For years, dealers have written or called nearly every day wanting to know what the latest and greatest thing in marketing is or where they can find vehicles that will work with their mix of customers and financing. These products literally address these questions in some form or fashion.

I frequently hear dealers or used car managers say their area of the country is different and you just can’t find inventory that will work with their store and their customers in special finance. Yeah, right. The dealer next door or across the street is able to fill their lot up with inventory. My comment is always, “Work smarter, not harder.” OK, it may have more of an edge than that, but it really just takes being smarter than the average bear.

So how do you do that? I have found two products that accomplish that.

Auto Auction Insider
The first is from ProMax Unlimited, a company that has been around SF a long time. The product is called Auto Auction Insider (AAI). There are a number of reasons why I like AAI. First, it is a standalone product; you don’t have to be a ProMax Unlimited user if you just want the auction tool. Second, it is inexpensive. At the time this article was written, their website offered it for just $195 per month. Basically, the gross generated from one car deal pays for it for an entire year, or probably more aptly, what you save by avoiding one purchasing mistake more than covers the annual fee.

It works by integrating and updating the NADA, Kelley Blue Book and Black Book values weekly and comparing these values to actual auction sales. It then allows you to see which vehicles compare best to the book values on a region-by-region basis to offer the most profit potential. Additionally, it allows you to filter the comparison between class type (mid-size, SUV, etc.) and make and model going back to the 2004 model year. Finally, it will even allow you to filter it by monthly payment.

At the end of the day, this powerful tool will tell any buyer which year, make and model vehicles offer the best profit potential based on class or payment range, as well as where in the country to buy them. Did I mention you can download an iPhone app for this as well? Now you can take this information with you on the road. As I said, work smarter, not harder, and through this, you will see that you really can find the inventory you need not only to put SF deals together, but with benchmark gross profit potential.

Now that you have found a particular auction or area of the country for inventory, you have to actually buy it. As good as AAI is, it doesn’t take auction-lane mistakes out of the game. I remember standing in the auction lane 15 years ago using some now-antiquated hand-held device trying to quickly book out a vehicle and process the information through a buying matrix that I had built in Excel to determine what I should pay for a specific vehicle based on its equipment and mileage and which finance company program I was trying to buy it for. Trust me, there weren’t many people trying to do that back then.

Bidzpin
Now there is an iPhone app that does it all and takes it one step further. Bidzpin is a product that was recently released and I think back to all of the hours of homework my buyers and I did before auctions and just wish I had this product.

Just as I used to do, you put in your predetermined settings: the minimum gross profit you’ll accept, average minimum down payment, average reconditioning cost, doc fee and sales tax. Finally, you select the top six finance companies to consider. The only difference is now this can be done in seconds and is accurate to the penny; my matrix was close, but not dead-on.

Now you walk into the auction lane (or online auction) and inspect the vehicle. Either by VIN or year, make and model (both entered in seconds), you dial the vehicle in, along with any additional equipment. Add the mileage and you are all set. You can “spin” the purchase price and see exactly how it impacts the gross profit across all six finance companies. Better yet, it uses colors so that you can quickly see whether a vehicle meets your criteria. As they say, “Green is clean and red is dead.” It offers even more neat and powerful tools, but this is certainly the key.

My buyers and I would have given our eye teeth for this way back when! At only $395 a month, it will pay for itself tenfold at the first auction you go to. Yeah, I am advocating spending nearly $600 a month to help you buy the right inventory, but so many dealers and buyers can’t accomplish this, and if you can’t find vehicles using these tools, you shouldn’t ever step foot in an auction lane.

VegasFlyTrap
This may be the best marketing tool I have seen in a long, long time. Today, talk to anyone with any digital marketing savvy and they will tell you that you have to drive more traffic to your website. I won’t disagree, that is very important. What is much more important is to turn that website traffic into actual leads (real people’s names with their contact information). There are a lot of theories on how to do that, but VegasFlyTrap is the best tool I have ever seen to accomplish it.

This new product uses an old hook – games – and turns website visits into leads. Auto Dealer Monthly will feature an article later this year about a Honda VW dealership in Port Charlotte, Fla., using this product to turn nearly 4 percent (249 last month) of their unique website visits into leads with complete customer data. Better yet, when scrubbed against their CRM database, it provided only one duplicate for an entire month. What does that mean? It means it is converting visitors who would otherwise not be leaving their contact information into leads!

Now for the proof in the pudding: the dealership and its BDC is converting 33 percent of the leads into dealership visits and 10 percent of them into sales! That is staggering. Do the math. The software is imbedded into your dealership website for $1,995 a month. Yes, it may seem pricey, but upon further review, if you are getting 4,000 unique visitors per month between your website, Facebook fan page and Craigslist listings (yes, it can go on all three) and you are able to just turn 4 percent of those into actual leads that you wouldn’t have otherwise had before, that would be 160 new leads. If you are able to convert just 5 percent, which is eight extra deals per month. At just $2,500 per deal, that is $20,000 in extra gross profit per month. That makes the cost well below benchmark. Now these aren’t just SF leads, but certainly a dealership with a good phone process or call center will absolutely eat these up. I absolutely love it, and best yet, it has very high accountability!

So there you have it. The three best things I came away with from the 2011 Special Finance Conference. If you have more questions, feel free to drop me a line!

Until next month,
Great Selling!

Auto Dealer Monthly Vol. 8, Issue 10

For months, the inquiries were more from dealers and managers wanting to know who was still buying business. That has shifted to dealers wanting to know what type of marketing and advertising they should be doing to drive the customers to their websites or through their doors. As I have written often, I always ask a question when someone wants to increase their traffic count, and that question is, “How much traffic do you currently have, and how are you staffed to handle it?” Usually a lot of hemming and hawing takes place at that point, or I get a lot of numbers that end in zeros or fifties.

The reason I always ask is that first, dealers tend to be rather urgent people. We ask questions like, “What can we do to put that deal together today?” Similarly, when they decide an opportunity exists, they are ready to roll out an advertising or marketing campaign instantly. I often call that approach, “FIRE, ready, aim!”

There are some dealers who are really making the needle move again in SF. Whether they are using conventional media, digital media or a combination of both, they are successfully driving traffic and converting sales. One client has increased SF business by 150 percent over the same time a year ago, and the store was already doing a lot of SF business. Upon hearing that story, other dealers are instantly ready to cash in on opportunity too.

The problem is most dealers are just not ready to do something like that. Indeed, they may be able to create astounding traffic, but unless they have the proper staffing, systems and processes in place, when the traffic hits, it either cripples the dealership (or department) or upsets the customers, or both.

There are a lot of talented marketing people around our industry. There are a lot of clever and ingenious dealers. Mix the two, and you can often create magic when it comes to floor or Web traffic.

The marketers (who get paid when dealers advertise) obviously fan the flames trying to entice the dealers to advertise. The problem is, it is the marketer’s job to create traffic; the dealer is the one who must convert that traffic into sales. Too often, the organization just isn’t equipped to handle it, especially when it comes to special finance. You could set thousands and thousands of dollars on fire in the middle of your showroom and enjoy it more.

That’s why you must first build the foundation. Through the hills and valleys of the auto industry, one thing that simply has not changed is the necessity of the 10 Critical Components for Success in Special Finance. The need to have all 10 components in place in order to excel is absolutely essential. After the industry downturn, many SF departments were stripped down or dismantled. Systems and processes vanished. The basic knowledge of how to structure a profitable and approvable deal may still exist, but everything else has disappeared in so many organizations. This is not something you are able to recreate overnight.

Start with commitment. It seems like that should be easy, but that’s not always so, especially if someone spends a wad of money on a marketing campaign that generates traffic but doesn’t result in deliveries. As a dealer or general manager, are you really ready to recommit to the budget increases necessary for inventory, staff or technology to make SF work?

If the answer is yes, then do your homework. Earlier in the year, I have discussed how to perform an analysis of the credit demographics of your store’s customers. Rather than detail it again, I will just remind you that if you haven’t already, you need to check our magazine archives online for the January 2010 issue and then perform the analysis. It will give you great insight on where your opportunities are.

From the analysis, you will also learn if you have the proper mix of finance companies on board. If you have a niche of customers you don’t have good financing solutions for, you need to take action before you push the marketing button; after all, how much fun is it to have a showroom full of customers you can get financed?

Once you have the finance companies in place, you then know what inventory is required to match up with their programs. No inventory, no collateral. No collateral, no way to structure deals. It is that simple. Once you acquire the inventory, you must also have a system (either manually or using software) to quickly be able to match a SF customer’s credit profile with the appropriate vehicle for the appropriate finance company.

Personnel follows next. Remember, the average salesperson can effectively work 75 new opportunities per month. That is why I always ask what the current traffic count is and how many people are on staff to work the leads. Certainly a call center or BDC will change the dynamics and allow a dealership to process more leads, but it is still very easy to overwhelm either your sales team or your finance desk.

If you already have the people aboard, are they properly trained? As the SF business waned, many people changed their approach, essentially ignoring the subprime credit customer. Is your staff quickly qualifying traffic to ensure the correct sales process is used? More importantly, are they using a standard SF sales process for the subprime customer? Are they trained to get a complete credit application? Are you sure that a solid credit interview is taking place which will provide the finance desk the best possible opportunity to get the deal approved?

Beyond training, how are employees compensated? Do you have a pay plan in place that is causing conflicts of interest? Does it mandate that someone in the store must lose for someone else to win on the deal? Does you comp plan penalize a finance manager for structuring a highly profitable front-end deal for the store where no back end is possible due to the finance company?

Finally, is your team able to quickly and accurately structure a deal so it can be approved and at the same time achieve benchmark gross profits? This would seem like an easy task, but in my workshops and conferences, the majority of people will leave money on the table when we work our sample deals. If that is happening in my workshops, you can bet it is happening in your stores.

Once the deal is sold, it’s just really beginning. Contracts must be turned to cash quickly. How many days does it take you to fund a deal now? Do you have the systems and processes in place to ensure that you have clean (and compliant) paperwork? If not, potentially doubling your sales volume could cripple your cash flow.

You should realize, this is just skimming the surface. These are just some of the issues I uncover when working with dealers. Many dealers naively think they can just sell their way through it. Occasionally you can, but even so, what opportunities are you giving up to do so?

Don’t mistake it—I am all for creating excitement and selling vehicles, especially through special finance. I encourage you to take advantage of the opportunities in the market today, and aggressively go after them. Just make sure you have a foundation in place that will both allow you to capitalize and create happy customers and employees at the same time. Only through that will you be able to perpetuate your success.

Until next month,
Great selling!

Auto Dealer Monthly Vol. 7, Issue 12

What I am referring to is the management process where decisions are made based on data gathered by the SWAG method. Sometimes this is also known as the SOP method. (For those who don’t recognize these acronyms, let me help you: SWAG stands for Scientific Wild-A__ Guess, and SOP stands for Seat Of the Pants.) In either case, you have highly intelligent minds trying to make a sophisticated management decision by using data that they have accumulated by using a SWAG. Incidentally, SWAGs may or may not be better than something that comes from MSU. I don’t mean Michigan State University or Mississippi State University or even Montana State University; I mean Making Stuff Up. That happens a lot, too.

With the burners on the special finance market now having been turned up to high, I am getting calls and e-mails every day from dealers or managers wanting to know how to create more SF traffic. They want to know what is new, what is hot, and what will fill their inboxes, voicemail boxes and showrooms with more traffic than they know what to do with.

My first question, as so many of you know by now, is always: How many opportunities did you have last month (combination of walk-ins, repeat/referrals, be-backs, Internet leads, credit hotline leads and call-ins)? And the next question is always: How many did you sell? Then, I always ask how many people the dealership or department has working these opportunities. It really is possible you have more traffic than you can handle and more may just make things worse. Enter SWAGs.

The problem is SF is the largest profit center I know of in a franchised dealership that does not have its statistics broken out on the financial statement. That leads to all sorts of guessing and conjectures on what the department really accomplishes and, in general, leads to a lack of expectations. Most people want “more” when they contact me—more sales and more gross profit most definitely. The problem is, their lack of sales and gross isn’t always due to a lack of traffic. It may be. However, it could also be inefficiencies with the way the current traffic is being handled, or indeed, it may just be where they are spending their marketing or advertising dollars.

Those clients with whom I consult on a regular basis or who have attended our annual SF conferences know what it is I look for. The tracking data is more than just the number of leads a campaign has generated. The report breaks down all the activities that go along with those leads, including sourcing where the opportunities come from. If you would like to have the tracking report in an Excel format, drop me an e-mail atGreg@AutoDealerMonthly.com.

So why is it so important to really know who is coming to the dealership and what happens when they do? For starters, the old adage is: Half of your advertising works, but which half is it? Certainly if you know which ad source produces the best type of traffic, you want to do more of it and less of something that isn’t working as well. Beyond that, you’ll learn which type of customer you do best with. Then you can increase that type of customer traffic, while finding a way to convert more of those from the demographic you struggle with.

You will learn who is not adequately contacting or talking to enough leads.

You will learn who is spending too much time on the phone with each customer.

You will learn who is outperforming or underperforming in the department.

You will learn who struggles to contact leads timely.

You will learn who struggles to adjust their call-back time in order to reach a difficult-to-contact customer.

You will learn who is not engaging to the customer, as their appointment-setting ratios are too low.

You will learn who is selling the appointment too hard, offering too much information or not engaging, as their appointment-kept ratios will be low.

You will learn who is being too harsh on the phone, as their appointment-setting ratios are low but their show rate is high.

You may even learn whether you have more traffic than your sales team can currently handle.

All this information and more can be used in daily one-on-ones, as well as for your decision-making. Finally, you can accurately compare your operation to that of the SF benchmarks we publish each year (the 2010 benchmarks are in the October 2010 issue of Auto Dealer Monthly). The bottom line is, the more accurately you measure, the better you can manage, and that will equal more sales and more net profits.

Until next month,
Great selling!

Auto Dealer Monthly Vol 8, Issue 1