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05............................................................... Planning for 2017 06.................................................. Phone Ups that Show Up 08...............................................NIADA Government Report 10.................................. CRM Technology vs. CRM Mindset 12..............................................Bank More on the Back End 14....................................................... Compliance Overdrive
WHAT’S NEW NIADA.tv
NEW CPO CHANNEL AND USED CAR WEEK
NIADA.tv just introduced a new channel devoted to CPOrelated programming, including marketing strategies and value perception of CPO. In addition, the site now offers 19 education and training sessions from the recent Used Car Week Conferences. Check out NIADA.tv for these videos and much more!
ADVERTISER’S INDEX
ADESA.................................................................................. IBC AutoZone .................................................................................5 NIADA CPO .......................................................................... IFC Lobel Financial..........................................................................3 Manheim...........................................................................10, 11 NextGear Capital................................................................... 12 Spireon ..................................................................................13 VAuto ...................................................................... Back Cover
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For information on how to become a member please contact Sally Leahy. sally@niada.com • 800-682-3837
NIADA HEADQUARTERS
NATIONAL INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION WWW.NIADA.COM • WWW.NIADA.TV 2521 BROWN BLVD. • ARLINGTON, TX 76006-5203 PHONE (817) 640-3838 The Nevada Dealer News is published bimonthly by the National Independent Automobile Dealers Association Services Corporation, 2521 Brown Blvd., Arlington, TX 76006-5203. Periodicals postage paid at Dallas, TX and at additional offices. POSTMASTER: Send address changes to NIADA State Publications, 2521 Brown Blvd., Arlington, TX 76006-5203. The statements and opinions expressed herein are those of the authors and do not necessarily represent the views of Nevada Dealer News or NIADA. Likewise, the appearance of advertisers, or their identification as members of NIADA, does not constitute an endorsement of the products or services featured. Copyright © 2016 by NIADA Services, Inc.
STATE MAGAZINE MGR./SALES
Troy Graff • troy@niada.com EDITORS
Jacinda Timmerman • jacinda@niada.com Andy Friedlander • andy@niada.com MAGAZINE LAYOUT & GRAPHIC ARTIST
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Dealer News / December 2016
SALES MATTERS JOHN CHAPIN
SELLING IS CHANGING… NOT REALLY Facts That Remain the Same
This past week I’ve received three separate emails from various sales gurus talking about how much sales has changed. While the Internet, social media and advances in technology have altered some of the peripheral aspects of selling, the foundational principles and keys that lead to sales success have remained the same. FACT: SALES IS STILL A NUMBERS GAME Failure in sales is due to a lack of activity 99.9 percent of the time. In other words, not making enough calls. Now that we have the Internet, I know sales reps who spend hours looking up background information on prospects before they call them. That is a mistake. Look up the information a prospect would reasonably expect you to have, but don’t spend hours being perfect. Just look up some quick information and make the call. Another way technology can work against us is some people believe they have to be technical experts before they call anyone. An insurance agent I know spent a full six months in the office studying cyber liability because he had to know everything before he could speak to anyone. The insurance agent is a producer (salesperson) first, not an underwriter (technician). The reality is you will never know everything and this is usually just an excuse to avoid doing the hard work of making lots of calls. Just because you have the Internet to look up information doesn’t mean you should be spending hours “preparing” at the expense of making calls. Just get some basics and make the call. Learn what you need to learn so you don’t make any careless or “stupid” mistakes, but focus more on activity than on being technically proficient. FACT: YOU’RE STILL THE EXPERT While it’s true that today’s consumer is, generally speaking, better informed than in years past, you’re still the expert who has probably forgotten more than they will ever know. The famous author Malcolm Gladwell once said it takes roughly 10,000 hours of study to master one’s craft. While you might not be at the 10,000-hour mark yet, you are still far better off than someone who has spent five, 10 or even 40 hours on the Internet studying your industry and products. You live in your business every day – the prospect doesn’t. People still need an honest, straightforward salesperson who understands the subtleties and idiosyncrasies and can educate them on what’s best for them.
FACT: FACE-TO-FACE AND PHONE ARE STILL THE MOST EFFECTIVE WAYS TO SELL Have you ever not received an email someone swore they sent you? It just happened to me again two weeks ago. In addition to the fact you can’t always rely on email, LinkedIn in-mail, or other Internet communication, you also lose the most important parts of communication, such as voice tone and body language. Plus, electronic communication distances you and dehumanizes the experience. For those reasons, in-person communication is always the most effective, followed by Skype and other face-to-face apps, then by phone communication. Electronic communication serves its purpose – short-sweet, non-critical communication in which you are simply conveying information. What kills me is when I see salespeople using email for initial communication or during an important part of the selling process. In that case, they are simply hiding behind technology because they are afraid to make a call. Also keep in mind that even non-critical electronic communication has to be backed up with a phone call or in-person contact to ensure it was received. You have much more impact when people can see and/or hear you. Don’t hide behind technology and spam people on the initial and other important communications. FACT: IT IS STILL ALL ABOUT RELATIONSHIPS AND DOING WHAT’S BEST FOR THE OTHER PERSON There is no “new relationship selling” or “solution selling.” The best have always focused on the long-term relationship and the best possible solution for the prospect, even if it involved sending someone to the competition. The best have always been seen as a peer and business partner looking out for the best interests of the prospect. THE BOTTOM LINE: THE ONLY WAY SALES HAS CHANGED IS FOR THOSE DOING IT THE WRONG WAY Years ago you could pull the wool over someone’s eyes, get away with not knowing as much, have subpar sales and people skills, and not work as hard. That said, the people who have always done it right have found little has changed over the years. For them, being great at sales still requires you work hard and make the calls, communicate effectively, build the personal relationships, practice professionalism, be knowledgeable, put the other person first and embody the character traits of honesty and integrity. John Chapin is a sales and motivational speaker and trainer with more than 27 years of sales experience as a No. 1 sales rep. He is author of the 2010 sales book of the year: Sales Encyclopedia. For more information, visit www.completeselling.com or email johnchapin@ completeselling.com.
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MANAGEMENT MATTERS BY KENNY ATCHESON
PLANNING FOR 2017 Make Necessary Adjustments “If you always do what you’ve always done, you’ll always get what you’ve always got,” said Henry Ford. Albert Einstein said, “The definition of insanity is doing the same thing over again and expecting a different result.” Now is the time to plan what you will do differently next year to succeed. I’ve had conversations with dealers who spend from $5,000 to $120,000 per month in advertising. I have discovered that regardless of the budget, there are some people who are so afraid of change they choose to continue
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getting mediocre results in lieu of making any adjustments. The resistance to change is not budget specific, but it is success specific. In other words, most successful dealers are ready to make a change at a moment’s notice as long as there is evidence there is a need for it. An interviewer asked Lee Iacocca what order he used to make changes when saving Chrysler. Iacocca said, “Order? We did everything at the same time.” Iacocca made lots of changes at the same time. It’s a good practice when necessary. In his book, Power to Change, Jim Jackson explains how some people only make changes after a crisis. According to Jackson, “You are right where you have chosen to be.” If you sell 40 cars or 240 cars per month, you have chosen how many cars you are going to sell. You may “desire” to sell 15 percent more cars, but that requires the decision to make changes. I’m not saying you should chase every shiny object you hear about from media agencies, a Twenty Group meeting or an article. Invest in consultations with an expert who will give you the bold truth. Don’t approach someone at an ad agency and ask what they have for sale. Carl Sewell, author of Customers for Life and owner of Sewell Automotive with dealerships located throughout the country, wrote about how important consultants have been to him. He doesn’t always take their
advice, but at least he knows he is getting the opinion of an expert rather than a sales pitch for services. Another advantage to professional consultation before investing in new strategies and media is you get “outside eyes” diagnosing and analyzing your strategies and tactics. Outside eyes are typically free from bias. They are not emotionally tied to anything in particular. Let me explain what I mean by “emotionally tied.” I’ve consulted for dealers who have done something one way for up to 88 years. They are emotionally invested in a particular method. It is what got them where they are. It may be something that lifted them from poverty to riches. That creates an emotional attachment. It took an outside set of eyes, a different angle and explanation of a new strategy, to get them to realize it was time for some tweaks. Your existing strategy and plans may be good, and only require minor tweaks to be great. Find out. Kenny Atcheson is the president of Dealer Profit Pros and author of Marketing Battleground: How to Deploy an Army to Battle for Your Business. Kenny teaches workshops, speaks at conventions and 20 Groups, and his company offers several marketing and advertising programs. His website is www.DealerProfitPros.com.
December 2016 / Dealer News
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SALES MATTERS
AUCTION NEWS
PHONE UPS THAT SHOW UP The Goal is Not Simply an Appointment
MANHEIM TRIPLES IMAGING OFFERING AVAILABILITY FOR CLIENTS Expansion in Response to
BY ALAN RAM
Every time I ask a group, whether it be dealers or salespeople, what the goal of a sales call is they tell me it’s to “set an appointment.” No, it’s not! Let me explain with two scenarios. Scenario A: You take a sales call. Everything goes great: You get a name, you get a number and, yes, the caller sets an appointment. You hear barking in the background, and you start talking to the caller about his dog. Now you’ve got some Golden Doodlerapport. Unfortunately, that appointment does not show up. Scenario B: Someone calls and you get her name and number. That’s no problem – you again use the highly effective technique that I call “asking them for it,” which works just about every time. This customer will not set up an appointment no matter how hard you try. She just won’t commit. But later on that evening, she comes in and buys. Which would you rather have? And that’s not a trick question. Clearly Scenario B, right? But she didn’t have an appointment. So what? The goal of a sales call is not to set an appointment but to have someone actually show up at your dealership. SHOW-UPS COUNT, NOT APPOINTMENTS. There’s a big difference between setting up appointments and having people arrive. I’ve had plenty of salespeople come up to me excited because they just used one of my word tracks on a customer on the phone and it worked great. My question is always, “Did the caller show up yet?” If not, nothing has worked “great” yet. Not until they show. Now, I’m not telling you not to set up appointments, so relax. Of course you want to set up appointments. But let’s face it, nobody comes into your dealership because you got their name and phone number. “Hey honey, that salesperson at Friendly Kia just got our phone number! Let’s get down there!” MESSAGING MATTERS By the same token, nobody comes into your dealership simply because you set up an appointment. They come in because of everything else you say. What reasons are you giving customers to come to your dealership, other than to see you? If you can’t answer that question, you need to figure it out. Most telephone training in the automotive industry is simple: 1. Get their name. 2. Get their phone number. 3. Smile, because a smile can be heard over the phone – that is true, by the way. 4. Then set up an appointment they probably won’t show up for. You need to step up your game. To get people to come to the dealership, you must give them solid reasons to show up. The next time someone asks you what your goal on a sales call is, I want you to say: “It’s to get someone to actually show up.” Alan Ram is president of Proactive Training Solutions.This article originally appeared on NCM’s Up to Speed blog (blog.ncminstitute. com) and is reprinted with permission.
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Dealer News / December 2016
Client Demand
In response to client demand, Manheim has nearly tripled the availability of Enhanced Vehicle Imaging, expanding from 25 to 74 auction locations throughout North America. EVI provides a consistent set of quality high-resolution images that showcase vehicles in an optimal way. Manheim said the service leads to a higher conversion rate for sellers and increased confidence about purchases for online buyers. “The Enhanced Vehicle Imaging service we use from Manheim Milwaukee has proven to be a big boost to our bottom line and has grown our online attendance,” Napleton Automotive Group remarketing manager Jeff Ricchio said. “And we love the positive feedback we get from buyers about the photos.” Manheim’s EVI produces photos superior to those traditionally available via the device used to take standard condition report photos. Using high-quality, state-of-the-art programmable cameras and software, certified photography staff members shoot the images after vehicles have been reconditioned. They display one car at a time and include a consistent set of views most important to buyers. High-resolution images, available in-lane and via Simulcast and OVE, enable viewers to pan the vehicle and zoom in and out to areas of interest on the vehicle. “Dealer interest in improving online sales and their success stories compelled us to broaden our EVI footprint and be an even better business partner,” Manheim senior vice president of inventory services Grace Huang said. The addition of Enhanced Vehicle Imaging helps consignors move vehicle inventory more efficiently, reaching up to 80 percent more online buyers with increased bids per sale, Manheim said. Manheim data also showed Simulcast listings with EVI images convert 16 percent better than two or three low-resolution photos, and 50 percent better than no photos. Dealers using EVI sell 27 percent more vehicles online than those who use two or three low-resolution images. EVI supports dealer efforts to sell less desirable, aged vehicles online – vehicles with expected low AutoGrade scores, high mileage or lower prices.
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HIT YOUR YOUR HIT MARK MARK APPLYTODAY TODAY APPLY
Completethe theNIADA NIADADealer Dealer Group Complete 2020 Group membershipapplication application invitation membership forfor an an invitation to attend attendasasa amember member candidate. to candidate. CommittedBoard Board Directors for Your Dealership →→ AA Committed of of Directors for Your Dealership →→ Dealers Average 25% Profit Increase in Their First First Dealers Average 25% Profit Increase in Their 33Years Member YearsasasTwenty TwentyGroup Group Member →→ Groups for Small and Large Dealers Groups for Small and Large Dealers →→ Tailored Monthly Composite Tailored Monthly Composite →→ Proprietary Forum ProprietaryOnline OnlineGroup Group Forum → Business Model Best Ideas Session → Business Model Best Ideas Session → Consulting, Training & Expert Advice → Consulting, Training & Expert Advice → Currently Forming Three New Groups → Currently Forming Three New Groups
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YOUR PLACE DEALER FIND INTERESTS. Retail BHPH
FIND YOUR PLACE Controller LHPH
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Controller LHPH Service For more Auto details,Finance contact Diann Flanders at 888-906-2705 or diann@niada.com www.twentygroups.com
For more details, contact Diann Flanders at 888-906-2705 or diann@niada.com www.twentygroups.com
The National Independent Automobile The National Independent Automobile Dealers Association’s recent acquisition of Leedom & Associatesrecent Dealer acquisition Twenty Dealers Association’s Groups will provide NIADA members 17 of Leedom & Associates Dealer Twenty different group optionsNIADA to joinmembers to help your Groups will provide 17 dealership improve profitability and identify different group options to join to help your opportunities for growth. Whether you dealership improve profitability and identify are an independent retail dealer, a BHPH opportunities for growth. Whether you dealer, a store manager, or if you operate are an independent retail dealer, a BHPH a franchise new car store, NIADA’s Dealer dealer, a store manager, or if you 20 Groups program has a group to fitoperate your a franchise new car store, NIADA’s Dealer needs and expectations. Whether you are 20 Groups has a togroup to fitlevel, your trying to takeprogram your business the next needs and expectations. Whetherfor you are train your staff or arrange financing your trying to take yourhelp! business to theDealer next level, dealership, we can The NIADA 20 Group dedicated to finding train yourprogram staff or isarrange financing for your the perfect group to fit your dealership size, dealership, we can help! The NIADA Dealer sales volume and overall operation.to finding 20 Group program is dedicated
the perfect group to fit your dealership size, sales volume and overall operation.
WASHINGTON UPDATE
NIADA GOVERNMENT REPORT
Latest Governmental Issues and Activity Here’s a rundown of some of the latest governmental issues and activity affecting the used car industry from NIADA senior vice president of legal and government affairs Shaun Petersen and NIADA lobbyist Sante Esposito of Key Advocates.
REGULATORY REPORT By Shaun Petersen
FEDERAL TRADE COMMISSION A federal court judge approved the FTC’s $10 billion settlement agreement with Volkswagen over the company’s deliberate cheating on government emissions tests. The approval formally starts the process for owners of certain Volkswagen and Audi 2.0 liter diesel vehicles – including independent dealers with those vehicles in their inventory – to get compensation. In most cases, the owners of VW and Audi diesel cars fitted with the emissions defeat devices will receive between $12,500 and $44,000 each, depending on the model, year, mileage and trim of the car, as well as where the owner lives. A post on the FTC’s consumer blog, www.consumer.ftc.gov/blog/vwbuybacks-and-lease-terminationsbegin, provides additional background information on the settlement order, along with detailed instructions for affected owners about how and where to file a claim and the claim-processing timetable. It also tells consumers how and where they can pick up buyback checks and noting those funds do not have to be used to buy a new Volkswagen.
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Dealer News / December 2016
CONSUMER FINANCIAL PROTECTION BUREAU Supervisory highlights: The CFPB released its latest supervisory highlights report, which showed recent supervisory actions returned more than $11 million to more than 225,000 harmed consumers. The report outlined violations found in auto loan origination and servicing, including a claim that servicers refused to return personal belongings from a borrower’s repossessed car until the borrower paid a storage fee. If borrowers did not pay the fee in the allotted time, usually 30-45 days, depending on the state, the companies would dispose of the property instead of returning it to the borrower. The CFPB said it is an illegal and unfair practice to refuse to return a consumer’s personal property until a fee is paid. Service providers bulletin: The CFPB reissued its compliance bulletin on service providers, saying the amendment was needed to clarify that entities have flexibility, allowing for appropriate risk management of service providers. The new bulletin includes the same list of expectations for managing service provider relationships, such as verifying that service providers understand and are capable of complying with federal laws; requesting and reviewing service providers’ policies, procedures and training materials; and including in contracts clear expectations about compliance. The revised bulletin gives entities some flexibility and discretion when determining the level of oversight needed, based on the circumstances of the relationship and the particular activities of the service provider, as well as the potential for harm to consumers. Comments on payday lending rule: NIADA joined with NADA and the RV Dealers Association to submit comments to the CFPB regarding its proposed payday lending rule. Our comments raised concerns that the CFPB’s proposed rule needs greater clarity to ensure retail installment contracts for the purchase of personal property, such as automobiles, are not covered by the proposal. We also told the bureau the purchase money exemption must include all components of the transaction, including the purchase of voluntary protection products such as GAP, as well as negative equity.
LEGISLATIVE REPORT By Sante Esposito
S.2663, REFORMING CFPB INDIRECT AUTO FINANCING GUIDANCE ACT Advocacy efforts heading into the lame duck session, which begins in midNovember, have been focused on urging Sens. Joe Donnelly (D-Ind.) and Heidi Heitkamp (D-N.D.) to cosponsor the bill, which rescinds the controversial auto
financing guidance action taken by the CFPB in March 2013 and provides for a more transparent and accountable process for addressing the issue of indirect auto lending. The effort is the result of a recent meeting with Sen. Richard Shelby (R-Ala.), chairman of the Senate Banking Committee, which has jurisdiction over the bill. In that meeting, Shelby committed to marking up the bill in committee during the lame duck session if two Democrats would cosponsor it. Donnelly is a small business advocate who was a featured speaker at NIADA’s 2016 National Leadership Conference and Legislative Summit. NIADA will also keep pushing its request for the Senate to convene a series of meetings with the CFPB and stakeholders to explore the possibility of an administrative solution to the issue. The CFPB’s guidance claimed dealer discretion on interest rates in indirect auto financing creates a “significant risk” of unintentional disparate impact discrimination. S.2609, MARKETPLACE AND INTERNET TAX FAIRNESS ACT This bill would allow states to charge sales tax on so-called “remote transactions,” such as Internet sales, but thanks to NIADA’s efforts it now specifically exempts vehicles, aircraft, vessels and business purchases – all cases in which states currently collect a use tax either when the vehicle is registered or because businesses pay their use tax. A summary of the text refers to the exemption as preventing “double taxation.” The Senate Judiciary Committee has received comments back from a wide range of stakeholders and is still deciding its legislative strategy. Rep. Bob Goodlatte (R-Va.), chairman of the House Judiciary Committee, and Rep. Anna Eshoo (D-Calif.) have developed a discussion draft bill on the remote sales tax issue. H.R. 6094, THE REGULATORY RELIEF FOR SMALL BUSINESSES, SCHOOLS, AND NONPROFITS ACT The bill, introduced on Sept. 21 by Rep. Tim Walberg (R-Mich.) with 76 cosponsors, would postpone the effective date of the Department of Labor’s rule revising income thresholds for determining overtime pay for executive, administrative, professional, outside sales and computer employees exempt from regular minimum wage and overtime pay requirements from Dec. 1 until June 1. The bill passed the House on Sept. 28 by a vote of 246-177. Seven Democrats, including National Leadership Conference speaker Rep. Henry Cuellar (D-Texas), voted in favor.
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MANAGEMENT MATTERS BY SCOTT BERGERON
CRM TECHNOLOGY VS. CRM MINDSET It's a Tool, Not a Crutch
Have you ever wondered how dealerships sold in volume before CRMs, before the Internet, before websites and Internet leads? I consider myself an old-school car guy who
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Dealer News / December 2016
knows how to use technology. I still believe there’s a place in this business for pen, paper and all the high-tech programs that make our lives easier. I started my career in the ‘80s and was lucky enough to work for a top 100 nationally-ranked dealership. We sold 500 vehicles, both new and used, per month. We did it directing our focus on advertising, ordering correctly, training, and a CRM mindset. In other words, we wanted all the information and we collected as much as we could. It wasn’t efficient compared to the tools we have now, but it worked because everyone was on the same playing field. Technology today works like a champ, when
it’s used as a tool and not a crutch. There are more ways than ever for potential customers to connect with a dealership. Online shopping is, by all estimations, the starting line for over 80 percent of all transactions. In the dealership, the CRM software is used to track, assess, notify and persuade consumers. It also lets you track the steps of the sale as well as who’s performing on your sales floor, and who needs help. We’ve all heard the phrase “garbage in, garbage out.” Technology is only as good as the information that goes in, and the process to get the information back out to reconnect with is where most dealerships lose deals. I’ve been in dealerships where their CRM reported a 100 percent closing ratio. They must have some pretty great salespeople, or they’re only entering their sales into their CRM, and forgetting about the other 80 percent of unsold prospects. And even if the leads automatically populate into the CRM, it doesn’t do any good unless someone is following up. CRM technology is limited without a common sense process within the dealership to make sure everyone gets touched, whether they’re Internet leads or face-to-face prospects. One thousand online leads and 300 visits in a month should show as 1,300 prospects, less the conversions to sales, which likely won’t show a 100 percent closing ratio. I’ll take bad news that’s accurate any day over grossly inflated closing ratios. An article on Adexchanger.com elaborates on the importance of dealership CRM as an all-encompassing relationship tool, not just technology, concept. Headlined “CRM: A Philosophy That Goes Beyond Data, Technology and Channel,” the article by digital specialist Mayur Gupta notes, “CRM software is not enough… Establishing a lifelong customer relationship and loyalty is not just a technology problem. Marketers need to bring the strategy, data and technology together to establish and operationalize a CRM capability. To do this, they must establish a customer relationship and experience strategy.” In the dealership, it’s as simple as asking, “What’s happening to my customers? Is my CRM helping me make more deals, or is our process breaking down?” So how does a dealer combine technology with a selling mindset that provides customers your undivided attention and connection before they say yes?
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How much tech is too much tech? How do you feel when someone is talking to you, but texting? How would you feel in a selling environment if your salesperson was entering data into their phone while they were showing you a vehicle? Probably not very good. But it’s reality in many dealerships that have invested fortunes in high tech, thinking it will “revolutionize their sales process.” Most customers aren’t buying it. No matter what a salesperson is doing on their phone, a vast majority of customers think they’re being ignored. In my opinion, when a salesperson is in front of a customer, their eyes need to be up and directed toward their customer. Look down at your phone and you’re likely to lose a deal. So the challenge really is how much technology do we need, and when is it best to use good old-fashioned rapport building and eyeball-to-eyeball selling? Old school or new school – It’s all good, if it’s done right. Once the sales force has learned (or relearned) the more traditional side of relationship-building and management, it’s time to show how mindset and technology together can forge a highly successful sales program. Technology can be a catalyst to help build traditional relationships to reach more people in more ways. When done right, it results in more deals. Used properly, tools such as Internet Lead Modules and CRMs can prime the pump efficiently. Using prospect and customer information, a smart CRM can store critical information about a prospect’s wants and needs, as well as timeline and budget. Technology does the heavy lifting, while customer engagement closes the deal. High Tech & High Touch High tech allows your sales team to be efficient. High touch, or client engagement, is what’s required to be effective. In other words, it doesn’t matter how efficient I am at auto responding to prospects if they don’t show up and buy. Most of us still want to do business with people we like, respect and trust – and that requires one-on-one interaction. For the best and most effective results, brainstorm about how best to use/blend the two – high tech and high touch. Then, test it in your next sales training session. Here’s one scenario using email as the springboard: Do what the others don’t. Instead of
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canned auto-responders for inbound leads, try a catchy, clever and, most importantly, personalized email that will spur a visit or at least put you higher up on the radar than the other guys. Try a subject line like, “Scott, I’ve been waiting for you to email me!” Most prospects shop online because they fear entering a dealership. They don’t want some pushy salesman. But, knowing you were low-key and fun to work with could help start a dialogue. Today’s customers don’t want the old sales gimmicks, but they also don’t want to be ignored, or feel like they’re going through a line at Walmart to buy
a car. This is a huge buying decision. They deserve your attention, your personality and the best experience you can provide. Remember, they can go anywhere in the world to buy their vehicle. Give them every reason to buy from you. Ultimately, it’s CRM technology and a selling mindset together that make customer relationship management work effectively in today’s auto sales world. Former dealer executive Scott Bergeron is the founder and principal at Daily Gameplan. com - a sales team performance company. Scott can be reached at 303.918.3169 or scott@dailygameplan.com.
December 2016 / Dealer News
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AUCTION NEWS
BY AUTO REMARKETING
ADESA LAS VEGAS HONORED Among Best Auto Auctions to Work For
Following a study conducted by the Best Companies Group, Auto Remarketing has announced the honorees in the inaugural Best Auto Auctions to Work For. ADESA Las Vegas was among those honored. At ADESA Las Vegas, general manager Brenda Aden said it’s “excellent teamwork and communication, along with a dedication to regular employee recognition and
development” that makes the Nevada auction stand out as a great place to work. Teamwork, in fact, is her No. 1 priority in managing her staff. “We take a personal interest in our team and communicate with them to encourage them to meet their goals,” she said when asked how she aims to boost morale as a manager. Having a positive environment in the workplace can be critical, she said. “Anytime you have employees who enjoy coming to work, it’s apparent to our customers. Our employees really put forth extra effort to ensure customer service is at its best,” Aden said. “This, in return, provides a comfort level for our customers who then enjoy working with us.”
ACCELERATE
BY GWC WARRANTY
BANK MORE ON THE BACK END The Ultimate Customer Satisfaction Experience
So much of what you do on a day-to-day basis is to preserve your front-end gross. You act with discipline when acquiring inventory, you carefully manage reconditioning costs, you price your cars based on demand and market and you work to sell them in a timely fashion. But what are you doing to make more profit on the back end of your deals? Statistics show very few dealers offer service contracts on every sale. But why? Beyond the fact you can better protect your customers after the sale, there are countless benefits that put more profit in your pockets. Think about the extra commas in your bottom line if you apply the same effort to your back-end profits as you do to protecting your front-end gross. Nice mental image, isn’t it? It starts with having a process: Think 300 percent. That means you offer 100 percent of your service contract menu to 100 percent of your customers 100 percent of the time. That doesn’t mean you’ll end up getting every single customer to purchase a service contract. But if you can bump your penetration from 25 percent to 50 percent, you’ve just doubled your profits from the back end of deals. Not to mention the more service contracts you sell, the more you stand to get back in return. You get out what you put in: A portion of every service contract you sell is set aside in the event a claim is paid on that particular vehicle. Check with your service contract provider to see what portion of that reserve, if any, you can get back when the contract expires.
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Dealer News / December 2016
GWC Warranty dealers who qualify for our Elite Dealer Program begin earning a portion of those reserves back when they reach certain service contract volume milestones. Create enough service contract volume and WealthBuilder dealers can qualify for up to 100 percent of their underwriting profits. Service contract volume isn’t the only driver of that profit center. Selling quality vehicles and focusing on reconditioning will help keep reserve accounts full, as fewer claims are paid from them. Up your game with upsells: When it comes to immediate profits, upsells to richer coverage levels with longer terms will help build up reserve account balances. If you’ve followed the first two steps of this process and you work in upsell opportunities, you’ll be offering better contracts more often, making more underwriting profits available and, perhaps most important, improving post-sale satisfaction, setting you up for long-term profitable benefits as well. Repeat, refer, rejoice: Where you stand to benefit the most from a standardized back-end profit approach is when it comes back to you on the front end. How does that work? Imagine the customer you protected for a longer term with richer component coverage. Now think about how he’ll feel when two, three, four or even five years down the road, the service contract you sold is still saving him money on unexpected repairs. It’s the ultimate customer satisfaction experience, and one customers will tell family and friends about. So when their cousin, friend or colleague needs a quality vehicle, where will they go? You guessed it – they’re coming to you. And when they’re in the market for another vehicle, you can be sure they’ll start their search where their last one ended – on your doorstep.
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SAFETY WATCH
PRODUCTS & SERVICES
DMS FOR INDEPENDENT AND BHPH DEALERS GOES LIVE
Web-Based Solution Tailored for Independent Dealers
After more than a year of dedicated development and collaboration with dealers, DealerSocket officially released iDMS at the company’s User Summit, Oct. 3-5, in San Antonio, Texas. iDMS marks the first of several upcoming product launches for DealerSocket’s full-scale, integrated technology platform tailored to independent dealers. “Our independent platform’s seamless integrations will provide tremendous flexibility for each product suite, including iDMS,” vice president of product strategy Jennifer Lee said. “Once all our independent products have launched on the platform, users will be able to access tools based on their job role, rather than by product line.” iDMS is a highly integrated solution including flexible accounting, powerful desking, an integrated lender portal, integrated service shop management, unsurpassed workflow and queuing processes, and robust reporting analytics, the company said.
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“One of the most useful benefits of iDMS is its scalability for all sizes of success,” director of product and engineering Jeff McCurry said. “This platform can help small to midsized dealerships get to the next level, as well as allowing larger stores to reach maximum efficiency in their operations. iDMS will scale as your dealership grows, so you will not be faced with future software decisions.” The new solution merges the features of FEX DMS and AutoStar Solutions – along with adding some original features. Features include: • 100 percent web-based, cross-browser, crossplatform functionality, with a special focus on mobile devices so dealers can access iDMS in the F&I office, on the dealership lot, or while running errands. • Buy Here-Pay Here decisioning and integrated lender portal, so dealers can finance a deal without leaving the platform. • Real-time accounting integration with QuickBooks, as well as flexible general ledger account creation and mapping, which gives dealers granular control of GL transaction accounting. • Comprehensive desking solution for both Buy Here-Pay Here and independent retail dealers. • Robust collections, such as stacked promiseto-pay and dynamic queuing functionality. • Multitasking capabilities through an extra communication module at the bottom of each screen.
FORD RECALLS HATCHBACKS May Accidentally Unlatch Ford Motor Co. is recalling 64,038 model year 2013-17 Ford Focus hatchback vehicles manufactured Feb. 14, 2012 to Aug. 26, 2016, and equipped with a manual transmission. The hatchback of the affected vehicles may be unlatched with a single press of the interior latch release button. As such, the vehicles fail to comply with the requirements of Federal Motor Vehicle Safety Standard (FMVSS) number 206, “Door Locks and Door Retention Components.” With only a single press needed, the driver may accidentally unlatch the hatchback, increasing the risk of injury to any unsecured passengers in the back. Ford will notify owners, and dealers will reprogram the Body Control Module with updated software, free of charge. Ford’s number for this recall is 16C13.
December 2016 / Dealer News
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COMPLIANCE OVERDRIVE BY CHIP ZYVOLOSKI
AVOID THE “ONE SIZE FITS ALL” RETAIL SALES CONTRACT MINDSET Address Your Specific Terms Avoid compliance violations and potential fines by setting aside time to review your retail sales contracts. Wait, aren’t all forms “one size fits all?” Your credit documents need to address the specific terms of credit you offer – matched with state and federal disclosures and provisions. Mismatching your credit terms and contract provisions could cost you thousands of dollars in fines, damages and legal fees as well as harm your business reputation. Here are a few features you should review to make sure your retail sales contracts match the credit terms you offer. Type of Property Sold Motorcycles, autocycles, off-road vehicles, RV’s and other motorized vehicles may not be “motor vehicles” under your state’s retail sales laws. Required contract and disclosure terms can vary depending on whether you are selling a “motor vehicle” as defined in your state’s retail sales laws. With the variety of motorized vehicle types available, make sure the contract you are using is designed for the type of personal property you sell. The same is true of your license to sell motor vehicles. Make sure your dealer’s license covers the property you sell. Cash Down Payments Usually, the cash down payment is received at closing, but dealers sometimes allow buyers to make one or more down payments after closing. Under the Truthin-Lending Act and Regulation Z of the act, these “deferred down payments” or “pickup payments” must be made no later than the due date of the second regularly scheduled payment. They also cannot be subject to a finance charge. It’s helpful to have a contract provision with buyer’s promise to make deferred down payments. It must also be a line item in the Itemization of Amount Financed, which treats it as a credit even though it hasn’t been received yet. Although it’s not required, dealers should include the date and amount of a deferred down payment in the Fed Box Payment Schedule. If you allow deferred down payments, be sure your contracts support them or are flexible enough to handle them. Note: some states do not allow deferred down payments or require them to be paid sooner than under Reg. Z.
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Dealer News / December 2016
Negative Equity Trade-Ins Under Reg. Z, a down payment in the itemization can never be less than zero. As a result, negative equity trade-ins require special handling. Reg. Z allows two methods of calculating the down payment. One way is to net all the cash and other credits against the negative equity in the trade-in (“netting”). Another way is to add all credits but not subtract any negative equity in the trade-in (“nonnetting”). The method used will affect the calculated down payment and the amount of a separate line financing the balance owed on the negative equity trade-in. You may not have much choice in selecting a contract with your preferred netting or non-netting method, but it’s important to understand which method your contract uses so you can explain it to buyers. Equal Installments. Balloon Payments. Equal monthly payments are a common payment frequency. Changing to more or less frequent equal payments can sometimes require changes to contract terminology and disclosures. Be sure to review your documentation and completion tools carefully if you require equal periodic payments other than monthly. Balloon payments are generally structured as a final payment that is more than twice as large as the average periodic payment. A balloon payment schedule can lower periodic payments, but the buyer might have problems paying the balloon. Dealers and lenders sometimes provide options for buyers who can’t pay the balloon amount. Those options may be included in the contract, especially if they are required by law. For example, one option is to allow a buyer to pay the balloon amount plus interest in installments, usually in an amount no greater than the prior installments. States sometimes require additional disclosures to warn the consumer of the final payment amount. Be sure to review your documentation if you offer balloon payment features. Arbitration Not all contracts include an arbitration provision. You should review your contract to confirm it has one if you want it. The CFPB has proposed a regulation that would preserve the buyer’s ability to join a class action lawsuit even if the dealer/ creditor has a contract right to require arbitration. If the CFPB’s proposal becomes final, you will want to review your decision to include an arbitration provision and either update or remove it. Conditional Delivery – Spot Delivery Is your retail sales contract conditioned on your ability to sell the completed contract to an assignee? If so, your retail sales contract should include a provision telling the buyer about it. If you do conditional deliveries, it can be risky to use a retail contract that doesn’t include a spot delivery provision
or specifically cross-reference a separate spot delivery agreement. In that case, someone reading the retail contract alone will not know it’s subject to another agreement. (The same concept also applies to arbitration provisions.) If spot delivery is an important element of your credit programs, make sure your contract addresses it in some way. Note: some states do not allow conditional delivery provisions. Fees and Charges Your retail sales contract probably has blank lines in the itemization and in other places. That does not mean you can put anything you want in the blank lines, especially fees. In many states, only specific fees with specific names are allowed. You should review your retail contracts to determine if they have any required disclosures or contract provisions for the specific fees you charge. What if there isn’t a contract provision or disclosure for your fee and it only appears on a blank line in the itemization? That may be okay for some fees in some states. The point is that you should research your state to determine what fee information is required and to confirm your retail contract has it. Like the seasons, your credit programs and terms can change over time. Now is a good time to review your credit documentation to make sure it is up to date. Chip Zyvoloski is a senior attorney for Indirect Lending at Wolters Kluwer. For more information, please visit www. wolterskluwerfs.com/indirect.
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