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MANAGEMENT MATTERS | BY DALE POLLAK
THE USED VEHICLE DONUT HOLE Three Ways to Work Around and Through
I’ve been struck by three trends in the current used vehicle market. First, late-model – three years and younger – vehicles account for almost 60 percent of retail sales, a fact affirmed in the latest Used Car Market Report from Edmunds. You can trace this development to the rise of offlease supply, which many analysts expect to continue, albeit at a slower clip than recent years. Second, the prevalence of late-model inventory is a bit tricky. Lower-mileage, nearnew used vehicles are facing competition with heavily incentivized new vehicles. As a result, the near-new vehicles aren’t selling nearly as fast as similarly aged units with higher miles. The Edmunds report affirms this trend. It said, “High levels of lease returns coupled with increasingly stringent mileage limits will feed an expanding pool of low-mileage used vehicle inventories that have proven to have a limited buying audience.” Third, there’s strong demand and interest for older, higher-mileage vehicles, but they aren’t nearly as plentiful as the later model
year inventory. The consumer demand for these vehicles isn’t surprising. There’s always strong demand for cheap, reliable transportation. Indeed, Edmunds noted these vehicles are turning faster than most other used vehicle inventory. In many ways, these trends force dealers to work around and through what might be described as a “donut hole” in today’s market. Here are three recommendations to help dealers address these market conditions: Re-assess your inventory strategy. The best Velocity dealers have been evaluating whether their inventory allocations for vehicle types and cost segments are truly correct and sufficiently precise for the current market. In some cases, dealers realize they’ve effectively given up on lower-cost vehicles and their buyers as they’ve placed a greater priority on higher-cost, late-model inventory. Inevitably, as dealers examine their allocations they find corrective opportunities to right-size segments they’ve overlooked, overstocked and understocked. Examine your inventory age/days to sale by segment. This analysis can affirm and illuminate inventory strategy assessment takeaways. Which vehicle segments are moving faster or slower than they used to and why? How do the Market Days Supply and Price to Market metrics compare to those of your fastest sellers? Dealers who conduct this analysis often find one of two factors, and sometimes both,
account for slower-movers – either the vehicle itself or its merchandising/pricing isn’t “right” for the market. Both suggest an opportunity for process changes. Dealers who apply these lessons learned are more likely to achieve the goal of retailing at least 55 percent of inventory in less than 30 days. Address Cost to Market creep. I have written before about the rise of inventory-level Cost to Market metrics climbing close to 90 percent, leaving only a maximum 10 percent spread for front-end gross profit. Dealers often know they should strive to maintain an inventory level Cost to Market ratio of 85 percent, but the creep occurs nonetheless. It’s true the prevalence of near-new inventory contributes to the Cost to Market increase. But it’s also true these vehicles are the easy pickings and perhaps reflect a lack of desire, discipline or interest in finding vehicles with more favorable Cost to Market ratios. I also recommend dealers revisit their reconditioning costs, particularly those associated with outside vendors, to find additional savings to help reduce Cost to Market ratios. The good news is that most forecasts call for a relatively robust used vehicle market in the months ahead – a suitable environment to make inventory management adjustments that help you work more effectively around and through the donut hole. Dale Pollak is the founder of vAuto and an executive with Cox Automotive. This column originally ran on his blog. For this story and all his posts, visit www.dalepollak.com.
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March/April 2018
DEALER NEWS
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p REGULATORY ALERT
08..........................Does Your RFC Pass the IRS Validity Test? 10...................................................MIADA Person of the Year 10............................AutoZone Opens Mega Hub Warehouse 14................................................. NIADA Government Report 16.......................................................MIADA Annual Meeting 18................................. Designing a Superior Meet and Greet
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NIADA NABD Convention & Expo Register Now! Registration is open for the NIADA/NABD Convention & Expo, June 18-21 in Orlando! With the forces of NIADA and NABD combined, it promises to be the most robust convention yet. Learn more and register today at www.niadaconvention.com.
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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 MA/New England Dealer News is published bi-monthly 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 Dealer News or NIADA. Likewise, the appearance of advertisers, or their identification as members of MIADA or NIADA, does not constitute an endorsement of the products or services featured. Copyright © 2018 by NIADA Services, Inc.
STATE MAGAZINE MGR./SALES
Troy Graff • troy@niada.com EDITORS
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DEALERS REQUIRED TO BEGIN USING NEW BUYERS GUIDE Revised Forms Dealers are now required to display the new version of the federally mandated Buyers Guide form on all used vehicles displayed for sale to consumers. Following a lengthy review of the Used Motor Vehicle Trade Regulation – commonly referred to as the Used Car Rule – in November 2016, the Federal Trade Commission released a revised rule that includes changes to the Buyers Guide form. The FTC gave dealers until Jan. 28, 2018, to exhaust existing supplies of the old Buyers Guide before requiring the revised form. NIADA worked extensively with the FTC on its review of the Used Car Rule to ensure any change to the rule did not impose a new regulatory burden on dealers. Through NIADA’s efforts, the amendments to the rule do not change its essential requirements – but the Buyers Guide form has changed.
EXECUTIVE COMMITTEE
BOARD OF DIRECTORS
PRESIDENT Juan Mendez JC Auto Sales
Bob Shaw Sr. Shaw Auto Leasing
Rich Copponi Auto Use/Auto Loan
VICE PRESIDENT Bob Baker Jr. Dorchester Motor Sales
Dana Duchak Lynnway Auto Auction
Tim Hoegler Manheim New England
TREASURER John Perro Perro’s Auto Sales
Dave Chandler Toy Store Auto Sales
Harold Proodian Wagner Group
SECRETARY Brent Landes Landes Family Auto
Luke Semmelrock Central Mass Auto Auction
Robert Shedd II The Auto Brokerage
Rick Schneider The Garage
Steve Newcomb Royal Administration
CHAIRMAN OF THE BOARD Bob Hayes Auto Town Rentals Inc.
Jacinda Timmerman • jacinda@niada.com Andy Friedlander • andy@niada.com MAGAZINE LAYOUT
Christy Haynes • christy@niada.com
EXECUTIVE DIRECTOR Melissa Otis director@miada.com
PRINTING
Nieman Printing
PAST PRESIDENTS
Steven Carnes - Worldwide Preowned LLC Tim Collins - Quincy Auto Auction Eddie Coolbrith - S & E Auto Ron Dial - Dialworks Phil Greenstein - Keystone Automotive
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The revisions to the form include: • A recommendation consumers get a vehicle history report before buying a used car that sends them to ftc.gov/usedcars for more information on how to get one. • Directions for consumers to visit safercar. gov to check for safety recalls before purchasing a used car. • A new description of an “as is” sale to clarify that “as is” refers only to whether the vehicle is offered with a warranty from the dealer. • Boxes dealers can check if they wish to indicate whether a vehicle is covered by a third-party warranty and whether a service contract may be available. • A box dealers can check to indicate an unexpired manufacturer’s warranty applies. • A statement in Spanish on English versions of the form advising Spanishspeaking consumers to ask for the Buyers Guide in Spanish if the dealer is conducting the sale in Spanish. • Addition of air bags and catalytic converters to the list of major defects that can occur in used vehicles. Dealers can obtain an English version of the new Buyers Guide at https://www.ftc.gov/ system/files/documents/plain-language/pdf0083-buyers-guide.pdf.
Dan ElDourihi 1A Auto Sales Pierrot Abiramia Milford Auto Mall
Don McKenna - Patriot Motors Inc. Fred Moschetto - Moschetto Brothers Inc. Louis Tedeschi - ASPI Motor Cars John Eleftherakis - John’s Auto Sales
F&I MATTERS
| BY SCOTT BATES & MIKE RIZKAL
DOES YOUR RFC PASS THE IRS VALIDITY TEST? Don’t Let Your RFC Become a Liability
WE FIND MANY RFCS
A N D D E A L E R S D O N O T R E G U L A R LY R E V I E W T H E I R O P E R AT I N G A G R E E M E N T S O R O P E R AT I O N S T O C O M P LY W I T H V A L I D I T Y FAC TORS FOR T HE RFC A ND IT S TRANSACTIONS.
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Related finance companies were not designed to be a tax-planning vehicle to reduce or defer auto dealership income. If the IRS validity test discovers noncompliance that cannot be explained in the RFC’s or dealership’s documentation, additional taxes and penalties can be severe. We find many RFCs and dealers do not regularly review their operating agreements or operations to comply with validity factors for the RFC and its transactions. The process is understandably time consuming and complex. You can rest assured, however, that if the RFC receives an IRS query, a dealership query often follows. RFCs are usually set up as S Corporations. The RFC acts as the lender in the dealer’s financing of used vehicles. The notes are sold to the RFC at a discount due to the higher risk the RFC incurs in the transaction. The RFC accrues the income as it is earned from the car buyer’s weekly or bi-weekly payments. The dealership collects cash up front then books a current and deducted loss for the difference between the full contract and the discounted contract. According to the IRS, a valid RFC must have the following characteristics. • When the finance contract is sold to the RFC, title has been transferred to the RFC in accordance with title and lien holder laws. • The discounting of the car dealer’s receivables is sold to the RFC at their fair market value. • There is a written arms-length contract between the dealership and the RFC. • The finance contracts are normally sold without recourse between the two related parties. • The RFC is responsible for repossessions. • The RFC is operated as a separate entity from the dealership and has the following characteristics: • Adequate capital to pay for the contracts. •M eets all state and local licensing requirements. • Maintains its own bank accounts. •H as its own address and phone number and operates as a separate entity from the dealership. •M aintains its own books. •H as its own employees who are compensated directly by the RFC. •P ays its own expenses. •C ustomers make payments to the RFC, not to the dealership.
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The IRS Audit Technique Guide cites two common issues that put the validity of the RFC into question. Either the dealership and RFC do not treat and record the sale and financing properly or the RFC is operating like a shell company rather than a legitimate separate entity: • At the time of each transaction, the RFC must show actual cash reserves in its own bank accounts to pay the dealer. The dealer in turn must record receipt of payment for the note. Each entity must have separate journal entries for the transaction. If journal entries don’t match up, the IRS may disallow the transaction. • As for its validity as a separate entity, if the RFC doesn’t have a separate address and does not advertise itself as a separate company, it factors into the validity test. It must also be proven the RFC is directly collecting payments and paying actual employees.
T H E R F C M AY B E C O M P L E T E LY VA L ID, A ND T HE L EG A L FOR M A BL E TO BE PROVEN, BUT DEALERS AND MANAGERS MUST BE CONFIDENT IN THEIR ABILIT Y TO SHOW P R O O F A N D D O C U M E N TAT I O N IN THE EVENT OF AN IRS QUERY O R A U D I T. S H A R I N G S TA F F O R RUNNING RFC BOOKKEEPING AND A D M I N I S T R AT I O N T H R O U G H T H E DE A L ER SHIP T O S AV E NOW C A N P R O V E C O S T LY I N TA X E S A N D P E N A LT I E S L AT E R O N . If the IRS does not view the RFC as a separate entity by these tests of validity, it will not allow the dealership to claim a deduction for losses on the sale of discounted vehicles to the RFC. It will defer to related party rules under IRS code 267 that do not allow loss deductions in transactions made between related persons. Without proper structuring as a separate operation, an RFC can become a liability. The RFC may be completely valid, and the legal form able to be proven, but dealers and managers must be confident in their ability to show proof and documentation in the event of an IRS query or audit. Sharing staff or running RFC bookkeeping and administration through the dealership to save now can prove costly in taxes and penalties later on. The IRS may determine the RFC is not a valid separate entity. This finding, in effect, invalidates the cash method of accounting for the sale of notes to the RFC. Interested in more details about RFCs and auto dealership accounting? Download our whitepaper at http://info. cornwelljackson.com/rfc-irs-target. Scott Bates, CPA, is a partner in the audit practice and leads Cornwell Jackson’s Business Services Department. Contact him at scott.bates@cornwelljackson.com or 972-202-8000. Mike Rizkal, CPA, is a partner in Cornwell Jackson’s Audit and Attest Service Group. Contact him at Mike.Rizkal@cornwelljackson.com or 972-202-8000.
ASSOCIATION NEWS
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2018 MIADA PERSON OF THE YEAR Joyce Mover
Joyce Mover was recently nominated 2018 MIADA Person of the Year. Joyce has been an employee of the Massachusetts Registry of Motor Vehicles since 1972. During her tenure she has worked on numerous projects, including the implementation of the Salvage Title Law and the Drive/EVR Program. She also implemented the Electronic Lien and Title Program in December 1994. Presently Joyce holds the position of ELT Program Manager and is the liaison for MIADA and the auto auctions in Massachusetts. Joyce has been an asset to the members and staff of MIADA for many years. She is always eager to assist. If she can’t help personally with an issue, she will find someone who can. Congratulations to Joyce on being chosen MIADA Person of the Year!
PRODUCTS & SERVICES
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AUTOZONE OPENS MEGA HUB WAREHOUSE MIADA Member Benefits Platinum MIADA sponsor AutoZone recently opened a mega hub warehouse store in Framingham, Massachusetts. This store alone contains over $15 million in inventory and is open 24 hours a day. MIADA members receive an exclusive discount along with a quarterly rebate program. Be sure to ask your local commercial AutoZone rep or the MIADA office how to take advantage of this exclusive discount program.
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AUCTION PERSPECTIVE
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SNOWY AUCTION Digging Out a Sale Question: What do you do when Mother Nature sends you more than 65 inches – over 5 feet – of snow in less than two days? Answer: You have an auction two days later! Question: What do you do two days later, when another 30 inches, or two and a half feet, of snow falls? Answer: You have an auction two days later! Welcome to Erie, Pennsylvania, over the holidays in 2017. This prolific event shattered several snowfall records that date back to 1893 in Erie, as well as a Pennsylvania state record. It was an all-time record for two-day snowfall in the state of Pennsylvania, as well as an all-time record for snow in any single day in Erie with 34 inches on December 25. The previous record was 20 inches on November 22, 1956. Erie’s records for two-day, three-day, seven-day and 13-day snowfall were also broken during this lake effect event. The following are a few past snowfall records: • Two-day snowfall: 26.7” Nov. 24-25, 1950 • Three-day snowfall: 30.2” Dec. 29-31, 2002 • Seven-day snowfall: 39.8” Dec. 27, 2001 - Jan. 2, 2002 • 13-day snowfall: 52.8” Dec. 31, 1998 Jan. 12, 1999 That’s not a misprint. Erie picked up more snow in less than 36 hours in this event than its previous 13-day snowstorm record. Needless to say, the 120.8 inches of snow in December is the city’s snowiest single month on record, clobbering the previous record of 66.9 inches in December 1989 by over four feet.
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This is also more snow in one month than Erie averages in an entire winter season – 100.9 inches. What’s more, this is also the snowiest month on record anywhere in Pennsylvania, according to the Pennsylvania state climatologist. Erie picked up more snow in this event than the yearly average snowfall in the following cities: • Minneapolis/St. Paul: 53.4” • Boston: 43.5” • Chicago: 37.1” Officials declared a snow emergency for the city. City officials stressed roads were “dangerous and impassable.” At Greater Erie Auto Auction, staff declared “We can do it!” With an amazing team of hardworking employees – one person in the loader non-stop, two people in plow trucks non-stop, two people out trying to find shovels in stores that were sold out, one person going home to bring back a snow blower, two people driving tow trucks, and more than 20 employees digging continuously between vehicles to clear tail pipes to get the car out from five and a half feet of snow – they did it! The auction industry is made up of hardworking individuals, who “put on the show” every week. Some locations have multiple auctions weekly. The relationships they build within the industry are strong and true. During this snowfall event, Greater Erie had an auction friend offer to send additional loaders for snow removal. Auction representatives said, “We are truly blessed to be a part of the auction industry and proud of the relationships we have built. All of us face many challenges to get our weekly sales put together. In Erie, Penn., snow happens to be one of them. We decided to embrace it! We decided to walk into work with a smile and positive attitude, and our team – working together – nailed it!”
The 72nd Annual NIADA Convention and Expo JUNE 18-21
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FOR MORE INFORMATION OR TO REGISTER: www.niadaconvention.com or call 1-800-682-3837 Register to attend by May 18
For the Early Bird rate of $549 – and don’t miss out on our group discount opportunities for additional attendees from your dealership.
BMSM: Buy More, Save More! $549
1 attendee
$549.00 each
$899
2 attendees
$449.50 each 18% off
$1,299
3 attendees
$433.00 each 21% off
$1,599
4 attendees
$399.75 each 27% off
$1,899
5 attendees
$379.80 each 31% off
NIADA is Rewriting the Playbook for the biggest event in the used vehicle industry by coming together with the National Alliance of Buy Here-Pay Here Dealers to create a combined Mega-Conference that blends the power of NABD’s BHPH expertise with NIADA’s wide-ranging education agenda – not to mention the largest Expo Hall in our history. The used car game has changed drastically over the past few years and continues to change rapidly. To keep up – and thrive – independent dealers not only have to adjust the plays they’ve been running for years, they need an entirely new playbook. Come join us in Orlando and rewrite your playbook to success!
What’s in it for YOU?
3 of the industry’s best conferences under one
roof as NIADA, NABD and FIADA come together at the NIADA Convention and Expo to create a used car Mega-Conference, offering the most complete and up-to-date education available.
5
tracks of education to serve the needs of all independent dealers: Retail, BHPH, Legal & Compliance, CPO and digital.
60+
education sessions covering topics such as hiring and retaining sales staff, BHPH collections best practices, certified pre-owned sales and operations, alternative profit centers, prospects and sales, BHPH to LHPH, wage and hour issues, best practices for F&I sales, and many more.
The
largest Expo Hall in NIADA Convention history, featuring more than 210 exhibitors offering the latest state-of-the-art products and services to help keep you ahead of the pack in today’s competitive market.
BOOK YOUR ROOM BEFORE MAY 1
To receive the NIADA/NABD room rate of $159 per night including resort fee. Rooms at the Rosen Shingle Creek will sell out quickly. Please book now!
No seriously, you need to book your room ASAP!
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WASHINGTON UPDATE | BY SHAUN PETERSEN
NIADA GOVERNMENT UPDATE
Latest Government Issues and Activity
NIADA IS YOUR VOICE IN WASHINGTON D.C., ADVOCATING FOR INDEPENDENT DEALERS, THE USED VEHICLE INDUSTRY AND SMALL BUSINESS. HERE’S A LOOK AT THE LATEST NEWS AND NIADA EFFORTS REGARDING LEGISLATIVE, REGULATORY, PAC AND GRASS ROOTS ACTIVITIES.
REGULATORY The Consumer Financial Protection Bureau is taking a hard look at itself under acting director Mick Mulvaney. Mulvaney, the White House budget director filling in as CFPB head until President Trump appoints a permanent director, has issued a “call for evidence” to determine whether the bureau is “fulfilling its proper and appropriate functions to best protect consumers.” To gather that evidence, the bureau is posting a series of requests for information, seeking comments on various aspects of its enforcement, supervision, rulemaking, market monitoring and education activities. Mulvaney said the RFIs give the public a chance to submit feedback and suggest ways to improve outcomes for both consumers and businesses. The first RFI asks for comments about the CFPB’s civil investigative demands, which the bureau issues when collecting information from an entity during enforcement investigations. The comments will help the bureau evaluate its CID processes and procedures and determine if any changes are needed. The CFPB has since posted an RFI regarding its administrative adjudication procedures. The RFIs represent a rare opportunity for independent auto dealers to make their voice heard by a regulatory agency that has left a large imprint on the auto finance industry in recent years. Tell the CFPB about your experience with a CID, the issues you’ve faced in responding as a small business and how the process could be improved to become more efficient. To make a comment on the CFPB’s RFIs, visit www. consumerfinance.gov/ policy-compliance/noticeopportunities-comment/opennotices/call-for-evidence.
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LEGISLATIVE The Senate will soon be voting on whether to confirm four candidates nominated by President Trump to serve as commissioners of the Federal Trade Commission. Trump sent their names to the Senate on Jan. 25. Among those names is that of Joseph Simons, a former FTC antitrust attorney whom the President said will be his choice for chairman of the commission. The others are Rohit Chopra, a senior fellow at the Consumer Federation of America and former CFPB student loan ombudsman; Noah Phillips, chief counsel to Sen. John Cornyn (R-Texas); and Christine Wilson, senior vice president for regulatory and international affairs for Delta Air Lines. The FTC is led by a fivemember panel that can include no more than three members of any political party. Simons, Phillips and Wilson are Republicans and Chopra is a Democrat. Currently, there are only two FTC commissioners – Republican acting chairman Maureen Ohlhausen, who has been appointed by the President to serve as a judge on the U.S. Court of Federal Claims, and Democrat Terrell McSweeny. Both will leave the commission when their successors are confirmed. There has not yet been a nomination for the fifth spot on the commission, which will be filled by a Democrat. Reuters News Service recently reported Senate Minority Leader Chuck Schumer (D-N.Y.) has recommended his chief counsel, Rebecca Slaughter, to the White House as a nominee. www.miada.com
PAC The day before NIADA’s Winter Leadership Meeting opened in Dallas in January, CEO Steve Jordan, president-elect Andy Gabler and executive committee members Joe McCloskey and Scott Allen met for lunch with Rep. Michael Burgess (R-Texas), a member of the House Energy and Commerce Committee. Rep. Burgess is a champion of small business who has engaged with NIADA on issues that impact dealers, such as used vehicle recalls. A longtime physician and member of the Subcommittee on Health, he discussed health care policy and sought to understand more fully the challenges independent dealers face due to rising health care costs. In addition to Burgess – to whom the NIADA-PAC made a campaign contribution – the meeting included a special guest: Rep. Kevin Brady (R-Texas), chairman of the powerful House Ways and Means Committee and author of the recent Tax Cuts and Jobs Act. Rep. Brady thanked NIADA for pushing Congress to keep the tax deduction for net interest expenses for floorplan-related costs and advocating for a small business exemption for all other interest-related expenses. He asked the NIADA dealers how the legislation was impacting their businesses and requested NIADA to continue to engage him on any issues related to the tax legislation. GRASS ROOTS Georgia IADA is mobilizing its members to fight a bill under consideration in the Georgia House that would change the way the state’s title ad valorem tax is calculated. The bill proposes switching the tax calculation from the vehicle’s fair market value to its retail selling price, which, according to the state’s legislative fiscal report, would result in a tax increase of more than $300 per vehicle. GIADA’s legislative team and lobbyists have begun introducing arguments and testimony against the bill and are gearing up for an extended battle. Meanwhile, the association has contacted dealers throughout the state and provided them with the names and contact information for all 12 members of the Georgia House Ways and Means Public Finance Subcommittee so the dealers can tell them to vote no on the bill. It is also encouraging dealers to contact their state representatives and senators. GIADA has supplied its members with talking points to make sure key issues are understood by the legislators. Among them: The tax change would mean consumers who buy a used vehicle from a dealer would pay hundreds of dollars more in taxes compared those who buy from a private seller, which would encourage more curbstoning by unlicensed sellers – a practice that can negatively affect consumers. GIADA is calling for all Georgia dealers to make their voice heard on this important issue.
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DEALER NEWS
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RETAIL READY | BY JUSTIN M. OSBURN
DESIGNING A SUPERIOR MEET AND GREET Crafting and Reviewing the Play Recently I was on an airplane and the lady next to me struck up a conversation. She asked what I did for a living and I told her I consulted independent auto dealers. She became very inquisitive about the car business. She quickly offered her fear of car shopping and told me about her recent experience that turned into a nightmare. I asked her what emotions she felt when thinking about driving onto a car lot to purchase a vehicle. She said, “Fear of being screwed.”
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This information is nothing new. However it is the building block of how critical an effective meet and greet can be to our prospects. An additional BHPH fear from the prospect is fear of getting turned down. Our first impressions and ability to gain trust set the sales process up for success or failure. While there are certainly dealerships full of sales professionals who open with a competitive meet and greet, there are some that struggle to offer a consistent and superior greeting to prospective buyers. Why? Why do some nail it time and time again while others struggle to get even one sales professional on the team to conduct a first-class meet and greet? Here are a few steps your dealership can take to improve the overall execution of the meet and greet on the lot, right now! Leadership must decide the expectations of the meet and greet. Team members do not usually wake up each morning and say, “Self, today I am going to have a horrible day and do everything I can to be disruptive and not follow my manager’s instruction.” Actually, most team members come to work each day willing to follow great leaders and the tactics that produce results. A pitfall easy to overlook is no structured script or direction for the sales team to learn, practice and perfect their meet and greet. A critical step to improvement is the leadership deciding, with clarity, how the meet and greet should be conducted and then teaching and coaching the team members to replicate that vision with repetition and practice. Consider regular, short sales meetings each morning. This gives the leadership an opportunity to see who is at work, who is not, who is late and who came dressed for success as well as get a pulse of the team’s attitude for the day and offer some quick and structured practice. Coach the sales department on how to run “the play” of meet and greet. When team members are confused or don’t know what to do, it’s human nature to do nothing, to stand still in the confusion. This is very apparent when a sales team member demonstrates hesitance to take an “up.” They are not sure what to do.
DEALER INSIGHT
March/April 2018
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You could fire them, or yell, or, worse, quietly remain bitter toward them as you both drown in failure. An alternative approach is to coach them how to run “the play” of meet and greet laid out in the first step. Then, rehearse it with them until they demonstrate perfect practice. If a mystery shopper walked on to your lot today and was greeted by the sales team, what would it sound like? Evaluate what works and does not work. If there is a well-crafted meet and greet plan and the team is demonstrating perfect practice, leadership should consistently encourage feedback on what parts of the play work and which parts could be improved.
THE GOAL
OF A MEET AND GREET SHOULD BE TO OFFER A G R E AT F I R S T I M P R E S S I O N , O P E N U P THE ABILIT Y TO BUILD RAPPORT AND U LT I M AT E LY M O V E T H E P R O S P E C T T O THE NEX T STEP IN THE SALES PROCESS. In football, a coach draws up a play and shows it to the team, then they practice all week and run the play in the next game. Certainly it doesn’t end there. The coach and the team are interested if the play resulted in big yardage, short yardage or even a loss of yards. They watch film after the game to review how the opponent responded to the play and what parts worked or did not work. If the play lost yards, it is not necessarily scrapped. Perhaps the blocking assignments need tweaking, a different player needs to touch the ball or the play needs to be run in a different situation. Once leadership at the dealership has drawn up a meet and greet, shown it to the team and rehearsed it, there should be a review with the team after it is has been used to see if it needs to be tweaked, changed up and/or improved. What are the results? What is the goal of a meet and greet and how do leadership and the team know if it was a successful play or not? The goal of a meet and greet should be to offer a great first impression, open up the ability to build rapport and ultimately move the prospect to the next step in the sales process. What is the next step? Can your leadership and team answer that question, consistently? Tip: A great opening question: “Hi, my name is Justin. Have you been to our dealership before or is this your first time?” I’d love to hear creative plays your team is running on the meet and greet. Typically a sincere and prepared opening has great results. For a few more opening questions that work, email me at justin@niada.com. Justin Osburn is a moderator, consultant and trainer for NIADA Dealer 20 Groups, offering more than a decade of experience in retail and Buy Here-Pay Here executive management. He can be reached at justin@niada.com.