DEALER NEWS
THE OFFICIAL MAGAZINE OF NEVADA INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION
FEBRUARY/MARCH 2018
NEW RULE FOR SALES TO MILITARY SERVICE MEMBERS
DOD SAYS “CREDIT-RELATED” PRODUCTS ARE SUBJECT TO MLA REQUIREMENTS PAGE 12
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W W W . N I A D A . C O M / N V. P H P
INSIDE INSIDE
MANAGEMENT MATTERS
06................................Annual Social Media Policy Review 08........................How Effective Leaders Handle Mistakes 09............................................................... Industry Trends 10............................................ NIADA Government Report 12........... New Rule for Sales to Military Servicemembers 14............................ Designing a Superior Meet and Greet
WHAT’S NEW
NIADA has acquired the National Alliance of Buy Here-Pay Here Dealers. The acquisition was finalized in December. Look for details in upcoming NIADA publications. See you at the NIADA/NABD convention June 18-21 in Orlando!
ADVERTISERS INDEX
AmTrust........................................................................IFC Lobel Financial.................................................................3 Manheim.......................................................................11 Manheim Southern California.........................................5 NADA Convention....................................................... IBC NextGear Capital...........................................................12 NIADA.TV........................................................................9 Protective .......................................................................7 VAuto................................................................Back Cover
OFFICE
For information on how to become a member please contact Tiana Ballard. tiana@niada.com • 800-682-3837
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 © 2018 by NIADA Services, Inc.
STATE MAGAZINE MGR./SALES
Troy Graff • troy@niada.com EDITORS
Jacinda Timmerman • jacinda@niada.com Andy Friedlander • andy@niada.com MAGAZINE LAYOUT
Christopher Hanley • chris@niada.com PRINTING Nieman Printing
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February/March 2018
COMBATING DEALER MARGIN DECLINES Selling and Servicing with Greater Efficiency
NIADA ACQUIRES NABD
NIADA HEADQUARTERS NATIONAL INDEPENDENT AUTOMOBILE
| BY DALE POLLAK
How many dealers figured they’d make up for ever-smaller margins in new and used vehicles by selling more cars in 2017? If you asked the question in a room full of dealers, I suspect most, if not all, hands would be in the air. “You make up your gross in volume” is the age-old rule of thumb in the car business. But what if the thumb is broken and the rule doesn’t fit anymore? That’s the situation in today’s retail automotive market. In June, the National Automobile Dealers Association reported dealers are seeing declines in two important places – on the gross and net profits they realize when they retail new and used vehicles, and in the overall number of vehicles they actually retail. Gross/net profits: NADA reported gross profit as a percentage of new vehicle selling price dropped to 5.9 percent in the first half of 2017 compared to the same period in 2016. For used vehicles, the gross as a percentage of the sales price dropped to 12 percent. Meanwhile, the net profit per new vehicle retailed fell 74 percent to minus-$396 and the net profit for each used vehicle retailed fell nearly 50 percent to $112. Retail sales: In the first half of 2017, dealers averaged 449 new vehicle retail sales, up just two vehicles from the same period a year prior. Used vehicles had a slight drop, averaging 358 retail sales, down from 362. Those dealership data points suggest dealers who believe they can retail their way to improved profits are probably kidding themselves in the current market. If that strategy worked, shouldn’t we see decidedly different numbers from NADA? The data amounts to a call to action. Dealers need a better way forward that doesn’t rely simply on selling more cars to make more money. Similarly, cutting expenses won’t provide dealers sufficient relief from the combined pressures of margin compression and a softer sales environment. The best way forward rests with increased operational efficiencies. Dealers simply have to find a way to sell and service customers with greater efficiency and lower costs. The good news here is that most dealers have three areas of longstanding inefficiency that, if addressed, can
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help them achieve the higher levels of operational efficiency, productivity and profitability they need to thrive in the years ahead. Human capital: Dealers continue to suffer from an average annual turnover of 67 percent in sales and 40 percent across their operations. Those figures suggest a high level of dissatisfaction. You can only wonder how many deals are lost or bad decisions made on any given day because the hearts and minds of dealership employees aren’t in the game. Dealers who have tackled this inefficiency have formalized their hiring processes around key personality traits and cultural fit and have moved away from the traditional practices of commissionbased pay and uncertain work hours. Inventory: I see signs of inventory inefficiency every day. If I had to summarize the problem, I think it’s fair to say up to a third of dealers’ vehicle inventory is effectively dead capital. Those are over-age vehicles that haven’t sold, and they’re preventing dealers from reinvesting that capital in more profitproductive units. Of course, there are a multitude of reasons behind such inventory inefficiencies but they all point to the same underlying need for more investmentminded inventory decisions. Dealers need to do a better job of assessing each vehicle’s retail prospects before they own it, then work more diligently to retail every unit more quickly, before its ROI and front-end gross effectively disappear. Technology: Dealers have invested sizable sums in technologies that should help their sales associates and service technicians work more productively and profitably. Yet sales associates still average about 10 retail sales per month and technicians about 40 hours per week – averages that haven’t changed in nearly 40 years. The statistics suggest solutions providers can and should do a better job of helping dealers achieve greater use of their tools, which would help dealers realize the promise of increased efficiency and profitability the technology and tools are intended to produce. Those three areas of opportunity don’t represent an end-all, be-all list. But they do offer starting points for dealers to push back against margin compression and a softer market, and gain back some of the profitability that seems to dissipate with each passing year. Dale Pollak is the founder of vAuto and an executive with Cox Automotive. This column originally ran on his blog. For this story and all his posts, visit www.dalepollak.com.originally ran on his blog. For this story and all his posts, visit www.dalepollak.com.
SOCIAL MEDIA
| BY KATHI KRUSE
ANNUAL SOCIAL MEDIA POLICY REVIEW Why It Is a Best Practice It’s 2018 and you know what that means – it’s time to assess and realign things for the new year. Do you have a social media policy in place for your dealership? If so, how often do you review it?
PROTECTING COMPANY ASSETS It’s a good business practice to regularly assess company assets. Public or private, a dealership’s market value or equity is based directly on the assets it retains. Assets both tangible – such as cash, property and buildings – and intangible – such as your digital reputation, policies and procedures, and social media presence – are directly responsible for a store’s market value. Social media policy falls under the intangible asset category, and reviewing your policy on an annual basis is a best practice. Just as a regular review of expenses and operations results in many benefits, so does a social media policy review. WHY DO AN ANNUAL SOCIAL MEDIA POLICY REVIEW? There is often a lot of angst and fear around social media, and an annual review takes some of the sting out. You can’t control everything, but with a good policy in place and regular reviews, you’ll leave a lot less to chance. Reaffirm company guidelines for employee use of social media. When hired, each employee should have signed an acknowledgment of receipt of the company’s social media policy. A process to conduct annual reviews of company policy on everything is always a good idea but it’s crucial for social media. Why? Because social media changes often and a dealership’s social media policy should change along with it. It’s an insurance policy in the event of a social media crisis. We’ve seen enough social media debacles at Kruse Control in the past nine years to know it’s not a matter of if, but when it could happen.
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Are you prepared should it happen to you? First, it should be determined and documented what a social media crisis is. Having a company-wide plan in place will empower you to act quickly and effectively when a crisis begins. Instead of wasting time debating how to handle things on social media, you’ll be prepared to take action and prevent the crisis from growing out of control. It helps avoid legal trouble and exposed liabilities. There’s a lot of pressure for dealers to communicate online today. It’s easy to overlook that social media brings certain responsibilities to mitigate liability. Some of the places a dealer could get into trouble are: • Using work without permission. • Defaming competitors. • Promises not kept. • User privacy. • Contest violations. Pro Tip: The use of social media increases the risk of accidentally committing libel, slander, copyright infringement and privacy invasion. All those tweets and posts can lead to lawsuits, but a general liability insurance policy can help. It includes protection for “advertising injury,” meaning claims from your competitors that you badmouthed them in an ad. It safeguards against accidental leaks of confidential information. Social media is a growing security risk as a source of data leaks and misinformation. Vigilance and training are crucial to minimizing risks for individuals and the company. Employees using personal electronic devices discuss all sorts of work-related topics on social media – both during and outside of work hours and locations. As a result, confidential data can leak directly. Another security concern about social media – which continues to make headlines – is criminals can exploit social media to rapidly disseminate “fake news” and other forms of misinformation. Such devious tricks impact more than just politics. They can be used to manipulate stock prices, harm personal or business reputations, or even cause people to take actions that harm innocent parties while helping criminals. In Kruse Control’s clients’ customtailored social media policies, we
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spell out the consequences that come from accidental leaks of confidential information. We determine where risks lie and recommend actions to prevent them. It protects a company’s digital reputation. Businesses around the world ranked damage to their reputation or brand, magnified by social media, as their top risk management concern, according to Aon’s 2017 Global Risk Management Survey. Warren Buffet said, “It takes 20 years to build a reputation and five minutes to ruin it.” That is especially true today, as highprofile crises including cyber attacks, product recalls and damaging social media posts become more prevalent. In the current environment, protecting reputation and actively managing risk can take on strategic importance. Yet for many organizations, managing reputation presents challenges. Many dealers do not have a written process exclusively for reputation management. Truthfully, until social media showed up, you didn’t really need it. Reputation management was left to the marketing and PR people. Today, every employee is a marketer. A review of social media policy will support ongoing efforts to build and protect a company’s digital reputation by spotlighting internal practices and processes. It keeps HR in the loop on marketing. More and more, dealers are using social media as a recruiting tool. With the addition of “social selling” into the sales process, it’s easy to see that HR is fast becoming a necessary participant in the social media marketing process. There’s a trend toward hiring employees who already have a current social media following because they are influencers and are often seen as subject matter experts, especially if they’re in sales positions. A review of social media policies and procedures should include an update on how HR folds into social media and outlines its stake in decision-making around social media. Kathi Kruse is an automotive social media marketing expert, blogger, consultant, author, speaker and founder of Kruse Control Inc., which coaches, trains and delivers webinars focused on integrating social media and online reputation management into dealership operations. She can be reached at kathi@krusecontrolinc.com.
MANAGEMENT MATTERS | BY DAVE ANDERSON
HOW EFFECTIVE LEADERS HANDLE MISTAKES
Strategies to Help You Master this Important Skill I recently filmed a DVD program for my online training platform on the topic of handling mistakes, and the response was even more robust than normal. I believe that’s because handling mistakes – ours and others’ – is such an ongoing, realworld leadership responsibility that affects everyone, both at work and at home. How you handle mistakes also goes a long way in determining the level of trust, buy-in, connection, and positive impact you can have on your team. Here are some thoughts and strategies to help you master this important leadership skill.
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HOW TO HANDLE YOUR OWN MISTAKES Admit a mistake as quickly as possible. Waiting to acknowledge a mistake gives the perception you’re either oblivious to what you’ve done, or you may be looking for a way out of taking responsibility. As a result, delayed confessions allow a hiccup to become a cover-up, and then a conspiracy. This perception will break trust and build disgust among the ranks. Don’t try talking yourself out of something you behaved yourself into. Own it. You don’t have to make a big deal out of it, just own it. The objective is to bring closure to a mistake quickly so you can focus on moving forward. As an aside, if you admit an error, don’t marginalize your effort by making an excuse for it. Own it. This models a positive leadership example your team will pick up on. Leaders with bloated egos or gross insecurities never manage to execute this first step. They wrongly believe admitting a mistake makes them look weak when the opposite is true. Admitting mistakes requires strength, and earns respect because others know how difficult it would be for them to do the same thing in your situation. Learn from the mistake, then don’t repeat it. This well-known quote sheds insight onto this point: “You can never make the same mistake twice because the second time you make it, it’s not a mistake, it’s a choice.” Coach Paul “Bear” Bryant offered sound advice along these lines when he said, “When you make a mistake admit it, learn from it, don’t repeat it.” The reality is anyone who tries new things, seizes the initiative, and makes decisions is going to make mistakes. We all do “stupid” things from time to time. But the key to growth is doing “new” stupid things, not the same old stupid things. Doing the same stupid things indicates you are unaware, unteachable, undisciplined, or worse. Doing new stupid things demonstrates you’ve left your comfort zone, tried something different, and now have an opportunity to learn what didn’t work so you can get it right next time. Teach others from your mistakes. This builds trust, connection, and bondedness with team members. John Maxwell put it well: “If you want to impress others, talk about your successes. But if you want to impact them, talk about your mistakes.” Get over it and move on. Continuing to rehearse, rehash, or blame yourself for the mistake is a mistake that compounds the original mistake. If you’ve admitted it, learned from it, and adjusted because of it, move on to gaining new ground.
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HOW TO HANDLE THE MISTAKES OF OTHERS Don’t get personal. Focus on the issue without getting personal with the individual that caused the issue. There’s a big difference between calling an action idiotic and calling someone an idiot. Attack the performance. Coach the performer. Address a mistake in direct, professional terms, without unnecessary drama or exaggeration. Again, be direct and professional, but also be conversational. There’s no need to pile on by injecting unnecessary hype or drama with statements like, “I can’t believe you could do something so insipidly foolish and careless! If ignorance is bliss you must be the happiest man on earth!” Focus the person on solutions, not scapegoats. An employee mistake is an unparalleled coaching opportunity. Look at it as a teaching tool, not a battering ram. Help the person think for themselves and take ownership concerning what they could have done better and how they’ll improve next time. Asking questions like: “What should you have done better, or instead?”, “What do you recommend we do from here?”, and “What did you learn and how can you ensure you don’t repeat the error?”, are nonconfrontational, collaborative ways to help the person grow by causing them to think and commit to act. When confronting a mistake, don’t rattle off their rap sheet of past unrelated mistakes. Again, this is a coaching opportunity, not an indictment. You’re not proving a case in court – you’re addressing and correcting a behavior. Keep the main thing the main thing. Rehashing past, unrelated mistakes is debilitating and distracts from the matter at hand. Engaging in “rap sheet rehearsal” will also break trust and credibility if you do the same with family or friends. It’s a recipe for ending up miserable and alone in your life. Encourage the person to take another shot. Making mistakes can cause others to procrastinate, become passive and lose their killer instinct, especially when a mistake is handled improperly. It’s a shame when this happens, because mistakes are a part of the growth process. When someone stops trying, both they and the organization miss out and fail to cash in on the mistake’s benefits of learning from the errors, learning a better way, and growing as a person. In such cases all they, and we, pay is the price for the error and never get the payoff the price could have brought. Dave Anderson is president of LearnToLead.
ACCELERATE
| BY GWC WARRANTY
5 INDUSTRY TRENDS TO WATCH IN 2018 Breakdown of Industry Outlook It’s a new year, which means a fresh start and new look at the automotive industry. We’ve read all the latest analysts’ reports and have a breakdown of where the industry is heading in what many believe is a promising year for the automotive industry. Used Car Sales Year-over-year statistics don’t tell the entire story when looking at December of 2017 – because December 2016 was an industry record – but looking at the year as a whole, the numbers look great. At year’s end, Edmunds estimated used car sales totaled 38.8 million, a number the entire industry can certainly live with. Dealer Sentiment Cox Automotive regularly releases its dealer sentiment index, which gauges how independent dealers are feeling about the current market. Independents scored 52 in the fourth quarter, which continues a trend of promising scores. Most encouraging is that fewer independents are now reporting “limited inventory” as a factor holding back
their businesses. Used Car Pricing Year-over-year used car prices at the end of 2017 almost broke even with the previous year – a positive sign that economic, regulatory and environmental factors haven’t impacted the industry too much in either direction. In fact, about half of all used car segments saw gains at the end of the year, meaning smart inventory selection will pay off in early 2018. Late-Model Supply Through November, J.D. Power Valuation Services reported a 4.4 percent
year-over-year volume increase for latemodel vehicles. Combine that with the fact 22.9 percent of new vehicle sales were leases, and it shows an availability boom that can stick around through 2019. CPO Sales For the seventh straight year, Certified Pre-Owned sales set record marks. And while this figure only encompasses manufacturer CPO programs, that doesn’t mean independents can’t reap the rewards. Offering an after-market CPO program will help you level the playing field and cash in on the trust customers place in CPO vehicles.
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DEALER NEWS
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WASHINGTON UPDATE | BY SHAUN PETERSEN
NIADA GOVERNMENT UPDATE
Latest Government Issues and Activity
NIADA IS YOUR VOICE IN WASHINGTON D.C., ADVOCATING FOR INDEPENDENT DEALERS, THE USED VEHICLE INDUSTRY AND SMALL BUSINESS. HERE’S A LOOK AT THE LATEST NEWS AND NIADA EFFORTS REGARDING LEGISLATIVE, REGULATORY, PAC AND GRASS ROOTS ACTIVITIES.
LEGISLATIVE President Trump discussed his legislative priorities for 2018 during a weekend retreat with Republican congressional leaders early last month at Camp David, and among the top items on that agenda is a bill addressing the nation’s infrastructure. While the focus of that bill will be improving America’s roads, bridges and airports – with a price tag in the hundreds of millions of federal dollars – it could also serve as an opportunity for some lawmakers to bring up an issue that would have a huge effect on independent vehicle dealers: recalls. On several occasions in the past, Sen. Richard Blumenthal (D-Conn.) has attempted to attach his proposal to ban the sale of all vehicles subject to an open recall to a “must-pass” bill. While none of those attempts have been successful, thanks in large part to the efforts of NIADA and our members, the infrastructure bill provides another likely opportunity for Senate Democrats to attempt to introduce the socalled “Blumenthal amendment” – especially after more than 3 million more cars were recently added to the massive recall for faulty Takata airbags. NIADA and other auto industry stakeholders will stay on top of the situation. NIADA supports the goal of having all recalled vehicles repaired, but opposes Blumenthal’s overbroad proposal, which does not help achieve that goal
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but instead sharply decreases the trade-in value of consumers’ vehicles. REGULATORY The White House won another key battle for control of the Consumer Financial Protection Bureau last month when U.S. District Judge Timothy J. Kelly rejected CFPB deputy director Leandra English’s request for an injunction that would have installed her as the bureau’s acting director. The ruling leaves White House budget director Mick Mulvaney – President Trump’s choice – in place as acting CFPB director until Trump names a permanent successor to Richard Cordray, who left the CFPB in November to run for governor of Ohio. In his decision, Kelly wrote English’s lawsuit to win control of the CFPB is “not likely to succeed.” English is expected to appeal the decision to the U.S. Court of Appeals for the D.C. Circuit. Kelly had previously denied a request by English for a restraining order to block Mulvaney’s appointment. English’s suit claims she is the rightful acting director because the Dodd-Frank Act, which created the CFPB, says the deputy director assumes that position in the director’s absence. The President cites his authority through the Federal Vacancies Reform Act to appoint an official already confirmed by the Senate in another capacity to also serve as the bureau’s acting director. While that’s being sorted out, Mulvaney
February/March 2018
moved forward by naming House Financial Services Committee staff director Kirsten Sutton Mork the CFPB’s new chief of staff, a position English held before Cordray named her deputy director hours before his resignation in an effort to install her as his temporary successor. Mork’s previous boss, Financial Services Committee chairman Jeb Hensarling (R-Texas), is reportedly one of the candidates Trump is considering as permanent CFPB director. GRASS ROOTS With the beginning of the new year, state legislatures throughout the nation are opening their sessions for 2018. This year, 46 of the 50 states will hold regular legislative sessions. As always, NIADA is keeping a close eye on key proposed legislation at the state level that affects independent dealers and the used vehicle industry. One issue to watch this year is simmering in California, where state Sen. Hannah Beth Jackson is reportedly considering introducing a bill to ban arbitration agreements in vehicle sales contracts. The IADA of California, with support from NIADA, is working with the state’s new car dealers association to oppose that potential legislation. Others include bills addressing debt and collections issues, which are expected to pop up in a number of states after several state legislatures proposed
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rate caps in 2017, as well as attempts to ban the sale of used vehicles under an open recall and unworkable restrictions on the use of GPS and starter-interrupt devices. NIADA has a record of recent success in fighting harmful legislation at the state level, including the defeat of an overreaching Buy Here-Pay Here bill in Oregon and the removal of severely restrictive provisions of a New Jersey GPS bill. PAC NIADA treasurer Scott Allen and I represented the association at a luncheon held by Rep. Kay Granger (R-Texas) to thank supporters who have contributed to her congressional campaign. Granger’s campaign has been the recipient of past contributions from the NIADA-PAC fund, earning the association’s support for her efforts to reform the CFPB – she cosponsored a bill to repeal the bureau’s 2013 indirect auto lending guidance. She is a member of the influential House Appropriations Committee. Invitations such as those are a direct result of the PAC’s activities and offer NIADA leadership unfiltered access to legislators, advancing NIADA’s advocacy efforts by allowing us to educate members of Congress about the issues important to our members and to continue to build relationships with Washington’s key decision-makers. Shaun Petersen is NIADA’s senior vice president of legal and government affairs.
LEGAL MUSINGS | BY SHAUN PETERSEN
NEW RULE FOR SALES TO MILITARY SERVICE MEMBERS DoD Says “Credit-Related”
Products Are Subject to MLA Requirements In mid-December, the Department of Defense issued a new interpretation of the Military Lending Act, impacting sales to members of the military and their dependents. When Congress passed the Military Lending Act, it imposed a series of requirements for extending credit to members of the military and their dependents. However, Congress also created several exemptions to those limitations, including one for the extension of credit that is expressly intended to finance the purchase of a motor vehicle when the credit is secured by the motor vehicle purchased. Congress included a similar exemption related to credit extended for the purchase of personal property. The new interpretation drastically alters the scope of what the industry previously understood the motor vehicle exemption to include. Before, dealers and finance companies understood the motor vehicle exemption to include the extension of credit for all things included in a motor vehicle transaction, such as the purchase price of the car, taxes and other state fees, negative equity and voluntary protection products like service contracts, GAP, etc. Now, DoD has turned that on its head. At issue is whether financing above and beyond the actual purchase price of the vehicle takes the transaction out of the safety net of the exemption. DoD’s interpretation says it depends on what is being financed. “Generally, financing costs related to the object securing the credit will not disqualify the transaction from the exceptions,” it reads, “but financing credit-related costs will disqualify the transaction from the exceptions.” So what are “costs related to the object securing the credit”? DoD provided some examples of costs that fit firmly within the exemption. Items such as negative trade equity, extended warranties or service contracts, and “optional leather seats within that vehicle.” What about “financing credit-related costs”? DoD said financing items such as GAP, credit insurance and “additional ‘cashout’ financing” are not included within the exemption.
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According to DoD, any dealer who finances those credit-related costs is subject to the Military Lending Act regarding transactions as far back as Oct. 3, 2016 – even though the new interpretation is just weeks old. So what should you do? Dealers selling and financing creditrelated products such as GAP and credit insurance should determine whether customers are members of the military or dependents of military servicemembers prior to offering F&I products for sale. Dealers can check by entering the customer’s social security number and birthdate into DoD’s MLA website at https:// mla.dmdc.osd.mil/mla/#/single-record. While other services might be available to provide that information, checking that website or subscribing to an MLA offering notated on a credit report from a credit reporting agency provides a safe harbor for determining covered persons. If customers are covered by the rule and you decide to sell credit-related products, specific disclosures must be provided in writing and orally. In addition, the transaction is subject to the military APR rate cap of 36 percent and other contractual limitations will be imposed, including a ban on arbitration provisions. One of the options many are considering to ensure compliance is simply not offering credit-related products to those covered by the rule. Many dealers, once they determine a consumer is covered by the MLA, are simply informing the covered customers that credit-related products are not offered for sale. Regardless of which compliance option they choose, dealers should consult with their attorneys to determine which products are “credit-related” and thus potentially subject to the rule. Your individual lawyer can provide you with specific legal advice tailored to your business. In the meantime, rest assured NIADA is working with other interested industry partners, members of Congress and federal regulators to express our concerns with the new rule and the lack of process involved in issuing it. DoD did not provide notice of the interpretation nor an opportunity for interested parties to comment before it was issued, precluding NIADA and other stakeholders from pointing out the harm that will come to both the military servicemembers and the industry. One of our strategies in explaining our position is to illustrate the value of those credit-related products. So if you as dealers are aware of any of your military customers who have directly benefited from GAP, credit insurance or other similar products, please contact me at (817) 640-3838 or shaun@niada.com. Shaun Petersen is NIADA’s senior vice president of legal and government affairs.
MANAGEMENT GAMEPLAN | BY SCOTT BERGERON
BURNING TRACKS TO INSUFFICIENT SALES PERFORMANCE DATA How to Successfully Integrate a KPI Tracking System
As your flight prepares to take off, how would you feel if you knew the pilots were only handling some of the items on their pre-flight checklist? While not a literal matter of life and death as it could be on an airliner, dealerships crash and burn every year because they fail to track critical sales performance data on every salesperson. Many focus on the number of done deals without tracking how many sales may have been left on the table. Insufficient daily tracking of such key performance indicators as number of clients contacted, number of test drives, and number of callbacks can make a vast difference in a dealership’s annual revenues. KPIs are the critical information needed to maximize time and make course corrections before molehills turn into mountains. It also can make a major difference to someone’s career and a dealership’s employee retention. If not held to a high accountability protocol, a salesperson can fail to make the grade and move on. Much like a football team without high performance standards that are constantly reviewed and improved, an entire sales team can flounder. There’s nothing worse than getting to the end of the month and realizing someone isn’t getting a paycheck, or is getting one they can’t live on. It’s bad for the rep, management, and the dealership as a whole. You need to know right away when someone is missing their numbers. Despite all these reasons to develop comprehensive KPIs and require each sales team member to be accountable to them, it often doesn’t happen. Why not? Reasons – or excuses – include the following: • Lack of time. Most of us feel overwhelmed much of the time. “One more thing,” even if it can make the difference between dealer success and failure, can feel like too much. • Lack of willingness. Particularly in smaller, independent dealerships, “seat of the pants” is the prevailing sales philosophy. Freewheeling sales teams exhibiting typical instinctive entrepreneurial traits succeed or fail based mostly on personality, charm, and intuition. While these are all important strengths, it’s vital to complement them with reliable adherence to objective tracking standards. Using the football analogy again,
the greatest players possess a healthy dose of talent coupled with strict adherence to objective measurements and observations. Dealer sales reps are no different. • Lack of follow through. Sometimes a dealership – and its employees – will become enamored with a “shiny new technology toy” to set up and track KPIs that may be bundled into a CRM. However, much like a young child getting a new toy, after the initial glow fades so does the follow through. The KPI tracking system gets relegated to the shelf, where it gathers dust instead of valuable information. • Lack of decisiveness. In other cases, the problem is inability to decide what KPI system to use because there are so many choices that decision-makers have a “deer in the headlights” type reaction trying to assess the best solution for them. They default to making no decision at all. • Lack of patience. Some KPI systems can be unwieldy to set up and implement. They can disrupt normal routines, require a lot of handholding, and generally be a pain to use. This is not the recipe for success. • Lack of budget. This is often the biggest challenge. While some KPI solutions are extremely cost-effective, others – particularly the largest and most well-known – require a substantial money commitment. Often, it’s just easier to justify not using the system because of cost. What is the best way to find and integrate a KPI tracking system, and use it consistently? • Research options. Unlike some technologies that are very complex and costly, KPI tracking solutions can be very economical, easy to use, and simple to complete on a daily basis. This isn’t rocket science. Look for the key criteria you need, then marry those criteria to a system that meets your needs. • Make it a habit. High-producing leaders promote success by making sure everyone on the sales team knows what is expected of them. Regular inspection processes ensure the sales machine is firing on all cylinders. Tracking and reviewing everyone’s KPIs every day, then making changes as needed to improve numbers, must be a commitment made both by management and individual team members. • Use it as a teaching and coaching tool. With this objective data, sales managers can help individuals improve their performance. If a salesperson isn’t entering the data, a manager can go directly to the person and find out why, then provide direction to make sure it happens. It can be a case of forgetting, a cry for help, or even defiance of the whole system. Top performers especially may avoid completing their daily tracking because they believe they’re above it and the rules don’t apply to them. But they should. • Make it fun, as much as possible. KPI tracking can be done as salespeople go
T O P P E R F O R M E R S E S P E C I A L LY M AY AV O I D C O M P L E T I N G T H E I R D A I LY TRACKING BECAUSE THEY BELIEVE THEY’RE ABOVE IT AND THE RULES D O N ’ T A P P LY T O T H E M . B U T T H E Y SHOULD. through the day on their smartphones, tablets, laptops, or desktops, in real time. The entire process can take as few as five minutes to finish – so it’s not like completing mounds of paperwork for a homicide investigation. • Make it a regular monthly appointment. In addition to daily tracking and adjusting, schedule an end-of-month session to review KPI statistics, goals, and desired changes based on the results. To make it even more compelling for individuals to comply, sales managers can review each salesperson’s results with the entire team present. This “peer pressure” can help make sure everyone is accountable, and allows top achievers a showcase for their good work. Remember, it’s about way more than the number of done deals. 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 Book,” cloud-based CRM, and direct consulting have been used in thousands of dealerships throughout the United States. Bergeron can be reached at 303.918.3169 or scott@dailygameplan.com.
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February/March 2018
DEALER NEWS
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RETAIL READY | BY JUSTIN M. OSBURN
DESIGNING A SUPERIOR MEET AND GREET Crafting and Reviewing the Play Recently I was on an airplane and the lady next to me struck up a conversation. She asked what I did for a living and I told her I consulted independent auto dealers. She became very inquisitive about the car business. She quickly offered her fear of car shopping and told me about her recent experience that turned into a nightmare. I asked her what emotions she felt when thinking about driving onto a car lot to purchase a vehicle. She said, “Fear of being screwed.” This information is nothing new. However it is the building block of how critical an effective meet and greet can be to our prospects. An additional BHPH fear from the prospect is fear of getting turned down. Our first impressions and ability to gain trust set the sales process up for success or failure. While there are certainly dealerships full of sales professionals who open with a competitive meet and greet, there are some that struggle to offer a consistent and superior greeting to prospective buyers. Why? Why do some nail it time and time again while others struggle to get even one sales professional on the team to conduct a first-class meet and greet? Here are a few steps your dealership can take to improve the overall execution of the meet and greet on the lot, right now! Leadership must decide the expectations of the meet and greet. Team members do not usually wake up each morning and say, “Self, today I am going to have a horrible day and do everything I can to be disruptive and not follow my manager’s instruction.” Actually, most team members come to work each day willing to follow great leaders and the tactics that produce results. A pitfall easy to overlook is no structured script or direction for the sales team to learn, practice and perfect their meet and greet. A critical step to improvement is the leadership deciding, with clarity, how the meet and greet should be conducted and then teaching and coaching the team members to replicate that vision with repetition and practice. Consider regular, short sales meetings each morning. This gives the leadership an opportunity to see who is at work, who is not, who is late and who came dressed for success as well as get a pulse of the team’s attitude for the day and offer some quick and structured practice. Coach the sales department on how to run “the play” of meet and greet. When team members are confused or
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DEALER NEWS
February/March 2018
A PIT FA L L E ASY T O OV ERLOOK IS NO S T RUC T URED SCRIP T OR DIRECTION FOR THE SALES TEAM TO LEARN, PRACTICE A N D P E R F E C T T H E I R M E E T A N D G R E E T. don’t know what to do, it’s human nature to do nothing, to stand still in the confusion. This is very apparent when a sales team member demonstrates hesitance to take an “up”. They are not sure what to do. You could fire them, or yell, or, worse, quietly remain bitter toward them as you both drown in failure. An alternative approach is to coach them how to run “the play” of meet and greet laid out in the first step. Then, rehearse it with them until they demonstrate perfect practice. If a mystery shopper walked on to your lot today and was greeted by the sales team, what would it sound like? Evaluate what works and does not work. If there is a well-crafted meet and greet plan and the team is demonstrating perfect practice, leadership should consistently encourage feedback on what parts of the play work and which parts could be improved. In football, a coach draws up a play and shows it to the team, then they practice all week and run the play in the next game. Certainly it doesn’t end there. The coach and the team are interested if the play resulted in big yardage, short yardage or even a loss of yards. They watch film after the game to review how the opponent responded to the play and what parts worked or did not work. If the play lost yards, it is not necessarily
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scrapped. Perhaps the blocking assignments need tweaking, a different player needs to touch the ball or the play needs to be run in a different situation. Once leadership at the dealership has drawn up a meet and greet, shown it to the team and rehearsed it, there should be a review with the team after it is has been used to see if it needs to be tweaked, changed up and/or improved. What are the results? What is the goal of a meet and greet and how do leadership and the team know if it was a successful play or not? The goal of a meet and greet should be to offer a great first impression, open up the ability to build rapport and ultimately move the prospect to the next step in the sales process. What is the next step? Can your leadership and team answer that question, consistently? Tip: A great opening question: “Hi, my name is Justin. Have you been to our dealership before or is this your first time?” I’d love to hear creative plays your team is running on the meet and greet. Typically a sincere and prepared opening has great results. For a few more opening questions that work, email me at justin@niada.com. Justin Osburn is a moderator, consultant and trainer for NIADA Dealer 20 Groups, offering more than a decade of experience in retail and Buy Here-Pay Here executive management.