Category Archives: Sub-Prime Financing

You Cannot Manage What You Cannot Measure!

This statement stands true for every aspect of business, especially when it pertains to automotive marketing. Tracking the effectiveness of your advertising campaigns in today’s competitive marketplace can substantially increase your ROI. As we head into the New Year and begin to analyze advertising budgets, let’s take a close look at some methods to effectively track your advertising.

Make sure that every incoming phone call your dealership receives as a result of an ad you are running is accounted for. For those of you who do not have a BDC, you can utilize an 800 service which directs all of your incoming phone calls to an automated system, providing you with daily, weekly, and monthly reports via the internet. This allows you to review trends such as:

[list:11pb6van]- Which of your marketing campaigns the caller has responded to.
– Average number of calls you are receiving daily, weekly, and monthly.
– Exact time of each incoming phone call, as well as the time of day your dealership receives its highest volume of calls
– Geographical location of your incoming callers based on zip code or area code. This will help you determine which audience you have the highest probability of effectively reaching through your advertising campaigns. [/list:u:11pb6van]

These services also help you to ensure that the not one lead will "slip through the cracks" because you have the ability to go online to produce leads and reports, so you can be sure that all leads are accounted for. Each of the advantages I have mentioned above will ultimately increase your ROI. If incoming calls from your marketing campaigns are directed to the telephone switchboard at your dealership, I can almost guarantee that you are not able to effectively manage these calls or measure results.

Good selling this New Year.

Michael Snider is the national sales manager for CIQ Inc., offering the Voisys Loan-By-Phone service. If you have any questions or wish to contact Michael you can reach him at 800-438-8642 x102 or

You Snooze You Lose: Timing Is Everything In Special Finance

Do you know of a dealership that allows potential buyers walk around the lot browsing vehicles for hours, days, weeks, even months, without being assisted by a sales professional? In all of my years in the automotive industry, I have never witnessed this, and the chances are, neither have any of you. On the other hand, I have witnessed special finance departments receive phone and/or Internet ups and not call those individuals back for days, weeks, or even months on numerous occasions. The question is:

What is the difference?

When people browse the lot looking for a vehicle, sales associates will leap tall buildings in a single bound to greet them within minutes of setting foot on the lot. Meanwhile, phone and Internet ups are more than likely seeking financing, but special finance departments around the country let these leads sit on fax machines, software programs, and email inboxes for ridiculous amounts of time.

If someone browses a car lot and is not greeted by a sales associate in a timely fashion, this person will more than likely go to another dealership and browse their lot instead, which is why the greeting is so vital to initiating the sales process. The same goes for someone who has applied for financing over the telephone or the Internet. If they do not receive a response in a timely manner, chances are they will call another number or go visit another Website until someone follows up.

In today’s competitive special finance market, finding a toll-free number or a Website to apply for an auto loan is not difficult. So why do special finance departments force prospects to look elsewhere because of their inability to follow up effectively? There could be a few reasons (or should I say excuses) as to why this takes place in special finance departments all over the country. Let us look at a few of them.

[list:f6bexg9k]- Well get to it when we get to it. They have bad credit and cannot get financing anywhere else anyway. That may have been true in the past, but we are not in Kansas anymore Toto. This is not the good old days of special finance where none of us had to work very hard because times were so good. Today, selling the ability to finance is no different from selling new or used vehicles. It is highly competitive and moves at the speed of light!

– In conversations with national trainers, general managers, and sales managers, one common denominator stands true for sales people of all industries: Most prefer selling to a live person rather than a voice on the other end of the phone. Some salespeople even refuse to pick up the phone and make the initial follow-up call. This isnt true in all cases, there are certain people who have very good phone skills and excel in this environment, but car sales have traditionally been done face to face. None of this matters, however, because the purpose of the initial follow-up call is to get the prospect in the dealership, not to begin the sales process.

– Today, 75 to 80 percent of special finance departments are equipped with some type of software to assist the department with tracking leads, many of which download leads directly for follow-up. This is a wonderful tool that has eliminated a great deal of paperwork. Time and time again, however, when I speak with a special finance manager who has some type of software, I am told, I havent logged into that thing in days. Well, if your leads go directly into this system and you haven’t logged in for days, that means you have no idea if you have any leads or not, much less if you have followed-up with the leads.[/list:u:f6bexg9k]
Dealerships that use the traditional method of logging each and every incoming lead as soon as it comes in are the ones that know, month in and month out, exactly how many leads are coming in, where those leads are coming from, and how many of the leads turn into sales. If you receive leads from multiple sources, which I am positive most of you do, it is imperative to log each lead in a timely manner. That way leads will filter down for someone to call and set the appointments, in a timely manner.

Michael Snider is national sales manger with Voisys (, complete lead generation experts offering the automobile industry marketing programs specifically geared towards the special finance industry. He can be reached at 800-438-8642 x102 or

Turning Compliance into Profits

Many dealers see new regulations as nothing but a burden. Denny Long sees them as an opportunity to sell more cars.

For auto dealers, “compliance” doesn’t have to be a dirty word. The most successful dealers I know all use compliance as a way to ensure more consistency in their sales process, make more sales and increase their profits. Let’s take a quick look at the rules regarding Adverse Action Notices, then learn how the aggressive creativity of one dealer totally transformed new compliance rules into a highly effective system for creating additional sales and profits.

You are required to provide Adverse Action Notices

It’s a common belief that financing sources, not dealerships, are responsible for issuing Adverse Action Notices. That is incorrect. Dealerships are considered to be participating creditors because they make decisions on which finance source to use and, in some cases, the decision not to send an application to a finance source. All participating creditors are required to provide Adverse Action Notices. So if you’ve got to do it, let’s look at the positive aspects of these rules.

What triggers the need for an Adverse Action Notice?

Another common misconception is that an Adverse Action Notice is only required once a credit report is requested. In reality, any time a full or partial credit application is submitted to you by a consumer, you may owe that consumer an Adverse Action Notice. The entire interpretation of the law cannot be covered in this article — the NADA Adverse Action document is larger than this magazine! But I would like to provide a brief explanation to help you understand how this law makes it possible increase sales and profits. So let’s get into the good stuff.

You may detect a sense of frustration in articles written by marketing people. Why are we frustrated? Because we work so hard to generate leads and many are never contacted, let alone properly worked. I’m sure this is not a problem at your dealership, but it does happen. You can probably imagine how excited I get when a law is introduced that states you must contact all your credit applicants. Because there will need to be recordkeeping to prove that the notices were provided if you are ever audited, you must have a tracking system in place. Follow-up and tracking that’s required by law — is this a great country or what? Again, we can’t cover all of the laws in a short article, but we do want to discuss a couple of areas that will really pay off for you.

Getting creative

As mentioned above, I know a dealer who took the rules and got creative to make them work to his advantage. First, he has software with automatic triggers to search his system each week for Adverse Action Notices that need to be printed. He then contracted with a printing company to produce full-color, 8 1/2” x 14” notices that stand out from the boring, black and white, standard-size letters that meet the minimum requirements of the rules. He uses the additional space and added impact of the color to add coupons and other offers to get more bang for his buck. Using this software and his creativity, he has a foolproof system that turns every Adverse Action Notice into an awesome-looking sales and service marketing program … Genius!

Notice of Incomplete Application

If you receive credit applications from your Website or a lead provider, you must first ask for the consumer’s name and address so that you have the minimum required information to provide an Adverse Action Notice. If any of those applications are missing the minimum information required to submit the application to a creditor, you must send the applicant a Notice of Incomplete Application. This alone is significant because your employees now are required to follow up on every application.

You may find this hard to believe, but some of the consumers who receive a Notice of Incomplete Application actually call the dealership to complete the application. The more completed applications, the more vehicles sold (there’s that sense of frustration again).

The creative dealer has set up his system to automatically scan the required fields. It looks for the blanks and then lists the missing information in the letter. In most cases, there are only one or two pieces of information missing, such as previous employer or Social Security Number. This assures the consumer that they’re not going to have to start all over again. This dealer then takes the additional room in his larger format letter and adds coupons for things such as free DVD players or gas cards just for stopping in to complete their applications.

Minimum required income

This is another field that often causes leads to be “cherry picked” and ultimately ignored. Again, if someone submits an application, you can no longer just toss it because the income is too low. You will need to set up a version of a letter that lets the customer know that you can’t process their application because their stated income is below the level required by your available lenders. I suggest that you actually show the minimum amount required by your lenders on this letter.

Some of the consumers who receive that letter will realize that their income is above the stated figure and call in to correct the information. Another found prospect and, possibly, another found sale! The creative dealer takes the process one step further and suggests other sources of income such as alimony, child support or Social Security that can be added to exceed the minimum requirements. He then adds two coupons to the bottom of the letter — one that gives an incentive to come to the store (such as the DVD player or gas card mentioned above) and the other for a great deal on an oil change. He figures that if they can’t buy a newer vehicle, they’re going to need to take care of their current vehicle.

There’s another bonus to these rules: It’s a lot easier to get your employees to do the follow-up and tracking of these consumers when it’s required by law, not just because that’s what the boss wants. After all, fines can be as high as $1,000 per incident, not to mention the potential for costly class-action litigation. If you are required to send just 500 letters per month, you can certainly afford to spend a little extra to mail letters that might turn into sales.

I suggest that you look into software that will make Adverse Action Notices easier if you don’t already have such a system. If handled properly, there can be great benefits to following these rules. There’s a good chance you will sell a few extra vehicles every month thanks to the tracking and follow-up that is required, and more sales is always a good thing. Good luck and good selling!

Denny Long is senior vice president at Dealer Marketing Services. E-mail him at

We Finance Anyone! Really?

“Low credit, no credit, we finance anyone!” Not many dealers have been making these claims lately, but as the recession fades and the economy brightens (yes it will happen—eventually) dealers may be inclined to throw themselves back into the sub-prime financing arena. In an effort to get people in the door and into cars, one or two may be tempted to advertise that they can finance anyone. Before a dealer boldly makes that statement or any other statement in connection with offers of credit, the dealer should check his or her state’s credit advertising rules. We note that the truth in lending act also governs credit advertising and dealers should not ignore federal law requirements in their advertising compliance efforts.

Generally, a dealer who advertises specific credit terms must state only those terms currently, or soon to be, offered by the dealer. While this restriction appears under federal law, a dealer can also be sued for violating it under a state’s unfair and deceptive acts and practices law. Many states also provide specific disclosure requirements and limitations applicable to credit offers. Here are just a few examples of those states’ laws:

A dealer in Alaska is legally restricted from making the advertising claim, “We finance anyone; we won’t reject anyone’s credit.” A dealer in Arkansas may not advertise the claim that a buyer has the ability to “take over payments.” In addition, Arkansas law limits the manner in which a dealer may offer extended first payment periods. Like Alaska, Arkansas law also limits a dealer from claiming that “everybody gets financed,” unless it is absolutely true and without qualification.

Some states, like California, require not only compliance with the Truth in Lending Act’s regulation Z advertising requirements for all credit sales, but also impose significant disclosure requirements and restrictions on credit advertising. California law also prohibits dealers from using such advertising claims such as “everyone financed,” “no credit rejected,” or similar claims unless the dealer is willing to extend credit to any person under any and all circumstances. Kentucky, Louisiana, Mississippi, and more than a handful of other states also place limitations on unrestricted credit offers.

If a dealer in Connecticut advertises in a language other than English, all required disclosures or limitations on the offer advertised must appear using the language principally used in the advertisement. Illinois dealers may not advertise or imply in advertisements that rates are approved or set by the state of Illinois or by the Department of Financial Institutions.

Iowa dealers may not advertise “add-on” or discount rates of interest (federal law prohibits this, as well). Regulations in Maine require advertisements to be in plain language and Massachusetts and Missouri laws require conditions or terms relating to qualification for credit to be clear and conspicuous. The Office of the New York Attorney General has published advertising guidelines for automobile dealers in connection with both the advertisement of vehicles for sale and the offer to provide credit financing. Ohio, Texas, Virginia, and Washington also heavily regulate credit advertising, and the list goes on and on!

When the economy recovers and dealers begin spending money on advertising again, don’t be penny-wise and pound foolish. A wise dealership will have its attorney review not only the advertisements for the sale of vehicles, but also its offers for credit.

Nicole Munro is a partner in the Maryland office of Hudson Cook, LLP. Ms. Munro represents motor vehicle dealers, sales finance companies, and lenders engaged in motor vehicle finance transactions. She can be reached at 410-865-5430 or by email at

Whadda Mean the Deal Isn’t Cashed Yet?

Special finance can be a daunting proposition to many dealers who have limited experience with it. It is definitely an entirely different ball game from retail. I have seen many dealers focus on getting some new inventory and signing up new lenders, but then turn around and apply the same policies and procedures for stips to their subprime deals that they do with their retail deals and this is a huge mistake.

Sure, all of our customers all want the nicest possible vehicle for the least amount of money regardless of their credit — that is almost always universal. But that’s where the similarities end.

In a retail transaction after the customer has spun the vehicle and signed the purchase order, it’s generally smooth sailing. Get it prepped, typed and get it delivered! Alas, with a special finance deal that was the easy part — the real work is just getting started. Getting a subprime deal structured, stacked and funded is often a more involved process than the sale itself.

Ask any dealer that has ever had to unwind a deal and repo a car after the sale because the income was overstated, (the customer really had six weeks on the job instead of six months) or that the utility bill you got as proof of residence turned out to be a cut-and-paste job and you will understand why.

When it comes to documentation you need to be as vigilant as a bank, perhaps even more so. Once those taillights break the curb, if you don’t have everything you need to get your deal cashed you may find it very difficult to get that customer back.

Here are a few simple steps you can follow to ensure you spend more time selling and less time chasing your customers after the fact.

Ask for what you want, hope to get what you need…

Salespeople can be notoriously “lazy” as we all know. I can’t tell you how many times I have received an application on my desk that looks like the guy who filled it out was blind in one eye and missing both thumbs. A five liner might be just fine on a 745 FICO buyer, but isn’t even close to being adequate for a subprime customer. Insist on complete applications from your sales staff. Make them slow down and get everything the first time. Landlord names and numbers, previous employment and residence history, bank information, even references with names, addresses and numbers right up front. The five extra minutes they spend getting a complete and detailed application will not only speed the funding process, but your approval process as well.

Time to get out the magnifying glass.

Be skeptical. Don’t just glance at the gross on the pay stuff and make a copy, scrutinize it carefully. I guarantee you the bank will. Make sure the taxes add up. Check every date on it to make sure they are in line. Look for deductions such as child support, garnishments or loan repayments. If you assume that Joe really makes $3,200 a month because he said so on his application, but Joe really nets about $1,500 a month after all his deductions, rest assured that the lender may now have a problem with his $550 a month payment.

For proof of residence, a six-month-old water bill usually won’t cut it. A letter from their probation officer probably wont cut it either. (Yes, I did actually get one of those for POR.) Remember that even if the customer forgot to bring a bill with them, most phone and utility companies have online bill payment and you can have the customer log on and print it out right at the dealership.

Buyers are liars? Hmm, never heard that one before.

Even though Tammy says she has been on the job six months, pick up the phone and check for yourself. Even though she says she has lived at her home for three years, verify that also. If the bank calls later, and the landlord tells them that he just gave her an eviction notice two weeks ago because she’s 90 days behind on her rent, don’t count on the them being too eager to stroke you a check. Take the time to verify every detail that the bank would. Finding a problem while the car is still on your lot is much easier to handle than finding it out once it’s burning gas.

Now these steps might seem cumbersome at first, but the reality is we aren’t talking more than a few minutes for each delivery and it not only will get your deals funded faster, but will go along way to protect you from fraud and unnecessary headaches.

Bob Selby has been in the automotive business for 13 years in both retail and finance. He began his career with one of the largest special finance lenders in the nation handling dealer advertising campaigns, Internet marketing and software systems. He has also worked with both independent and franchise dealers as a sales trainer specializing in lot-up and phone-up techniques, as well as a consultant addressing issues such as inventory management, reconditioning practices, and pay program structures. His e-mail address is

Leedom and Associates, LLC – Sarasota, FL

What You Don’t Know CAN Hurt You!

As an owner or manager we always do our best to stay on top of every aspect of our business. Unfortunately, there are always things that slip through the cracks. One item that many times stays off of our radar regularly is one of the most basic building blocks of our business, and that is what your sales people are saying to your customers.

It’s simply not realistic to sit next to every salesperson every minute of the day and listen in on every word they say — as much as we might like. Experience tells us that even the sharpest and most well-trained salesperson will eventually and inevitably resort to some bad habits, if left to their own devices long enough.

Fortunately there is technology available that can help to keep you on top of your staff. Several companies such as “Who’s Calling” and “Call Source” have been around for years now and many dealerships use them. Surprisingly, I still run into dealers who do not subscribe to these services, and many dealers do not realize they exist and are very affordable. If you are one of those few who are still not familiar with call and lead tracking services, spend some time and do some research.

These companies and many like them utilize toll-free numbers that you can list in your advertising and track the number of inbound calls you receive. Many of these services also record the calls so that you can listen in on them later and see precisely how the call was handled. The benefits services like these have on your advertising budget and management is tremendous, but that’s another article altogether. Today, I want you think solely about what it means to be able to listen in on these calls.

The first thing I would encourage you to do is if you own a firearm, be sure to unload it. Secondly, if you take medication for high blood pressure, make sure you take it. Third, press play and listen in.

The sheer amount of mishandled calls in the average dealership will make your head spin. What you as an owner or manager “think” is being said or asked on the phone, usually isn’t. Often it’s the exact opposite. When you manage to get your head wrapped around the sheer volume of customers that get blown off on the initial call it often times is a very unpleasant, if informative, experience.

I hear dealers complain all the time about how hard it is to drive clients to their store or how expensive it is to advertise today, but the reality is many do not invest the necessary time and training to monitor what happens when the phone finally does ring. Simply throwing money at the problem by upping your ad budget is rarely the ideal solution. A far better course of action is to maximize the effectiveness of your advertising by monitoring the results, and the phone is your first line of defense.

Even worse is when dealerships do subscribe to services like these, but don’t take full advantage of the variety of tools and services. Your call logs and recorded calls are every bit as important of a management tool as your inventory reports and P&L statements.

Watching these logs, listening to the calls, making your staff accountable for the calls you give them and providing the necessary, ongoing training and tools to make the most of them is one often overlooked, but very necessary aspect of managing our business. Failure to do so is quite probably costing you more money than you know!

Bob Selby has been in the automotive business for 13 years in both retail and finance. He began his career with one of the largest special finance lenders in the nation handling dealer advertising campaigns, Internet marketing and software systems. He has also worked with both independent and franchise dealers as a sales trainer specializing in lot-up and phone-up techniques, as well as a consultant addressing issues such as inventory management, reconditioning practices, and pay program structures. His e-mail address is

Leedom and Associates, LLC – Sarasota, FL

Without A Vision, Profit Potential Is Reduced

It’s been said, "The mind cannot achieve what it cannot perceive." Dealership service departments are losing thousands of dollars, because the service manager does not have the true perception of what his department could really produce. After all, according to last year’s financial statement, labor and parts dollars have increased this year. However, last year’s profits could have been so much better, based on technician proficiency at 85%, stall utilization at 53%, service advisor selling techniques as "order takers", and one-line repair orders at 65%.

Last week I received a call from a regional manager of a major auto manufacturer, who asked, "Why can’t service managers get their employees to work together to accomplish a single objective?" There are several key elements that are needed in developing the path toward greater profits. The number one factor is a concise vision of what the service department can accomplish. It’s important to establish realistic achievable goals. Goals will force strategy. The service manager must know his break even point and just as important, how to generate a 20% net profit; the monthly service expense divided by the current gross profit percentage, less 20 points, which will equal the labor sales necessary to generate a 20% net profit. Successful service managers must communicate their vision to every employee in the department. The service manager should sit down with each team member and help work out realistic goals. These goals should include long-term as well as short-term objectives. The service team should agree that the vision is realistic and obtainable. Through constant reminders, proficiency reports, and communication, the employees are kept informed of how close they are to achieving the goal. Many service managers have met with failure, because of their inability to communicate with their employees.

The service manager should help develop teamwork through trust and respect. There must be integrity, a commitment to customer enthusiasm, employee accountability at all levels, a passion for winning, and a dedication to continuous improvement. Someone once said, "Without a vision, the people perish." Without a vision in the service department, profits will be lost. Labor time if not used today, will be lost forever.

Develop a management team that shares your vision. Empower your employees to make good, sound business decisions with training and communication. Allow your employees to take ownership of your vision by giving them the opportunity to help establish goals toward achieving your plan.

David Brown, president of Brown & Associates consulting firm has 34 years experience in the automotive field, including 16 years with the GM Parts Division and Chevrolet Motor Division. If you have questions or comments about this article, call 866-578-8773 or email him at

Top 10 Sales Killers in Special Finance

Any veteran of special finance will tell you that the road to the sale is different. The sale is easily and often derailed due to a general lack of process that stems from misunderstanding the customer and assuming that the motivators for buying are the same as those for more conventional buyers. The customers may want the same things, but there is one key difference—buying power.

In special finance, the customer’s buying power needs to be determined effectively and discreetly long before ever presenting a vehicle. As challenging as the business of selling in special finance might be for some, losing a sale is unbelievably easy. I have listed below the Top 10 Sales Killers in Special Finance, which you can use as a checklist to help you sell vehicles to more customers.

Sales Killer #1:
No situational awareness. In the military, the success or failure of an operation was often determined by the level of situational awareness the team had. The same holds true in sales. We need to know “How, What, When, and Why” about the customer with regards to the sale.

We need to know their buying power, or “how” they are going to buy. We also need to know “what” they want to buy. What types of vehicles are they interested in purchasing? What do they want? What do they need? The “when” is often determined by necessity and goes hand-in-hand with the “why.” Why is the customer in the market? What are the consequences if they do not purchase today? The answers tell you important information about the customer’s situation that will help you make the sale.

Sales Killer #2:
Jumping to conclusions. It is too easy to stereotype and jump to conclusions, particularly if you think you’ve seen a pattern with the previous 10 customers. You’ve heard the saying, “You can’t judge a book by its cover.” Well, you can’t judge a customer by their appearance. Anyone with experience in special finance will tell you that customers come from all different walks of life, jobs, education, credit and incomes. Never jump to conclusions! Doing so will cost you money. Instead, do your homework and always look for ways and reasons to make a deal happen. The worst case scenario is that you end up treating a person with very limited buying power as a “customer.”

Sales Killer #3:
Lack of professional appearance. If you want people to listen to you and heed your advice, you have to come across – both in appearance and demeanor – as a professional expert who can and will help them. This means that you’re appropriately groomed and walk with confidence. The number-one fear in a customer’s mind when buying a vehicle is that they will be taken advantage of or get a bad deal. They need to trust you as an expert. People will buy from you based more on your conviction and enthusiasm than they will your product knowledge. Remember, perception is reality.

Sales Killer #4:
Talking too much. When you’re talking, you’re telling. When you ask questions to get customers talking about their needs, you’re selling; you’re finding out what they want to buy. A question is the most powerful form of persuasion. And the more they talk to you, the more they trust you. The key is to ask the right questions, and when the customer starts talking, shut up and listen.

Sales Killer #5:
Not investing time in building rapport and earning trust. Good rapport builds trust. No one will want to make a purchase from someone they don’t like and trust. Pay attention to your sales training and get to know your client a bit. The dividends are exponential.

Sales Killer #6:
Lack of a qualification system. Many customers won’t be good candidates for A-tier financing. Therefore, you have to qualify them with a thorough process that requires experience and savvy. You have to take time and develop the need before ever making recommendations or presenting solutions. If you get hung up on price or a specific vehicle or down payment too early in the sale, you are guaranteed to lose the sale. Your challenge is to figure this out as early as possible in your communication. Come up with at least three or four standard questions, the answers to which will tell you how to proceed with the sale.

Sales Killer #7:
Not knowing when to present and when to close. Too many salespeople think they have to tell potential clients everything they know about the product. The same holds true in car sales. Information can overload the customer, so avoid TMI (too much information). Even after a prospective customer has indicated that they’re ready to buy, the salesperson keeps talking. Doing so is often a turn off to the customer and more often than not, costs you the sale.

Sales Killer #8:
Ego. Selling is serving. We are in a business where customer service is king. You must set aside your own wants and needs and serve the wants and needs of your customers. Get the dollar signs out of your eyes. If your customers suspect you’re pushing a sale or a particular vehicle because of what’s in it for you instead of what’s in their best interests, they’ll find another dealer to do business with.

Sales Killer #9:
Not having a strong relationship with finance companies. You must have strong relationships with finance companies that cover the full spectrum of finance. Too many dealers jump into special finance without having a finance company for clients whose scores are below 520, or they simply have too many finance companies and no relationships. Treat your finance companies like they are your most important business partners because in reality, they are.

Sales Killer #10:
Not paying attention to details. If you skim over details or shortcut your process and presentation because you’ve done it so many times that you’re bored with it, you will lose sales. Remember, every presentation is new to your client, so give it with enthusiasm and without taking shortcuts. Pay attention to the details.

If you or your company doesn’t have the practices and policies in place to properly fulfill the expectations of your clients, you’ll find yourself working harder and harder to get new business. Invest some time and effort in laying out procedures that can be standardized and followed by everyone who works in the dealership. Be consistent, under-promise and over-deliver. Make your customers say, “Wow!”

Written by Tom Herald
Benjamin Herald and Associates

Tracking Your Special Finance Numbers

I have tracked the performance of special finance departments (and dealerships) since the mid-90s. For years, the data was pretty consistent. Deviations from year to year between industry averages and benchmarks were fairly small and always upward. Then, the recession hit in the latter part of 2008, and for the next 18 months, the special finance market went into a complete tailspin. In a cyclical industry marked by distinct ebbs and flows, this became such a low-water mark that it took many dealers right out of the SF business.

It is now a full year after the SF market has returned from the doldrums. It has been a year marked by the easing of credit policies, slightly higher advances of the finance companies serving the market and improved dealer operations. Most significantly, it has been a year of increased amounts-to-finance and monthly payments. Indeed, many dealers are now performing at sales volumes and gross profit levels near the peak four years ago.

Deal volume and gross profits have increased so dramatically that I recently felt it prudent to perform an interim recalculation of the SF benchmarks. (A complete recalculation will be performed and presented at the 2011 Special Finance Conference held in late September.) This recalculation revealed that gross profits are already up mid-year by $313 for franchise dealers (to $3,117 per deal) and $145 for independent dealers (to $2,949 per deal).

So how exactly do you stack up? That is the question that I hear and see repeatedly through calls and emails each month. To simplify the answer, we have created a quick and easy online Special Finance Profit Analyzer that you can complete in a matter of minutes.

To use it, simply go to, our sister publication and the sponsor of the 2011 Special Finance Conference. Once there, it is hard to miss the “Profit Analyzer” tab. Simply click on it and you will find a form to complete with data about your department (or store if it is a standalone SF location). Benchmarks (the 75th percentile, meaning one of four is above it and three of four fall below it) have been calculated for three different types of dealerships—franchise, independent and independent locations that are owned by franchise dealers (i.e., they have all the franchise finance companies). Once the data is entered, simply click “submit” and you will instantly see how you compare.

The profit analyzer takes into consideration a number of factors, some of which many dealers may not be currently tracking. If that is the case, the dealership will plug in some assumptions that pull from the average sale rates, average credit demographics and average conversion rates. In any case, you will instantly know where (if) any opportunities exist for your dealership. I have seen many instances where a dealer will be performing above the benchmark, but are falling woefully short in other areas.

The lead conversion ratio is where I see many dealerships currently missing opportunities. Dealerships performing at and above benchmark level are still converting one or more out of every eight opportunities, and that counts e-leads. When lead conversion is off, it always ties back to the Ten Critical Components for Success in SF. Generally, it will be inventory, the phone or the sales process.

A classic example occurred recently. I took a call from a dealership in North Carolina – a state in which dealers traditionally have done well in SF. The caller couldn’t understand why they were having such a hard time getting customers to set appointments and then show up for them.

In this case, it involved one of the most common situations I see. It is where a dealership is working leads from either a lead provider or their own website, and rather than contacting the lead immediately to set an appointment, they either call the customer to work their credit (or even worse, work it based on the information they have) in order to secure an approval. They are often successful in getting an approval, but can never seem to be able to reach the customer (that likely has bought elsewhere by now). If they are able to reach them and get them into the store, they have either scared the customer off or given them “credit muscles,” which means they now know they can buy and will shop every other place near them as they always know they can come to your dealership.

About three hours after I took the call from the North Carolina dealer, I received a detailed email from a former 20 group member seeking answers. In this case, it was again simple. I logged on to their Promax system and examined their inventory. While the inventory they had booked out quite well for SF, it was far too expensive for the credit demographics they were seeing come in the door. Almost every approval was causing them to have to cut the sales price (and ultimately the amount-to-finance) back so far that their gross profit disappeared, eliminating the chance to put together deals. These are just two examples that I commonly see, and they just happened to come in nearly back to back.

When you finish with this article, go to and analyze your department. It won’t take but a few minutes, and if for some reason you aren’t tracking all the information that is asked of you, that will give you a good idea of other areas that need to be tracked in order to better manage your efforts.

Finally, highlight September 26 to 28, on your calendar. That is when the 2011 Special Finance Conference will travel to Las Vegas for the first time in its five-year history. This year, we’ve teamed up with F & I and Showroom and their annual Industry Summit, which should provide an unparalleled educational opportunity for everyone in your sales and finance department. Don’t miss it!

Greg Goebel
President, CEO
Auto Dealer Monthly
Publishing Auto Dealer Monthly and Special Finance Insider Magazines

Traditional Media Once Again Working Well in Special Financ

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 nearly two 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 have been out of the broadcast media market for a while and are in need of some direction, feel free to give me a call or drop me an e-mail at I will be happy to steer you to some of the media companies whose results are being proven to me every month by my clients, and you can analyze it yourself. For those who are ready to move forward and capture SF market share, it certainly can give you a way to get into the market quickly and cost-effectively.

Greg Goebel
President, CEO
Auto Dealer Monthly
Publishing Auto Dealer Monthly and Special Finance Insider Magazines