DEALER
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NE VADA INDEPENDENT AUTOMOBILE DE ALERS ASSOCIATION | JUNE /JULY 2019
Building a Successful (Sales) Culture DALLAS, TEXAS Permit No. 2079
F O U R F E AT U R E S O F A G R E AT W O R K C U L T U R E | PAGE 6
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JUNE 17-20 | THE VENETIAN, LAS VEGAS
THE 73RD ANNUAL NIADA | NABD CONVENTION & EXPO NIADA is Accelerating Your Success through the most comprehensive event in the used vehicle industry! We are back in Las Vegas at the phenomenal Venetian Hotel, Resort and Casino. This is the premier event for the independent vehicle dealer – a true one-stop shop for the best in dealer education, networking, and products and services. The NIADA|NABD Convention and Expo will also provide the largest Expo Hall in our history, where you can find the solutions you need to run your business more efficiently and profitably. The used car game has changed drastically over the past few years and continues to change rapidly. To thrive in this everchanging marketplace, independent dealers not only have to move faster, they need to gain momentum! Come join us in vibrant Las Vegas and Accelerate Your Success!
WHAT’S IN IT FOR YOU?
5 60+
tracks of education to serve the needs of all independent dealers: Retail, BHPH, Legal & Compliance, CPO and Digital.
KEYNOTE SPEAKER SARAH ROBB O’HAGAN: Legendary Business Leader and Former CEO of Flywheel Sports, Former Global President of Gatorade, and Former Marketing Director at Nike Author of Extreme You: Step Up, Stand Out, Kick Ass, Repeat and Founder of Extreme Living Robb O’Hagan has been named twice to Forbes magazine’s list of the “Most Powerful Women in Sports,”
SPONSORED BY
education sessions covering topics such as hiring and retaining sales staff, BHPH collections best practices, certified pre-owned sales and operations, alternative profit centers, prospects and sales, BHPH to LHPH, wage and hour issues, and best practices.
The largest Expo Hall in NIADA Convention history, featuring more than 200 exhibitors offering the latest state-of-the-art products and services to help keep you ahead of the pack in today’s competitive market.
Don’t miss out -- register to attend NOW and customize your experience!
www.NIADACONVENTION.com
MARKETING MATTERS | By Kenny Atcheson
ANOTHER STRATEGY MAY GET REGULATED
The Future of Ringless Voicemail Index
05.................... Be the Coach Your People Deserve 06.................Building a Successful (Sales) Culture 08.............................................. 5 Social Media Tips 10......................................... 3 Hurdles to VSC Sales 12......................................................Nevada SB 350 14...................................NIADA Government Report
Advertisers Index
Lobel Financial.......................................................3 Manheim................................................................ 11 NextGear Capital................................................ 8-9 VAuto......................................................Back Cover
What’s New
N AT I O N A L Q U A L I T Y DEALER WEBCAST JUNE 20
Quality Dealers from across the nation will gather in Las Vegas to compete for the coveted title of National Quality Dealer during NIADA’s Convention & Expo. Even if you’re unable to attend in person, don’t miss this exciting event! Watch the live webcast on NIADA.tv on Thursday, June 20, 7 PM PDT (9 PM CDT).
Office
For information on how to become a member please contact Kathy Robbins at kathyrobbins@niada.com or 800-682-3837
NIADA Headquarters
NATIONAL INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION WWW.NIADA.COM • WWW.NIADA.TV 2521 BROWN BLVD. • ARLINGTON, TX 76006-5203 PHONE (817) 640-3838
For advertising information contact: Troy Graff (800) 682-3837 or troy@niada.com. 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 © 2019 by NIADA Services, Inc.
STATE MAGAZINE MGR./SALES Troy Graff • troy@niada.com EDITORS Jacinda Timmerman • jacinda@niada.com Andy Friedlander • andy@niada.com MAGAZINE LAYOUT Christy Haynes • christy@niada.com PRINTING Nieman Printing
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A new court case may have major implications for an effective and inexpensive strategy. First, here is a history of a few other historical examples. Text marketing offers 90 percent open rates – better than anything else. Businesses learned of these high open rates and quick response rates from marketing companies such as Dealer Profit Pros and a lot of dealers started doing it. Consumers got annoyed and wrote letters to Congress. As a result, Congress and/or FCC heads made it tougher to succeed by texting customers. Popups on websites were all the rage when they were first devised. They couldn’t be ignored. Well, popup blockers took care of that. Google Adwords even made it against their terms and conditions to send an ad that contained a popup to a page. Facebook Ads offered great targeting. Facebook has more information on Americans than the federal government. I did some pro bono work for a new Christian preschool in my area. I was excited to use targeting based on “geographical location,” “parents with kids between the ages of 1 and 5,” and “parents who identify as Christian.” There was only one problem. Facebook removed the religious affiliation targeting. They’ve since removed lots of other targeting after Zuck’s visit to Congress. Cold-calling – although a pain – was effective and had no cost other than labor. If it was being done by a commission-only salesperson there was no upfront cost – only commissions paid after the sale. It was great. Then government muckety-mucks came up with the Do Not Call list. And now a new court case… When ringless voicemail first came out, I jumped for joy. It was fast, inexpensive, and a whole lot less annoying than robocalls. Even if robo-calls were 100 percent legal and compliant, I don’t like using them because nearly everyone is annoyed by them. (*Pro tip: don’t annoy potential customers.) A ringless voicemail is as it sounds. Ringless voicemail providers assured, “You can get tens of thousands of voicemails to potential car buyers without their phone
ringing, within minutes for very little money – and they won’t know it’s automated.” Personally, I have found most consumers are not fumed by receiving voice messages, but they despise robo-calls. Unfortunately for advertisers, the U.S. District Court for the Southern District of Florida has concluded ringless voicemails are “calls” under the TCPA and therefore subject to its regulations. In the Schaevitz v. Braman Hyundai, Inc. case, the dealership used a ringless voicemail provider to transmit unsolicited pre-recorded voicemail messages to individuals’ cell phones. None of this article is meant to be legal advice. I am not an attorney. However, in my personal opinion, this Florida case could lead to nationwide recognition of the outcomes of the case, meaning the Do Not Call list will apply. What Does it Mean? This article is not meant to discourage or encourage any of the strategies mentioned thus far. Many still work well, just not as well as they used to because of regulations. Or they require further analysis and rules to be adhered to. There are definitely two things every dealer should do: • Use a multi-media approach. The more media strategies you use, the less likely a new rule, regulation, or law will affect your business. In addition, different people respond to different types of media. • Use strategies that will never be outlawed or overly regulated. Direct mail and referrals are two of those strategies. The United States Postal Service is not going anywhere. It legally has to exist. There are a number of advantages to using direct mail in our 2019 Direct Mail Quick Tips Guide. Email jean@DealerProfitPros.com if you would like a free copy. Referrals won’t be outlawed either. There may be limitations on paying for referrals (check with your attorney) but word of mouth will always be effective – if you treat people awesomely. Kenny Atcheson is the founder and president of Dealer Profit Pros and author of Marketing Battleground: How to Deploy Under-the-Radar Strategies to Explode Your Profits. His website can be found at www.DealerProfitPros.com.
MANAGEMENT MATTERS | By Dave Anderson
BE THE COACH YOUR PEOPLE DESERVE
Are You a Critic or a Coach? Ken Blanchard called feedback the “breakfast of champions,” and rightfully so. We all need feedback to grow and develop to our fullest potential. When done properly, coaching those on your team and giving them quality feedback is one of the highest return uses of your time. However, when it comes to giving feedback, many leaders today are more of a critic than a coach. They point out what’s wrong without offering the individual any coaching that would allow them to adjust and bring better performance day in and day out. Criticism without coaching doesn’t elevate people – it frustrates people. What follows are some key principles of coaching, and some steps to make sure you’re the coach your people deserve, and not just a critic of them. But first, let’s discuss what it means to be a critic and what it means to be a coach so you can better assess your style of giving feedback. A critic is defined as “one who expresses displeasure or an unfavorable opinion about someone or something.” Simply put, criticism without coaching is merely expressing displeasure and leaving it at that – not exactly the balanced feedback “breakfast” necessary to grow, develop, and invest in the people on our team. A coach, on the other hand, is “someone who gives private teaching, a trainer or coach.” Make no mistake, a coach will also express displeasure concerning poor behaviors or performance, but the difference is he or she will also provide instruction on how to improve. With a better understanding of what it means to be a critic and a coach, let’s look further at the differences between them. To improve performance, a coach will provide feedback concerning poor performance and immediately follow it up by redefining a performance expectation. The coach will do this both conversationally and sincerely, without getting personal, profane, loud, or reminding the offender of their past flaws and faults as the critic does. To improve performance a good coach will show the person what good performance looks like. By redefining the performance expectation with the individual, you’re setting the standard. By modeling and demonstrating the good performance you’re looking for, you’re setting the example. To further reinforce his or her point, the coach will explain why it’s important
to perform the task or duty in the manner prescribed. A great demonstration of what you’re looking for, by itself, is not enough to help coach the individual to greater levels of performance. This is why the best leaders in any field explain the “why” behind it. They understand people are more likely to apply the “how,” and live with the “what,” if they first understand the “why.” To test the individual’s comprehension of the feedback and the example demonstrated, a coach will ask the person to perform the task again to demonstrate their understanding of the proper technique. The only way you can know for sure that people get it is to test them, and let them show you they’ve got it. If the person requires further training to be able to perform the task or create the desired outcome, the coach will provide the resources necessary to support the person. Strong cultures understand talent doesn’t arrive fully developed, and a ferocious dedication must be made to training, coaching, and mentoring employees. Identifying and resourcing a team member’s growth by providing tools, experience, mentors, training or additional practice are key ways the coach supports and helps build the skillset necessary for the person to perform well. Once the performance improves, a coach will reinforce the change or improved behavior. This is because behaviors that are reinforced and rewarded are more likely to be repeated. But remember, the longer you wait to reinforce the behavior, the less impact it has. Reinforce often and quickly when you’re trying to influence behavioral and performance changes. If necessary, the coach will establish consequences for the performer if the poor behavior or performance continues. If you want to change a behavior, you must change the consequence for that behavior. As the saying goes, “If nothing changes, nothing changes.” Even when establishing consequences, a good coach will affirm belief in the performer and his or her ability. This is because the coach understands the consequence being established is something they’re doing for the person, not to the person. The sole objective of a consequence is to improve performance.
In summary, a critic is good at finding and pointing out faults or flaws. While a coach does likewise, his or her primary objective is to create the structure and tools necessary to eliminate the flaws. The coach is not just a “finder” but a “fixer.” With these points in mind, are you more of a critic or a coach? If you were to randomly survey team members on your coaching and feedback abilities, would they agree? If not, or if you’re unsure, the good news is you can fix that by bringing more focus to applying the principles shared here and adding value to your people, so they in turn can add more value to the organization. If you have good people who are being hamstrung by criticism without coaching, don’t expect them to endure or stay in your ranks for long. They won’t put up with the abuse, nor should they. Step up and be the coach they deserve – don’t wait until it’s too late to do so. Dave Anderson, “Mr. Accountability,” is a leading international speaker on personal and corporate performance improvement. He is also the author of 14 books and host of the podcast, The Game Changer Life.
WWW.NIADA.COM/NV.PHP JUNE/JULY 2019 DEALER NEWS 5
SALES MATTERS |
By John Chapin
BUILDING A SUCCESSFUL (SALES) CULTURE
Four Features of a Great Work Culture You just hired the perfect person: great work ethic, positive and upbeat. They show up early, leave late, take 10 minutes of a 15-minute break, and do more than expected and more than you ask for. Now let’s take that person and put them into an environment where people are negative, aren’t held accountable, take three days off for a hang-nail, show up at 8:05 then spend 45 minutes “getting ready” for their day, start preparing to leave at 3:30 and leave at 5:00 like there’s a fire drill. What happens to that perfect hire? One of two things: they either become just like everyone else after about a month, or they leave. Whatever your culture is, it has a substantial impact on performance. There is significant peer pressure to conform to the culture, be it good or bad. This peer pressure is one of the four main motivators for people who belong to any group. Positive peer pressure is what took my grades from C’s in public high school to A’s and B’s in private high school. It’s also what ensured I made over 200 phone calls per day in my first job as a stockbroker. If you’re a great team or organization with a great culture, fantastic. Unfortunately, most organizations have negative cultures, or at least elements of them.
F EAT U R ES O F GR E AT C ULT UR E S Great Leadership Culture is top down. It begins at the top and flows down through the entire organization. Whatever the leadership team eats, breathes, walks and talks related to culture will become the culture. As a leader, you don’t get what you want, you get what you tolerate and allow. And what you tolerate and allow you tacitly condone and get more of. If you allow people to miss their numbers year after year, when it’s evident they aren’t making the calls and doing the necessary work, you’ll get more of that. If you allow negativity in the workplace and don’t hold people accountable, you’ll get more negativity and more people not doing their job. On the flip side, if you lead by example, walk your talk, believe in people more than they believe in themselves, empower them, listen to them, give them all necessary tools and resources, and hold them to a higher standard, you’ll get more of that. Rules and Decrees The culture in an organization is how people treat other people, how they treat work, and how they treat the work environment. Great cultures have rules and decrees regarding these three items – written rules and decrees.
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Here are a few examples: • E veryone is expected to show up on time, work until the end of the day, finish what they start, be honest, have integrity, and put in a full day’s work for a full day’s pay. • E veryone will be held to the highest professional and ethical standards. There is no place in the workplace for negativity or unprofessionalism. You will be respectful to all employees and clients. Gossip, talking, and otherwise communicating behind someone’s back won’t be tolerated. • W e are a great organization with a great product. We take better care of our clients than the competition because we care more. Your rules and decrees, totaling about eight to 15 in number, should be framed and prominently posted in several highly-visible areas in the workplace on a document titled: Rules and Decrees of the Workplace. Prospective employees should also receive a copy of these during the interview process and you should have a conversation with them about how they feel about these. By the way, full acceptance of the rules and decrees is a non-negotiable prerequisite to being hired. Everyone is on Board with “All In” Commitment When Malcolm Butler was limited to a few special teams plays in Super Bowl 52, many people said that move cost the Patriots the Super Bowl. Maybe. My contention is that had they let him play and won Super Bowl 52, the Patriots would not have been back to play in Super Bowl 53. No one who breaks the rules gets a pass. If this is allowed even once, people inside the organization start to question the integrity of the culture, and the culture starts to crumble. When you’re more interested in winning, or making a sale, than living by your values, it’s the beginning of the end. Again, no one gets a pass on the rules, not even your top sales rep.
Cover Story
This doesn’t mean people don’t get a mulligan. You can allow a mistake or two, but address it immediately, and keep the leash short. Don’t allow chronic offenders who are making blatant and/or repetitive mistakes. While an occasional mistake may be inevitable, carelessness, ignorance, and apathy aren’t. Culture is a Living, Breathing Organism A great culture can’t simply be written out, placed on the wall, and left to die. It needs to be kept alive and well by visiting it often, talking about it, and reviewing it. Repetition is important, because like any new habit it will take time to imbed the culture into the consciousness and sub-consciousness of everyone in the organization. Once it’s locked in and habitually followed, discussing the culture keeps it on everyone’s radar and ensures it is remembered and adhered to. Also, it may be necessary to tweak some rules or decrees from time to time. Though many rules and decrees aren’t likely to change, there may be times when changes in people, technology, and other unforeseen future events make an edit necessary. Finally, you build a great sales culture by building a great overall company culture. As part of the organization, the sales department is included in all rules and decrees. Everyone, from leadership to the mailroom, must be on the same page when it comes to culture. So, while the sales department may have some additional rules and decrees related to activity, quotas, and other items, building an all-in, solid organizational culture is what will ensure the success of the sales culture. John Chapin is a sales and motivational speaker and trainer. He has over 31 years of sales experience as a number one sales rep and is the author of the 2010 sales book of the year: Sales Encyclopedia. For more information, visit www.completeselling.com or email johnchapin@completeselling.com.
AUCTION NEWS
MANHEIM LOCATIONS RECEIVE TOP HONORS Manheim Nevada Earns Regional Award
Manheim locations across the country were honored recently by commercial consignors for outstanding performance and service at the 2019 Conference of Automotive Remarketing in Las Vegas. Fourteen Manheim sites took home various national and regional awards, with four sites achieving double award status. “It’s an honor to be recognized by our partners for delivering great service and top results,” said Manheim president Grace Huang. “We are very proud of these teams and appreciate their continued commitment to going above and beyond to deliver winning performances for their clients.” The complete list of Manheim award winners – including double award winners Manheim Denver, Manheim Dallas, Manheim Tulsa and Manheim Statesville – are as follows.
Manheim is North America’s leading provider of end-to-end wholesale solutions that help dealer and commercial clients increase profits in their used vehicle operations. Through its physical, mobile and digital sales network, Manheim offers services for inventory management, buying and selling, floor planning, logistics, assurance and reconditioning.
Approximately 17,000 team members help Manheim offer 7 million used vehicles annually, facilitating transactions representing nearly $61 billion in value. Headquartered in Atlanta, Manheim North America is a Cox Automotive brand. For more information, visit www. manheim.com.
AV IS B U D GET GRO UP • H igh Volume Physical Auction: Manheim Dallas • Most Improved Sales Partner: Manheim Early Access • Top Brick and Mortar Digital Seller: Manheim Statesville A RI • A uction of the Year: Manheim Harrisonburg BRIDG EC R EST A C C E PTAN C E CORPO R AT I O N • A uction of the Year: Manheim Cincinnati – Weekly • Auction of the Year: Manheim Tulsa – Bi-weekly • Highest Net Black Book: Manheim Dallas – Weekly • Highest Net Black Book: Manheim Tulsa – Bi-weekly • Most Improved: Manheim Mississippi – Weekly • M ost Improved: Manheim Denver – Bi-weekly CONS U MER P O RT F OL I O S E RV I C E S • T op Gun Award for Best Overall Performance: Manheim Northstar Minnesota CRED I T A C C EP TA N C E COR P/ V R S • West Coast Region: Manheim Nevada GM FINANCIAL • R egional Award: Manheim Denver • R egional Award: Manheim Pennsylvania • R egional Award: Manheim Statesville LE AS EP L A N • S tellar Performance Northeast Region: Manheim Fredericksburg • Service Award East Region: Manheim Philadelphia M ERC HA N TS F L EE T M AN AG E M E N T • A uction of the Year: Manheim Milwaukee WWW.NIADA.COM/NV.PHP JUNE/JULY 2019 DEALER NEWS 7
SOCIAL MEDIA | By Kathi Kruse
5 SOCIAL MEDIA TIPS FOR CAR SALESPEOPLE
Put Your Professional Brand into Action Building a recognizable professional brand opens up professional opportunities. Social media can be very helpful for car salespeople to build authority, engage current and wouldbe customers, and set appointments. Every time you are online, in a meeting, at a conference, networking reception, or even a backyard BBQ, be mindful of the following: 1) What others are experiencing about you. 2) What you want others to experience about you. In each of your engagements, your customers, peers and even friends and family are evaluating you. When you’re solid in your professional brand, there is no difference between #1 and #2. As a car salesperson, being new to this idea of a professional brand can be challenging. However, when you begin to see yourself living through the “lens of a brand,” your perspective will change and you’ll become more mindful about how you approach the professional brand you are trying to define and aiming to live.
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Customers have changed how they shop: • 95 percent of car buying begins online (Google). • 96 percent of consumers are influenced by online reviews (eMarketer). • 80 percent of car buyers are more likely to turn to social media than a salesperson (Crowdtap). • There is expectation of price without having to talk to anyone (DrivingSales). • The average consumer visits 1.6 dealerships in person (Autotrader). Putting your own professional brand into action allows you to greet the customer where they are and help facilitate a purchase (or a purchase through their friends and family). We call this “social selling.” These five “social selling” steps will help you put your professional brand into action. Look Your Best Your image is just as important in the digital world as it is in the real world. Online, your profile image is the first thing prospective clients will see. Make a
good impression with a professional image that isn’t too stuffy but still makes you look trustworthy and friendly. The copy in your bio on any social network has to accomplish everything a greeting, handshake or elevator pitch would do in person. Write every word with your prospect in mind and write in the first person, not the third. And be sure to very clearly share your contact info. Share multiple avenues if there is room. On a site like LinkedIn, where you have more real estate to expand upon in your summary section, tell a story about who you are, why you do what you do and how you can help. Remember, LinkedIn is different from a resume. Use your headline not just for your title but also for a short phrase or keyword explaining how you help your clients. Build Your Credibility Your store has a solid reputation, but do you? Social networks can help you build your personal brand. With every Facebook post,
Instagram post, LinkedIn comment or Tweet, you can grow your reputation and establish a solid foundation. It’s a great record of your authentic self and a great place to demonstrate your understanding of your industry and potential clients. High credibility can be achieved by sharing relevant articles about the auto industry and your dealership as well as adding thoughtful insights to conversations and solving problems your prospects may have. It’s all in the name of establishing trust. When you share interesting thoughts, others will re-share them, tag you or start a conversation with you. Track Your Social Selling Efforts The best way to get better at social selling is by learning from your existing efforts. Collect insights from your current efforts and see what’s effective as well as what isn’t. Based on this data, ask yourself what you should be doing differently and what you can do better. This can help you gain clearer direction of how you should adapt your efforts to deliver even better results. Track these metrics and set personal goals to improve: • Inbound connections and network growth. • Content engagement rate (how many people are engaging with your content each week?). • Follower quality (followers who find and engage with your content).
• Prospect referrals. • Lead activity. Pro tip: LinkedIn has a “Social Selling Index” (SSI). LinkedIn should be one of your preferred channels to prospect. Check out your own SSI at business.linkedin.com/salessolutions/social-selling/the-social-sellingindex-ssi. Monitor Relevant Conversations to Find Prospects The most effective tactic to understand what your prospects want and need is to listen to them. You can then customize your messaging and/or offering based on this knowledge. All you need to do is pay attention to what your prospective and current customers are saying. Monitor relevant conversations about your vehicles to see what issues existing customers are experiencing. Maybe they’re venting their frustrations about your service on social media. Or they could be raving about you but mentioning some areas that need improvement. You can make use of all of this information to provide solutions to your existing customers and address their issues. So you’ll be nurturing your relationship with them to enhance their loyalty. Pro tip: Participate and engage in Facebook and LinkedIn Groups. You can share your valuable expertise and content, ask relevant questions or engage with group members to build a relationship.
Find Your Prospects Social networks are a great place to learn more about your potential clients. Pay attention: where do your potential clients turn to seek more information about problems they may have? Do they belong to a LinkedIn group? A public or private Facebook group? A weekly Twitter chat? Plant yourself there, listen to their conversations and get involved. While LinkedIn is the place to turn for business connections, Twitter has a much better search function and has a lower barrier to entry. You can follow anyone you want, from a CEO to a celebrity, and they don’t have to accept your request as they do on LinkedIn or Facebook. They might even follow you back. Once you’ve found some prospects, they may be able to lead you to others. For example, check out whom they are following and start following those people as well. On LinkedIn, some of the best conversations happen in industry-specific groups. Check the profiles of your prospects and see which groups they are a part of, and then join them. 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.
WWW.NIADA.COM/NV.PHP JUNE/JULY 2019 DEALER NEWS 9
ACCELERATE |
By GWC Warranty
3 HURDLES TO VSC SALES
How to Clear Them
The numbers are in. Consumers have spoken. There are three main reasons customers don’t protect themselves with service contract coverage. The good news is dealers can easily clear these hurdles with the right program in place. A study recently released by Pegasystems surveyed more than 1,000 consumers to understand whether or not they saw value in service contract coverage and what stops customers from purchasing a VSC with their vehicles. Overall, the study found 63 percent of customers do not have a service contract despite seeing the value in one. Why is this? Let’s dive into what stops customers from buying a VSC and how you can overcome those obstacles. Cost Thirty-five percent of customers say they can’t afford a service contract. But when you compare the small increase in monthly payment to what a major repair could do to
a tight monthly budget, it’s easy to see which scenario is easier to withstand. With so many used car buyers on tight monthly budgets, a service contract’s monthly investment can easily pay off in the long run. Not Thinking They Need One Thirty-two percent customers think they’ll never encounter the need for a service contract, but trends say otherwise. A simple question of how long the customer plans on owning the vehicle he or she is purchasing is just what you need to clear this hurdle. With the average length of ownership on the rise, chances are your customers will be in their vehicles for a long time. Used cars are inherently more likely to break down, especially as they approach and surpass 100,000 miles, making it more likely than
ever a customer will need a VSC at some point during his or her ownership. Lack of Availability at the Time of Purchase To solve for the 29 percent of customers who aren’t offered a VSC at the time of purchase, all you have to do is turn to the 300 percent rule. The first step is having a service contract provider that offers the product versatility – from both a vehicle and term perspective – that fits your inventory. Once that’s in place, it’s vital you present 100 percent of your products to 100 percent of your customers 100 percent of the time. You’ll never bat 1.000, but you’ll get better at your presentation as you continue to get real-world practice and you’ll inevitably see the results in your F&I profits.
COMPLIANCE MATTERS | By Digital Authority Partners
BUILDING AN ADA COMPLIANT WEBSITE
A Quick Guide
Lawsuits targeting business websites with ADA violations are on the rise. In fact, the number of ADA lawsuits filed in federal court for alleged website violations reached a record of over 10,000 in 2018, a 34 percent increase from 2017. You risk steep fines if your car dealership’s website is not ADA compliant. Your first violation could cost anywhere from $55,000 to $75,000, not to mention the potential revenue loss from failing to cater to the nearly 50 million adults in the United States living with some form of disability. It pays to comply with ADA regulations, but more importantly, it’s the right thing to do. What does it mean to have an ADA compliant website? Title III of the Americans with Disabilities Act stipulates businesses must provide a website experience that works for all citizens – including those with disabilities. This means having a site that accommodates users with visual impairments, as well as those with hearing, motor, and cognitive impairments. Here are four critical steps to ensure your website is ADA compliant.
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Ensure your website can be easily navigated with a keyboard. Users with disabilities may have trouble gripping a mouse, but they can still operate the computer using another limb, their eyes, a headpointer or a mouth stick. Ensure users can perform all tasks on your website using a keyboard. This includes everything from page navigation to clicking on a link or button, selecting a radio button, or scrolling through the website’s menu. Use alternative text on graphics. Blind or visually impaired users need software applications called screen readers to make sense of your website. Screen readers rely on alternative text or metadata included in the website code to “translate” images to users. Alternative text should be 125 characters or less to be compatible with most screen readers. As an example, alt text for the image of a vehicle should include the vehicle type, color and other background details. Make your forms accessible. All website forms need to be easy to understand and fill out by those with disabilities. This can be achieved by adding
text labels to your forms such as “textbox,” “checkbox,” “radio button,” and “menu.” Provide clear instructions about what actions you expect users to take, such as “request a quote” or “apply for financing.” Don’t place time limits on your form. This allows users with disabilities to complete actions at their own pace. Additionally, all forms should have easy-to-see error messages with steps on how to fix them. Fix your language. You can program the language of your website’s content by using the HTML language attribute, allowing screen readers to read content out loud with the correct pronunciation. For example, without the language attribute, a screen reader pronouncing a German car brand would sound like a tourist who doesn’t speak the language, causing confusion for the listener. Use proper color contrast. You also need to ensure adequate color contrast. Reading brown on a black background is hard enough for a normal user, but almost impossible for those who are color blind. According to the Web Content Accessibility Guidelines standard for color contrast, a 4.5:1 ratio between text or images and background is required. All customers and website visitors deserve a great online experience. Designing an accessible website should be one of your top priorities in 2019. If you don’t have the expertise to fix ADA compliance issues inhouse, consider working with an agency. Digital Authority Partners can help you build a userfriendly, ADA compliant website. Contact us at hello@ digitalauthority.me or (312) 600-5433 to get your ADA audit today.
WWW.NIADA.COM/NV.PHP JUNE/JULY 2019 DEALER NEWS 11
PAID ADVERTORIAL |
By Jeff Karg
NEVADA SB 350
The Real Impact to Consumers and Creditors In mid-2017, the Nevada legislature passed SB 350, a law that significantly changed how companies could use GPS and starter-interrupt devices to mitigate the risk of financing subprime consumers for automotive loans. While several of the law’s stipulations make sense for protecting consumers – such as requiring written consumer disclosure for the use of the devices and providing override commands to help consumers when in need – other aspects of the law had a major negative impact to the dealers, banks and finance companies using the technology. Perhaps the most impactful aspect of the law was the stipulation that a starterinterrupt device could not be activated until the contract holder is more than 30 days past due. For dealers and finance companies using GPS and/or starter-interrupt technology, the goal is to remind consumers to make their payments and to activate the starterinterrupt after they have been reminded and a grace period has passed – typically 3-5 days. As for how SB 350’s impact has been felt in the industry, ask Milo Trevizo, director of operations and finance for CAG Acceptance. Trevizo, who has been with CAG Acceptance for more than seven years, oversees financing, loan servicing, loan origination, remarketing and legal issues, among other duties. CAG Acceptance, which services 21 dealerships in Arizona and four in Nevada, stopped all loan originations in Nevada after the law passed. CAG Acceptance has used GPS/starterinterrupt solutions from PassTime for nearly a decade as part of its program to provide financing to subprime and deep subprime borrowers. PassTime was chosen by CAG as its GPS/ starter-interrupt provider because of the quality of the product, its reliability and the starter-interrupt capability of the solution. CAG also identified PassTime’s service as a key differentiator for the company – one Trevizo said is difficult to quantify, but often is just as important as any other company attribute. “CAG Acceptance was formed to help sell cars to and finance customers no one else would finance,” he said. “The PassTime device allowed us to pursue that mission, because it helped us lower the risk that comes with financing consumers with deep subprime credit.” Unfortunately, SB 350 made that mission just about impossible in Nevada. The Industry Predicted the Impact of SB 350 In a June 29, 2017 article by Nick Zulovich,
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senior editor of Auto Remarketing’s BHPH Report, written just before Nevada SB 350 took effect, Trevizo spoke about what the new law would mean to his business. “Trevizo … emphasized that doing business without the device’s impact would be nearly impossible,” Zulovich wrote. “The finance company began to use these devices in 2011, and during a five-year span, Trevizo indicated CAG was able to provide vehicle installment contracts to 3,200 customers, an increase of more than 1,000 percent compared to the time before the provider used the technology.” Zulovich quoted from Trevino’s testimony before the Nevada State Senate at a March 31 hearing about the bill. “From our experience, the starterinterrupt technology has enabled customers to obtain loans who would otherwise be unable to obtain financing,” Trevizo said during the hearing. “We had been seeing vehicle repossessions in Nevada double, delinquencies triple and our loan volume reduced in the absence of starter-interrupt technology. “If the proposed legislation passes, we envision a sharp decrease in loans, leading to severe reduction in profitability. This will force CAG to cease conducting business in Nevada. This will mean customers of CAG may be left without an avenue to purchase a vehicle.” Turns out, he was right. CAG continues to service its existing portfolios in Nevada but stopped loan originations in the state after the new law was implemented. Delinquency rates on CAG’s loans in Nevada jumped from an average of 9 percent for accounts that were 1-90 days past due while using the PassTime devices to an average of 33 percent under the new law, Trevizo said. The legislation that was supposed to help protect consumers has instead forced a major finance company serving those consumers to stop new business in the state. It’s a Communication Device What many don’t realize about these devices is they help facilitate communication between consumer and the finance company. When a consumer has a device installed on a vehicle and a payment is coming up, that consumer is much more likely to contact the creditor if he or she cannot make the payment. Without the device, consumers typically go “radio silent” in that scenario. Trevizo emphasized CAG wants consumers to call in that situation so they can work out an arrangement, which could
include a payment deferral, a change in the payment due date, an extension or even a full loan modification. But without contact and communication with the consumer, those options become very difficult. “If a consumer gets too far behind in payments, the options become more difficult to implement – and, unfortunately, it can result in losing the vehicle,” Trevizo said. 25 Days Makes All the Difference CAG previously used PassTime payment reminders and starter-interrupt devices on all loans in Nevada. The company policy was to activate the starter-interrupt feature of the device after device payment reminders were issued and the consumer was five days past the due date. CAG customers were informed about the device, its features and how it would be used. “We’d get calls in the four or five days past due period because customers did not want their ability to drive their car interrupted,” Trevizo explained. “Often they would make their payments or we’d work out an extension or deferment, etc. “But because it happened so close to the actual due date, it was much easier to work out an arrangement.” With the change in law, users of this technology could not activate a starterinterrupt feature of a device until the consumer was at least 30 days past due. While that sounds like a benefit for the consumer, it was actually a detriment. “While we used to get calls around the four or five days past due mark before the law, afterward, those calls wouldn’t come in until around 29 or 30 days past due,” Trevizo said. “At that point, the consumer is about a full month behind and essentially owes two payments.” That makes it much more difficult for consumers ever to catch up on their payments or to work out solutions that are affordable to them for the long run. “Many consumers treated the ‘disable date’ as their payment due date,” Trevizo said. “So if that moved from five days from their actual due date to 30 days after, those consumers were perpetually behind on their payments and were rarely able to catch up.” Whatever the intent of the law’s stipulation was, the reality – at least for CAG – was that using starter-interrupt technology only after consumers had been 30 days late on their payment resulted in payments slipping past the due dates to the point that consumers could rarely, if ever, get caught back up.
ACCELERATE |
What About Using Only GPS Instead of the Starter-Interrupt Feature? According to Trevizo, CAG Acceptance views GPS/starter-interrupt technology as a communication tool and not as a repossession tool. Of course, with GPS you can find the vehicle – but by that point, the situation has gotten to a place neither party wanted to be. The consumer has given up on the vehicle and the payments and is more or less waiting until for the vehicle to be repossessed. The creditor has had several (at least) missed payments on the contract and has to go through the repossession process on the account, then needs to hire or send employees to locate and recover the vehicle. Trevizo said without the use of PassTime’s devices, repossessions for the company went through the roof. For many finance companies, by the time an account gets to the repossession stage, it is a poor outcome for the creditor and a poor outcome for the consumer. Voluntary Surrenders Another often overlooked aspect is the device’s impact on voluntary surrenders. A voluntary surrender is when a consumer turns in the vehicle in a situation in which he or she no longer intends to make payments on the loan. With a device in use, consumers would often voluntarily surrender a vehicle because they knew it would be disabled shortly after the due date, so there was no incentive to keep it. With GPS only, or under the new law requiring disablement only after 30 days, voluntary surrenders dropped off considerably. Consumers continued to drive their vehicles well past the payment due date, adding additional wear and tear without reducing the balance. Effect vs. Effectiveness The effect of the Nevada law to the business of CAG Acceptance is clear. The restrictions on the devices caused the company to stop loan originations in Nevada, as it was no longer commercially viable. Those events also created a compelling view of the effectiveness of the devices themselves. When CAG discontinued the use of PassTime’s devices in Nevada, the result was a comparison of accounts that had devices associated with them and accounts that did not.
By GWC Warranty
VEHICLE PHOTOS THAT SELL
While using PassTime devices, CAG’s Nevada portfolio averaged a 9 percent delinquency rate on accounts between 1-90 days past due. The use of payment reminders and starter-interrupt 3-5 days after the due date kept delinquency numbers down on subprime accounts. Compare that to the delinquency numbers without the use of devices: an average of 33 percent on accounts between 1-90 days past due – a 24 percent increase in delinquencies in the accounts without PassTime devices. Evaluating the Impact CAG Acceptance made the business decision to stop new originations in Nevada as a direct result of the law. “When you are talking about financing people who have deep subprime credit, there is not a lot of wiggle room,” Trevizo said. “Statistically, the risk of default is very high. “Starter-interrupt devices helped reduce or mitigate some of that risk. The law in Nevada is so restrictive on the technology that it makes it virtually unusable. Without that additional protection against risk, it just doesn’t make sense to continue to do business in Nevada.” So for CAG, the result was to cease additional loan originations in Nevada and focus solely on Arizona. While there are likely still some options for consumers with deep subprime credit to get vehicle financing, Trevizo said, “I don’t see other finance companies rushing into Nevada to finance people in that position. My guess is a lot of those deep subprime consumers aren’t getting loans.” For a law that was positioned as a way to help consumers, one impact could be that it is now even more difficult to get vehicle financing in the first place. PassTime continues to take the lead, along with industry partners, to proactively monitor legislation and meet with lawmakers about the technology the company provides. PassTime’s hope is with continued education about how the devices work, how they help the industry and the impact of restrictions around them, lawmakers can make informed decisions and hold a more comprehensive view when creating legislation. Jeff Karg is director of marketing and communications for PassTime. He can be reach at (303) 962-3152.
Set Your Inventory Apart
Every picture you take of your inventory and post online can be the one click that sells a car or sends your customers on to a competitor’s website. When it’s time to get your camera ready for that new score from auction, be strategic to make sure your customers see everything that’s good about your inventory. Focus on the Details Things like tire treads, shots of clean engine compartments, high-quality stitching on upholstery and other small items can show your attention to detail that will attract customers and save them on repairs after the sale. These items may seem small, but can give the customer the impression they’re buying a meticulously maintained vehicle.
Highlight Your Reconditioning You spend valuable time and money on getting your cars ready for primetime. Show this to your customers. You can even go as far as to show off an invoice or list of work done on the car to get it ready. It shows your customers how this car can stand out from similar models on sale elsewhere. Try Video A tool like Covideo gives you the ability to bring a standard vehicle walk-around to life. It gives you the ability to give your customers a firsthand look at the car. You can take them behind the wheel, in the seats and up close with every bell and whistle to show it off like a photo never could. WWW.NIADA.COM/NV.PHP JUNE/JULY 2019 DEALER NEWS 13
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 Congress overturned the Consumer Financial Protection Bureau’s controversial guidance regarding discrimination in auto finance last year, but that doesn’t mean the issue is dead. The House Financial Services Committee’s Subcommittee on Oversight and Investigations held a hearing May 1 to examine discrimination in the automobile loan and insurance industries. The hearing included debate about the CFPB’s now-nullified guidance document, which claimed dealer discretion on interest rates in indirect auto lending creates a “significant risk” of unintentional disparate impact discrimination. “Last Congress, Republicans impeded enforcement of fair lending laws, making discrimination potentially worse,” committee chairwoman Maxine Waters (D-Calif.) said, referring to the vote to repeal the guidance. “Buying a car is a significant purchase for many Americans and should be a fair and transparent transaction, free of discrimination. Unfortunately, this is not the case for persons of color.” Waters said a “test of auto lending discrimination” by the National Fair Housing Alliance found “nearly two-thirds of minority loan applicants received higher-cost financing options from automobile dealers than less qualified white applicants.” “These types of practices warrant Congressional scrutiny, analysis and ultimately legislation,” she said. While much of the questioning and arguments from committee members went predictably according to party affiliation, Rep. Joyce Beatty (D-Ohio) joined ranking member Patrick McHenry (R-N.C.) in casting doubt on the CFPB’s methodology used to identify the race and ethnicity of consumers in determining disparate impact discrimination. Congressional Democrats would like to address the discrimination issue legislatively now that they control the House, but their options are limited by the previous Congress’ override of the CFPB guidance – not to mention the Republicancontrolled Senate.
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REGULATORY The Federal Trade Commission has completed its 3½-year review of the Holder in Due Course Rule and concluded no changes are necessary. The commission said it received 19 comments from the public about the rule – including a comment from NIADA – since the review began in November 2015. All of the comments supported retaining the rule as is. The Holder Rule, formally known as the Trade Regulation Rule Concerning Preservation of Consumers’ Claims and Defenses, was put in place to protect consumers when they purchase personal goods or services with money loaned by a merchant or a lender who works with a merchant. The rule requires those loans to include a provision that preserves consumers’ ability to raise the merchant’s misconduct as a reason for not repaying the loan, even if the loan is sold to a third party. It also prevents businesses from using financing mechanisms to collect debts from consumers when the debt arises from a sale in which the merchant defrauded customers, failed to deliver the goods or services, or engaged in other misconduct. The five FTC commissioners were unanimous in approving the rule with no changes, and affirmed the commission’s 2012 advisory opinion that the remedies provided by the rule are not limited to circumstances in which the seller’s conduct warrants rescission of the contract, or in which the goods or services sold to the consumer are worthless. PAC In conjunction with the National Auto Auction Association’s Day on the Hill last month, the NIADA Political Action Committee made campaign contributions to freshman Sen. Todd Young (R-Ind.) and Rep. Cathy McMorris Rodgers (R-Wash.). Young serves on three Senate committees important to independent dealers and the used vehicle industry: Finance, Small Business and Entrepreneurship, and Commerce, Science and Transportation – the committee with jurisdiction over the contentious issue of recalls. As the ranking Republican on the House Energy and Commerce Committee’s Subcommittee on Consumer Protection and Commerce, Rodgers also is deeply involved in the recall issue.
Rep. Cathy McMorris Rodgers
Sen. Todd Young
Rep. Maxine Waters
GRASS ROOTS Lawsuits are being filed against dealerships in more than 30 states alleging their websites do not comply with the Americans With Disabilities Act. The 1990 law requires businesses to make “reasonable accommodations” for access to people with disabilities in “any place of public accommodation.” The suits are claiming the Internet is a place of public accommodation, which requires dealerships and other businesses to make their websites accessible to those who cannot use them as currently configured. Those accommodations could include coding to convert words on the screen to audio for blind users, descriptions in videos for the deaf and keyboard commands for interactive functions for people who cannot use a mouse, all of which could be costprohibitive for small businesses such as dealerships. There is currently no federal standard for making websites ADA compliant. The Department of Justice issued advance notices of proposed rulemaking on the issue in 2010, but the Trump Administration withdrew them in 2017, saying DOJ will evaluate whether such regulations are necessary. California dealers have been hit hardest by the lawsuits because state law mandates a minimum of $4,000 in damages plus attorney’s fees for each violation in disability discrimination cases, regardless of the actual damages. Attorneys have made such suits a specialty, with plaintiffs sometimes visiting a number of dealerships and making the same claim in hopes of receiving multiple settlements. Shaun Petersen is NIADA’s senior vice president of legal and government affairs.
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