited circumstances, one or both sections of the inflator could enter the interior of the vehicle. “If an occupant is present in the vehicle, there is an increased risk of injury.” Owners of the involved vehicles will be notified by first class mail. Toyota and Lexus dealers will install retention brackets on the curtain shield air bag inflators at no cost. “These retention brackets are designed to prevent the inflator chambers from entering the vehicle interior if separation occurs,” officials said.
SEPTEMBER/OCTOBER 2016 / DEALER’S EDGE 19
E H T N I GET E N A L Y VICTOR
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SEPTEMBER/OCTOBER 2016 / DEALER’S EDGE 21
BHPH PERSPECTIVE ///
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Success depends on your available capital and your day-to-day involvement, your commitment to collections, and so much more.
BHPH PERSPECTIVE / BY DUSTIN KERR
WHAT’S THE SECRET TO A SUCCESSFUL BHPH BUSINESS?
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>> Some Best Practices for Success
I HAVE THE PLEASURE of meeting Buy HerePay Here dealers all over the country when I travel. I see owners of both small and large operations. Sometimes, I meet a BHPH owner who is just starting out. Other times, I meet one who’s been going strong for many years. I’ve even encountered retail dealers who are seriously considering a jump into our industry. Even with all these differences, there’s one universal question that unites these people: What’s the best way to run a BHPH business? You may not like my answer. It’s a question I take very seriously, so I answer it honestly. And I’m not going to lie. So, generally speaking, they aren’t very satisfied with my answer! Why? Because I genuinely believe there are many successful ways to run this business. There’s no cookie-cutter solution. Success depends on your available capital and your day-to-day involvement, your commitment to collections, and so much more. How the business performs is heavily influenced by your temperament and your market – there are dozens of factors that can make or break BHPH dealerships. I see different business models every day that are highly successful. Pick your method – but follow best practices. Even though I heartily believe the right success model depends on your circumstances and attention to detail, each of the profitable BHPH businesses I’ve encountered operate with a few best practices I believe you should follow to maximize your business and mitigate your exposure to risk. 22 DEALER’S EDGE / SEPTEMBER/OCTOBER 2016
1. Understand this is a collections business, not just a sales business. I see more dealers struggle with this idea than any other because they just don’t understand this simple, but crucial, point. It’s especially hard sometimes for someone who has built a successful franchise or independent business where sales, gross and expense control were the keys to success. In the BHPH business, we cannot just sell our way out of bad collections! To make the most of the business, our collectors have to be the dealership’s most talented, best trained and best compensated employees. A well-run collections department can make up for a lot of mistakes in other areas. 2. Get serious about compliance. If you don’t have the wherewithal to devote time every day to compliance, I suggest not getting into this business. If you’re already in and still not serious about compliance, I suggest getting out while you still have a business and a choice! The CFPB and the Department of Justice will do everything they can to put you out of business if they even think you are not following their rules. Ignoring compliance puts everything you have in jeopardy. If you can’t (or won’t) manage that reality, you shouldn’t have a BHPH dealership. 3. Be an advocate for BHPH businesses. Reread No. 2. If you want life in the BHPH industry to be easier, you have to fight for it. One way is to join the state and national associations that are fighting for your business’s survival against the likes of the CFPB and DOJ. Not only should you be a member, but it is very important you contribute financially to these associations so they can fight for your rights. Connect with your city council members, senators and state/national representatives and other important political figures in your area. Make sure they understand just how much your business contributes to the local economy – and educate them about the industry, so they realize you aren’t the “bad guy” consumer advocacy groups like to make you out to be. Find out their stance on the
CFPB and DOJ and vote accordingly. Remember the quote by Edmund Burke: “The only thing necessary for the triumph of evil is that good men do nothing.” Stand up for yourself and others. 4. Join a 20 Group. The best career move I ever made was joining a 20 Group. Nothing else I tried made me a better operator – or provided a better ROI – than the insights I gained from that group. The power of peer collaboration and accountability you receive in a 20 group setting is magnificent. Imagine sitting in a room with 20 other dealers talking about your business. You get to see the good, the bad and the ugly, and have literally hundreds of years of experience in the room with you! The one warning I will give you, though, is that you must have an open mind and be ready to go back to your dealership and make meaningful change because your fellow 20 group members will hold you accountable to making your business better. Even when you’d prefer they didn’t. BHPH success is possible – and important. I love this industry. Although we often get a bum rap, BHPH dealerships provide a valuable service to the vulnerable in our community. We help people learn to be financially responsible, and we give them the means to get up on their feet and improve their lives. It’s amazing. So, no, there’s no perfect business model for success in this industry, no matter how many times people may ask me to show them the way. But if you take our work seriously, commit to helping people while making a profit and follow the best practices I’ve outlined above, you’ll make it. And if you encounter bumps along the way, give me a call and I’ll help you out! Dustin Kerr has been in the automotive industry for 15 years with the last 10 spent exclusively in the Buy Here-Pay Here and Lease Here-Pay Here industry. Dustin serves as an NCM consultant and sales and collections trainer to the Buy Here-Pay Here industry. This article originally appeared on NCM’s Up to Speed blog (http://blog.ncminstitute.com) and is reprinted with permission.
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