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  1. Cutting Off Your Nose to Spite Your Face

    Dont Let the Bad Lead Syndrome Stymie SF Growth

    When I bought my first e-lead, there were only a handful of providers. We had been working infomercial leads for over four years at my Hyundai and used car stores when I was first approached by one of the trailblazers of the industry—InterActive Financial Marketing Group. We were very adept at turning volumes of what would be termed marginal-quality leads into appointments that would show and ultimately buy, so it didn’t take much to convince me to give these new leads a whirl. I really didn’t expect much; after all, did subprime credit customers really have Internet access?

    It took less than a month to discover these leads were of much better quality than our infomercial leads; we closed 18.3 percent of them in the first 30 days. I suddenly found myself doing whatever I could to find the few other e-lead providers, such as Customer Funding and Cyberleads, to lock down exclusive arrangements for large market areas. The final month before I sold the stores, we delivered an amazing 31 percent of the leads we bought.

    At the same time, in the pre-Google days, we ramped up efforts to drive traffic to our SF Web site, as it didn’t take long to learn that it was much easier to set appointments that were kept from leads that came from our own site. We were reaping big bonanzas at an unbelievably low cost per sale. Of course, we already had four years invested in learning how to quickly and efficiently process and work infomercial leads.

    Today, the e-lead landscape has changed dramatically. Not all leads are created equal. An amazing number of new lead providers pop up every month. The quality has changed markedly, as some of the leads today are created from everything from spam e-mail to offers to win big-screen HDTVs and iPhones. Many of these leads are now bought and sold wholesale (some over and over).

    While this isn’t meant to indict all the new lead providers that have burst onto the scene, certainly some seem to be doing their utmost to pollute the e-lead environment. The situation is no different than in any other industry; a few bad apples spoil the whole bunch. There are indeed a few companies that churn these leads on the market and get blacklisted by the quality companies, only to change their names and begin selling them again. It’s basically the same modus operandi used by a few disreputable direct mail companies that have scammed dealers for years.

    As a result, today there are more leads on the market than ever, and many are certainly of lesser quality than what existed eight years ago. So what is one to do, throw up their hands and walk away? I think not.

    When we first pushed the infomercial button 12 years ago, that too was lightning in a bottle. We created more leads than anyone could handle and blew out every system we had in place. We quickly gathered the attention of other dealers who also followed with their own campaigns. Initial quality was actually pretty good, but that soon changed. Over the course of the next four years, infomercials were looked at by my team in about the same light as many dealers view e-leads today. You know what? We still sold cars. Was the cost per sale as good as it was initially? No, but to this day, dealers sell thousands of cars every month from infomercial leads thanks to good systems and processes.

    Just like the dealers selling vehicles from infomercial leads, if you have a good system to work these e-leads and work them with discipline and perseverance, you will sell cars. Now that is a pretty big “if”, but it is a fact. I don’t know whether it is tougher to create the “machine” or to have the discipline to work it, but that is what it takes.

    I know a very successful SF dealer who is looking outside of the auto industry to purchase e-leads of all types—real estate leads, mortgage leads, renter leads, etc. Heck, I bet he would buy library card e-leads if he could find them. What he cares about is cost per sale, not cost per lead. They track them like crazy, work them through a call center and turn them into lots of sales. It is simply a numbers game.

    It is much easier for a dealer or manager to complain about the deterioration of lead quality than to admit the ultimate root of the problem is the process by which they work the leads.
    If you or your department manager is faced with the problem of limited ROI on the e-leads you’re buying – for that matter, any leads you’re buying, regardless of the source – it is time to examine your processes as well as your providers. Regardless of how your department is set up to handle leads, it is vital that any person communicating with a customer has been thoroughly trained with the proper telephone techniques for special finance.

    To accomplish this, you must first identify the goals of the phone call. The primary goal is to establish good rapport and set an appointment (which will be kept). Without achieving this, a sale will most likely never occur. Please note, I did not say work to get the customer approved before you invite them into the store! Secondary to the appointment-setting goal, in some instances, is gathering or clarifying information used to qualify the customer’s creditworthiness and ensuring the customer brings all necessary documents in order to take immediate delivery. The most important thing to remember, however, is that you are selling the ability to obtain financing and an appointment to visit the dealership.

    The best preparation for all of these goals, regardless of the size or configuration of your team, is to use call guides in conjunction with training that emphasizes role-playing. Some people may roll their eyes when the words “guide” or “script” are used, but nothing ensures sustained success any more than a well-rehearsed call that is delivered 100-percent naturally.

    Over the years, my stores used the same guide and modified it to reflect what created the lead (i.e. an infomercial, the Internet, or a fresh call directly to the dealership from a newspaper or TV ad). Remember, with many situations, the dealership most likely already has credit information that the customer has supplied over the phone or Internet. As you craft your guide, keep in mind your goals and also remember to anticipate the four questions that you will most likely encounter. You must be prepared to deflect those questions that can so easily cause a call to fail, resulting in no appointment or an appointment that doesn’t show. The four most common customer concerns are:

    • How much of a down payment will I need?
    • What will my payments be?
    • What is the interest rate?
    • Do you have any [fill in the blank] in stock, and how much are they?

    Why is it so important to have answers prepared to deflect these questions? Any one of them can allow the customer to take the lead in the conversation, ultimately sidetracking you from your goal. In addition, at the time of the call, most of them can’t be answered. Even if you could, there is often no “good” answer. For example, if you quote a rate or a payment (heaven forbid), you have either painted yourself into a corner or unnecessarily scared away the customer.

    Some of you may think this is all too simplistic for your well-trained teams. The fact is that the best teams practice daily; that is how they remain champions. Alex Rodriguez still attends batting practice every day. If the appointment-set or -show rates start to drop, that generally means that people on the phones are beginning to ad-lib or modify items on the guide. It is “back to basics” time.

    Once training is addressed, the most important thing to remember is that time is of the essence. Yes, some of the leads you receive may be days or even months old, but you’ll still sell some of them. Are they your best percentage? Of course not.

    These leads go from green to ripe to rotten with amazing speed. What you can’t do is let the stale leads taint the urgency to work with the real-time leads. The problem is, you seldom know if a lead is minutes or months old before you make the call. You have to call them all, and call them quickly. True e-Leads involve customers who are looking for immediate gratification (they want to know whether or not they are approved right now).

    Another type is the customer who may be sitting across the desk from a less-skilled F&I manager who has just submitted the customer’s credit info to a company like e-Loan as a last ditch effort to find financing. In either case, time is your enemy. The ideal response time from the moment the lead arrives is within 15 minutes. After an hour, the lead really becomes stale.
    Along with a process, you must have a system in order to track your activities. Without proper tracking, you will have no way to discern which lead providers truly deliver an effective cost per sale. I would rather pay $40 per lead and close 10 percent of them than pay $5 per lead and only close one percent; but if you can get the $5 leads to close at 4 percent, I will take them all day. Without dedicated tracking, you really don’t know what is working and what isn’t.

    Similarly, without tracking you won’t know which call center or salespeople need additional training or coaching. You may discover you have someone who can’t close a door, let alone a sale, but they do a terrific job at setting appointments that are kept. Tracking is the key to solving the puzzle.

    How do you proceed? It takes opportunities to sell vehicles. The way I see it, you have three choices. You can build the machine, the systems and processes necessary to efficiently work leads of any type. Using that regimen, coupled with discipline and perseverance, you will succeed.

    The second choice is outsourcing. If you can’t successfully build the machine, you can outsource it. There are a number of outsourced call centers that dealers are using to cost-effectively work e-leads (and any other leads), set appointments and follow-up no-shows. If you have made an earnest effort and don’t have the people or time, this is definitely an option.

    Finally, you can just say, “To heck with the e-leads,” write them off and work on a way to capture all of the SF customers who are already walking in — and back out of — your front door. Or, you could do that and work the e-leads. Now that would be a novel idea! There are plenty of leads out there and vehicles to sell. The strong dealers just keep persevering. Put a plan in place, and stick to your plan. The ongoing rewards shall be great!

    Until next month,
    Good Selling!

    Vol 5, Issue 5

    To register to attend a Special Finance SuperCharged workshop or training with Greg Goebel, click here. 

  2. Have You Searched Your Dealership Lately?

    Negative Customer Comments Can Offset Thousands Spent in SF Advertising

    I have talked with probably more than 10,000 dealers about special finance over the past two decades. The range of their commitment to special finance has been from “off the charts” to a “you couldn’t get me to touch it with a 10-foot pole.” There are a multitude of reasons why some dealers have gravitated towards the latter end of the spectrum, but the most prevalent reason seems to be that dealers feel participating in the subprime credit spectrum will damage their organization’s CSI.

    Indeed, if not performed properly, SF has the potential to damage a dealer’s reputation, but face it, so does virtually any other profit center in the store. The problem was, 20 years ago, you could probably hide from it fairly easily. Customer complaints were mainly limited to the Better Business Bureau or the attorney general’s office (none too fun in their own right), and even if a customer filed a legitimate complaint, the public had to call and request information about a dealer in question (if they were even members of the BBB). Many consumers probably did not take the initiative. Certainly, dealership reviews were unheard of.

    Reviews of any sort were difficult to find and limited to print. Product reviews seemed to start with Consumer Reports decades ago. Others joined the parade, but their data also was found in print. When the world went digital in the ‘90s, accessibility to immediate information and opinions was born. Suddenly, it became very easy to review available products, services and the actual providers in real time, and everyone had an opinion and an avenue to share it.

    Early adopters in the digital realm were Amazon.com and eBay. When I first looked at eBay, I thought to myself, “Who on earth is going to use auction-style bidding to buy high-ticket items that they have never seen from people they have never met?” Then, I noticed something called “Feedback.” Real people were candidly, honestly and without reservation rating the people they were buying from (and vice versa), and with that transparency, a whole new culture was born.

    People started turning online for nearly all their information. Whether you are looking for a restaurant, a camera, old car parts, a washing machine or an automobile, you can quickly and easily find out what people (whether an industry “expert” or a consumer) have to say about not only the product you are looking for, but the individual or dealer who is selling and servicing it.

    All of this has changed the way people shop and certainly has impacted how people buy.

    I tried to think of how many things I had researched online in the past 90 days before I purchased, and how the research actually affected my purchasing decision. The Goebel household has been doing its share to spark the economy, as we have bought a number of big ticket items. A washer and dryer, two new vehicles, a refrigerator/freezer and a computer have had to be replaced in our household lately, and that doesn’t even consider the many hotel stays I have made during the same time. Each time, my wife or I, and sometimes both of us, spent significant time online looking for information on the products or services we were considering. To say that the many reviews I encountered had a major impact on our purchases would be a gross understatement.

    Then, there is the “other” side—the consumer “do-gooders.” They go by many names (RipoffReport.com, Ripoff.org, Yelp.com, CarDealerCheck.com, etc.), and they absolutely can create havoc for even the best businesses. Certainly many businesses have solid if not stellar customer satisfaction programs in place. In spite of that, it’s impossible to satisfy 100 percent of your customers. That means that crackpot customers, ex-employees with a grudge, or even your competitors can conjure up a claim and post it, regardless of whether it has any basis in fact. The scary part is what RipoffReport.com publishes on its home page: “ALL complaints remain public and unedited in order to create a working history on the company or individual in question.” Nice.

    I casually searched a couple of friends/clients who run impeccable dealerships and have very strong SF departments. They have CSI that is off the charts and processes in place to absolutely ensure satisfied customers. Unfortunately, one had a terminated salesperson with an axe to grind, and the other had a customer whose financing fell through after their documents did not support what they had told the dealership. After Googling each of their stores, guess what pops up near the top in search? You guessed it, RipOffReport.com reviews saying how bad the dealers were with wonderful descriptions like “fraudulent,” “scam artists,” and “bait and switch” screaming at you. Oh yeah, the complaints are almost three years old, and I have seen them as much as six years old.

    These dealers spend thousands and thousands of dollars each month on their digital marketing. Their Web sites search extremely well, which should go a long way to attracting Web site visits (which hopefully will turn into leads). The problem is you have to wonder how much the negative reviews posted on RipoffReport.com cost them, because those negative reviews search extremely well and are usually immediately below the dealership’s main Web site in an Internet search. That is something that can’t ever be tracked, managed or even refuted. How wrong!

    So, what does your dealership look like when you search it through Google, Yahoo! or Bing? Have you checked it recently? There are so many ways for your dealership to be rated or reviewed that I would be amazed if you don’t have a review or two floating around somewhere in cyberspace. If it shows up on the first page when you search, especially if you search by your dealership name, you can bet that your customers are seeing it. You can bank on something else too: If there are unsolicited reviews out there, they are almost always negative. While I relate this to my initial statement about dealers being concerned about CSI and doing SF, this really crosses over to the entire dealership.

    So what can you do? It all starts with a plan. Whether with SF, conventional retail, service or parts, you must earnestly be trying to achieve 100-percent customer satisfaction, which is a lot easier said than done. You must have a way that unhappy customers can easily connect with the dealership and have their concerns heard and addressed. You can’t make everyone happy. You may be 100 percent in the right, but they don’t always seem to understand it that way. Being right and having your customer mad and posting scathing reviews gets you nothing. In that same vein, realize that you can’t just ignore crackpot customers anymore. If they have access to a computer, they can do long-lasting damage.

    You must also be proactive. You need to take charge of building your own reputation. You need to have an easy-to-use system and/or tool that allows your sales and management team to build your own portfolio of positive reviews of your dealership and people. Probably the best time to garner a positive testimonial is right after a customer has taken delivery of their car. Some might argue it is better to do this before they go into the finance office.

    For a couple of years now, savvy dealers have been using this time to take a quick video snippet of the customer and their new vehicle, or having them spend a few minutes writing down some quick comments about the dealership and their salesperson. These comments are always positive, and it gives the dealership or department an extensive library of positive reviews. This is a great proactive strategy; however, it presents one significant challenge.

    If customer testimonials are only on the dealership’s Web site, the only way to find it is by going to the Web site. A customer may find a dealership’s site listed on page one of search results, but if a negative review has been posted on one of the aforementioned consumer sites,it will almost always show up as well (sometimes even above the dealership’s Web site). The damage has been done, and it is like a train wreck.
    In my opinion, the best way to showcase your library of reviews (and to minimize the negative reviews) is to use a standalone Web site for your reviews. Used properly, they will search extremely well (often better than the consumer sites), and if they are linked to your primary Web site, they will also help its SEO ranking. Whether you create your own or use some of the vendors now available that provide that service for you, I feel it should have an outside or third-party feel to give it extra credibility. Whatever you do, if you choose an outside vendor, make sure you have control over what appears on the site. If a customer gives you a glowing review but uses third-grade grammar and spelling, it will read much better if you can clean it up.

    One word of caution, there are some vendor sites that border on extortion. If you don’t pay to list your dealership, the sites give the feel that you are not “certified” or are less reputable. One I will name – CarDealerCheck.com – because they go so far as to have a list of their “100 Worst Car Dealers.” The top dealer on the list is named because of negative reviews from just two people. Go Google “Worst Car Dealers” and see what comes up. There are others that will allow you to sign up, but they will also sell or post competitors ads on your page of the site, which certainly takes the customer looking everywhere but where you want them.

    The bottom line is that your credibility is at stake every day in the car business. Whether you decide to engage in SF or not, I strongly urge you to base your decision on something other than the fact that it may hurt your CSI or image. Every one of my franchise’s CSI was always in the top 10 percent of the country, often in the top 2 percent. SF did not hurt us. Your store’s culture is what will make or break your CSI, and my point here is that in today’s world of instant information, I believe you must be proactive about building and maintaining your “visible” reputation. I feel that those SF departments (and dealerships in general) that understand this will separate themselves from the pack and ultimately will be that much more successful in the long run.

    Vol. 7, Issue 2

    To register to attend a Special Finance SuperCharged workshop or training with Greg Goebel, click here.

     

  3. Traditional Media Once Again Working Well in Special Finance

    Dealers Taking Advantage of Vacated Broadcast Media Markets

    As the calendar turns to March, good news seems to be abounding in the special finance world. E-mails and phone conversations with dealers and their managers indicate that business is indeed returning to that of the old days (late ‘90s) when SF was solid and deals were reasonable. Another good sign: the lion’s share of the messages in my inbox and voicemail are centering around marketing questions again rather than finance companies. With dealers wanting to know what is working or what is hot on the marketing front it means that they are once again engaged in SF and now are trying to figure out how to garner more than their fair share of the market.

    I am excited to hear that what I will call “old-school media” is still working, and in some cases, working very well. It has been years since dealers aggressively went after the market in broadcast media. With the majority of discussion today being centered on digital and social media, traditional special finance advertising in broadcast media is certainly not new-wave.

    How can it be that old-school could possibly be cost-effective in today’s market, and how are dealers implementing it? It’s not rocket science, and in candor, this run may not last forever, but it certainly is working right now. Marketing – advertising messages in particular – must stand out from the crowd to attract attention. They also need to help establish a brand, a familiarity of what you expect from the message, and broadcast media (especially television) is once again providing that opportunity. With the majority of dealers and departments pulling out of what was perceived to be expensive media, suddenly those dealers who remain own the attention. Combine that with a strong message and professional production and you can own your market.

    Granted, many of the dealers I work with are generally on the larger end of the SF spectrum, but that doesn’t mean you have to spend tens of thousands of dollars nor have a store full of dedicated employees to make it work effectively. Today, there are some quality media companies that have excellent production and through the use of shared or licensed (but personalized) media, a dealer can be on the air in a matter of days, driving traffic as well as effectively branding themselves for basically no more than the cost of the airtime. Thirteen years ago when I was one of the pioneers for infomercials, the production and ramp-up cost was nearly $30,000. Dealers can do this for much less today.

    These changes have allowed dealers to enter the market more feasibly, it has allowed them to also tie in the Internet to make their advertising more powerful. The most effective advertising takes customers back to a Web site for not only the credit application, but also for hundreds of inventory listings. This makes the Web site much stickier, keeping the customer engaged all the way through completing a credit application. Longer Web visits, completed credit applications and customers anticipating a call means higher appointment conversions—and ultimately more sales.

    My definition of cost-effective and efficient retail automotive advertising is where media cost per sale is in line with industry benchmarks, and the total number of customer opportunities equals the maximum number of leads the sales team can properly handle. Any money spent to bring one more customer opportunity than that in is money wasted. The goal is to reach your maximum capacity at the lowest cost per sale. Remember, the average (not benchmark) full-time salesperson can handle 75 new opportunities per month. The great ones can handle about 125. Yes, there are dealerships that have people handling 150, 200, even 250 new leads per month, but they are simply picking the low-hanging fruit. Their closing ratios are generally well below average, and their follow-up for both prior sales and unsold leads from prior months is virtually non-existent.

    The keys to effective use of broadcast media are no different than any other type of media. Always track your results and activity, don’t spend any more than you need to keep the employees that you have busy, and have all the other necessary components in place to take advantage of the opportunities.

    What has convinced me that this is a good time to be in broadcast? Once again, it is simple. The data kept by the dealers I work with all indicate that both the cost per lead and (more importantly) the cost per sale are once again very much in line with current industry benchmarks. Without good tracking, you are using the SOP method (Seat-Of-the-Pants), which almost always results in a much higher than necessary cost per sale.

    If the television market once again becomes over-saturated, then the results will certainly diminish. When I first entered the SF infomercial market, there was only one other dealer in the country engaged in it. My business life changed immediately and forever. My SF business more than quadrupled overnight. Yes, four years down the road everyone else had copied my lead, and it was much harder for my message to stand out from the crowd. Now, the economic crisis has driven all but the steadfast out of the SF business. For those daring to stand out from the crowd, as many I work with have chosen to do, the time is right once again.

    If you are interested in learning about our broadcast media services, click here.

    Until next month,
    Great selling!

    Vol. 7, Issue 3

  4. The Key to Maximizing Current Showroom Traffic

    I get calls and e-mails every day asking many of the same questions and complaining of the same things. “Who do you know that is buying in this market?” “The finance companies aren’t buying anything!” “You just can’t make any money in special finance anymore.”

    In a nutshell, yes, the market has tightened, but those of you who believe special finance doesn’t work or that you can’t make any money anymore have been drinking the wrong Kool-Aid. You are just flat wrong and have created a self-fulfilling prophecy.

    Yes, advances have declined. I, along with others in the media, have been chronicling this for months. Judging by the losses incurred by the finance companies from their 2006 and 2007 paper, they were way out of control (just like they were a decade earlier when the market tightened).

    Guess what else declined while the advances were retreating—wholesale used vehicle prices. That allows dealers to still structure deals and make good gross profits on them. Benchmark gross profits have not declined any more than they had during the late second and early third quarters of 2008. The benchmark gross profit (combined front and back) for franchised dealers is still $2,860 per vehicle.

    So, what does that mean to dealers today?

    First, conventional floor traffic is down significantly. Consumer confidence has reached the lowest level ever recorded. Not many people are buying on impulse or emotion.

    Second, due to an unprecedented number of foreclosures and the highest unemployment level in 16 years, more consumers have had their credit become impaired. Longtime prime credit customers have become near prime and subprime.

    Third, the banks and finance companies, after suffering through poorly performing portfolios and reduced sources of funds, have not only tightened advances, as previously mentioned, but have also tightened credit decisioning.

    These three factors have given dealers the feeling that SF credit is tighter than it really is and that you can’t get deals bought.

    Let me go back to my original statement; that is just flat wrong. In surveying my bellwether SF clients and dealers around the country, the market has indeed stabilized. As I stated months ago, dealers had to adjust. Those who did have found ongoing success – not as easy as it had been before, but success nonetheless.

    That success has been sustained by focusing hard on two of my 10 Critical Components for Success: Inventory and the Sales Process.

    As mentioned above, wholesale prices fell drastically over the third and fourth quarters. Dealers who were nimble and selective were able to take advantage of some amazing inventory buys, which allowed them to continue to structure profitable deals even with reduced advances, as long as they didn’t botch the sales process.

    Longtime readers of my column have long since been aware of my Green and Red Balloon practice. For new readers, I have always said it would be ideal if dealers could place a balloon kiosk in the customer parking area, and upon arriving, customers would be required to select one of two colored balloons to walk around the dealership with—either a green balloon for those with good credit or a red balloon for those with subprime credit.

    That would make the sales process so easy. It would help keep a salesperson from directing customers to, and working deals on, vehicles the customer could never qualify for nor afford. Red Balloon (RB) customers would be identified immediately, and after the meet–and-greet, they would immediately be directed into the finance loop. With Green Balloon (GB) customers, nothing in the process would change from the tried and true.

    In order to maximize our opportunities as well as make the customer experience as good as possible, we must put a technique in place that allows us to identify the customer as early as possible. With fewer showroom opportunities, there has never been a more important time to properly identify your customers.

    The key, regardless of the department structure, is to insert a simple, non-offending qualifying question or two into your meet-and-greet process. This can be as simple as asking, “Are you here for the big sale today? Great! Are you interested in our special [insert the appropriate number] percent APR interest rate program for preferred credit customers?” If the customer says yes, you have a GB and you’d proceed with your traditional road to the sale.

    If the customer says no, then you can say, “Then would you be here to take advantage of our special financing programs to help you establish or re-establish credit? … Great, please follow me inside and we can get you quickly pre-approved.” In this scenario, you have a RB and you’d proceed with the traditional SF sales process.

    You can certainly ask different questions. “Is the car you are currently driving financed?” If the customer says yes, you can ask, “Who with, if you don’t mind me asking?” If they tell you it’s financed with Wells Fargo, that’s a mixed signal because it could be a prime or special finance deal. Then you can ask, “And how has your experience been with them?”

    If the customer says, “I hate them, they are always calling me,” that’s a RB signal telling you the collections department has been calling them, so you can assume SF.

    From here, in some stores the RB signal will mean turning over the customer to the special finance sales team or department. In others, it will mean bringing them inside to begin the finance loop and privately discuss their credit background. Ultimately, with the SF customer, it means the focus shifts to qualifying for financing rather than looking at a specific vehicle.

    If a qualifying question is used early in the sales process, SF customers are much less likely to be shown vehicles they cannot qualify for, meaning the dealership will have a much better opportunity to deliver a vehicle, and the sales process for these customers will provide a much more positive buying experience.

    Other qualifying methods could be to ask: “Mr. Jones, would you like our assistance to help find you competitive financing or leasing options on this purchase?” If the customer says yes, you can respond witn, “No problem, we will be happy to. Let me ask you, on a scale of one to five, five being great (not good, but great), how would you rate your credit?” If they reply a five, work them as a GB. One through four, RB.

    No matter what selling system you are using, I have seen this process successfully integrated into all the traditional approaches with ongoing training and consistent practice. Salespeople, sales managers, finance managers and SF managers must be educated as to what needs to take place, when it should take place and how it will be executed. Following that up by measuring the results allows you to manage the progress as well.

    Keep in mind that this process not only will boost your ability to properly select and structure SF deals, but it will enhance your ability to sell and earn gross profit on the green balloon deals as well.

    If you would like more information on the SF sales process, you can find more detail in the archives of AutoDealerMonthly.com. Even more about it is detailed in my book “The Complete Guide to Special Finance,” also found on our Web site.

    Selling opportunities have always been too precious to squander, but now, it can cost a dealer the store. The bottom line is that in order to succeed in today’s special finance market, you must be able to quickly distinguish a subprime credit customer from a prime credit customer. If you are a subprime-only store, you must be able to quickly differentiate from a traditional SF customer and a deep-tiered customer, and even a buy here pay here customer. Doing so will allow you to succeed at a time when most are convinced that it can’t be done. That, folks, means extra market share for you.

    Vol 6, Issue 2

    To register to attend a Special Finance SuperCharged workshop or training with Greg Goebel, click here.

     

  5. The 3 Factors That Affect Purchase Decisions

    Why do people decide to buy? Some consumers use an intense system of thorough investigation before they decide to purchase, while others are basic impulse shoppers. Either way, three factors affect all purchasing decisions. Retailers should be familiar with the impact each factor has on the minds of consumers. A thorough understanding of the interdependency of each factor will help you market your inventory better, attract more customers and close more deals.

    Apple, Inc. was flawless in their execution when they rolled out the iPhone and iPad because they knew what made consumers act. They knew the emotional hot buttons. They knew how to create enough excitement about a new line of entertainment gear that, for many, a simple “want” transformed into a self-justified, immediate need. The iPhone and iPad hit the market with a fury like the Running of the Bulls and Apple’s stock skyrocketed. So did the net worth of Steve Jobs, a hard-charging and creative businessman who understands the consumer.

    If you want a better understanding of how consumers act, implement these three factors into your marketing and sales plans:

    The Economic Factor – This is the foundation of a purchasing decision. People can’t buy what they can’t afford no matter how badly they need it or want it. However, affordability is often a matter of perspective, which would explain why so many consumers use “creative” budgeting to get the things they really want. This practice has led to the special finance market and a struggling mortgage industry, and it has you reading this article.

    In our business, the economic factor is represented in the terms of down payments and monthly payments. You will be better served to hold your considerations of this most basic of the three factors to the end, long after you’ve gained the attention and interest of your prospects. Otherwise, you will run into the common scenario of “these customers have no money” problems. To stay off that road, focus on the other two factors first.

    The Functional Factor – The functional factor is all about needs. It’s about logic, what makes sense and the best interest of the customer. Although it too plays an important role in the decision to buy, it is the boring factor and typically doesn’t affect emotional appeal.

    That being said, the functional factor is perhaps the most important of all three when it comes to special finance. A dealer must set the customer up for success and not for failure. It is much too easy to get a customer excited about a vehicle that is out of their price range and/or does not meet their needs. A dealer with a strong special finance program is able to weave logic into the equation and convince the customer to do what is in their best interest by taking time to learn and understand their needs first.

    If you take the time to uncover the needs with a thorough analysis, you will build more rapport and be much more likely to earn the customer’s trust in the process. Then, when you introduce the logical choice later in the sale, your customer will be more apt to follow your advice and direction rather than seeing you as just another fast-talking salesperson.

    The Psychological Factor – All effective advertising appeals to emotion, or the psychological side of the sale. The psychological factor is all about what the customer wants. To divert the customer from the “wrong” vehicle and effectively bypass price, a special finance salesperson must introduce the psychological elements of the sale early in the process. One effective method that I recommend is to show the customer the merits of establishing or re-establishing a positive credit score. To be effective, you have to build the vision of an easier life for them with good credit, and then, get their buy in.

    Personal image is also an important emotional hot button. Having an iPhone is a social statement. Likewise are having a nice car and home. People want the best they can afford and, more often than not, the best they can’t afford. That’s why the most powerful commercials focus on image and not price. Image, fear, wants and dreams are all powerful emotional forces that drive the decision to buy. If used in a timely fashion, they will be the forces behind higher down payments and profit.

    To register to attend a Special Finance SuperCharged workshop or training with Greg Goebel, click here.

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