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AU G U S T/ S E P T E M B E R 2 016
S A L E S M AT T E R S COMPETING WITH FRANCHISE DEALERS AND COMING OUT ON TOP P A G E 12
How Converting Sales to Service Can Help You Sell Cars
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New PassTime Series on niada.tv Get more from your GPS! There is a new video series on niada.tv that identifies how PassTime GPS tracking solutions facilitate higher rates of return on financing based upon improved customer payment performance. It also discusses PassTime’s wireless GPS telematics products. Check out this new series and much more at niada.tv!
06 L OST ART OF THE SWITCH
2$5,000 0 1 6 M EIN M BAUCTION E R D IS C ODISCOUNTS UNT BOOK $5,000 IN AUCTION DISCOUNTS $50 BUY FEE ONE PER MONTH 2016 M EM B ER D ISC OU N T B OOK $50 BUY FEE ONE PER MONTH L I n JN T B OOK s INER AUCTION 2016 $5,000 M EM B D ISCDISCOUNTS OU ong
sLand
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Long IsLand
new Jersey
ersey
syracuse
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(TWO) $100 OFF FEE /$100 (TWO) $100 SELLFEE FEE ––TOTAL $400 FROM FROM EACH AUCTION = AUCTION TOTAL $1,600= TOTAL (TWO) $100 OFF BUY FEE / BUY (TWO) OFFOFF SELL TOTAL $400 EACH
$5,000 IN AUCTION DISCOUNTS
08 NIADA CONVENTION
$50 BUY FEE ONE PER MONTH
10 NEW JERSEY’S OBSCURE WARRANTY NOTICE ACT
Long IFEE sLand new Jersey syracuse $50 BUY ONE PER MONTH BLOOMBERG – SELL (TWO)FEE $50 BUY FEE FROM (TWO) EACH $50 OFF SELL FEE (TWO) $100 OFF BUY FEE / AUTO (TWO)AUCTION $100 OFF – OFF TOTAL $400 AUCTION = TOTAL $1,600 Long IsLand
12 COMPETING WITH FRANCHISE DEALERS 14 4 ESSENTIALS FOR BIG SALES IN THE DOG DAYS OF SUMMER 15 D OES YOUR CONTENT MARKETING STRATEGY INCLUDE VIDEO? 18 C FPB’S PROPOSED CONSUMER ARBITRATION RULES
new Jersey
syracuse
BLOOMBERG AUTO AUCTION – (TWO) $50 OFF BUY FEE (TWO) $50 OFF SELL FEE (TWO) $100 OFF BUY FEE / (TWO) $100 OFF SELL FEE – TOTAL $400 FROM EACH AUCTION = TOTAL $1,600 BSC AMERICA, BEL AIR, MD – $50 OFF REGISTRATION BLOOMBERG AUTO AUCTION – (TWO) $50 OFF BUY FEE (TWO) $50 OFF SELL FEE
BSC AMERICA, BEL AIR, MD – $50 OFF REGISTRATION
BLOOMBERG AUTO AUCTION – (TWO) $50 OFF BUY FEE (TWO)OFF $50 OFF FEE SELL FEE BUFFALO AUTO AUCTION – $100 OFF BUY FEE / $100 SELL BSC AMERICA, BEL AIR, MD – $50 OFF REGISTRATION
GARDEN SP T Auto Auction
YO UR PR OF SP IT OT
BSC AMERICA, BEL AIR, MD – $50 OFF REGISTRATION GARDEN SPOT AUTO AUCTION – (FIVE) $50 OFF BUY FEE
BUFFALO AUTO AUCTION – $100 OFF BUY FEE / $100 OFF SELL FEE BUFFALO AUTO AUCTION – $100 OFF BUY FEE / $100 OFF SELL FEE
GARDEN SPT T GARDEN SP
Auto Use...............................................................6 Autotrader........................................................ IBC Black Book............................................................3 Manheim .......................................................10, 11 Manheim New York...............................................5 Manheim Pennsylvania........................................13 NextGear Capital............................................. 9, 12 PassTime............................................................. 7 STARS GPS...........................................................15 VAuto.................................................... Back Cover
YO UR PR OF SP IT OT
Auction Auto Auction MANHEIM ALBANY –Auto $100 OFF BUY/ $100 SELL BUFFALO AUTO AUCTION – $100 OFF BUY FEE / $100 OFF SELL FEE GARDEN SPOT AUTO AUCTION – (FIVE) $50 OFF BUY FEE YO UR PR OF SP IT OT
ADVERTISER’S INDEX ADESA............................................................. IFC
GARDEN SP –T (FIVE) $50 OFF BUY FEE GARDEN SPOT AUTO AUCTION Auto Auction
YO UR PR OF SP IT OT
GARDEN SPOT AUTO – AUCTION – (FIVE) $50 SALE OFF BUY FEE MANHEIM NEW JERSEY 1 FREE 7-DAY POST INSPECTION MANHEIM ALBANY – $100 OFF BUY/ $100 SELL
MANHEIM ALBANY – $100 OFF BUY/ $100 SELL MANHEIM ALBANY – $100 BUY/OFF $100 SELL MANHEIM NEWBURGH, NEW YORKOFF – $100 BUY/ $50 SELL
MANHEIM NEW JERSEY – 1 FREE 7-DAY POST SALE INSPECTION MANHEIM NEW JERSEY – 1 FREE 7-DAY POST SALE INSPECTION
MANHEIM NEW YORK SKYLINE – (TWO) $50 OFF BUY / (TWO) $50 OFF SELL MANHEIM NEW JERSEY – 1 FREE 7-DAY POST SALE INSPECTION
MANHEIM NEWBURGH, NEW YORK – $100 OFF BUY/ $50 SELL
OFFICE
For information on how to become a member, please contact Paula Frendel: 855.694.2324 or njiada.pfrendel@gmail.com
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MANHEIM NEWBURGH, NEW YORK $100 OFF$100 BUY/ SELL $50 SELL MANHEIM PENNSYLVANIA –– $100 BUY/ MANHEIM NEWBURGH, NEW YORK SKYLINE – (TWO) $50 – OFF BUY / OFF (TWO)BUY/ $50 OFF SELLSELL MANHEIM NEW YORK $100 $50 MANHEIM PHILADELPHIA – (TWO) $50 OFF BUY / (TWO) $50 OFF SELL MANHEIM NEW YORK SKYLINE – (TWO) $50 OFF BUY / (TWO) $50 OFF SELL
National Independent Automobile Dealers Association www.niada.com www.niada.tv 2521 Brown Blvd. Arlington, TX 76006-5203 phone (817) 640-3838
MANHEIM PENNSYLVANIA – $100 BUY/ $100 SELL
MANHEIM NEW YORK SKYLINE – (TWO) $50 OFF BUY / (TWO) $50 OFF SELL MANHEIM PENNSYLVANIA $100 BUY/ $100 ROCHESTER CENTRAL AUTO AUCTION – $200 OFF –BUY FEE; $200 OFFSELL SELL FEE; ENTRY FEE ($35) MANHEIM PHILADELPHIA – (TWO) $50 OFF BUY / (TWO) $50 OFF SELL
The New Jersey Dealer News is published bi-monthly by the National Independent Automobile Dealers Association Services Corporation, 2521 Brown Blvd., Arlington, TX 76006-5203; phone 817-640-3838. Periodicals postage paid at Dallas, TX and at additional offices. POSTMASTER: Send address changes to NIADA State Publications, 2521 Brown Blvd., Arlington, TX 76006-5203. The statements and opinions expressed herein are those of the individual authors and do not necessarily represent the views of New Jersey Dealer News or the National Independent Automobile Dealers Association. 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. All rights reserved. State Magazine MGR./Sales Troy Graff • troy@niada.com Editors Jacinda Timmerman • jacinda@niada.com Andy Friedlander • andy@niada.com Magazine Layout & Graphic Artist Chantae Arrington • chantae@niada.com Art Director Christy Haynes • christy@niada.com Printing Nieman Printing
2016 MEMBER DISCOUNT BOOK
MANHEIM PHILADELPHIA – (TWO) $50 OFF BUY / (TWO) $50 OFF SELL MANHEIM PENNSYLVANIA – FREE $100 BUY/ SELL ROCHESTER SYRACUSE AUTO AUCTION – ONE BUY / ONE $100 FREE SELL NO LIMIT ROCHESTER CENTRAL AUTO AUCTION – $200 OFF BUY FEE; $200 OFF SELL FEE; ENTRY FEE ($35) ROCHESTER CENTRAL AUTO AUCTION – $200 OFF BUY FEE; $200 OFF SELL FEE; ENTRY FEE ($35) STATE LINE AUTO AUCTION – 12 MONTHLY COUPONS FOR REGISTRATION
MANHEIM PHILADELPHIA – (TWO) $50 OFF BUY / (TWO) $50 OFF SELL
SYRACUSE AUTO AUCTION – ONE FREE Sell BUY / ONE FREE SELL NO LIMIT $5,000ROCHESTER in Auction Discounts! Buy and Fees...SAME AS CASH! PLUS...$4,000 in Vendor Coupons! ROCHESTER SYRACUSE AUTO AUCTION – ONE FREE BUY / ONE FREE SELL NO LIMIT STATE LINE AUTO AUCTION – 12 MONTHLY COUPONS FOR REGISTRATION
ROCHESTER CENTRAL AUTO AUCTION – $200Buy OFF and BUY Sell FEE; Fees...SAME $200 OFF SELL AS FEE; ENTRY FEE ($ $5,000 in Auction Discounts! CASH! STATE LINE AUTO AUCTION – 12 MONTHLY COUPONS FOR REGISTRATION
PLUS...$4,000 in Vendor Coupons! $5,000 in Auction Discounts! Buy and Sell Fees...SAME AS CASH! PLUS...$4,000 in Vendor Coupons! ROCHESTER SYRACUSE AUTO AUCTION – ONE FREE BUY / ONE FREE SELL NO LIMIT
STATE LINE AUTO AUCTION – 12 MONTHLY COUPONS FOR REGISTRATION
4 DEALER NEWS / AUGUST/SEPTEMBER 2016
www.newjerseyiada.org AS C $5,000 in Auction Discounts! Buy and Sell Fees...SAME
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MANAGEMENT GAMEPLAN / BY SCOTT BERGERON
THE LOST ART OF THE SWITCH >> Bring the Pendulum Back
BACK WHEN car deals were far easier, and customers didn’t spend six months self-diagnosing their needs, the ability to switch a prospect out of one car into another was commonplace and done with virtually every deal. Today, switching prospects from one vehicle to another can almost be considered a lost art. Re-focusing on it, though, can bring your dealership more deals. Historically, switching vehicles was a natural part of the sales process. Today, customers are more rigid in their quest, and to them, it’s often more about finding the “exact perfect vehicle.” Prospects walk in armed with loads of online research information about vehicle history, equipment, trade-in and retail values. But often they haven’t accurately assessed the value of their trade-in or calculated their monthly payments. That’s when forward momentum stops going forward, and the deal starts going sideways. The Swinging Pendulum – from Too Pushy to Too Cushy Traditional used car salespeople often were branded as being too pushy, too money motivated, and far too aggressive in their efforts to make a sale. Today’s pendulum, in many cases, has swung too far the other way. Reacting to a prospect who seems to know it all, many sales reps have basically adopted an order-taker mentality instead of being a value builder and solution provider. Part of this is a natural aversion to the used car stereotype. Part of it is salespeople or the sales process being allowed to become too soft. Here’s a typical scenario: A prospect walks in with an inflated idea of trade-in value, and little or no idea what their actual monthly payment will be. The prospect has researched trade-in value based on retail versus wholesale, and perfect condition compared to actual condition. Other than perhaps a ballpark guess, the monthly payment is an unknown. In some cases, the salesperson may overhear comments about payments or terms, but may choose to still let it go to
6 DEALER NEWS / AUGUST/SEPTEMBER 2016
the finance office – where it can, and in many cases does, blow up. Where’s the sweet spot? Bring the pendulum back toward the center. Just because a prospect has done research and is somewhat knowledgeable doesn’t mean he or she doesn’t need or want an “expert” to help guide the process. A major key to successfully finding that middle ground is knowing and asking the right questions, and if need be, switching the prospect to another vehicle that makes more sense. Switching it Up Salespeople need to be well aware of their “switch car inventory” ahead of time. Rules of the road include: 1. Training the sales force on switching. During your sales meeting, sales manager(s) should go through their inventory with their sales team and train what’s new on the lot, the hot cars from auction, the perfect switch vehicles – such as cars sold at auction for well below Blue Book and that allow the dealership to essentially get the deal done when trade values are upside down. This gives the sales rep, and the dealership, much better odds at making a deal happen. 2. Training/retraining the sales team on taking charge and being tuned in. Can you tell how to spot a green-pea on the lot? They’re the ones being led by their prospects instead of the other way around. Sales managers need to make sure their team is controlling the deal, not being led down the wrong path by a prospect who seems to know “exactly what they want,” but in the real world isn’t even close to reality for payment and terms. During the initial introduction phase, salespeople should always work towards keeping the prospect as flexible and open to suggestions as possible. As smart as today’s prospects are, it’s always a good idea to remember most only walk into a dealership or purchase a car every four to five years. Salespeople and managers work deals bell to bell nearly every day. So you and your team’s opinion should be taken as expert advice, especially in terms of deal structure. You know what’s
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IAA OFFERS EXPRESS NOTARY >> Electronic Assignment Of Title Documents
INSURANCE AUTO AUCTIONS Inc. recently announced its newest offering, IAA Express Notary, which allows for the electronic assignment of title documents. Carriers that choose Express Notary as their document delivery service can tap into a national network of mobile notaries who will travel directly to the vehicle owner and execute documents on the spot. The electronic assignment ability allows the notary requirement to be satisfied at a faster rate. SAFETY WATCH /
BMW RECALLS VEHICLES FOR CHILD SEAT RISK >> May Increase Risk of Injury
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Former dealer executive Scott Bergeron is the founder and principal at Daily Gameplan (www.dailygameplan.com), a sales team performance company. Daily Gameplan’s Red Books and cloud-based CRM have been used in thousands of dealerships throughout the United States. Bergeron can be reached at 303.918.3169 or scott@dailygameplan.com.
PRODUCTS & SERVICES /
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going to work and what’s not. The key is having enough rapport and trust built to be able to efficiently lead the deal. This level of competence must extend to making sure walkins, rarer these days, are helped as soon as possible. I walked into a dealership a few years ago wearing my worst blue jeans, and a tank top covered in dried paint. I had finished my Saturday work around the house and was ready to go buy my dream car. I was looking for a certified pre-owned Porsche 911. I was on the lot for at least 20 minutes. There were several salespeople available, but no one acknowledged me. Being from the car business, I really wanted to see if prejudging still existed just from the clothes I chose to shop in. I did finally get help, and yes, I bought the car. But the first impression is still something people put a lot of stock in. 3. Understanding the marketplace. When I visit a town, I make it a point to find prevalent radio stations to get an idea of what, how, and who they’re advertising to. It gives me a quick snapshot of potential audiences for cars – whether it’s young “Kardashian types” or highly educated, more affluent prospects. If I were working at a used car dealership in that town, I would attempt to determine right away what station(s) a prospect tunes in to – which may provide some valuable intel about how to switch and sell a car. Sales managers need to train their people to do similar investigation, so they can learn to spot hot button motivators, as well as building value in benefits. Just segmenting by generation (e.g., millennials) won’t do it. No matter what traits predominate, at the end of the day it still comes back to buying from people they like and can identify with. A salesperson who can listen, build rapport and truly be an expert can switch when need be, or build the value up on the first choice so it makes sense to spend a little more.
BMW OF NORTH AMERICA LLC is recalling certain model year 2011-17 X3 sDrive28i, X3 xDrive28i and X3 xDrive35i vehicles manufactured July 2, 2010 to April 14; 2015-17 X3 xDrive28d vehicles manufactured March 10, 2014 to March 31; and 2015-17 x4 xDrive28i, X4 xDrive35i and X4 xDriveM40i vehicles manufactured March 3, 2014 to April 15. The affected vehicles have lower anchor bars for securing child restraint seats that may become damaged when using the EuropeanISOFIX-type, rigid-style connector, child restraint system. Damaged lower anchor bars may increase the child’s risk of injury in the event of a crash. BMW will notify owners, and dealers will weld a reinforcing bracket to the lower anchor bars and the vehicle body, free of charge.
AUGUST/SEPTEMBER 2016 / DEALER NEWS 7
ASSOCIATION NEWS ///
ASSOCIATION NEWS /
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NIADA CONVENTION RECAP
Kris “Tanto” Paronto, one of the heroes of the infamous Sept. 11, 2012 terrorist attack on the U.S. diplomatic mission in Benghazi, Libya, told the harrowing story of those 13 hours in a gripping keynote address >> that left the overflow crowd standing and cheering. Paronto discussed courage and handling adversity and crisis situations, as well as the decision of himself and his CIA Annex security FROM THE VENUE TO THE CONTENT , the 2016 NIADA Convention and team to speak out about what happened that night in the face of Expo was all about reinvention. conflicting reports from government and media that told a different While the theme of “Success By Reinvention” was created with the story. idea of helping dealers thrive in the rapidly changing used car business, Attendees also had a chance to celebrate, dance and loosen up at it fit the industry’s biggest event just as perfectly. the Cigars and Martinis and Margaritas welcome reception in a lush, NIADA celebrated its 70th annual Convention in a new venue – the tropical setting at poolside, and at a disco-themed closing party recently renovated Mirage, which provided a larger yet more intimate following the crowning of Florida’s Scott Lanier as the 2016 National setting – as well as a sold-out 60,000-square foot Expo Hall with more Quality Dealer. than 170 exhibitors and the most extensive dealer education agenda in In addition to the NQD ceremony – webcast live as always on history, featuring more sessions on more topics than ever before. NIADA.TV – the previous night’s National Leadership Awards Banquet It also included more attendees than ever before. The 2016 introduced new NIADA president Billy Threadgill as well as honoring Convention obliterated the event’s attendance record, sailing past the NIADA scholarship recipients and the winners of awards for the top previous mark, set in 2006 at the Las Vegas Hilton, by a staggering 24 performers within the association and the used vehicle industry. percent. The number of dealers and first-time attendees both rose by “I can honestly say my experience was far above and beyond my 30 percent or more. expectations,” said Daniel Johnson of LiteHouse Auto in Lakewood, “I got what I came for,” said Sean Schuetz of Klass Motors in Santa N.Y., a first-time attendee. “We will not miss a Convention from here Ana, Calif. “I wanted to learn new ways to take my business to the next on out.” level, and I’ll be spending the next several months implementing what The 2017 NIADA Convention and Expo will be back at The Mirage and I learned at my dealership. It was the most informative convention I is scheduled for June 12-15, 2017. Save the date and don’t miss your have attended.” chance to be part of the used vehicle industry’s biggest event of the While the education is always the focus, there was, of course, a lot year! more happening.
Reinvention Creates Success for 70th Annual NIADA Convention and Expo
8 DEALER NEWS / AUGUST/SEPTEMBER 2016
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AUGUST/SEPTEMBER 2016 / DEALER NEWS 9
LEGAL NEWS / BY ANTHONY E. BUSH, ESQ., ECKERT SEAMANS CHERIN & MELLOTT, LLC
CLASS ACTIONS INVOLVING NEW JERSEY’S OBSCURE WARRANTY NOTICE ACT
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>> Best Dealer Practices
DESPITE BEING nearly 40 years old, New Jersey’s Truth in Consumer Contract
10 DEALER NEWS / AUGUST/SEPTEMBER 2016
Warranty and Notice Act (“TCCWNA”) has only recently been used as a basis for numerous class action lawsuits against national retailers and car dealers. What is the TCCWNA? Unlike New Jersey’s Consumer Fraud Act, under the TCCWNA consumers do not need to show: • Any actual damages. • That they bought anything from sellers. • That there is any unconscionable commercial practice to prevail on TCCWNA claims. Alleged violations of the Act generally fall into two categories. First, the TCCWNA prohibits the inclusion of unenforceable terms on websites or in contracts that pertain to the retail sale
of goods and services. For example, websites or contracts that contain provisions that virtually bar all contract or negligence claims may subject your business to a TCCWNA claim. Second, the TCCWNA provides it is permissible to include phrases such as, “exclusions may not apply in some jurisdictions.” However, consumer contracts, notices or signs must state which provisions are unenforceable or inapplicable within the State of New Jersey. Failure to do so is a violation of the Act. Successful litigants under the TCCWNA are able to recover $100 for each violation plus attorneys’ fees. Since individual claims only have nuisance value, TCCWNA claims really only have value if brought as part of a class action lawsuit. Recent Cases Involving Online National Retailers In the last several months, Advance Auto Parts, Walmart, Johnson & Murphy, J. Crew, Vitamix and others have been sued in federal court in New Jersey in class actions alleging their websites’ terms and conditions improperly attempt to absolve them of responsibility over the products they sell. The suits typically allege New Jersey law prohibits these types of exculpatory clauses (because they undermine the purpose of the laws to protect consumers). They seek to recover hundreds of thousands to millions of dollars often without any proof that a single person suffered damages. Cases Involving Car Dealers and the TCCWNA There a number of substantially similar lawsuits currently on appeal concerning the same contractual provision set forth in a Retail Buyer’s Order Form used by many new and used car dealers in this state. The Buyers Order form contains the following provision concerning the payment of sales and use tax: “The price of the motor vehicle as specified on the face of this Order includes reimbursement for certain Federal Excise taxes, but does not include sales taxes and use taxes (Federal, State or Local) or other taxes unless expressly stated. A customer assumes and agrees to pay, unless prohibited by law, any such sales, use or occupational taxes imposed on or applicable to the transaction covered by this order, regardless of which party may have primary tax liability.” Plaintiffs alleged the language violated the TCCWNA provision on the grounds that it suggests the payment of taxes are or may be void, unenforceable, or inapplicable but failed to explain the applicable law in New Jersey. The trial courts have found the challenged provision accurately and unambiguously informs New Jersey consumers of their obligations to pay taxes under current New Jersey tax structure. Furthermore the inclusion of the flexible language of “unless prohibited by law” does not violate the TCCWNA. These cases are currently under appeal. The businesses community is anxious for any appellate court ruling that restricts interpretation of the TCCWNA and possibly
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SAFETY WATCH /
BRIDGESTONE RECALLS TIRES FOR TREADS >> Tread May Separate
If it is important
for a retailer to maintain the provision on their website or contracts, the retailer should expressly state the disclaimer does not apply in New Jersey.
BRIDGESTONE/FIRESTONE North America Tire (Bridgestone) is recalling 32 Firestone FR710 tires, size 205/65R16, and Champion Fuel Fighter tires, sizes 205/65R15 and 205/70R15, manufactured March 27 to April 9. These replacement passenger car tires may have been manufactured with inconsistent rubber coverage over the steel plies. As a result, the tread may separate. A tread separation increases the risk of a crash. Bridgestone will notify the owners who purchased the tires, and dealers will replace the tires, free of charge. The manufacturer has not yet provided a notification schedule.
slows the stream of future litigation involving the TCCWNA. Dealer Best Practices Whether it is your online advertising or your physical documents used at your onsite locations, there are pre-emptive steps dealers can take to avoid becoming the target of a TCCWNA class action lawsuit. It is important to have a well-drafted arbitration clause in the terms and conditions on your business’ website and in your contracts or Retail Buyers’ Orders. These provisions are valid, binding and enforceable and provide protection, provided that: (1) they clearly state the consumer gives up their right to a jury trial; and (2) the arbitration clause states unambiguously the consumer may not serve as a class member or a class action representative. (If the consumer can’t participate in a class or serve as a class representative, the claim has nuisance value only.) Arbitration clauses have generally been held enforceable. However, they are under attack in recent New Jersey cases and on a national level from the Consumer Financial Protection Bureau, which seeks to propose new regulations limiting their use in consumer contracts. The New Jersey Supreme Court has held arbitration provisions must state clearly that all claims are subject to arbitration, and that the consumer gives up their right to file a lawsuit. Courts have also held that if such provisions are “buried” in a consumer contract, they may not be enforceable. Another easy step to protect a retailer is to review any provisions that contain a disclaimer of liability that is unenforceable in New Jersey. If it is important for a retailer to maintain the provision on their website or contracts, the retailer should expressly state the disclaimer does not apply in New Jersey. Finally, best practices are to have your entire website disclaimer language and existing contracts undergo a thorough review for compliance with all existing federal and state obligations.
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AUGUST/SEPTEMBER 2016 / DEALER NEWS 11
SALES MATTERS / BY DEALERSOCKET
COMPETING WITH FRANCHISE DEALERS AND COMING OUT ON TOP >> How Converting Sales
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to Service Can Help You Sell Cars
12 DEALER NEWS / AUGUST/SEPTEMBER 2016
Every time a
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DEALERSOCKET’S DAR for Fall 2015 cites two primary problems independent car dealers face. One is used car sales and the other is repair services. Why are these issues for independent dealers? This finding is based on an independent dealer’s ability to convert used car sales to repair services, which correlates with customer satisfaction and retention. How do you convert sales to service? You must change customer perception. Almost all business is judged by the strength of the customer service department. You need to change consumer buying habits. DealerSocket reports for independent dealers only 30 percent of sold customers brought their vehicle back to the dealership for service within the first year. The average percentage of repeat customers is only 20 percent. They examined a Chrysler Jeep dealer and discovered the average sold customer who brought their vehicle back to the franchise dealer for service during the first year of ownership was 80 percent while the customer retention rate was 44 percent. How do they do it? According to DealerSocket, they have established a two-step process unique to their group and region. They introduce all new customers who purchase a vehicle to the service department at the time of delivery by scheduling their first oil change. Once the customer is in the service department, they created a program they call Platinum Plus. Every time a customer spends money in the Service Drive, 15 percent of dollars spent goes towards the purchase of their next vehicle. This has proven to increase retention in service. Converting customers who bought vehicles from the sales department into service customers is the formula for increasing customer holdings. The cycle of customer sales purchase to customer repair service, coupled with a 2-5 year trade-in is the pattern every dealership seeks to obtain. How does an independent dealer compete with the larger franchise? DealerSocket surveyed consumers and found 75 percent say where they purchase their vehicle is influenced by negative online reviews. Your online presence matters and there are ways to make it work for you. DealerSocket proposes several solutions: • Data mining or data discovery is the process of analyzing data from different perspectives and summarizing it into useful information. This information can be used to increase revenue, cut costs, or both.
customer spends money in the Service Drive, 15 percent of dollars spent goes towards the purchase of their next vehicle.
This software is an analytical tool often used by retail, financial, communication and marketing organizations. It enables companies to determine relationships among internal factors like price, product positioning, or staff skills to external factors like economic indicators, competition, and customer demographics. This allows you to properly position your business and possibly increase customer sales and retention. Customer relations management software keeps a customer database with phone numbers and email addresses, so you can schedule follow ups, appointments, and email blasts that allow you to continually reach sold and prospective customers. • Schedule your customer’s first oil change before they walk out the door and send a reminder before the appointment date. This is an excellent way to build a sales/service cycle. • Examine sales trends, including the retail sales outlook, trends by vehicle type, web based and device driven sales, and the online shopper and how they’re utilizing your website. Traditional marketing processes are irrelevant in light of today’s online marketplace. The DealerSocket DAR for Fall 2015 summarizes their report the following way: Increase customer retention by: • Integrating sales and service processes. • Building trust and communicating the value of the service department within the first year of selling a vehicle. • Utilizing data mining software. Grow revenue by: • Implementing appointment confirmation processes. • Focusing on used car opportunities. • Decreasing spending on traditional advertising. • Creating a digital shopping experience that drives consumer engagement.
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SALES MATTERS / BY BRENT CARMICHAEL, NCM ASSOCIATES
4 ESSENTIALS FOR BIG SALES IN THE DOG DAYS OF SUMMER
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>> The Right Plan for Summer Profit
THE DOG DAYS of summer are here. The typical
BHPH dealer will sell 30 to 35 percent of their annual units in the first three months of the year. They will also realize about the same percentage of their annual profit in the first quarter. So, if you got off to a slow start this year, summer could be the only way to salvage your annual sales. However, it’s going to be a lot harder. But you can profit in the summer – with the right plan. Good sales in the summer are no different than selling in the first-quarter heydays. It just requires more focus and drive because your customers have less money and can be harder to find. The four steps I outline below will give your team the skills and focus to make sales, even in the most challenging months. Step One: Develop the right skills. The first of the key ingredients, and most important, is simply training. Well-trained salespeople can sell any time of year. Set up a training schedule to get your team on point. Both phone training and basic sales skills training should be done weekly, at a minimum. Specifically, address how to overcome objections. Role playing is a good way to accomplish this. Educate your staff on how to set effective appointments by recording and reviewing the calls. Lot traffic is at a premium during the dog days, so make sure your people know how to handle effectively what opportunities they do have. Step Two: Keep up appearances. Appearance is critical. Now, I’m not necessarily talking about your employees’ appearance, which should always be neat and professional, but your overall lot appearance. Over my many years in the business and as an executive conference moderator with NCM Associates, I’ve discovered the No. 1 reason BHPH customers choose a dealership is that it looked good when they drove by. Let’s take this at face value and make sure your lot is the bestlooking one in town! Fortunately, improving your lot appearance isn’t difficult. Make sure it is always neat and orderly. Arrange vehicles evenly and with a good mix of colors and styles. Don’t have them face all four directions of the compass! Host a lot party or rodeo at least once a week to force yourself to keep the lot fresh. And don’t forget the cars themselves. You should consider the vehicles on your lot as your mannequins and treat them the way a fine department store treats theirs. Keep
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them fresh, neat, clean and always ready to sell. That goes for overall lot appearance as well. A fresh coat of paint and some weed killer can do wonders. Step Three: Entice your customers. Successful dealerships understand you can’t just wait for clients. Good marketing brings people to your lot, so develop a plan that offers attractive incentives. Summer is a time when repeat and referral programs really pay dividends. And it is also a good time of year to focus on referrals, not just with your customer base but with outside companies and people as well. If you are not already paying referrals to noncustomers, it’s something you should give some serious consideration to. I can assure you some, if not all, of your competitors are doing it. Marketing also extends to your web presence. Make sure your website is up to date. Read through your “About Us” sections and any testimonials – do you need to make changes? Review your employee introductions – has anyone left or been promoted? Do the photos need to be replaced? Reviewing photos is of particular importance if you display inventory. I was on a dealer client’s website the other day and the inventory photos had snow on the vehicles! It’s also critical you check any advertised specials. You don’t want someone stopping in for a deal that’s no longer current! Step Four: Get your message out. If you want to make the most of the dog days of summer, make sure people know about you. In this very competitive industry, advertising in some form or fashion is a must. The two most popular advertising media are, of course, television and radio. And, contrary to popular belief, use doesn’t drop off in the summer. Advertising is only effective when it reaches the right folks with the right message. When promoting in these channels, remember to advertise to your customer, not yourself. Chances are your buyers watch different television stations than you do and may even listen to different radio stations. Select ad placements where your clients are watching and listening. If you aren’t certain what media your customers are using, survey both new and existing customers to gauge their entertainment preferences. In other words, just ask them. Moving past traditional media, there are many options in social media to get your message out. I won’t go into them here, but I recommend you get the basics. As you can see, the formula for selling in the dog days is the same as selling in the heydays. Although there are usually fewer opportunities, you can capitalize on what you have when you pay more attention to detail. And it doesn’t need to be expensive – the two most important items outlined above are the least expensive. With the right mix of training, lot maintenance, and marketing and advertising, I know you can keep the dogs at bay. Brent Carmichael is the executive conference moderator at NCM Associates. This article originally appeared on NCM’s Up to Speed blog (blog.ncminstitute.com) and is reprinted with permission.
MARKET WATCH /
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BLACK BOOK UNVEILS RESIDUAL FORECAST ON THREE-YEAR-OLD VEHICLES >> Rising Supply’s Continued Impact
BLACK BOOK, a division of Hearst Business Media that provides new and used vehicle valuation services and custom data licensing solutions, unveiled its May residual forecast illustrating the downward pressure on prices that increased supply will continue to have over the next few years. Black Book forecast data shows residuals on an average three-year-old vehicle will dip from the current three-year retention of 52 percent in 2016 to 47.8 percent by 2019. Retention values on a three-year-old vehicle peaked in 2013 when vehicles were retaining approximately 54.5 percent of their original typically-equipped retail. Favorable credit availability, continued growth in demand, and consistently low gas prices have provided support in keeping retention rates high in the last five years. Increased used supply in the marketplace, driven by the significantly large volume of sales on new cars and trucks has played a driving role in slipping retention rates this year. Here are the historical three-year retention rates and the projected residual forecast on an average three-year-old vehicle according to Black Book: • 2012: 53.8 percent. • 2013: 54.5 percent. • 2015: 54.1 percent. • 2016: 52.0 percent. • 2017: 50.1 percent (forecast). • 2018: 48.6 percent (forecast). • 2019: 47.8 percent (forecast). The historical data represents published Black Book Wholesale Average values as a percent of new typically-equipped retail. The forecast represents published Black Book Residual Values averaged across all threeyear-old models. “Despite the industry’s continued efforts to maintain a strong pace of sales on new cars and trucks, the increased level of supply in the used market has begun to weaken prices on both cars and trucks,” said senior vice president of automotive valuation and analytics Anil Goyal. “We saw the first sign of this in 2015, when cars saw aboveaverage depreciation on the year, and this year we will see rising depreciation for truck segments as well.” www.newjerseyiada.org
ONLINE MARKETING / BY KATHY R. TAFOLLA, LOBEL FINANCIAL
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DOES YOUR CONTENT MARKETING STRATEGY INCLUDE VIDEO? >> Video Outperforms in Driving Conversions VIDEO CONTENT is exploding across the Internet, in social media feeds and in social hubs. Given the growing quantity of social media, you can capitalize on video marketing. Even more, you can shoot, edit and produce these videos inexpensively. How is this possible?
search engines. You want to know how many website visitors are clicking on it and how long they’re staying on the page. Most B2C business owners know content marketing is the most commercially important part of your digital marketing campaign. Why? The object of content marketing is to help and inform consumers. It is to show people your business knows the industry and their expertise is credible. Mastering a video content marketing campaign will help you build relationships with your customers before they step foot on the premises. Content tells people why your products are good and how it benefits them. For dealerships this might include financing options, reliability, and what sets you apart from the competition. Content allows the consumer
to view your offerings, and if presented well, compels them to buy from you. Online marketing reports indicate content videos outperform other content types in driving conversions. Videos increase consumers’ understanding of products and services and website visitors are more inclined to purchase a product after watching a video. Moreover, you can expect to see a rise in interactive and personal video content to help turn viewers into leads.
1. Write a script. 2. Record a voice over. 3. Use Adobe to create the graphics. 4. Get a video recorder for live video. 5. Use Adobe After Effects for video editing. 6. Add music using sound effects. 7. Publish.
You can also use PowerPoint to video edit if money is a factor and Adobe is out of your budget. Video content marketing allows consumers to satisfy their information and entertainment needs all at once. It’s also a great way for small business owners to compete with larger businesses. Video is unrivaled when it comes to reaching your target audience. YouTube reports over a billion viewers, almost onethird of the people on the Internet every day. Video content is straightforward, quickly shared and easily accessible. It’s easy to create a business channel where all of your video content can be found through an organic search. Since buying a car is a visual experience and your dealership website is primarily based on images, it makes sense to include video content as a way to build relationships with customers. You’ll make personal connections through your website and build prosperous business connections in the process. Some examples for you to consider are: • Stories from customers. • A fictional series. • Personal stories. • Documentary style videos. • An interview. All of these ideas will help your customers connect to your dealership. This can be a fun and exciting way to not only brand your dealership but engage existing and new customers as well. In content video marketing storytelling is crucial. It’s effective because people love stories and they connect to authentic human experience. It creates an emotional investment. Content can be defined as experimental as much of it is based on trial and error. You post content and track it through Google Analytics to see how it’s ranking in the
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LIFTING THE HOOD ON CFPB’S PROPOSED CONSUMER ARBITRATION RULES
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>> How it Might Affect You
BY NOW, YOU’VE READ about the Consumer Financial Protection Bureau’s proposed new rule affecting consumer arbitration agreements. The headlines are all about its proposal to prohibit consumer arbitration clauses from blocking consumers’ ability to join class action lawsuits. A lot has already been written about that point. But there are a few details that will help round out your understanding of the proposal. So let’s look under the hood at the proposed rule and how it might affect you if it becomes final. 1. Ban on prohibiting consumers from joining a class action lawsuit. This is the main point you’ve heard about. Arbitration provisions are often part of the retail sales contract or are separately executed to cover a motor vehicle credit sale. They commonly give either party the right to require the other to arbitrate a future dispute rather than resolve it with a civil lawsuit. That means, for example, if a buyer files a civil lawsuit or joins a class action civil lawsuit, the dealer can require the buyer to resolve the issue through arbitration. If the CFPB’s proposed rule is finalized, consumer arbitration agreements could no longer allow a dealer/creditor to require a buyer to arbitrate instead of filing or joining a class action lawsuit. If the proposed rule becomes final, consumer arbitration agreements entered into after the effective date will require the following provision: We agree that neither we nor anyone else will use this agreement to stop you from being part of a class action case in court. You may file a class action in court or you may be a member of a class action even if you do not file it. Dealers will need to modify their consumer arbitration agreements to include the new provision and to make the text consistent with new limitations. Of course, the other option is for dealers to simply stop using consumer arbitration provisions. 2. Arbitration class actions. The proposed rule does not seem to prohibit consumer arbitration provisions that prevent buyers from creating or joining a class-wide arbitration proceeding. Consumer arbitration agreements commonly prohibit class action arbitration proceedings, so those provisions could remain unchanged. 18 DEALER NEWS / AUGUST/SEPTEMBER 2016
3. Paying for consumer arbitration. In the past, the consumer arbitration process was criticized for potentially being more expensive for consumers than small claims courts or other civil lawsuit alternatives. If it was more expensive, the prospect of arbitration might cause some consumers not to pursue their claims. The cost of arbitration has been raised in lawsuits to argue that an arbitration agreement should not be enforced. Today, many consumer arbitration agreements provide the dealer will pay most or all of the arbitration filing fees, arbitrator’s fees and other arbitration costs. In addition, arbitration organizations like the American Arbitration Association and JAMS have adopted consumer arbitration rules requiring the dealer to pay most or all of the costs of arbitration. The CFPB’s proposed rule does not regulate who pays for consumer arbitration. Since claims will probably be subject to arbitration organization rules anyway, it’s not likely dealers will change their contract terms on who pays for arbitration. Dealers will probably continue to bear much of the costs of consumer arbitrations. 4. Required reporting of arbitration results. If the proposed rule becomes final, in any arbitration action that results from a consumer pre-dispute arbitration agreement, the creditor must provide the CFPB with certain information about the claim and results of arbitration. The CFPB plans to use the information as part of its research on the topic. 5. Timeline from proposal to final rule. The CFPB is seeking public comments on its proposed rule. Comments must be submitted within 90 days of the date the proposed rule is published in the Federal Register. If the amount of early media attention is any indication, the CFPB will likely receive a number of comments. It will then take some time to analyze the comments and consider any edits to the proposed rule. The proposed rule specifically provides that if it is finalized, it will become effective 211 days after publication of the final rule in the Federal Register. Putting these steps together, if the CFPB publishes a final rule, it probably will become effective no sooner than May 2017. The CFPB’s proposed rule is receiving a lot of attention in the auto finance marketplace. Most of the attention is on the proposal that dealers can’t use an arbitration agreement to prohibit consumers from joining a class action lawsuit. Much will continue to be written about that specific item. But remember the other details will help determine whether the engine of consumer arbitration agreements will continue to run or end up on the scrap heap. Chip Zyvoloski is a senior attorney for indirect lending at Wolters Kluwer. For more information, please visit www.wolterskluwerfs. com/indirect.
INDUSTRY NEWS / BY USED CAR NEWS
FTC SCHEDULES DISCLOSURES WORKSHOP
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COMPLIANCE OVERDRIVE / BY CHIP ZYVOLOSKI
>> Putting Disclosures to the Test
THE FEDERAL TRADE COMMISSION will host a public workshop on Sept. 15 to examine the testing and evaluation of disclosures that companies make to consumers about advertising claims, privacy practices, and other information. The FTC’s workshop will explore how to test the effectiveness of these disclosures to ensure consumers notice them, understand them, and can use them in their decision-making. The workshop, called “Putting Disclosures to the Test,” is aimed at encouraging and improving the evaluation and testing of disclosures by industry, academics, and the FTC. Effective disclosures are critical in helping consumers make informed decisions in the marketplace. The FTC has a long commitment to understanding and testing the effectiveness of consumer disclosures, and is especially interested in learning about the costs and benefits of disclosure testing methods in the digital age. Among the areas where disclosures play a key role in consumer protection are: disclosures in advertising, designed to prevent ads from being deceptive; privacy-related disclosures, including privacy policies and other mechanisms to inform consumers that they are being tracked; disclosures in specific industries designed to prevent deceptive claims, including jewelry, environmental claims, and fuel economy advertisements. The FTC is soliciting presentation proposals for the event, which may be submitted to disclosuretesting@ftc.gov. More information on the proposal process is available on the workshop’s website. Members of the public may also submit comments for the workshop online. The public comment period will remain open until Nov. 2. The workshop is free and open to the public. It will be held at the Constitution Center, 400 7th St., SW, Washington, DC 20024. www.newjerseyiada.org
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