DRIVELINE
THE OFFICIAL MAGA ZINE OF MICHIGAN INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION
FA L L 2 018
LYFT SOME RISK
LEVERAGING RIDE SHARING FOR YOUR BENEFIT. | PAGE 08|
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ONLINE MARKETING | By Kenny Atcheson
“DRESS UP” FOR YOUR DEALERSHIP
Step in Your Customer’s Shoes
Kids, adults, and pets got dressed up last year for Halloween to the tune of $9 billion. Hot costumes included characters from Stranger Things and Wonder Woman. This year, characters from The Incredibles will likely be hot costumes after a $180 million opening weekend for the animated movie. The hot costume for you and your employees this year should be to “dress up” as your customer. Pretend to be your customer and get into character. Forget everything you know about your business and look at it from an outsider’s perspective. Customers do not know your business offers the best service or products just because you say so. Your competitors say the same thing. Everything your customer has to go through to purchase from you is a direct reflection of your products and services. Therefore, their experience influences whether or not they buy from you the first time or a second time – and it influences whether they send referrals. Start from the beginning of the process as if you were a customer. Do not assume anything. What do you see? Type the same words into Google your customer would when beginning a search for a car, such as “bad credit car dealer.” Take note of what you see. Does your website show up in the top four? Do you have a Google ad in the top two? Is your ad a good reflection of your business? Does your ad display information that makes your dealership stand out as uniquely better than the competition? Is your rating a 4.5 or higher? When the customer looks at your “can’t miss” online reviews and review rating, is it at least 4.5? If not, there is room for improvement. If your company rating is a 4.5 or more, the customer may still click to read reviews about your dealership. If they do, is the latest review – or the one showing at the top – positive? The customer hasn’t made it to your actual website yet, but they are already making a judgment about your dealership. Does your business look like one of many choices – a good choice, the best choice, or The Obvious Choice? (The Obvious Choice is a trademarked training program offered by Dealer Profit Pros.) Is anything broken? The customer finally makes it to your website. Your company website may be up and running – but does it do its job?
Your website’s job is to generate leads. If it is not generating enough leads it is likely not building trust with potential customers. How many trust factors are at play? Are there happy customer testimonials continuously populating on your site? Are there testimonial videos? Are there pictures of friendly people – not just cars? Are there any broken links? Your organization should have a regularly scheduled check-up of your website. Click around and make sure everything works. I’ve visited dealer websites on which everything looks fine until I filled out the beginning of a finance application only to be sent to an error page. The lead was never captured. Big, national companies are not immune to this problem either. While planning my travel to deliver The Obvious Choice training to a Buy Here-Pay Here dealer a few states over, I was looking for a rental car. I clicked on an advertisement for National car rental. The ad took me to a webpage that was under construction. Two weeks later I checked to see if National was still paying for advertisements that sent people to a broken webpage. Yep, the ads were still running. Become Sherlock Holmes Create an alias email and/or phone number, or hire someone to check on the followup processes of your dealership. Find out if your salespeople are following up with leads in a timely manner. Do they use the communications and processes you have created? I have a number of horror stories and examples of zero or putrid follow up. I won’t go into all of them here because that’s not the point. The point is that whatever you do, improve your customer experience and continue to monitor their experience and processes. You will earn more business, more referrals and more repeat business. This article doesn’t even discuss customer service. Think about how many other touches there are to get a customer to buy. • Is the person who answers the phone pleasant? • Does the salesperson connect with the customer and build trust? • Does the salesperson follow up after a purchase and non-purchases? There are so many places to make a mistake. If you don’t keep an eye on it, customers may feel like they are going through a haunted house, but not in a fun way. Your profits or lack thereof will be scary. The only thing that should be scary this Halloween are the costumes. Kenny Atcheson is the founder of Dealer Profit Pros and author of Marketing Battleground: How to Deploy Under-the-Radar Strategies to Explode Your Profits. His website can be found at www.DealerProfitPros.com
PRODUCTS & SERVICES| By Auto Remarketing Staff
CARS.COM LAUNCHES PRODUCT FOR FACEBOOK MARKETPLACE Promotes Dealer Listings
Cars.com has unveiled a new social solutions product designed to help dealers share their Cars.com used car listings with active shoppers on Facebook Marketplace. Cars.com’s new Facebook Marketplaceintegrated product, Social Sales Drive, can directly connect dealer’s inventory to its business page on Facebook. According to Cars.com, Facebook is two times as efficient as paid search when it comes to directing active car shoppers to a dealership’s website to engage with inventory. “Social is a must-have for automotive dealers with the increasing amount of time people spend on social media and their desire for a shopping experience that meets them where they are,” Cars.com chief executive officer Alex Vetter said. “The combination of powerful Cars.com advertising and targeting with the efficiency of social as a selling channel is a win-win for dealers and manufacturers. Cars.com is innovating at the speed of retail and leading the way for social selling in automotive.” In addition to Conversations, the company’s messaging platform that can seamlessly integrate into dealer websites for 24/7 chat options between dealers and car shoppers on Facebook Messenger, the Social Sales Drive solution can automatically upload a dealers’ complete used car inventory to Facebook Marketplace. According to Cars.com, over 50 percent of Facebook Marketplace car shoppers are connecting with dealerships during offhours, between 6 p.m. and 9 a.m. www.miada.us
Fall 2018
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INSIDE
SAFETY WATCH
CHRYSLER RECALLS 1 MILLION TRUCKS
DRIVELINE
THE OFFICIAL MAGAZINE OF MICHIGAN INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION
06..........................................The Facebook “Secret Formula” 07..................................................................President’s Letter 08......................................................................Lyft Some Risk 10................................................Saved Time Is Made Money 12.......................................................................Email Security 13..................................................................Financial Tune Up 14................................................. NIADA Government Report
WHAT’S NEW
National Policy Conference Dates Announced The 2018 National Policy Conference will be held September 24-26 at the Ritz-Carlton Pentagon City. Make plans now to join NIADA in Washington, D.C. as we meet legislators face to face to make your voice heard! Stay tuned for more details.
ADVERTISERS INDEX
FastLane Auto Exchange .......................................................5 Greater Kalamazoo AA...........................................................7 Lakeside Insurance..............................................................IBC Manheim ...............................................................................11 NextGear Capital ..................................................................12 Textmaxx Pro.......................................................................... 9 TrueCar..................................................................................IFC VAuto......................................................................Back Cover
OFFICE
For information on how to become a member of MIADA please contact us at (248) 828-7010 or www.miada.us.
NIADA HEADQUARTERS
NATIONAL INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION WWW.NIADA.COM • WWW.NIADA.TV 2521 BROWN BLVD. • ARLINGTON, TX 76006-5203 PHONE (817) 640-3838 Driveline is published by the National Independent Automobile Dealers Association Services Corporation, 2521 Brown Blvd., Arlington, TX 76006. Periodical postage is paid at Arlington TX, and at additional offices. The statements and opinions expressed herein are those of the authors and do not necessarily represent the views of the Michigan Independent Automobile Dealers Association or NIADA. Likewise, the appearance of advertisers, or their identification as members 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
Jacinda Timmerman • jacinda@niada.com Andy Friedlander • andy@niada.com MAGAZINE LAYOUT Christy Haynes • christy@niada.com PRINTING
Gates Might Fly Open ASSOCIATION NEWS
NEW MEMBERS WELCOME!
BUSHA MOTORS Marysville, MI DANIEL AUTO SALES INC. Clinton Twp, MI FRAZER COMPUTING Canton, MI
GREAT LAKES CONFORMITY Lake Orion, MI
MOTOR CITY TOYS TRADEWIND CAR Clawson, MI COMPANY Muskegon, MI
BOARD OF DIRECTORS CHAIRMAN OF THE BOARD Ray Campise Certified Motors 23509 Little Mack St Clair Shores, MI 48080 586-775-7000 sales.cmotors@gmail.com
DIRECTORS Rick Rynberg Rynberg’s Car Co. 3880 Holton Rd Muskegon, MI 49445 231-744-1441 rickandwendy1@verizon.net
PRESIDENT Otto Hahne City of Cars 1695 Stutz Dr Troy, MI 48084 248-458-1500 otto@cityofcars.com
Tony LoBretto Alamo Valley A/S 6100 West D Ave Kalamazoo, MI 49009 269-344-8250 alamovalley@gmail.com
Jerry Drouillard Autohaus of Royal Oak 4411 Delemere Royal Oak, MI 48073 248-549-3636 gdro999@hotmail.com
Darvin Mileski NextGear Capital 11799 N College Ave Carmel, IN 46032
Jeff Baker Muskegon Car Credit Inc. 1515 28th St SW Wyoming, MI 49509 616-249-2000
VICE PRESIDENT Kelly Herb Tom Stehouwer Auto Sales 7000 S Division Ave Grand Rapids, MI 49548 616-455-7000 TREASURER Joe Kuhta GWC Warranty 8865 Reese Rd Clarkston, MI 48348 248-670-1133 JKuhta@gwcwarranty.com SECRETARY Ed Ophoff Ophoff Motor Sales Inc. 2921 S Division Wyoming, MI 49548 616-452-7761 edwoph@aol.com
Nieman Printing
ROAD CANDY AUTO SALES Essexville, MI
Chrysler (FCA US LLC) is recalling 1,149,237 2015-17 Ram 1500, 2500, and 3500 pickup trucks equipped with a power locking tailgate and either a 5-foot 7-inch or 6-foot 4-inch bed. The tailgate actuator limiter tab may fracture and cause the tailgate to unlatch and open while driving. Chrysler will notify owners, and dealers will repair the vehicle, free of charge. Chrysler’s number for this recall is U74.
Maurice VanCoillie Van’s Used Cars 23509 Little Mack St Clair Shores, MI 48080 586-773-0560 586-773-0660 Bob Vincent Automotive Dealer Services LLC PO Box 102 Milford, MI 48381 586-477-8282 robertvincent@live.com
Ted Cooper Genesys Systems Inc 360 E Maple Rd Troy, MI 48083 248-597-1003 ted@gensystems.com EXECUTIVE DIRECTOR Lisa Michael 5119 Highland Rd PMB 393 Waterford, MI 48327 248-828-7010 lisamichaelmiada@gmail.com
Nicole Renee Rite On, Inc 4680 W Jefferson Ave Ecorse, MI 48229 313-649-7308 nicole.riteon@gmail.com
MISSION STATEMENT
THE MICHIGAN INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION IS COMMITTED TO PROMOTING GROWTH AND PRESERVING THE VITALITY AND INTEGRITY OF THE INDEPENDENT MOTOR VEHICLE INDUSTRY THROUGH EDUCATION AND LEGISLATION AS ADVOCATES FOR CONSUMERS AND DEALERS.
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SOCIAL MEDIA | By Kathi Kruse
INDUSTRY NEWS
THE FACEBOOK “SECRET FORMULA” TO GET MORE CUSTOMERS
CARFAX RIDES FOR AUTISM AWARENESS
Three Crucial Steps
It’s a lot easier to sell to people who know you. Over the years, Facebook has been a conduit for dealers and their customers to connect. However, as important as it is in the digital marketing process, connecting doesn’t always equate to more sales. Dealers must make their “connecting” count. There’s a solution that seems to elude a lot of vendors in the social media space. They sell you on the buzzwords but then deliver stingy results. Real results take a proven formula with the right key performance indicators to guide you along the path. The Facebook “secret formula” I use to get more customers has three separate and distinct steps: 1. Attract. 2. Engage. 3. Convert. Each of these three steps contains specific tactics that guide in-market buyers through your sales funnel and into your showroom. Before we get into the formula, it’s important to point out it’s easy to waste time on Facebook. So, no matter what your business goals may be, it’s crucial to start with a solid Facebook marketing strategy (i.e.: what do we want to achieve and how will we get there?). Facebook has become a sprawling urban jungle and it’s easy to get lost in the brush without a plan. THE FACEBOOK “SECRET FORMULA” Attract. Attracting buyers in this highly competitive online landscape requires a deep understanding of your target market. To attract your ideal customers, you must know who they are first! Identify who your target customers are, what they care about, and what influences their purchase decisions. You’ll start with your market area as a base point and then determine the attributes of your ideal customer – income range, credit worthiness, model of vehicles they purchase, etc. Once you determine the audience you want to reach, you can then begin to design content for Facebook posts and ads. It’s widely known consumers purchase from dealers they know, like and trust. Facebook marketing allows you to consistently add value to your target customers’ lives through relevant information, expert tips and insights, entertaining/creative content, and specials offers and discounts. Engage. Engagement drives everything on social media and here’s where many dealers fall flat. They struggle with knowing what to do with
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their fans once they become connected. Fact: You really do need to be social on social media. To be social, you need a human. The first step is to choose someone who can easily speak for you online, manage your ads and your content, answer Facebook Messenger inquiries, etc. To engage successfully, create a “content strategy” that showcases your store and your personality. Post content and regularly review your results – then continue to post the types of content your target customers need and want. Don’t worry about being all things to all people. Focus on genuinely engaging customers and inspiring them to take action. Convert. The unique value of social media is its strength to attract and engage those customers who will most likely buy from you. Selling to people who actually want to hear from you is far more effective than interrupting strangers who don’t. Your targeted content informs, educates and entertains. The next step in the secret formula is to deliver just the right offer (and value) that helps your customers finalize their purchase decision. Once you’ve decided on the offers you want to extend, use Facebook ads to promote them. Facebook ads have become the single most important way to be seen on social media. Pro tip: Ad targeting is a highly prized skill. If you advertise to people who don’t know you, there’s a wall that needs to be scaled, and without a large budget that’s a tall order. Use Facebook ad targeting to bring in-market buyers closer to you so their decision is easier. Bonus Secret: Retain Social media is your secret weapon in customer service. Currently, 92.5 percent of brands fail to meet customer expectations on social media and these failures can have big implications. Quality customer service – regardless of channel – relies on a meaningful, efficient, solution-focused exchange between a dealership and its customers. The growing preference for social media as a preferred communication channel requires a “re-thinking” of your customer service strategy. Stakes are high, and sloppy customer care is not a risk any modern dealer can afford to take. Wrapping it All Up Facebook is where your customers spend their time. Take advantage of my “secret formula” to explore the opportunities for your organization. Kathi Kruse is an automotive social media marketing expert, blogger, consultant, author, speaker and founder of Kruse Control Inc., which coaches, trains and delivers webinars focused on integrating social media and online reputation management into dealership operations. She can be reached at kathi@krusecontrolinc.com.
Event Raises $425,000 for Autism Research
More than 1,000 people, including 92 Carfax employees and family members from around the country, banded together to raise a total of $425,000 for autism research in the 2018 Bike to the Beach DC. On Aug. 3, bicycle riders and volunteers from DC-area businesses, members of Congress, charitable organizations and more came together to raise awareness of the disorder. The 106-mile ride from Washington, D.C. to Dewey Beach, Del. is an annual event held in association with Autism Speaks. This was the seventh straight year Carfax supported the event. The Northern Virginia-based company has raised a total of more than $170,000 toward the cause. Carfax’s goal was to raise $60,000 for this year’s ride.
INDUSTRY NEWS
KAR NAMES PRESIDENT FOR PREFERRED WARRANTIES
Edmund Field
KAR Auction Services Inc. named Edmund Field president of the company’s Preferred Warranties Inc. business unit. PWI serves independent used vehicle dealers and small franchise retail automotive and power sports dealers by offering extended service contract protection plans for preowned vehicles. Field will be responsible for leading PWI’s operations and digital and mobile product development and advancing the company’s market growth strategies. He will be based at KAR’s global headquarters in Carmel, Ind. Field joined KAR earlier this year as the director of new product development. Before coming to KAR, Field was at Volkswagen Group and VW Credit, Inc. He supported the areas of insurance, sales and business development, new product development, contact center operations, fleet management and manufacturing.
ASSOCIATION NEWS
PRESIDENT’S LETTER
Upcoming Events
Our used car future looks bright and interesting. There was a lot of talk about rideshare and car subscription services at the 2018 NIADA Convention and Expo in Orlando, Florida. If you couldn’t make it this year, make sure you don’t miss OHIADA’s convention on October 27 in Columbus, Ohio. Details can be found at OHIADA.org or by calling the office at (614) 8635800. Last year was a wonderful time and I met many new vendors I hadn’t been aware of. Like the NIADA Convention, they have great educational classes. I’d like to see what the interest would be in having a golf outing next summer. Please contact our executive director Lisa Michael with your thoughts or if you’d attend. Our most spectacular MIADA event this year is coming up fast. It’s the Annual Awards Banquet at the Henry Ford Museum. We’re very excited to experience all this venue has to offer. It’s really
PRODUCTS & SERVICES
LANE ALERTS
Never Miss a Desired Vehicle at Manheim a great show of planes, trains, and automobiles, not to mention other cool exhibits! We have the entire museum to ourselves and would love to see all of you there. This event is open to everyone so if you have friends or family who are interested in this fabulous place, don’t pass up this opportunity. This is a great time to meet other dealers in MIADA. Room reservations at the Dearborn Inn and raffle tickets are still available. Contact Lisa Michael if you have any questions. Remember, MIADA needs your support. We are currently working on getting a bill passed for prelicensing for all new dealers that would help immensely. The MIADA is your voice that helps educate and build a better industry for all dealers. A special thanks to all of the volunteers, board members and vendors that support the MIADA. We wouldn’t be where we are without all of you. Thanks! Otto Hahne
Buyers know that getting the right vehicle at the right time is critical to maximizing profits in the ultra-competitive used car industry – but that can be challenging during an auction sale day where thousands of vehicles are crossing multiple auction blocks in just a few hours. With Manheim’s Lane Alerts, buyers can receive a text message in advance of a vehicle they’re interested in coming up for sale, so they will never miss the opportunity to bid on a unit they need. In the six months since Lane Alerts launched, over 33,000 vehicles have sold to a client who set up a Lane Alert and received that Lane Alert message. “The adage ‘you can’t be everywhere all the time’ is never truer than during a busy auction sale day when it is critical a buyer be in the right lane to bid on the cars they need most,” said Manheim’s Zach Hallowell. “Lane Alerts is another example of how Manheim is ‘meeting our clients where they want to be’ by augmenting the auction experience with technology to make doing business with us easier and faster.” Previously, buyers would have to spend time reviewing run lists and planning out their sale day strategy to ensure they could bid on the right vehicles – which consumed time they could be devoting to other parts of their businesses. With Lane Alerts, dealers can simply click to watch vehicles and be confident they can make it to the right lane in time to bid on specific units. Lane Alerts work equally well for buyers using Simulcast or attending physical sales. Dealers can sign up for Lane Alerts through their dealer profile at manheim.com/lanealerts or directly from vehicle details pages or search results pages on Manheim.com. They then select to receive Lane Alert notifications for the units they want to watch in an upcoming sale. A text message will be sent to their mobile device prior to the watched vehicle crossing the block.
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MANAGEMENT
| By John F. Possumato
LYFT SOME RISK
LEVERAGING RIDE SHARING FOR YOUR BENEFIT. Sometimes a counterintuitive but simple idea surfaces that seems so obvious you have a, “Why didn’t somebody think of this before?” moment. This is one of them. But perhaps it’s not so obvious unless you have some understanding of both the traditional BHPH/subprime dealer world and the new world of ride sharing/ride hailing. As BHPH dealers, we have our money at risk every day. The skill is in judging whom to take that risk on and how to get them to pay us each month for their vehicle. In the completely different world of ride sharing – led by companies such as Lyft and Uber – the lifeblood is recruiting new drivers, but screening those drivers before they ever take on a passenger. Once screened, the best ride share driver tends to be a part time, “casual” driver who uses the on-demand employment of ride sharing to supplement income when his or her “day job” doesn’t bring home enough to pay all the bills. Those part-time drivers tend to drive 1020 hours a week. They are steady, reliable contributors and don’t seem to burn out or drive too much to increase the probability of accidents. As BHPH dealers, we frequently review credit, but we don’t have access to prospects’ DMV records or – even more useful – a full background check to know whether the individual to whom we are about to extend credit has ever committed a crime. We resort to asking for utility bills, next of kin addresses, etc., anticipating the worst. Even if we had the ability to quickly and accurately do DMV and background checks on every prospect who walked through the door, there would be a cost, particularly for the background check, of upwards of $35-50 per candidate. So here’s the idea: Why not combine the need for a strict ride share candidate screening with your desire to know whether the prospect you’re intending to risk your BHPH or recourse loan with has a clean DMV and background check?
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Specifically, why not set up an iPad online kiosk in the store and, based on your discretion in “reading” your prospect, suggest or even require a potential customer to apply to drive for Lyft (which has a more stringent background check than Uber) on the spot, the same way you require pay stubs, utility bills, addresses of friends/relatives, etc.? You call the shots here, so you can make acceptance by Lyft to drive as another of your criteria for “buying” the candidate. Wouldn’t it be nice to know your potential new customers have passed a DMV check and a thorough background check before you trust them with your vehicle? Of course, if a candidate fails to qualify, you won’t know exactly why. But you will know something was wrong in one of those categories, so you can evaluate the situation accordingly. Best of all, with a Lyft kiosk in the showroom, the screening checks would be quick and costfree to you. How can you beat that? Well, I’ll tell you how. Let’s say, hypothetically, one of your customers is a little overdue on a payment and gives you what sounds like a legitimate story about why he/she can’t pay you today. Now you could pull out the file, see he or she was accepted to drive and say, in a very understanding tone, “I totally understand why you are short on cash, but that’s in the past. Go turn your Lyft app on, take a few extra hours – I know you are approved – and come bring me all of the payment tomorrow.” A ride share driver can make up to $35 an hour and be paid the same day. Now if your customer doesn’t come in with all of the money to pay you in 24 hours or so, well, you know to turn off the vehicle and get it.
On-demand employment truly answers a lot of questions, if not solve some of our problems. Now, you might counter, “I had a customer once take my vehicle and, unknown to me, drive for Uber/Lyft, kill my vehicle, never pay me and the repossessed vehicle was trash.” Everyone has had or heard a story like that, right? Well, you always have had to screen for abusers, long before there was Uber and Lyft. Ride sharing just makes it a little easier for that type to defraud both parties. So you will still have to use your judgment – there is no getting around that side of the business. However, if you are the one to introduce the idea of applying to drive, the prospect is less likely to already have that in mind, or to be a career driver. Maybe you can “root out” those who are career drivers if your new prospect responds to the idea by sharing he/she already is a ride share driver. You can then inquire further as to how many hours the prospect drives and use your GPS device to track miles more closely if you roll him/her. Additionally, those ride share drivers who “kill cars” don’t last long on the Lyft program. Every passenger rates every ride. If the vehicle has problems, the passenger invariably gives a low rating, and just a few low ratings can cause deactivation by Lyft. So there you are – perfect synergy here and a great way to leverage “new mobility” to your benefit. John F. Possumato is founder and CEO of DriveItAway, which recently integrated with HyreCar, to roll his “path to ownership” and “Lyft Your Down Payment” program, and dealer-based “Car Sharing for Ride Sharing” nationally.
ACCELERATE |
By GWC Warranty
NOT TRAINING?
No More Excuses
With everything you handle on a given day, it’s easy to dismiss training for you and your staff. You understand the value, but always find a reason to put it off. But that can end today. Sure, your main goal is to sell cars. That goes without question. Without finding ways to keep things fresh and to continue to evolve, however, you risk falling behind the competition. You probably already understand this and therefore see the value in dealership training, but it’s easy to watch the busy days, weeks and months fly by without pursuing the training your dealership needs. All this said, there’s no better time than the present to overcome these common reasons for putting training on the back burner and get started on a path to a more successful dealership. Not enough time. This is the easiest excuse when it comes to avoiding a training program. It’s also the easiest to overcome. There are countless options for online training you can complete on your own time. Convenience is just the first step though. Setting deadlines is on you. Give
you and your team goals to complete certain coursework and you can begin holding each other accountable to chip away at the training iceberg. Not enough money. Training can be expensive. But it doesn’t have to be. Looking in unexpected places for ondemand training (like your vehicle service contract provider) might be your ticket to affordable – or even free – training resources. A quality VSC provider will value your loyalty and be able to provide training for your entire dealership that will be able to help you be more successful and efficient in every aspect of your business. Not enough people. So you have a small team, maybe even a team of one, and you think training would be a waste of your time, right? Wrong. Small teams need training that can maximize success and efficiency more than any others. If you’re running a small shop, you need to maximize all your resources. Learning best practices, pro tips and processes that diversify your skills could actually be the best use of your time. Not enough opportunity. You might be more of a numbers person and have historically had trouble quantifying the opportunity training holds. When overcoming this objection, think about if you had two more upsells in the F&I office each month. Or if you sold five more cars. Or if
THERE’S NO BETTER TIME THAN THE PRESENT TO OVERCOME THESE COMMON REASONS FOR PUTTING TRAINING ON THE BACK BURNER. you learned about a new product that could double F&I revenue. Unless you train on the processes and methods you can employ to achieve these goals, you’ll have no path to get there. There is always opportunity and room for improvement in your dealership, and training is the road to get there.
SAFETY WATCH
KIA RECALLS 508,000 VEHICLES
Airbags May Not Deploy
A faulty control unit that could prevent airbags from deploying in the event of a wreck has prompted Kia to recall 508,000 2010 through 2013 model year vehicles. Kia said the airbag control unit, which tells the airbag and the seat belt pretensioners when to activate, could be “susceptible to electrical overstress” in the event of a frontal collision. If the control unit is damaged internally, it may not relay the severity of the crash to the airbags and seat belt pretensioners. The recall covers a wide swath of Kia vehicles, including the 2010-2013 Kia Forte sedan and Forte Koupe, 2011-2013 Kia Optima sedan, 2011-2012 Kia Optima Hybrid sedan, and 2011-2012 Kia Sedona minivan. The vehicles were built through August of 2012. The recall stems from a lawsuit filed in 2014 when a 2012 Kia Forte sedan was involved in a wreck and its airbag didn’t deploy. A Forte Koup was involved in a similar wreck in which the airbag didn’t deploy in 2017. Kia, NHTSA, and the supplier that produced the supplemental restraint system used in the Forte conducted an investigation in May to determine what was at fault and what needed to be repaired. www.miada.us
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SALES MATTERS | By John Chapin
FOUR INGREDIENTS FOR SALES AND BUSINESS SUCCESS
Winning Recipe
It happened again two weeks ago. I met with someone struggling to get their business going. One of the first questions I asked, and always ask: “What are you doing to bring in revenue (sell something)?” “I have a display at the local Walmart, and I belong to five chambers of commerce.” “And how long have you been doing that?” “Five years.” “And how much business have you gotten from each one?” “Pretty much zero from all.” I’m not kidding. I also wish I could say this experience is the exception to the rule. Actually, it is more the rule than the exception when I talk to a struggling salesperson or entrepreneur. What’s the definition of insanity? Right. For five years. Look, it really only takes four things to be successful in sales and business. If you have all four, success is virtually guaranteed. If you are missing even one, eventual failure is guaranteed. Good People Skills If you’re good with people – people like you because they feel good around you and believe you care about them – you’re off to a good start. If people like you, they’ll buy from you. The best salespeople and business people always have great people skills. They can connect and carry on a conversations with anyone at any level or any age. They have a charisma about them and their conversations flow smoothly and easily. They are able to make people feel important by talking about what’s important to them, being a good listener, and focusing completely on the other person as if they are the only person in the world. Even in a crowd, they can make you feel as if the two of you are the only ones there. That relationship, that connection, is usually the most important aspect when selling most items. A Great Attitude A great attitude includes: passion, confidence, conviction, commitment, and perseverance. It also includes being positive. The former attributes ensure you have the mental wherewithal to go out into the world with enthusiasm and remain that way while suffering the slings and arrows necessary to succeed in business and sales. The latter attribute, being positive, ensures you present well to people.
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ACCELERATE
Your objective is to be a pleasure to interact with, to be the most pleasant person people encounter during the day, and to be a joy to do business with. You want people to enjoy the experience of working with you. This means going above and beyond, doing more than people expect, and always doing everything in your power to make sure the client feels important. You want to have a can-do, happy-tohelp-you attitude. The Right Activities Activity starts by having a plan that includes how much business you need, how many people you need to talk to, and where to find those people. In addition, you need the self-discipline to stick to the plan and ensure you spend your time and money on the right activities and resources. The most important activities you spend time on during the day are the ones that bring money into the business. It isn’t working on your logo, driving to the post office, or entering information into the computer. During business hours over 90 percent of your time should be spent on activities that generate cash flow. The fastest way to build business is by calling on people in person or on the phone. Business is a contact sport and is all about relationships. In order to build relationships and connect with people, you need to be talking to them live, not sending spam emails, LinkedIn messages, or connecting on Facebook. Also, your activities should be focused on meeting new people. Going to the same networking events and seeing the same people over and over again is a mistake. Incidentally, discomfort and fear of calling on people, both strangers and people you know, is what stops most people and causes them to fail in sales and business. If you’re going to be successful, you need to get over that. Bottom line: focus on meeting strangers and making lots of contacts. Business is a numbers game, if you talk to enough people during the day you will eventually run into someone who needs what you have or knows someone who needs what you have. So go out there and take massive action. A Good Product and Support This one goes without saying. If you have good people skills, a great attitude, and are focused on the right activities, you’ll make your share of one-time sales. But if you have a bad product, or are lacking support, the word will get out and any success will be short-lived. John Chapin is a sales and motivational speaker and trainer. He has over 27 years of sales experience as a number one sales rep and is the author of the 2010 sales book of the year: Sales Encyclopedia. For more information, visit www.completeselling.com or email johnchapin@completeselling.com.
| By GWC Warranty
SAVED TIME IS MADE MONEY
$
Maximize Time in the F&I Office
F&I is the final step in a long car-buying process for your customers. The quicker you can provide value, get a signature and make the sale, the better your chances are for growing your profit potential on the back end of deals. Just like every second of your time equates to dollars and cents in your pocket, wasted time in the F&I office can cost you a valuable service contract sale. Maximizing the time you spend with customers in the F&I office helps them be more receptive to the value of a service contract and helps you make the most of every sale’s final moments. With a few small tweaks to your sales and F&I processes, you can save your customer’s time while simultaneously saving your bottom line. F&I Videos in Your Showroom You can start planting the seed about a service contract sale even before a customer steps in the F&I office. If you have a monitor in your showroom, put it to use. Turn off the news and run some videos that help explain the value of a service contract. Doing so gets the customer thinking about protection from out-of-pocket repair bills and understanding why it’s important to them. Electronic Tools Modern online and electronic tools help speed along the process to get your customers out of the F&I office just as quickly as they got into it. When customers can sign electronically, view educational information on the fly and navigate the process without leafing through papers and signing or initialing multiple places, it makes the entire process simple and painless. Self-Service Post-Sale Tools Having a service contract provider that provides customers with on-demand resources that answer common questions can help you save time in the F&I office. You can save time explaining certain details if your customers have a place to get the answers they need once they leave your dealership. Information like how to file a claim, where to find a shop and looking up coverage details are just a few examples of information your customers should be able to find on their own whenever they need it. Quality Follow Up Reminding your customers of the coverage they have, where to find answers to questions and how to utilize their service contract coverage may be common practice, but there may be ways you can do it more effectively. Tools like Covideo can add a personal touch to the routine email or phone call commonly used in sales and F&I follow ups. Giving your message a better chance to be heard only increases the likelihood that it resonates with customers and results in the experience you desire for them.
www.miada.us
Fall 2018
DRIVELINE
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TIPS
SECURITY WATCH | By Tyson Lee
EMAIL SECURITY TIPS
How to Keep Hackers Out
I recently received an email from a dealer we just funded on a bulk purchase asking to cancel the funds we had just sent electronically. He said he would send me his new banking instructions. Thinking this strange, I called the dealer and texted him a picture of the email I received. He said, “Tyson, I did not send this. This did not come from me.” While on the phone, I got our IT department involved. We found the hacker was deleting the messages the dealer was sending from the dealer’s email, but we could still pull them up in his archived folders. We had the dealer change his password, but the hacker was still able to send emails out. We then had the dealer unplug all Internet access, all computers and the router, and to power everything down. We had him call his Internet provider to make sure the IP address would be changed. The dealer also contacted his anti-virus provider to see what they could do. Just think what this hacker could have done if he was able to get ahold of credit card numbers or customers’ personal information! What a mess it could have been for this dealer. Here are some tips on how to keep hackers out. Use strong passwords. Strong passwords, although hard to remember, are your first step towards protecting your email and other online accounts from the bad guys. Use a combination of uppercase and lowercase letters, numbers and special characters such as $, &, or %. Use a secure online strong password generator such as https://xkpasswd.net or https://www. passworddog.com if you need help. Don’t use the same password across all the online services you access. With the growing number of online services we access, remembering multiple passwords is getting harder. So, users tend to use the same password across all the services they use. The danger with this approach is if your password gets leaked or one of the online services you use gets hacked, all your online service accounts are vulnerable to unauthorized access.
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Don’t write your passwords on sticky notes. Do not write your passwords on sticky notes and keep them with your phone or leave them next to your computer. If you are having trouble keeping track of different passwords you use for your online accounts, there’s help for you in the form of password managers or password vaults that help you store you passwords in a secure manner. Check out LastPass free password manager at http://www.lastpass.com. Enable two-factor authentication (2FA). Most of the popular email providers such as Gmail, Yahoo, and Microsoft, and online services such as Facebook, Instagram, and Twitter support two-factor authentication. With 2FA, you use a second factor besides your password to access your account. This second factor, in most cases, is simply a verification code sent to your phone. Be aware of phishing. Phishing is a form of fraud in which fraudsters send you emails that look like the ones you would receive from a reputable company such as Facebook or Apple, but are meant to trick you into revealing your user ID and password so fraudsters can gain access to your email, confidential data, or other valuable information from your account. Once they gain access to your account, they will then try to send emails to people on your contact list and try to trick them into revealing their account credentials. Install anti-virus software with email scanner. Hackers send viruses, malware and spyware as email attachments. Virus and malware are software programs or code written with the intent to harm or disable your computers. Spyware is software written with the intent to steal your confidential information or let hackers control your computer remotely. One of the best ways to protect yourself from these is to install antivirus software that includes an email scanner. AVG Free is one such free software with email scanner (http://free.avg.com). Antivirus email scanners scan email and attachments and remove or block viruses, malware and spyware. Since hackers are changing their software constantly, make sure you update the antivirus software and virus definitions regularly. Tyson Lee is the marketing and sales manager for United Acceptance, Inc. He has been helping dealers across the nation for the past 12 years.
MANAGEMENT MATTERS
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By Victor Kraft
FINANCIAL TUNE-UP
Give Your Dealership a Competitive Edge
The business of buying and selling vehicles continues to transform. Dealerships face challenges related to operations, the industry’s regulatory environment, and buyer financing. However, taking advantage of tax reform, getting your financial reporting in shape, understanding the true cost of inventory, and broadening customer financing options can help keep your dealership in fine tune and give you a competitive edge. Get familiar with the impacts of tax reform on dealerships and their owners. The Tax Cuts and Jobs Act has major implications for dealers. Chief among them is the deductibility of interest expenses. The good news is floor plan interest is still deductible in full. For dealers with less than $25 million in gross receipts, non-floor plan interest is limited to 30 percent of net income before interest and depreciation. The limitation has a higher chance of applicability when profitability is low and there are large amounts of non-floor plan interest expense (e.g., lines of credit, bank notes, and mortgages). Dealership business losses can no longer be carried back to prior tax years to claim refunds. This will likely affect dealers who have alternating years of profits and losses. The maximum C corporate tax rate is now 21 percent. Pass-through entities, such as S
corporations and partnerships, are eligible for a 20 percent deduction of qualifying income. In some cases, restructuring the entity type may reduce dealership tax liability. Understand the importance of timely and accurate financial reporting. The need for timely and accurate financial reporting is crucial for all dealerships. Dealerships may have cash in the bank, but if future obligations, payables, and bills have not been recorded, a dealer is exposed to cash flow issues and may be hampered in its ability to secure lending. A good rule of thumb is to have monthly financials closed within 10-15 days after the end of the month. Many small dealerships use the cash method of accounting. There are inherent limitations of this accounting method as sales and expenses are only recorded when cash is received or paid by the dealership. Long term obligations, bills received but not paid, and the value of inventory may not be accurately captured under cash accounting. Consider using the accrual method of accounting, as it paints a clearer picture of the status of the dealership and is the preferred method of banks and lenders. Know your inventory. Do you know the true cost of each vehicle on your lot? Vehicle costs include the acquisition cost, floor plan interest and fees, and reconditioning costs. We recommend analyzing the dealership’s overhead costs (building/lot rent, administrative salaries, etc.) and applying a standard pack to each vehicle. Knowing the true cost can help dealers make better decisions when negotiating deals with customers.
BHPH MATTERS | By Scott Bates, CPA
BHPH BUDGET AND EXPENSE OVERSIGHT
Plan to Increase Profitably
The tried and true formula to increase profitability is to either increase revenue or reduce expenses. Is your dealership as profitable as it could be? Is there room to improve your BHPH budget? How do you know? You could compare your dealership to other BHPH dealers and against industry benchmarks. If you discover you are receiving less gross profit per car than the industry benchmarks, you may be leaving money on the table. It could be time to reassess your plan, or your plans. BHPH dealers need several plans to oversee their budgets because it is
a very cash-intensive business. Your plans should include: • Six to 12 month revenue plan. • Expense plan. • Profit plan. • Cash flow plan. In your cash flow, for example, if you are budgeting for a $1,500 average down payment but are really averaging $700, you will run out of money to buy more cars. If you are budgeting your expenses based on this cash flow, your budget will be quickly off. In your revenue plan, are you projecting net new account growth or is it going to shrink? The more mature a portfolio gets, the harder it is to attain new growth (e.g. 20 paid off, 20 charged off, 40 loans a month = zero growth). Some dealers choose to chase aggressive sales without considering if the deal is a good one to put on the books. Chargeoffs will eat up profitability more than any other expense, and it is usually a
Having the right product mix is crucial for dealerships and should be tailored for the market and desired customer. Performing a two- to three-year sales analysis of vehicles by make, model, and type can shed light on which are losers and winners. Diversify product offerings. Increases to the cost of vehicles continue to exceed wages of consumers, which has put pressure on selling prices and hampered margins. Consumers are reliant on vehicle financing, which presents dealerships opportunities to offer a variety of financial products associated with financing. GAP (guaranteed asset protection) insurance, extended warranties, and voluntary debt cancellation coverage provide risk coverage to customers while providing backend revenue to dealerships. Victor Kraft is a senior associate in CLA’s dealership practice. Find out more at CLAconnect.com/dealerships.
self-inflicted expense due to poor deal structures and underwriting. Poor deal structures and underwriting sometimes stem from a lack of training for staff. Dealers should consider staffing and proper training as investments in gross profit rather than as expenses. Too few or untrained staff leads to shortcuts and mistakes. As you gain productivity from staff and consistency in deal documentation and communication, you can increase your gross profit per sale. Plan your expenses in advance as you do your revenue projections. You should know your expense per car sold, including closing and underwriting costs, staffing, service and follow-up care and collections. Scott Bates is an assurance and business services partner for Cornwell Jackson. He supports the firm’s auto dealership practice. Contact Scott at scott.bates@cornwelljackson.com or 972-202-8000.
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Fall 2018
DRIVELINE
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WASHINGTON UPDATE | By Shaun Petersen
connections between the old car and their devices – for example, apps that let you locate the car in a parking lot or control vehicle functions remotely. Those recommendations apply to dealers as well. Make sure all data is cleared from your vehicles before you sell them. Some vehicles have a factory reset option that returns all settings to their original state. Check the owner’s manual or visit the vehicle manufacturer’s website for information about how to reset and remove the information.
NIADA GOVERNMENT REPORT
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.
GRASS ROOTS
LEGISLATIVE
After a three-week delay requested by Democrats to gather more information, the Senate Banking Committee approved the nomination of Kathy Kraninger as director of the Bureau of Consumer Financial Protection by a 13-12 party-line vote. Her bid to head the nation’s most powerful financial regulatory agency now goes before the full Senate. Kraninger, who currently serves as an associate director of the Office of Management and Budget, was nominated by President Trump to replace acting director Mick Mulvaney – Kraninger’s boss at OMB. Committee Democrats criticized Kraninger as unqualified to lead the CFPB, citing a lack of consumer protection experience, and took shots at her role in the policies of the Trump Administration’s Department of Homeland Security, whose budget she oversees. But committee chairman Mike Crapo (R-Idaho) said Kraninger’s “significant leadership experience at federal agencies and on Capitol Hill,” and “her depth and diversity of public service experience” gave him “confidence she is well prepared to lead the bureau.” If confirmed, Kraninger is expected to continue the policies of Mulvaney, who has eliminated what he called the bureau’s “regulation by enforcement” and has critically examined many of the policies implemented by his predecessor, Richard Cordray. Mulvaney has also backed proposed legislative reforms aimed at making the CFPB more accountable.
“The Federal Trade Commission has issued a consumer alert advising those selling their cars to clear all data stored in the vehicle’s electronic systems, as personal data that was downloaded from syncing smartphones could remain” 14
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“Personally, I think Ms. Kraninger will do a good job of trying to rein in an agency that needs to be reined in,” Sen. Mike Rounds (R-S.D.) said.
REGULATORY
DOL is listening: The Department of Labor conducted a nationwide series of public listening sessions throughout September to gather views on its Overtime Rule, which spells out the details of the Fair Labor Standards Act’s requirement that employees receive overtime pay for working more than 40 hours in a work week. The rule exempts executive, administrative and professional workers from that requirement. The sessions were held in Atlanta (Sept. 7), Seattle (Sept. 11), Kansas City (Sept. 13), Denver (Sept. 14) and Providence, R.I. (Sept. 24). NIADA member dealers attended each of the sessions to offer their opinion on the rule. The sessions followed a request for information issued by DOL on July 26, seeking feedback on how the overtime exemptions are defined as the department studies a possible revision of the rule. Specifically, DOL is asking for public input about the appropriate salary level at which the overtime exemption should apply, the benefits and costs to employees and employers resulting from an increase in the current salary threshold of $23,660 per year, the methodology used to determine an updated salary level and whether DOL should regularly update the salary standard at certain time intervals. FTC consumer alert: The Federal Trade Commission has issued a consumer alert advising those selling their cars to clear all data stored in the vehicle’s electronic systems, as personal data that was downloaded from syncing smartphones could remain – and be accessible by the new owner. That information includes address books, phone numbers, log-in info and data gathered and stored on apps, location data or even garage entry codes for home or office. The FTC also reminded consumers to cancel or transfer all subscription services that might stay with the car, such as satellite radio or wi-fi hot spots, and to clear any
In August, I represented NIADA at the American Association of Motor Vehicle Administrators International Conference in Philadelphia, interacting with officials from state motor vehicle departments nationwide. One of the topics we discussed was AAMVA’s proposal for a document spelling out recommended best practices for handling titles for junk and salvage vehicles. AAMVA has formed a working group to try to standardize the states’ various definitions for title brands, such as salvage. The group is working on a draft document of proposed definitions that state DMVs can take to their state legislatures to adopt, providing consistency across the country. The draft will also include best practices on how to handle those titles – for example, should a “junk” vehicle ever be allowed to be rebuilt and driven on public roads? NIADA and some of our partners – including NAAA, NADA, Cox Automotive, KAR Auction Services and Copart – met with AAMVA to raise concerns with some of the concepts currently being considered as best practices. Those discussions will continue as we work together to create workable definitions and best practices.
PAC
Rep. Mike Kelly (R-Pa.), a car dealer and a leading voice for the auto industry in the U.S. Congress, was named NIADA’s 2018 Legislator of the Year during last month’s NIADA National Policy Conference in Washington D.C. Kelly was also the speaker at the conference’s Power Lunch during our Day on Capitol Hill, when independent dealers and industry partners from across the nation met with members of Congress and their staff to discuss the issues that affect our industry. Kelly was one of several members of Congress to receive contributions from the NIADA Political Action Committee during the NPC. That group also included 2017 Legislator of the Year Roger Williams (R-Texas), Rep. Mark Walker (R-N.C.) and Rep. Barry Loudermilk (R-Ga.), all of whom participated in the annual Friends of the Automotive Industry Congressional Reception and Dinner. Shaun Petersen is NIADA’s senior vice president of legal and government affairs.