Performance Groups

Greg's brand new special finance performance groups will help you improve your SF operation.

Upcoming Workshops

See the event calendar and attend a workshop that Greg teaches.

Onsite Consulting

Need some help getting your operations off the ground? Get onsite consulting from Greg.

  1. Giving Birth to a World Class Special Finance Department Part 4

    Fourth in a six part series of articles.

    While the names and locations are being changed to protect the company’s privacy, this is the fourth of six articles that document the process being used to develop a startup Special Finance operation inside an already successful independent dealer, located on the fringe of one of the major metro markets in the United States. It will detail the plan, the strategies, the successes and the challenges encountered over a six month period, with the end goal of the new department to reach a monthly sales volume of 70 deals at over $230,000 total gross by the end of that period.

    At the Halfway Point and Very Optimistic

    As we passed the halfway point at the end of month number three, the ‘Red Team’ is beginning to gel. Certainly, as with any new location or department, there exists ebbs and flows – and certainly uncaptured opportunity. In looking at the body of work, we have to be pleased. Here is a summary of what we experienced in month three.

    The Highs

    • With DealerStrong’s Executive Trainer, Shawn Foster, on site often this month, the sales management team gelled. No different than any other dealership, personnel will make or break the team. After struggling harder than ever in any market to get quality people hired and trained, we finally turned the corner in month three. The management team appears to be solid with our Red Team director and credit managers working well together. Each has their strengths and weaknesses, but they are pushing each other to be better and ultimately, closed 41 sales out of 114 total showroom for a 36% closing ratio – a full 8% over the benchmark!

    • The sales personnel team stabilized with the hire of one new sales consultant, replacing one that just couldn’t quite get over the hump. Through our daily 15 – 20 minute training program the staff are getting better and better at consistently executing their activities – which ultimately produces results. All three sales consultants are keepers and we will next look to add a fourth.

    • Although buying the correct inventory for subprime has not been difficult, the get-ready has –with some units taking over a month to hit the front line. The dealership, which has 200+ units in stock, added a new inventory management software – Rapid Recon – and it appears that it is certainly helping speed the process up. By the end of the month, new processes were in place in the service department to streamline the reconditioning and get-ready of the inventory.

    • The broadcast television marketing is working well! Our goal was to get the BDC ready, then push the “Go” button. We launched a two week test of the Nation’s Premier Auto Dealer program in the prior month. It worked very well, which allowed us to budget $25,000 in month three. The goal was to generate 400 trackable incoming phone calls. We hit 447 – 10% more than expected – in an expensive television market. That will bode well for the upcoming months!

    • Craigslist became a terrific lead source. We paid the son of one of the Red Team employees to post on Craigslist. We posted 446 vehicles, received 106 leads, and the (ineffective) BDC got 24 into the store, and we sold 11 – 46%. Total cost was $2,680 for all the fees and posting. Pretty darn good ROI!

    • ProMax is working well and the team has embraced it and is using it very well. For a completely new team that has had little to no experience on ProMax and less experience tracking, they are doing a superb job. It makes it so easy to manage with good data.

    The Lows

    • Ultimately our Achilles heel was the BDC. After ramping up to four BDC team memberss, we unexpectedly lost a team member. Additionally, we had hoped to see a BDR rise through their performance and leadership. None have demonstrated that to this point. Finally, DealerStrong’s BDC trainer, Wendy Reeves, had a full plate with our other consulting clients this month so the time she was able to spend with a leaderless team was limited. As a result, the BDC’s appointments-to-show production was abysmal – just 14% of total leads and 15% on incoming calls (as opposed to expected the 49%). That will be remedied in month four with Wendy onsite again and more phone training available.

    • Our website to this point has been a dismal failure. Through some communication issues, features that we expected were omitted. They finished month three without the Google Places page showing yet. The highest the website has placed in search was page 5 – even with a direct search of the dealership name – and as a result we only had 30 website leads. (We were expecting that many per day.) Additionally, we know it had to impact the walk-in traffic as people that can’t find the company’s website have to wonder if the dealer is legitimate. To the vendor’s credit, they are working diligently, and a PPC campaign that we launched at the end of the month did bear some fruit, so we roll into month four with hope.

    • The one third party lead provider we opted for was a total disappointment. Virtually all the leads were bogus. They even used their BDC to verify them, and confirmed our results.. To the company’s credit, the owner did not invoice us for a single lead, and made that decision without any question from the store. They are a class company that I have used for a long time and will use again – just not in this market until they can figure out why the leads were bad. The good news is it cost us nothing but the BDR’s time. The bad news is that I would have really rather had the expense and the extra leads.

    The Bottom Line

    While at this writing, the net profit (total red team revenue less all red team expenses including advertising, payroll, bonuses and payroll taxes) for the month hasn’t been finalized. The month was deemed a success as the department exceeded its sales volume forecast with 41 units and average total deal gross profit of $3,201. We expect the net to come in similar to month two where we generated an additional $57,766 for the store

    While sales volume increased 17%, our gross per deal dropped as the department helped the ‘Green Team’ retail out of some of their aged inventory that wasn’t purchased for SF. Additionally, as stated earlier, even with a mountain of leads/calls, the ineffective BDC didn’t turn a sufficient number of leads in to showroom visits, thereby driving up the advertising cost per sale. Nonetheless, even with the missed opportunity, but with another $50,000+ profit in just the second full month of operation, smiles abound.

    We know we can fix the BDC, and will, quickly. We also know the website will soon start indexing and with the television spots running, our lead count will soar. Finally, we know if we can simply get them in the door the sales team will close them. At this writing the department has been functioning from a clean sheet of paper for just 90 days with a staggering closing ratio. We can’t wait for month number four where we have a forecasted sales volume of 50 units in with three fewer selling days!

    In the meantime, stay tuned and we will be reporting again next month. Until then,
    Great Selling!

  2. Giving Birth to a World Class Special Finance Department Part 3

    Third in a series of six articles

    While the names and locations are being changed to protect the company’s privacy, this is the third of six articles documenting the process being used to develop a startup Special Finance operation inside an already successful independent dealership, located on the fringe of one of the major metro markets in the United States. It will detail the plan, the strategies, the successes and the challenges encountered over a six month period, with the end goal of the new department reaching a monthly sales volume of 70 deals at over $230,000 total gross by the end of that period.

    End of Month Two and Halfway There

    Special FinanceMonth number two represented the first month where we were fully staffed, trained and operational for the entire calendar month. We were excited to say that we beat our monthly goal in units and gross profit. While we patted ourselves on the back for that accomplishment, we knew there was so much more opportunity in front of us. The following is an update of where we sat at the end of month two.


    This is a good news/bad news story. The bad news is that without a doubt, we can say this is the toughest market we have ever experienced to hire sales people and finance managers. We expected to have on board three solid customer service representatives by the first week of the first month. It took us up to the last week of the second month to actually achieve that goal. During that time we must have interviewed two dozen people, hired ten, and only had a handful even report for work. During the same time, the dealership tried unsuccessfully to hire a prime finance manager and failed as well. I even started looking online to see if there was some red flag we were missing about the dealership. Not the case. Just a tough market!

    The good news is that after two months both the BDC and the sales team are finally fully staffed and they seem to have gelled into a good crew. We now have a very solid management team with our SF director as well as a very experienced credit manager. The two have begun to develop chemistry and adapt to their roles allowing daily training of our sales team, which surprisingly has taken longer to build than expected.

    The BDC has been going through the typical ups and downs of a start-up BDC. They initially started working the shared leads from Focus, which we felt would be a great place to start (practice/live role play) given how inexpensive they are, and that they are people who are genuinely interested in buying a vehicle. The team quickly learned to set appointments, but the appointment-show rate was slim, again, nothing unusual – especially in a competitive market. By the end of the month, they were not only getting them to show, but buy. Total cost per sale was $243 per car, which was very affordable – and great training.

    The best news was the conversion rate for people that made it into the showroom. While the Red Team (the Special Finance team) worked with just 74 people in the showroom, they delivered 37 for an amazing 50% closing ratio (as a note, we pulled more bureaus and could have had more showroom traffic, however, they were from well over 50 miles away and the decision was made to not invite anyone that did not have the income or verifiable job required to make a deal). The team worked well together selecting proper inventory to match with finance companies and in the end, averaged $3,600.34 per unit retailed – 20% over our target deal gross.

    Lead Management

    During the second month, the Red Team started showing adeptness at working with ProMax for everything. From inventory, finance company selection, CRM and follow-up to reporting, they really came into their own. The automated follow-up protocols that Wendy Reeves set up for scheduled and missed appointments helped improve the show rate as the month rolled on.

    Additionally, the management team really started to click with how to use the reports to measure, manage and train/coach the sales and BDC teams to continually improve their performance.


    After getting our feet wet in the first month with third party leads (Focus, Inc. shared leads) we tapped the “Go” button with some broadcast advertising as we launched our Nation’s Premier program on the 15th of the month. We did a two week test with broadcast television for just $10,000. The results were very positive, with calls and walk-ins generated from it running under $50 per call, and sales tied to it at about $540 per unit sold. Considering it was a new trade name and a small buy, we were certainly excited and will push the “Go” button about twice as hard in the next month.

    The biggest disappointment in marketing came with one third party lead provider that I have had a very long relationship with. They were confident that they could produce 135 leads within a 15 mile radius that would be within certain credit score parameters and income. Unfortunately, that did not pan out. We did receive about half of that, 67, but with disastrous results. Of the 67, the BDC was only able to appoint 3 and no one showed.

    The overwhelming theme from the customers was that they had not applied for an auto loan. To the provider’s credit, they had their own BDC call the entire customer list with the same results, indeed validating they were worthless leads. To their credit (and to no surprise) they did not charge for the leads. Again, good news/bad news. While we didn’t pay for anything, we were definitely counting on those leads to be a source for another 10 – 13 sales, which with them, did not occur.

    Finance Companies and Credit Tiers

    For the month, we soldout

    Credit Score Tier # of Units
    No Credit Score 5
    Tier 4 SF Credit 1
    Tier 3 SF Credit 5
    Tier 2 SF Credit 7
    Tier 1 SF Credit 19

    Only the most difficult tier, SF T-4 was underserved. Surprisingly, we cashed contracts with 11 different finance sources. Capital One Auto Finance led the way with 8 deals, followed by 7 with AmeriCredit and 6 with Wells Fargo. We used all resources, however, as we had three each with Ally, Exeter and United Auto Credit, and the mix also included Pronto, Sierra, Gateway One, CPS and Honor. All in all, a great job was done by the credit team.


    While we had sufficient inventory, and Clay Rodgers and Aaron Mathews certainly were able to source needed inventory well, the biggest challenge they discovered was having the proper process to get the units through the shop on a timely and cost affordable basis. Some units had to sit for three weeks before getting into service just for an inspection. This was addressed and new procedures were put in place for the buyers and service department to address this issue.

    On to Month Number Three

    With glowing results, you might think that this project is going to be a piece of cake. We know better. As we head into the next month, we are focused squarely on continually hiring and upgrading our talent, using the reports and tools to our avail to better manage and train, and of course, trying to create more showroom traffic.

    We know that even if our conversion percentage were to drop to 33%, if we can put 200 people into the showroom, that we would nearly be at our goal of 70 SF units per month. Of course, it doesn’t work that way. Certainly if that were to occur, we would outgrow our systems and processes for inventory sourcing and very likely funding.

    Our goal at the onset for the third month was 40 units and $120,000 in total gross profit. While the sales growth is minimal over actual, and the gross goal would be a step backwards, we are really focused on the bottom line of the department. The department cleared nearly $28,000 after paying all associated expenses (including personnel). So while we are certainly looking to grow the department, we will certainly be bottom line focused as we progress to the halfway point of the project.

    In the meantime, stay tuned and we will be reporting again next month. Until then,

    Great Selling!

  3. Giving Birth to a World Class Special Finance Department Part 2

    Second in a six-part series

    While the names and locations are being changed to protect the company’s privacy, this is the second of six articles documenting the process being used to develop a startup Special Finance operation inside an already successful independent dealership, located on the fringe of one of the major metro markets in the United States. It will detail the plan, the strategies, the successes and the challenges encountered over a six month period, with the end goal of the new department reaching a monthly sales volume of 70 deals at over $230,000 total gross by the end of that period.

    Special Finance Department Month One: The Launch

    It was a Monday. The third day of the month. DealerStrong’s Executive Trainer, Shawn Foster, and I walked into Champion Motors full of anticipation and a tad bit of uncertainty. The anticipation was fueled from working with dealer-partners Clay Rodgers and Aaron Matthews for 30 days already as we were laying out the foundation of their soon-to-be Special Finance department. The uncertaThe Launchinty was from having never physically visited their dealership and having hired or come to terms with two new employees we had never met face-to-face, along with a couple individuals that were in the last stages of interviewing.

    More uncertainty was established as Rodgers and Matthews had initiated a full-scale facilities remodel in the 20 days prior to us arriving to make room for the new Special Finance team, including building out a BDC (Business Development Center). I fully expected to find studs and roughed in electrical and was prepared to make the best of it. Did I mention that Matthews was off for 11 days in Europe for his honeymoon during the construction time?

    Oh yeah, one last detail. In the days before we arrived, they had been scheduled to finish their ProMax installation. The trainer from ProMax walked in the door at the same time we did – meaning no one in the dealership, except for me, had a clue about how to use their CRM and desking system. Just a bit of uncertainty – but truly nothing life or death.


    To our delight, all the new team members expected were present and accounted for. The new SF director, who has 15+ years as an independent dealer in the same general market, had been working as a dealership consultant for the last three years. The positives included that he certainly knew subprime and he also had been exposed to an assortment of technology and ideas in the stores he had been working with. He also had done quite a bit of training and team building, and with hiring a new staff with little expected retail auto experience, that was important. The biggest negative/surprise was it turned out he had not sat in a SF director seat to speak of in at least three years, so there was more rust in his desking practices than what we might have wanted. Nonetheless, something we felt he could overcome.

    Our sales staff were the hardest to hire from a distance. We began with one on “Opening Day” and with two more who required a later start date due to notice required with former employers. The good fortune was that we were able to bring in one new team member who had actually worked SF deals from start to finish (albeit not in great volume).

    A week later the new BDC team members arrived, and three out of three (we actually could have hired a fourth) were present and accounted for. We did lose one the first day, but we had expected attrition built in and as a result, it was not a significant setback. We quickly added a third BDR, who appears to be a significant upgrade.

    Realizing that the first day of a new hire’s employment is the most important day in establishing the culture and easing their fears, we customized DealerStrong’s Onboarding Manual and had a much scripted day of welcoming/training, including presentations by both of the partners, various managers, ourselves and the dealer’s HR manager. It was followed by another two weeks of training to both make our team competent and confident ahead of our mid-month launch.

    I must compliment Dwayne Bennett of ProMax who did a great job of orienting both the prime and the subprime staffs on their product, and thorough training as well. It is rare when I am onsite with a client during a CRM install. Even with the normal hiccups in setup that you naturally expect, it really went well.

    Special Finance Companies

    I had given Matthews a punch list of Special Finance companies and credit unions they needed to get signed up with in the month before we arrived. To his credit, he had accomplished far more than I imagined. As we started, we had nearly every finance company we needed, plus most of my “wish list.”

    Fortunately, my own long term relationships with some of the top finance companies I have done a lot of training for helped us get their premium programs. As we started business, we weren’t going to lose any deals to any other dealer that had a better selection of finance companies. We will be adding a few additional niche finance companies, but we were certainly in a good place to get started.


    Rodgers is the partner in charge of inventory and he really sunk his teeth in. As detailed last month, we were in a really good spot to begin with. Even though their 200 plus units in inventory had been sourced for prime credit luxury and highline customers, we quickly found nearly 20 units that made very good SF vehicles from a cost and spread against the book standpoint. The bonus was they were not run of the mill off-rental units which made it very easy to present to aspiring subprime credit customers. Rodgers quickly caught on to what was needed for the bread-and-butter SF inventory and immediately started using his connections to bring the needed stock to 30 units.


    After nearly two weeks of orientation and training, the department launched on the 13th. Bumps, sure. Stumbles, sure. But along with them came the smiles. The first car out the door was anything but the traditional SF inventory. Availing ourselves of the Diamond status bestowed by Capital One, we sent a super sweet, seven-year-old BMW 5 series down the road to customers who traded in another vehicle that will be a perfect Tier 3 or T4 unit, and who, that same evening, gave us two outstanding reviews online. We patted ourselves on the back for exceeding benchmarks as well. Deal number two the next day was a three-year-old BMW X5, as a healthy down payment allowed us to reduce a customer’s payment to fit the required payment-to-income ratio.

    As we go to press, the switch has been flipped for Focus leads. We are trying to hire one additional business development representative and are getting ready to shoot footage to use with our Nation’s Premier Auto Dealer direct response program, which will launch in about 30 days. Our conservative target stated last month was to get the facility built, staffed, BDC launched and sell five units, at above benchmark gross profits. Realistically we want 15. We certainly believe 30 by months end is doable. Now, all we have to do is make sure the team has got their funding system ready to go. Time will tell, but so far, so good.

    Until next month,
    Great selling!

  4. Giving Birth to a World Class Special Finance Department

    First in a six part series of articles.

    While the names and locations are being changed to protect the company’s privacy, this is the first of six articles that document the process being used to develop a startup Special Finance operation inside an already successful independent dealer, located on the fringe of one of the major metro markets in the United States. It will detail the plan, the strategies, the successes and the challenges encountered over a six month period, with the end goal of the new department to reach a monthly sales volume of 70 deals at over $230,000 total gross by the end of that period.

    The Starting Line

    New clients always mean new challenges, some more exciting than others. It was certainly more exciting when Aaron Matthews and Clay Rodgers, partners at Champion Motors, an independent dealership already retailing an averaging 100+ pre-owned vehicles per month reached out. They wanted my team and I at DealerStrong to help them build a Special Finance department. They were experts at marketing (digitally) and selling to prime credit customers, but like anyone selling used vehicles, they realized many of their customers had blemished credit and wanted to better serve them.

    Matthews and Rodgers realized they had neither background nor experience in subprime, so rather than try to pay the tuition of developing that channel through trial and error; they turned to the experts to speed that timeline up. Since it had been many years since I personally had the opportunity to build a solely SF department from a clean sheet of paper, I jumped at the chance. (Usually our SF efforts are combined with developing the entire operations of a dealership.)

    This article will focus on the planning and make ready period, the thirty day period prior to launching the business. It is a tough phase as the Matthews and Rodgers see the potential and want to go from zero to wide open overnight. It isn’t going to happen – not and be able to sustain it. To me, this is the most important phase as it involves building the foundation for the “machine.” I believe in building the machine, adding fuel to make it go, continuing to increase the fuel until the machine maxes out and needs to be grown again. In this situation, to get to the end goal there will likely be three phases of growth.

    Timeline: To be accomplished in the first 30 days

    With no existing department, DealerStrong must help Champion Motors accomplish a number of tasks in the first thirty days prior to launch. They cover:

    1) Personnel
    2) Customer demographics and finance companies.
    3) Inventory
    4) BDC and Technology
    5) Facilities


    To commence SF you need a skilled manager with sound integrity. Additionally, we will launch the department with a minimum of two sales people. Finally, within the first month of operation we will launch a BDC that will initially focus on SF. The BDC will be staffed with three BDRs.

    To expedite the hiring we placed ads on, used our own DealerStrong web site and our social media sites as well as several others. Additionally, we used LinkedIn to make our network aware of the openings. Finally, we reached out to key industry partners that have ties to the city to try to find managers with the skill sets and character needed.

    Quickly resumes came in. We use a generic and compliant employee application, which we forwarded to the respondents with resumes that were worthy. Once the applications are returned the screening process begins. Employment tests were provided to determine if skills sets and claimed skills are equal. From there, interviews were scheduled and eventually reduced to a handful to be interviewed by Rodgers and Matthews. It is a scripted process that eliminates the riff-raft from the hirable few. A staff will be ready for the on-boarding and job training on Day 1.

    Customer Demographics and Finance Companies

    In the pre-engagement homework, Rodgers and Matthews quickly and thoroughly reviewed the credit bureau pulls from the prior 30 days breaking them first into prime and subprime tiers. This is when they discovered that 52% of the credit pulls were for customers with subprime credit. Additionally, a significant percentage fell into the category of zero score to a 510 credit score.

    Our goal is to match the customers with subprime credit to a portfolio of finance companies or banks that will cover the entire credit spectrum. Fortunately, Champion already had signed relationships with Ally Finance, Capital One Auto Finance, Chase Bank and Wells Fargo. That is a good base. To that we created a list of 15 additional auto finance companies and credit unions needed to cover the entire spectrum of credit, with instructions to Matthews and Rodgers to get them signed by the end of the 30 day period.


    Certainly, anyone that has ever read my writings knows how integral I believe inventory is to the success in SF. It must not only be behind book on the lot, ready to go, but it also must fit the banks/finance companies’ parameters that will be used for each particular customer. Our goal is simple. Inventory a supply on the ground equal to a one-month’s supply of forecasted SF sales, and do it so that the unit count is essentially divided among the credit tiers in relationship to the makeup of the customer’s credit demographics.

    The great thing in Champion’s case is that we are essentially starting from a blank sheet of paper. They currently stock about 150 – 170 units for their prime business. A quick analysis of their inventory indicated that about 10% of their inventory would work well for SF customers. That meant there was no dire need to rush out and buy a lot of inventory but rather work our way into a perfect supply.

    Shawn Foster, DealerStrong’s inventory specialist was involved in the planning phase, as we worked with Matthews, who is responsible for inventory, and his buyers to set out parameters to buy from. Additionally, we established reconditioning standards for their service department to work from. The immediate expectation was that beginning with mid-month of the planning phase to the middle of the following month 15 units would have to be acquired and made ready for sale.

    BDC and Technology

    At onset, the sales staff, which numbered only five, answered all the incoming calls and made all the outbound calls for the 700 total opportunities to do business the dealership currently had. Recognizing the team had no subprime experience and no additional capacity to handle more leads, we knew they would not be utilized. Additionally, being in a major metro market, once marketing was added to the mix, the lead count each month could literally reach the “thousands.” As a result the decision was made to build a BDC immediately and by the middle of the first active month have it both fielding incoming calls as well as making all outbound SF calls.

    Additionally, the CRM system being used by Champion really wasn’t well suited for a BDC and subprime, or their service department. The decision was made to install ProMax Unlimited and move the entire operation to it – prime, subprime and service. Additionally, with the dealership poised to have over 200 used vehicles in inventory, ranging all the way from a nearly new Audi R8 Quattro to deep subprime vehicles, the outstanding desking features in ProMax will allow the subprime team to be able to glean opportunities out of higher-end inventory that would normally not be expected to work well.

    With ProMax to handle call and lead management, we added Bidzpin to help the buyers identify and bid the inventory to match the finance companies. Technology will help us keep us ahead of the game with inventory from sourcing to structuring.

    As stated before, we began the BDC with three BDRs. Wendy Reeves, the DealerStrong BDC expert and trainer worked with the BDRs to essentially take a newbie crew and turn them into a strong foundation. Not only did Reeves work through the processes and the call guides, with ProMax on board, was able to install our entire template contact and follow-up system (email and text), which has proved so important in increasing the contact-to-lead ratios and the shows-to-appointment ratios. She anticipated a mid-first month time-line for the BDC to be ready to go live, and expects them quickly to hit benchmark productivity.


    Next was getting the facilities ready for the new team and BDC. The dealership is a former second tier franchise store. It has been very tastefully reappointed to handle the upscale prime business. What it didn’t have was sufficient space ready to add the additional SF personnel. Rodgers and Matthews quickly went to work to convert a nice-sized storage area adjacent to the showroom to house the customer waiting area for both sales and service. This allowed the former customer waiting area to be converted into office and cubicle space for the new SF team.

    Additionally, it was decided that a small office building immediately adjacent to the dealership, also owned by Champion, would be converted to handle the BDC. It is large enough to accommodate up to eight BDRs along with a manager, so it should work well. The month lead time gave us the ability to get it outfitted and wired to handle a VOIP phone system.

    And so went the first month of planning and make ready. It certainly was an active time, but it certainly provided the ability to build a solid foundation. Next month we will discuss the results as we go live. Without a doubt, as in any organization, there will be hiccups and obstacles that are encountered that will have to be worked through. That said, we feel extremely optimistic and have nothing less that absolute expectations that our initial goals will be met, and should be a ton of fun.

    Until next month,

    Great selling!

  5. Special Finance Commitment

    Are you on the 36% or the 64% team? Trust me – you want to be on the 36% team but it will take special finance commitment. In this post, I will explain the 64% team (and why you don’t want to be on it) and help you see where dealers are missing opportunities to grow.

    According to Experian for 2Q2014, the average credit score for a person financing a used car was 641. This means the average customer’s credit score was well below the definition of prime credit and within two points of being a subprime credit customer (compared to a 711 for a person financing a new vehicle).

    Combine that with some powerful proprietary data that John Palmer, the CEO of Promax Unlimited, shared with me. Using the State of Illinois as an example, data showed there are 1,060 dealers registered to do business. In that state, over 1 million people had credit scores between 500 and 640 – the heart and soul of subprime. Over a consecutive four month period, 817 dealers both pulled credit bureaus and had at least one credit bureau per month with credit scores between 500 and 640. During those four months, based on the known people living in the state with credit scores in that range, 10% came into a dealership and had credit pulled. Of those, 20% purchased a vehicle at that dealership, meaning 80% did not. Of those that did not, 29% purchased at another dealership.

    Of the 817 dealers, 64% (521) had more customers that came into their dealership with those credit scores sold by competing dealers than they sold themselves. More telling, in the entire state of Illinois, only 18 dealers averaged selling at least 25 vehicles per month to customers in that credit range.

    With the recently announced total-deal SF benchmark of $3,567 for used vehicles and $3,775 for new vehicles, what a colossal whiff, especially for the 64% that had their competition outsell them on customers they already had in the store!

    Upon scanning the list of the dealers that made up the 64%, I found it to be littered with some of the largest and most profitable dealerships in Illinois. How can that be? It is really very simple – total lack of commitment to SF customers, which currently makes up exactly 33% of all the vehicle sales. This is nothing new, but it certainly keeps me scratching my head. I assure you, had we completed this exercise for all the other states the results would have been the same.

    If I were to poll the 64%, many would take umbrage with my comments about them not being committed. They may even have a SF Manager in place, and might be doing 10 to 15 deals a month. I see it often. In their mind, they have put their money where their commitment is.

    Denial is easy. Commitment goes well past writing checks. I really don’t have to look past some of our own consulting and training clients/friends to reinforce this point – and they are certainly writing checks. They “think” they are committed. If they were, their competition wouldn’t be outselling them with their own customers. They would ensure the systems and processes exist that they have learned need to be in place. They would commit to buying the correct inventory and in the correct quantities to avoid aging and book-drop. In general, they would be doing better.

    To have the commitment, which means the whole team must be engaged, you first must understand why it doesn’t exist, then you have to address those issues.

    The first reason is that the SF department is the largest profit center not broken out separately on a dealer’s financial statement. The sales and gross numbers flow into the new car department, the used car department, and the F&I areas of the financial statement and are unable to be distinguished. If a dealer doesn’t really know how well they are or aren’t doing, and all else is going well, they assume the SF effort must be as well.

    Along the same lines, it is difficult to measure SF activities by themselves. How many true SF opportunities do stores really have – whether dealership visits or leads? My team and I are continually in clients’ CRMs and it is amazes me to see how ineffectively they have been set up. Without reasonably accurate information, you can neither manage nor hold people accountable. If the expected results don’t materialize, it is easy to lose commitment thinking, “We just don’t get that type of customer in here,” or “Our customers are different.”

    Whether it is the BDC, sales personnel, used car manager, buyers, sales or finance management team members, there must be accurate and consistent ways of measuring to facilitate improvement and ensuring that it is occurring. Measure activities – not results. If the correct activities are occurring consistently, so will the results.

    Next there are the comp plans. Often comp plans have been developed by F&I vendors who have based plans around product sales and penetrations. That is great, unless a Tier 3 or worse customer is approved by a finance company that does not offer finance participation or allow any/much back end product sale. If that is the case a finance manager delivering that type of deal (that at benchmark gross profits still means more than $3,200 for the dealership) actually will have his compensation negatively impacted by the sale. Do dealers really believe that a finance manager is really going to work hard to put that deal on the books if it hurts their compensation?

    Additionally, I often see dealerships with a prime finance manager(s) and a SF manager. A hard line of demarcation is set, often based around a credit score. One manager must lose to have the other manager win, even though a credit score above/below might have been better served by using the alternate sales process. No matter what, someone always loses, and almost always it includes the dealership as well.

    Compensation issues also carry over to the sales personnel. In some dealerships subprime sales commissions are reduced by 50% in order to help offset the compensation for the SF manager. Brilliant! Not so much. What this ensures is that the sales person is going to work the deal as prime credit to the death hoping for a miracle to occur in the prime finance office which allows them to receive 100% of the commission. If your dealership is set up this way don’t kid yourself about it not happening.

    As long as we are talking about personnel, let me insert egos. I have had the good fortune to be able to work with some of the best SF teams in the industry. They all have at least one thing in common. While being experts at what they do, they all believe there is more to achieve. One client is delivering 150 – 175 SF deals a month. That is terrific (it is easily 33% of their business) but knows their grosses are just average because of a commitment issue with their used car buyer(s). They are working hard to fix it and recoup the extra $1000 per unit.

    On the other hand, I continually chuckle at the inflated opinions many individuals have of their abilities when they are clearly performing well below average in every area. Their confidence and swagger makes them feel they have nothing to learn and need only “more traffic.” Due to the inability of the dealership to truly measure, they are able to get away with it (or eternally suffer from it) and therefore nothing changes.

    Somewhat along the same lines, some dealers are so profitable there is little motivation to make it work. They are happy to write checks, but their rationale is often, “I don’t want to do anything to upset the apple cart.” OK, $3M to $4M net profits are nice, granted, but an extra $1M is even better, and it simply takes the commitment to convert the 33% of the business that you are missing. One dealer client that has nearly 20 stores in a market could easily add another $10 million in gross profit per year to their operation but it must be too much work to think about, because there is always an excuse to put it off until next month.

    Finally there is what I call the fear of change or the unknown. A few clients come to mind where they have processes or team members that they know are holding them back. If they make a change in processes, they fear a team member (without commitment) may leave. Worse yet, they know they have a team member(s) that should be replaced but they fear (1) that when starting the search for the replacement that the team member may discover it and leave before the replacement is found; or (2) the replacement they find may turn out worse than what they currently have. The result – go with the status quo. No commitment and no improvement.

    I am sure there are other factors that cause the 64-percenters to lack the commitment necessary to outsell their competition on the customers they already have in their own stores, but for certain, this list is a good start. Most likely those organizations that lack the total commitment necessary to excel in Special Finance have at least one – most likely many – of these issues.

    My challenge to you as many of you approach your annual forecasting and strategic planning sessions for next year is to truly look at your organization and at the opportunity, then find a way to develop the total commitment necessary. Let’s restate the fact – the average credit score for someone financing a used vehicle is 641, 33% of all vehicles sold are sold to subprime credit customers, these customers are walking into your store every day and those dealers that are operating at benchmark levels are delivering at least 28% of those customers at total deal gross profits of $3,500 and beyond.

    Whether you are fat and happy, or whether you have someone or a team that thinks they are ‘all that and a bag of chips’ and know it all, the bottom line is that in the majority of all stores, if one-third of your business isn’t being delivered to subprime customers then you are most likely on the 64-percenter team – not a team that most successful dealers every want to be on.

    Besides commitment, there are nine other critical components that need to be in place to excel in Special Finance. Commitment IS the corner stone and foundation needed for the other components to fall in place. Get committed and choose to be one of the 36%. Get your Special Finance plan ready and watch the next year be your best ever.