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V I S I T U S A T W W W .T N I A D A . C O M

ONCE YOU FIND WHAT WORKS, DON’T REST ON YOUR LAURELS. CONTINUE TO LOOK FOR WAYS TO IMPROVE. LOOK FOR BETTER WAYS TO COMPETE, BETTER ANSWERS TO OBJECTIONS, BETTER WAYS TO COMMUNICATE AND BUILD RELATIONSHIPS – MORE EFFECTIVE AND EFFICIENT WAYS TO OPERATE. SALES MATTERS

BY JOHN CHAPIN

BUILDING YOUR SALES MACHINE Follow These Simple Steps

The “how to” behind building a highly effective, competition-dominating, sales juggernaut is actually fairly simple. What isn’t simple is executing the steps and sticking to the plan. The dedication and resolve necessary to start and complete the process is where the majority of people fail. If you’re ready to skyrocket sales in your organization, here are the steps to get it done. Super-Intense Sales Training The most important tool a salesperson can have in their arsenal is great sales skills. Yet, while most organizations spend tens or even hundreds of thousands of dollars on a new producer, send them to product training, and load them up on technical skills, most balk at investing a fraction of that on the most important training: sales training. Poor sales skills is a key reason why most salespeople end up with mediocre or bad sales results. When considering how to train your people, let’s start with the gold standard. In the best case your training would look like what my dad got from IBM The first six months were spent at IBM’s main office where new salespeople trained half the time on product and half the time on sales. Everyone was given a sales playbook that included all scripts for what to say and how to handle all sales situations. Next, that playbook was memorized, practiced, and drilled until they had every single sales situation embedded in their brains. When my dad finally returned from training, he was with his manager and one

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of the top sales reps out in the field for three more months. They practiced, drilled, and rehearsed everything before, during, and after live calls. Finally, after nine months he was allowed to go on calls by himself. If you’re like most people reading this, you don’t have the resources of an IBM and you probably can’t invest nine months doing the training mentioned above. In that case, you want to do something similar to what I do when training brand new agents in the insurance industry. The first thing they do is spend two days in one of the top insurance producer schools. When they get back, I give them a playbook with reinforcement CDs, all the scripts, and everything else necessary to handle all sales situations and scenarios they’re going to encounter when they’re out prospecting and chasing new business. They memorize these and we practice through roleplay. After a very short period of time, once they have the basics down, they start calling on live prospects. They learn most of what they learn by getting their nose bloodied out calling on small accounts. After weeks of internalizing everything they learned in the first school and from me, I send them to a second school. We follow the same reinforcement process as we did before. Next, I send them to a third school. By the time they’ve completed the above process, their sales skills are better than about 97 percent of the people they are competing against. As a result, because sales skills are the most important skills by far, they are doing a significant amount of business at this point. Activity Although activity is actually more important than sales skills, it is second in chronological order. Before I send someone out to make calls, I want them to have a general idea of what they’re saying so we train on sales skills first.

This step is all about massive activity and tracking that activity. The insurance agents have a quota for new people they have to attempt to contact every week. At the end of the week I want: the number of new people called on, spoken to, prospects, appointments, follow up calls on prospects not reached, sales, and several other items. While the most important tool a salesperson can have is great sales skills, the most important attributes a salesperson can have are hard work, persistence, and an ability to persevere. This is all about making a ton of calls and staying after it no matter how badly they get beat up. Continuous Practice and Reinforcement of Sales Skills Your people have to constantly be reading the scripts, listening to sales CDs in the car, roleplaying, and otherwise practicing, drilling and rehearsing everything they’ve learned. As a leader you want to test them by throwing objections and different situations at them along with going on some calls. It’s also important to work on sales skills in sales meetings. This also means resending your people to training. An insurance agent will go to each of the producer schools three times the first three years they are working with me. Each time they learn something they missed the first time and the ideas they do remember get further reinforced and improved. Every time they come back there is an instant bump in sales. Continue to Improve and Innovate Once you find what works, don’t rest on your laurels. Continue to look for ways to improve. Look for better ways to compete, better answers to objections, better ways to communicate and build relationships – more effective and efficient ways to operate. Remove Obstacles from the Sales Process Obstacles come in several forms. It can be support people not doing their jobs, inefficient systems or processes, tedious, unnecessary, extra items you ask your people to do or even having salespeople doing items that support people should be doing. Keep an eye out for anything that seems to be taking your salespeople away from “new business” activities. Remove Negativity and Slackers from the Environment The key to all of the above is to develop and follow a proven system that trains and reinforces sales skills and ensures your people are doing tons of the right activities the right way. JOHN CHAPIN is a sales and motivational speaker and trainer. He has over 27 years of sales experience as a number one sales rep and is the author of the 2010 sales book of the year: Sales Encyclopedia. For more information, visit www.completeselling.com or email johnchapin@completeselling.com.

December 2017 / TENNESSEE DEALER CONNECT

INSIDE

03................................................Building Your Sales Machine 06................................................BHPH Income Opportunities 08............................................................. Building New Roads 10............................................................. Washington Update 12..............................................................New Profit Sources 13...........................................................Flood Damage Basics 14.........................................Improving Your “About Us” Page

WHAT’S NEW

SPECIAL FEATURES: DISASTER RELIEF

NIADA and Spireon recently teamed up to provide disaster relief to those directly impacted by hurricanes Harvey and Irma. Partnering with the NIADA Foundation Disaster Relief Fund, Spireon is contributing $100,000 through the end of the year to help with recovery. Spireon is also helping customers get their businesses back up and running through data on their NSpire platform. To learn more, check out the story on NIADA.tv’s Special Features channel.

ADVERTISERS INDEX

AmTrust................................................................................IBC Black Book............................................................................IFC DAA Dealers Auto Auction Group, LLC..................................5 Manheim................................................................................11 NextGear Capital...................................................................12 PassTime..................................................................................7 VAuto.................................................................... Back Cover

OFFICE

Darryl Noble P.O. Box 2219 • Lebanon, TN 37088 615-506-4968 Cell • 1-866-5TNIADA dnoble@tniada.com

NIADA HEADQUARTERS

NATIONAL INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION WWW.NIADA.COM • WWW.NIADA.TV 2521 BROWN BLVD. • ARLINGTON, TX 76006-5203 PHONE (817) 640-3838 The Tennessee Dealer Connect 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 TNIADA 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 © 2017 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

ACCELERATE

BY GWC WARRANTY

WHY CUSTOMERS REFUSE A VEHICLE SERVICE CONTRACT Setting Yourself Up for Success

There’s a lot of blame to go around when an F&I deal falls through. You might put it on the customer who just didn’t have an open mind. Or you could point to the sales department that agreed to a deal that left little room in the customer’s budget. In the end there’s only one place to look when it comes to opportunities in vehicle service contract deals gone bad: the person sitting across from the customer. But there’s good news. It’s an easy problem to fix. Every service contract deal that doesn’t happen is an opportunity to objectively look at why the deal didn’t come to fruition. But boiling things down, there are two main reasons why customers refuse to buy a vehicle service contract: they think they can’t afford it or they don’t see the need right now. Focus on key words in each of these objections: Customers think they can’t afford them, and they don’t see the need right now. What’s positive here is the person sitting across the desk from the customer in the F&I office has control over both of these lines of thinking. All it takes is a few questions for you to show the customer what they really can’t afford is a major repair bill and while the vehicle is in great shape now, there are realities with used cars they should prepare for. Almost every customer will object to paying more for a VSC. The key here is getting to the bottom why.

BOARD MEMBERS Executive Director

Darryl Noble P.O. Box 2219 Lebanon, TN 37088 615-506-4968 Cell 1-866-5TNIADA (586-4232) dnoble@tniada.com

President-Elect

Marcus Davis Marcka Auto Auction 150 Cox Avenue Crossville, TN 38555 931-456-7555 Office marcka@citilink.net

TENNESSEE DEALER CONNECT / December 2017

Often, it’s a simple misunderstanding of what common repairs cost. Always ask priceconscious customers what they think a major repair costs. Regardless of their answer, you have an opportunity to position the value of a service contract. If their response is too low, you can show past repair orders and ground the customer in the reality of these costs. If the response is on point or on the higher end, you can focus on how such a repair impacts a monthly budget while asking the customer if that repair fits within their monthly expenses. When customers don’t see the need for a service contract, it’s usually due to confidence they have in the vehicle they’re buying. Most car buyers expect to be purchasing a vehicle in good working order. So why would they need protection on repairs? The reality here, especially with used vehicles, is that components are more likely to break down as they age. Ask a customer about their level of understanding of factory warranties, if the vehicle still qualifies. Here is your opportunity to showcase that factory coverage covers many parts least likely to fail. But a service contract covers many of the components likely to break down with wear and tear. Just like your grandparents visit the doctor more often, used vehicles will visit the shop for smaller issues more often as they age, so it’s important to be prepared for this fact. Getting to the root of why your customer is refusing a service contract is where your opportunities reside. Most of the time, customers are excited to drive off in their new car or they simply don’t understand many of the intricacies of owning a vehicle and what it costs. Take this opportunity to act as a consultant. Ask the right questions and be prepared with the answers, and you’ll set yourself up for more success in the F&I office.

President

Mark Noble AmeriCar, Inc. 200 W. Main Street Lebanon, TN 37087 615-977-3313 Cell 615-547-6075 Office mnoble@tdstn.com

Auction Member Rep

Stephanie Baker DAA Murfreesboro 1815 Old Ft. Parkway Murfreesboro, TN 37129 615-217-2848 sbaker@dealersauto.com

Sr. Vice President (Vacant)

Treasurer

Jimmy Evans Evans Auto Exchange 615-895-6990 evansautoexchange@ yahoo.com

Secretary (Vacant)

Member

David Stancil D&B Auto Sales 1384 Poplar Drive Crossville, TN 38558 931-707-8899 Office

Member

Alan McFadden Al’s Auto Mart 202 Hwy 52w Portland, TN 37148 Phone: 615 325-2727 Cell: 615 403-1190 Fax: 615 325-1190 email: carnut3333@ yahoo.com www.tniada.com

Tuesday at 9:00am 877.232.0259

Wednesday at 2:00pm 615.217.2848

Thursday at 9:00am 423.499.0015

Thursday at 9:00am 901.480.4250

Thursday at 9:30am 251.348.8855

MANAGEMENT MATTERS

BY SCOTT BATES

BHPH INCOME OPPORTUNITIES Long Term Profitability

For dealers who want to keep control of their portfolio but also increase profitability long term, they need to focus on customer longevity. To keep their customers in a vehicle longer, more BHPH dealers are offering some kind of warranty. Many more have optional service contracts available. Offering mechanical protection up front with the car sale increases the chances a customer will contact the dealer if the car breaks down. Some warranties include an option for free towing, which gets the car – and customer – back to the dealership to resolve any issues. With warranties and service contracts, of course, you need a well-run service department. The service department staff needs to focus on a good customer experience, not just keeping a car running. Staff also should understand exactly what is covered under the warranty or service contract to communicate with the customer and handle proper repairs. For example, a dealer may explain up front the customer has a full or limited warranty on any mechanical repairs for a set period of time. This option is designed to keep in contact with the customer and make small repairs to avoid bigger ones. Frequently, a broken down car equals stopped payments. Instead, the dealer offers to make repairs, eliminates this common excuse for non-payment and stays in contact with more customers. By staying in contact with customers, the dealer can offer more options to keep them happy and making payments: • Get the vehicle in and inspect it proactively/make repairs. • Provide a discount. • Add missed payments or big repairs on the end of the existing loan. • Get customers into another vehicle through refinancing. • Adjust the payment schedule to support changes in circumstances. Consider offering regular spot checks on the vehicle or letting customers upgrade to a nicer model while keeping payments the same. Extra service can sustain thousands in payments each month while reducing the need to sell as many cars per month. One of our BHPH clients recently spoke to us about outsourced bookkeeping services to free up his time to spend on repairs. He calculated time spent in service was more valuable than in the back office if it meant getting more cars back on the road and payments in the door. In this competitive environment, the industry is advocating decisions like this, focusing more on

customer longevity and extra service options. Dealers who free up their time from the back office or sales can focus on service and collections practices, including: • Reviewing all existing customers weekly and identifying which customers are currently behind on payments. • Contacting customers and inviting them to the dealership to talk about getting current on payments. • Offering a list of options that can support up to date payments. • Training staff on a welcoming experience that demonstrates your interest in keeping the relationship. • Monitoring payment habits and communicating as soon as there is a change. Ultimately, a customer-centric approach will help your dealership become self-

TENNESSEE DEALER CONNECT / December 2017

sufficient – with enough cash flow to reinvest in the dealership operations and enough efficiency to focus on attracting new customers and new revenue streams. If your vision is also to provide a valuable service to the community for people who need a car and can’t get one any other way, then a customer-centric approach is certainly the right business model. Cornwell Jackson works with BHPH dealers frequently to adopt new approaches to service, cash flow and profitability. For more information, visit www.cornwelljackson.com. SCOTT BATES, CPA, is a partner in the audit practice and leads Cornwell Jackson’s Business Services Department. Contact Scott at scott.bates@cornwelljackson.com or 972-202-8000.

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INDUSTRY PERSPECTIVE

BY DALE POLLAK

LESSONS FROM THE SALE OF ROLLING STONE Don’t Make the Same Mistakes

When I was a teenager, if you wanted to keep up on music and politics, you read Rolling Stone. I credit my older brothers for introducing me to the magazine. Once I’d read it the first time, I was hooked. I especially remember the writing. For me, Rolling Stone was a way to be in the front row at concerts, or behind the scenes of a political campaign, without actually being there. It didn’t hurt the magazine had an edgy reputation – just the sort of thing that made a teenage kid from the Midwest want to get his hands on the latest copy. These memories came to mind as I read news that, on the eve of its 50th anniversary, Rolling Stone is up for sale. The news didn’t surprise me. It’s been years since I’ve read a copy, and it’s tough, in general, for magazines to be successful in today’s digital age. But I was struck by some of the reasons

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that apparently led to the sale, and the lessons they offer for dealers. Resistance to change hurts. Rolling Stone’s founder and publisher, Jann Wenner, reportedly didn’t think a print magazine would ever fall out of favor, even as subscribers declined and shifted online in recent years. There’s a lesson here in the way many dealers regard, and often resist, the purchase preferences of today’s car buyers. I suspect Rolling Stone would be better off today if it had opted to reinvent its business and distribution model a lot earlier. The same seems to be increasingly true for dealers and the rise of online retailing. In the end, there may not be much “it” to get around to if you wait too long. Reputation and relevance are related. I can’t recall a specific reason I stopped reading Rolling Stone. I do remember the articles and stories seemed less compelling to me in college and beyond. Perhaps the last time I sought out Rolling Stone followed the controversy over its story of an alleged gang rape at the University of Virginia. I read the piece for myself and thought, “This won’t turn out well.” Subsequent investigations found serious breaches of journalistic fundamentals, all of which damaged the magazine’s reputation. Dealers would do well to remember your

reputation is only as good as the worst online review or your last miffed customer. Likewise, today’s consumers have long memories, and social media outlets to vent, when you break their trust. Talent sets the tone. You could make the case Rolling Stone thrived the most when it consistently fielded top-notch writers and photographers – some of whom Wenner had the foresight and guts to give their work its first significant chance. The same is true for dealers. When your people really shine, so does your dealership. As their leader, it’s your job to create the environment where they have a real chance to reach their potential, and continue to grow as individuals. By definition, this outcome means dealers have to do way more than simply provide an attractive paycheck. A New York Times article reports Wenner, in the late ‘90s, turned down an offer of $500 million for Rolling Stone. Last year, Wenner sold a 49 percent stake in his company for $40 million. Perhaps those figures represent the biggest lesson of all. 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.

December 2017 / TENNESSEE DEALER CONNECT

MANAGEMENT MATTERS

BY JUSTIN M. OSBURN

RETAIL READY Building New Roads in 2018

In the United States, millions of drivers jump in their vehicles and take to the roads each day. These drivers are from different states and backgrounds, with different levels of education. Though a diverse group, almost none just get up and decide to drive down the wrong side of the road. Why? They know this would be high risk for the safety of themselves and others. They know which side of the road to drive on and at what speed because the federal, state, and local road officials have a common vision of how traffic should flow. To prevent accidents and tragedy, drivers must receive communication from those visionaries. This communication is done primarily through driver’s education and signs. The road visionaries did not expect traffic to just “know” when to stop, when to not pass, what speed to drive, which side of the road to drive or when to exit or stop. Similarly, most workers get up every day with the intention to go to work and do the right thing. Most do not get up with malicious intent to cause chaos at their work place, or at your dealership. However, when the dealer and organizational leaders have not stepped back and thought about how they want their “roads” to function, the vision they have cannot be communicated. Leaders must decide which side of the road drivers will drive on before they can post the sign. The leaders must decide how fast people should drive for safe and efficient travel before they can post a speed limit sign. At the dealership, the senior leaders must have a vision how the business will operate before they communicate it to their team. Leaders must decide what the sales process is before they communicate such to the sales team. If the visionaries of the road system just built a road and no one took the time to decide how it would function, can you imagine what chaos traffic would present each day? Imagine no rules, no signs, no stop signs, no stop lights, no yield signs, no “no passing” zones and signs. Without an organizational vision for your operation, your business might resemble a road system with no thought or communication on how to use it. If you’re familiar with my “Gears to Profitability” dealer model, you know internal service quality precedes external service quality and the result and combination of both dictates profitability. Your responsibility as a leader is to provide short and long term vision. I find many dealers are confused what that means. Back to the roads, if you decide

roundabouts are safer and more efficient than traffic lights, visionaries will begin to plan the best place to put a roundabout, what the flow of traffic will be and what rules and signs will organize it best for drivers. This is a long term vision. However, if a bridge is about to fall down and requires immediate repair, or an ice storm hits and salt is needed in the dead of night, this is a short term vision to keep traffic flowing until the longer term possibilities are completed. The dealership’s overall vision sets the framework that each leader inside of the business uses to create their own vision for individual departments. Think of the department managers as state and local roadways working together in congruence with overall highway rules. Leaders take responsibility for creating and communicating a compelling vision. This is essential for leading your team to success on the lot, in service or in the office. There is no better time to create and drive a clear vision than at the beginning of the year. So what is a strong and clear vision? It is a picture of the future that is created in the imagination and catalyzes action! The compelling argument for a clear and communicated vision is to prevent organizational chaos. Each leader’s vision is critical to individual success and impact. Effective leadership focuses on doing the right things. Do you do the right things? Do you do things right? Does your team do the right things? Do they do things right? First, know and understand the vision of the organization, how the roadways work. If you are the dealer, have you communicated the vision of the business clearly? This will enable your leaders to develop their own visions within the areas they control in the business to support the overall goals of the dealership. Second, leaders must create a vision that supports and contributes to the overall vision of the organization or department. As a leader, it is not healthy to construct and distribute a vision that is not a primary effort to advance your department toward the overall vision of the business. Doing so will cause you to conflict with the business itself, resulting in friction with other leaders in the operation, conflict with other departments and confusing communication to those in your charge. Imagine you are in charge of the roadways in a small town, and you decide it

TENNESSEE DEALER CONNECT / December 2017

makes more sense for everyone to drive on the left side of the road. Your vision is not congruent with the overall operation’s vision and will cause chaos and tragedy. Last, communicate the organization’s vision in a way that is compelling and inspirational. Part of your responsibility is to consistently broadcast the direction of the department and the dealership to nonleaders on the team. When you are traveling in an unfamiliar, large, downtown area and using GPS to assist you, the directions for your next turn are given two miles, one mile, and half a mile in advance as well as at the time of the turn. Signs are also used, frequently, to communicate the vision – think exit signs, speed limit signs, mile markers, etc. All these communications work to support the overall operational objective. As a leader in your organization, your behaviors demonstrate your vision and impact your dealership’s success. If you tell your team to drive 65 miles per hour on the right hand side of the road, but every day you drive 85 miles per hour on the left hand side of the road, you are not offering yourself or the organization any value. How well does your vision create a shared and meaningful purpose? Does it inspire passion and interest? Does it guide decision-making and strategy? Does it convey values? Effectively communicate your vision. This allows others to decide to follow your vision. The impact is emotional commitment. The New Year brings new beginnings. The page is turning and it brings a fresh start mentally and emotionally. We step out in January and breathe in the new air while feeling anticipation of how this year will be better than the last. While most of us “feel” this reset, it fades away in a relatively short period of time. Make a long lasting effect this year. Imagine and motivate with a vision. I get great satisfaction receiving all of your emails. I’d love to hear your story on vision. Also, contact me for more information on Gears to Profitability or an NIADA 20 Group. Write 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. He can be reached at justin@niada.com.

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ASSOCIATION NEWS

SPIREON DONATES $100,000 TO NIADA FOUNDATION’S DISASTER RELIEF FUND Major Financial Commitment to Assist the Dealer Community Affected by Hurricanes Harvey and Irma

Spireon Inc., a Diamond-level NIADA National Corporate Partner and leading provider of GPS solutions with GoldStar and other connected vehicle products, will contribute $100,000 to the NIADA Foundation’s Disaster Relief Fund to assist members of the automotive community in their recovery from the devastating effects of hurricanes Harvey and Irma. Spireon, a longtime NIADA partner, said it selected the NIADA Foundation Disaster Relief Fund for its commitment to directly contribute to its customers and the communities they serve because it was the quickest way to help in the recovery. “Our hearts and prayers go out to the folks whose lives have been impacted by hurricanes

Harvey and Irma,” Spireon CEO Kevin Weiss said. “We know the road has not been easy over the past few weeks and we know the recovery efforts will continue for months to come. “We are incredibly thankful for the support our customers have shown us over the years and feel very fortunate to be in a position to give back to these impacted communities.” In addition, Weiss said Spireon will use its NSpire platform to provide the data its customers need to help get their businesses up and running, creating reports to help identify assets potentially at risk from the storms and assist dealers in assessing the next steps for their business. “When Spireon heard the NIADA Foundation had created the Disaster Relief Fund, it quickly rallied and offered a major financial commitment to help those affected by the catastrophic storms,” said Steve Jordan, NIADA’s CEO and president of the NIADA Foundation board of trustees. “We appreciate that Spireon understands recovery doesn’t happen overnight and we are looking forward to working with Kevin

Weiss and his entire team to advance our shared goals of helping all members of the independent dealer community get back on their feet again.” The Disaster Relief Fund was established by the NIADA Foundation to provide a venue for members of the National Independent Automobile Dealers Association and its industry partners to assist fellow dealers and others in the automotive community affected by the recent storms. Jordan said 100 percent of all contributions received will be donated to provide relief from the effects of flooding, help repair property damage and assist with other disaster-related needs attributable to the catastrophic weather events that struck Houston and other areas along the Texas coast and Florida. The NIADA Foundation is a non-profit 501(c) (3) charitable organization that serves as the focal point of NIADA’s charitable efforts and coordinates the association’s charitable giving. The NIADA Foundation will continue to fund hurricane relief efforts in the coming months. It is not too late to donate. For more information or to contribute, visit www. niadafoundation.org.

MARKET WATCH

FLOOD CARS IN THE U.S. JUMP 20 PERCENT Reminder and Offer from Carfax

New research from Carfax suggests drivers may be behind the wheel of more than 325,000 previously flooded vehicles. That number is a 20 percent increase from 2016 and a stark reminder for consumers to do their due diligence when used car shopping. Vehicles reported as flood damaged by a state’s Department of Motor Vehicles, insurance companies and more have washed up in every state. These 10 states have the most:

1. Texas – 51,000 2. Louisiana – 29,000 3. Pennsylvania – 20,000 4. Florida – 19,000 5. Kentucky – 16,000 6. Illinois – 15,000 7. S outh Carolina – 13,000 8. Virginia – 13,000 9. North Carolina – 13,000 10. Michigan – 11,000

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LOCALIZED FLOODED VEHICLE STATISTICS ARE AVAILABLE UPON REQUEST. AN INFOGRAPHIC ALSO IS AVAILABLE FOR USE AT WWW.CARFAX.COM/PRESS/RESOURCES/FLOODED-CARS.

“I bought a car last year and the seller never told us anything about it being a flood car,” said Pennsylvania resident Charlene Geiger. “When we got home and ran a Carfax, there it was – a flood car from Hurricane Sandy. It showed the seller bought it as a salvage car and the title was washed when he brought it to Pennsylvania. We lost $16,000 over all of it.” In addition to the current total, several hundred thousand more flooded cars may emerge from hurricanes Harvey and Irma. Historically, about half the vehicles damaged by floods end up back on the market. Flooded cars rot from the inside out as water corrodes the mechanical parts, shorts the electrical system and compromises safety features like airbags and anti-lock brakes. Health concerns are an added problem, as mold and bacteria permeate the soft parts of the car.

“Our data shows there’s still much work to be done in helping consumers avoid buying flood damaged cars,” said Carfax president Dick Raines. “They can, and do, show up all over the country, whether it be a few miles or hundreds of miles from where the flooding occurred. With two devastating storms already this year, it’s vital for used car buyers everywhere to protect themselves from flooded cars that may wind up for sale. Start with a thorough test drive, a vehicle history report and a mechanic’s inspection before buying any used car.” In the wake of hurricanes Harvey and Irma, Carfax is letting consumers check for flood damage free of charge at carfax.com/ flood. Localized flooded vehicle statistics are available upon request. An infographic also is available for use at www.carfax.com/ press/resources/flooded-cars.

December 2017 / TENNESSEE DEALER CONNECT

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 On Oct. 27, NIADA hosted “Used Car Buying 101,” an event for staff members of the House Automotive Caucus on Capitol Hill to educate the staffers and the members of Congress they represent about the process of purchasing a used car. The event was conducted by NIADA president-elect Andy Gabler of Lakeside

Among the Congressional offices represented were those of Rep. Mike Kelly (R-Pa.) and Marcy Kaptur (D-Ohio), co-chairs of the Auto Caucus; Rep. Kevin Brady (R-Texas), chairman of the Ways and Means Committee; and Rep. Bill Shuster (R-Pa.), chairman of the Transportation and Infrastructure Committee. REGULATORY The U.S. Congress, using its power under the Congressional Review Act, has struck down the Consumer Financial Protection Bureau’s controversial Arbitration Rule. In a dramatic late-night session on Oct. 24, the Senate approved the resolution to overturn the rule, which would have banned auto dealers and other businesses from using arbitration agreements with class-action waivers. The vote was split 50 votes each way before Vice President Mike Pence cast the tie-breaking vote. President Trump signed the resolution into law, officially

From left, Michael Darrow, Andy Gabler, Shaun Petersen and Rob Kerner explained to House Auto Caucus staffers the regulatory burdens faced by dealers and consumers in the car-buying process. Auto Group in Erie, Pa., Lakeside Auto finance manager Rob Kerner, NIADA legislative committee member Michael Darrow of The Auto Finders in Durham, N.C., and myself. They provided a demonstration of the customer and dealer experience in buying and financing a car, including all of the paperwork required in each deal. Kerner and the dealers picked a staffer from the audience to be the customer and walked the group through the entire used car buying process, explaining all the forms that need to be signed, what they’re for and why they’re required, the relevancy of credit scores, voluntary protection products offered and the various regulatory obligations that must be fulfilled, such as privacy notices. The NIADA contingent encouraged the “buyer” and audience to ask questions as they went through the deal and explained the process.

repealing the Arbitration Rule. The House had voted to repeal the rule in July. According to the Congressional Review Act, no rule substantially similar to the one repealed can be issued without specific legislative authorization from Congress. The repeal is a victory for small businesses, which would have had to absorb the higher cost of litigation versus arbitration, and for NIADA, which actively advocated for overturning the rule and made it a point of emphasis at the National Policy Conference in September. It’s also a win for consumers, who according to the CFPB’s own study recover on average far greater payouts in far less time from arbitration than from class-action lawsuits. “This rule was nothing more than a boon to class-action lawyers levied on

TENNESSEE DEALER CONNECT / December 2017

the backs of America’s hard-working consumers,” NIADA CEO Steve Jordan said. “Arbitration has proven to be a faster, less expensive and more effective means of resolving consumer disputes than class-action lawsuits.” GRASS ROOTS A delegation representing NIADA, Illinois IADA and the used vehicle industry met with staff of Illinois Gov. Bruce Rauner on Oct. 11 at the governor’s office in Chicago to educate the governor and his staff on the use of GPS and starter-interrupt devices and their importance to Illinois dealers. For several years, State Sen. Steve Stadelman and the Illinois attorney general’s office have introduced legislation that would place undue regulatory burdens on the use of the devices. Illinois dealers, with help from NIADA and representatives of the payment assurance industry, have so far been successful in preventing harmful legislation, but as that type of legislative action is becoming more widespread nationwide, the dealers felt it was time to reach out to the governor so he and his staff could help. IIADA executive director Bruce Eklund, dealers Gordon Tormohlen and Steve Taylor, Ariad Sommer of Ituran GPS and I discussed the issues involved with staff representatives, who asked questions that indicated they had done their homework on the subject. The dealers presented GPS-related information as well as information about Illinois’ dealer education curriculum and a report showing the economic impact of auto dealers throughout the state. The meeting went longer than scheduled and we came away feeling the governor’s staff is open to helping the state’s independent dealers. PAC Thanks to generous contributions from 135 NIADA members, the NIADA Political Action Committee is wrapping up a record year for fundraising. At press time, nearly $200,000 had been raised for the NIADA-PAC Fund in 2017, bolstering its coffers and putting the association in a strong position to make the voice of the independent dealer heard in the upcoming 2018 midterm House and Senate elections. In all this year, the PAC distributed more than $135,000 to 15 campaign committees representing candidates committed to supporting small business, independent dealers and the used vehicle industry. SHAUN PETERSEN is NIADA’s senior vice president of legal and government affairs.

www.tniada.com

ACCELERATE

BY GWC WARRANTY

5 NEW PROFIT SOURCES YOU CAN START TOMORROW Small Changes Can Give You a Big Boost

At a certain point, every business – even the best ones – can go stale. Numbers are good, customers are happy, but there’s always the lingering thought of “could it be better?” Oftentimes, the answer to this question can lie in the little things – small changes you can make quickly that give you the boost you’re looking for. Trying new things can be difficult and sometimes uncomfortable, which is why it’s important to start small. Giving a new approach, product or service a shot could be the first step you take toward major changes that greatly benefit you and your dealership. With that in mind, let’s take a look at five of these “first steps” you can easily integrate into your dealership. Try a New Product Your vehicle service contract approach might be spot on. Your penetration rates are high and you know just what to say to get a customer on board with a service contract purchase. But if you’re looking for a little extra F&I profit or simple ways to better protect your customers, a new product might be just what you’re looking for. Products like GAP, Certified, Service Lane and more are good opportunities for you to apply your F&I skill set on small, but impactful new products. Try a New Strategy If your vehicle service contract presentation is lacking the effectiveness you desire, trying to attack it from another angle could help give it a breath of fresh air. Luckily for you, there are plenty of online training resources available – some at no charge – that can lay out these new approaches and processes in a simple, easy-to-implement manner. Try a New Tool Customers are more savvy than ever before, especially when it comes to technology. If they’ve spent hours researching a vehicle and landed at your lot, replicating that technology experience can help them drive away in a new vehicle. Even the F&I process can be done on tablets with apps and other useful tools your provider might offer. Try a New Follow Up Plan Do you make follow up calls? Are they achieving what you’d like? Do they appeal to the modern-day customer we just discussed? Something like Covideo can go a long

TENNESSEE DEALER CONNECT / December 2017

IF YOUR VEHICLE SERVICE CONTRACT PRESENTATION IS LACKING THE EFFECTIVENESS YOU DESIRE, TRYING TO ATTACK IT FROM ANOTHER ANGLE COULD HELP GIVE IT A BREATH OF FRESH AIR. way toward ensuring your message is heard. The union of personalized video messaging and email delivers your message in a candid way via a communication tool today’s customer prefers. Try New Lead Generation Even just one phone call a day can add up when it comes to your efforts to drive new leads into your dealership. If you’re selling vehicle service contracts regularly, knowing which contracts expire when can be a good start to build your call list. For GWC Warranty Elite Dealers, we even do that check for you with our Elite Lead Generator. You can also set reminders for when service contracts expire so you know when to call a customer who might be in the market for a new vehicle or another VSC. By giving one of these simple new tools or tactics a try, you’re taking an important first step toward making small changes that have the potential to make a big impact. And once you’ve perfected one, don’t be afraid to try another. The best dealerships are constantly improving, which most times means making small changes along the way that add up to major profits over time.

www.tniada.com

MARKET WATCH

BY MATT ARIAS

FLOOD DAMAGE BASICS Tips on Flooded Vehicles Damage to vehicles by floodwater is a topic that keeps coming up as we continue to analyze issues around the country that have physical effects on vehicles. As stated by NAAA, “Vehicles are frequently exposed to moisture during their ordinary operation, maintenance and reconditioning. Occasionally, such exposure may leave residual marks or indicators similar to those left by exposure or immersion of the vehicle in floodwater.” We also know that flood damage carries a stigma that damages the overall value of a vehicle. It is vitally important that a systematic and complete inspection be performed by personnel qualified to appropriately evaluate each condition in the context of the total condition and vehicle history. WHAT IS A FLOOD? According to the National Flood Insurance Program’s website (www.floodsmart.gov) a flood is defined as “a general and temporary condition where two or more acres of normally dry land, or two or more properties are inundated by water or mudflow.” Floods are caused by events such as hurricanes and damaged or overflowing levees, dams, drainage systems, rivers, ponds or lakes. The majority of floods are caused by rainfall. HOW DO WE INSPECT A VEHICLE FOR EVIDENCE OF FLOOD DAMAGE? As outlined in the NAAA Auction Standards Training, flood damage involves the entire vehicle, any relevant history and title status. Below is a recommended course of discovery to determine if a vehicle requires disclosure for flood damage. Data History Ideally the majority of insurance companies that manage flood-related claims to all property will report to various vehicle-history databases. One of these databases is run by the National Insurance Crime Bureau, a North American non-profit membership organization created by the insurance industry to address insurance-related crime. It works closely with law enforcement agencies. NAAA recommends using more than one credible source to help establish the claim may be valid by creating a need to inspect visually. Title Status The title may or may not be branded due to the effects of the flood. The vehicle may indicate “total loss” history but have a clean title. It is important to understand the reason the vehicle was deemed a “total loss.” If the title is branded, the vehicle will require a proper disclosure by sellers to would-be buyers when selling at an auction that falls under NAAA policy.

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Physical Condition The vehicle may have been cleaned up partially or fully. The indicators below will help the inspector determine the actual presence of flood damage. • Strong musty odor in interior or luggage compartment. • Surface rust under dash or seats on unfinished steel brackets, frames or springs. • Dampness in seat cushions, headliner, visors and other upholstered components. • Mud, silt or sludge build-up in wheel wells; inside bumpers, hinge boxes, door openings/ sills, or door drain holes; under carpets or luggage compartment floor mats. • Surface rust on underbody components, brake rotors/drums, exhaust system, pinch welds, brake lines, chassis components. • Mud or sludge build-up inside door panels, behind luggage compartment side walls, beneath dash, inside glove box, etc. • High water marks on door panels, upholstery, trunk interior, or head or tail light lenses. • Deposit of debris such as silt, grass and small twigs. • Accumulation of silt/rust inside major mechanical components. • Extremely corroded wiring harness, fuse boxes, etc. • Corrosion to structure that requires disclosure, per NAAA Structural Damage Policy. Some caveats exist with the physical inspection. The NAAA policy exempts vehicle affected by water ingress by the following: • Heavy detailing: Some carpets and upholstery are badly stained or soiled. This may require hard scrubbing with hot water and strong chemicals during the detail process. These signs alone are not proof of flood damage. In many cases, carpet wetness or dampness and odors in the trunk area and interior are misdiagnosed as flood damage. • Dirt road usage: Many vehicles are operated on unimproved, dirt and gravel roads. Many are subjected to off-road conditions. Thus mud, silt and sludge build-up may be normal and should not in itself be considered flood damage. Interior dust and dirt accumulated during normal operation may become muddy during the detail process. • Normal wear and tear: Light surface rust is common on exposed metal surfaces and is not sufficient alone to prove flood exposure. The absence of rust on exposed metal should also be considered, although not conclusive, as evidence of no flood exposure. • Disclosure requirements: No disclosure is required nor is arbitration allowed for the following types of water exposure, provided that none of the components outlined below are damaged: o Rain, snow or sleet due to open windows, doors or tops, or leaking seals. o Car wash or rinse water. o Carpet or upholstery shampooing or cleaning. o Stream, pond, puddle or floodwater that does not rise above the rocker panel or otherwise enter the passenger compartment. o Stream, pond, puddle or floodwater that enters the luggage compartment, but does not damage any electrical components – such as lighting or wiring harness – or does not enter the passenger compartment. Disclosure is required and arbitration shall be allowed under the following conditions: o Claim filed within specified timelines (per NAAA Appendix 1). o The title has been correctly branded indicating flood history of the vehicle. o Any of the following components have been damaged due to immersion:  Front or rear lighting or wiring harnesses.  Engine and its major components.  Transmission and differential.  Dash instrument panel and wiring.  Passenger seat cushions.  Power seat or window motor.  Major sound system components. The recommended disclosure that a seller should make to would-be buyers is “Flood Damage.” This disclosure requirement should be made regardless of sale light, but buyers must be mindful of sale channel exemptions (e.g, salvage sales). All stakeholders must be mindful of the vehicle’s history, physical symptoms and policy disclosure requirements when selling or buying at auction. Keep in mind that flood damage vehicles are like floods. They can appear anywhere it rains! MATT ARIAS is Manheim’s director of operational excellence. This article originally appeared in NAAA’s On the Block.

December 2017 / TENNESSEE DEALER CONNECT

ONLINE MARKETING

BY KATHI KRUSE

TIPS TO IMPROVE YOUR “ABOUT US” PAGE Start on the Right Foot

Customers who view your “About Us” page will spend 22.5 percent more than those who don’t. And, according to Blue Acorn, those who view it are five times more likely to make a purchase. I’ve often wondered why dealers don’t put more effort into these great opportunities to bring customers closer to the store. The average “About Us” page is a boring, self-serving mix of me, me, me, and us, us, us. But this page is so vital to your business! In fact, it’s usually the first place people look before they start to take you seriously. Get it wrong and you could be turning people off without even knowing it. A Good “About Us” Page is Crucial to Digital Operations A good “About Us” page is hard to come by because they’re difficult to get right. An “About Us” page that actually converts should: • Focus on your target customers and the value they get. • Provide testimonials, social proof, and other facts that prove your value. • Be a visually appealing page with photos and videos. • Convey your personality and why people buy from you. Ah, but how to achieve these objectives can be tricky. It’s all about trust. The “About Us” page builds a relationship with customers and gains their trust. While trust is largely intangible and unable to directly account for its ability to win customers, it is the undeniable invisible force behind sales performance and retaining customers. TIPS TO IMPROVE YOUR DEALERSHIP “ABOUT US” PAGE 1. Start with simplicity and clarity. Begin with a short introduction about your store. Sum up what you do in two to three sentences, but keep the language very simple – no jargon. Tell the story of your inception. Use meaningful language to engage customers. Talk about the dealership’s core values, principles, and goals. Talk about the obstacles you’ve overcome, the things you’ve learned along the way, and anything that makes you sound like more than a machine pumping out products. 2. Stop using mug shots. I have seen my fair share of employees’ pictures on dealership websites. Who takes these photos, an off-duty cop?

A better alternative is to take candid shots of your team doing their job. Have them look at the camera, smile and illustrate their enthusiasm. 3. Tell a story about each team member. Interview each team member to get their heartfelt responses. Here’s what we use at Kruse Control: Hi there! We’ve put together a survey that will help us connect better with our customers and our community online. With your help, we can tell the story of our dealership. We pride ourselves on transparency and introducing you digitally will not only show how much we value your daily contributions but help you connect with our customers and community as well. Please help us by answering just a few short questions about yourself. We really appreciate your participation and we promise to make you look good! Name:___________________________________________________________________________________________ 1. What is your title and job description here at (dealership name)? __________________________________________________________________________________________________ __________________________________________________________________________________________________

2. How long have you worked at (dealership name)? __________________________________________________________________________________________________

3. What do you love the most about working for (dealership name)? __________________________________________________________________________________________________ __________________________________________________________________________________________________

4. What do you like to do when you’re not at work? __________________________________________________________________________________________________ __________________________________________________________________________________________________

5. What brought you to the automotive industry? __________________________________________________________________________________________________ __________________________________________________________________________________________________

6. What kind of car do you drive? What do you love about it? __________________________________________________________________________________________________ __________________________________________________________________________________________________

7. Do you volunteer or support any local causes in our community? If yes, please tell us about it. __________________________________________________________________________________________________ __________________________________________________________________________________________________

Thank you for answering these questions and for making our customers’ experience memorable. 4. Show examples, with links, of ways you’re participating in the community. I can’t tell you how many dealerships I’ve managed, and/or know, that spend thousands of dollars supporting local community causes. What I don’t see very often is evidence of that on their websites! It’s not self-serving to emphasize your good works. If a team member has answered “yes” to #7 of the questionnaire, make sure to illustrate how they’re giving back. 5. Include testimonials and social proof. A good “About Us” page always needs to have some mention of past successes, achievements, social proof, etc. Include a testimonial from one of your satisfied customers. Pick one that combines a compelling story with real examples of how your company met his or her satisfactions. Video is very powerful. Film customers or your employees and pick people who are engaging and feel comfortable in front of the camera. Putting it All Together How does your “About Us” page measure up? If the answer is “not so much,” let me know and I’ll help you improve it.

TENNESSEE DEALER CONNECT / December 2017

KATHI KRUSE is an automotive social media marketing expert, blogger, consultant, author, speaker and founder of Kruse Control Inc. Kruse Control coaches, trains & delivers webinars focused on integrating social media and online reputation management into dealership operations. She can be reached at kathi@krusecontrolinc.com.