Training » Old Dogs (even car dogs) CAN learn new tricks!

Old dogs (even car dogs) CAN learn new tricks!

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The call came in around 2:30 PM on Thursday. I was glad to hear from Steve. About a month earlier, we met and had begun working together. His dealership happens to be one of the franchises, that in recent years, has struggled. New car sales had fallen off as his manufacture’s incentives had waned. Regardless of how he advertised, lot traffic simply was not what it used to be. As a result, Steve had wisely decided to supplement his bottom line by proactively pursuing subprime sales.

After having evaluated our solution, Steve had come on board and was underway in his pursuit. Bob, our regional manager, had been to the dealership to train Steve’s managers and staff. We had toll free numbers in place. Our live operators were taking initial customer interviews around the clock. Marketing was placed, beginning with direct mail, and lead flow was good. Steve’s staff was working the leads through the CRM tool and new sales had already more than paid for his initial investment.

Steve’s staff was not new to subprime. Like most dealerships, they saw quite a bit of it walking on their lot every day. They used DealerTrack to submit applications to lenders for approval and had a finance manager on staff who used to specialize in subprime. Steve was returning a call because Bob had reached him with a concern that his staff was not maximizing their opportunity for sales. Bob was out of the office and Steve was calling me to find out the reasons for our concern.

The reasons were actually buried in the “Notes” section of our CRM. Bob saw a number of pre-qualifying questions that his staff had been asking when making initial follow up calls to customers. At first, Steve was caught off guard by my comments. The notes showed questions about down payments, co-signers, stips, payoffs on trade-ins and concerns about the quality of some applicants’ credit. Some customers that appeared to be less qualified had only been contacted one time. In these cases, single messages had been left asking the customers to call the dealership. Steve was caught off guard because for years this had been normal business practice. As we talked further, a light bulb went off. He asked if Bob and I could stop by early next week to meet again with his managers and staff.

The meeting began with a brief introduction by Steve. He had asked us to stop by to review some the Best Practices we had discussed by phone. We began our interview with the managers, following their process of handling a lead from the moment it comes in. Our follow-on questions were then directed to the sales reps who were calling the customers to set appointments. We wanted to know what they said and talked about when calling the customers. After asking some additional clarifying questions, we began to constructively critique their process. We focused on their pre-qualifying prospects.

Six of the seven people in the room quickly came to agreement. However for Kyle, a rep who was setting appointments, it was a struggle. He had been in the business for 15+ years. He had “worked plenty of subprime customers” and had learned “that it was best to not waste his time bringing these customers to the dealership without qualifying them first”. I want to share with you five of the Best Practices for Subprime that we discussed that day.

Don’t consider your leads as “leads”; consider them as “ups”. You would not ignore an “up” on the lot. Don’t ignore any of your “leads” either.

Follow up quickly and be persistent in setting appointments. As hours pass, your chance of selling the customer diminishes. It may take 6-8 phone calls. Persistency and consistency will sell more vehicles.

Don’t overly pre-qualify the customer. Cash down and co-signers will be easier to come by after you establish a relationship with a customer and land them on a “finance appropriate” vehicle that they love.

Keep the barrier of entry low. If you initially ask a customer to bring in every necessary stip, while your competitor asks for only a few, the customer may never show for your appointment.

Sell the appointment, not the vehicle. You are in the loan origination business. Explain the process to the customer, set an appointment to get the customer to the dealership and get off the phone.

Steve humbly explained that for him this was going to be a transition. For years, he had seen himself in the “car business”. With subprime, he now understood he was also in the “loan origination business”. He admitted his own tendency was to approach subprime customers with prejudice. That prejudice often led him to pre-qualify the customer before completely working them through a subprime sales process. A manager spoke up and agreed that sometimes he would pre-qualify prospects and not thoroughly work the process or “take the customer entirely to the mat”. Kyle continued to struggle. He didn’t believe in these new practices. Then one of the other managers spoke up and helped an old car dog learn some new tricks.

He reminded Kyle of a young lady that he worked recently that had come on the lot. She was absolutely buried in her trade. She had more negative equity than could ever be covered by any vehicle in their inventory. Her credit was really rough and she had no cash down! Be honest. Put yourself in Kyle’s shoes. If you were setting an appointment and found that kind of information, how completely would you work the sales process? Would your prejudice affect how aggressively you sold that appointment?

This lady didn’t need to be invited to the dealership. She was already there. As a result, they thoroughly walked her through the subprime sales process. She sat through a credit interview. She understood that purchasing a car was going to help her re-establish her credit. Though her credit was rough, the finance manager was able to get her approved. As they worked with her, a relationship also grew. She picked out a vehicle that structured for the bank’s payment call. She test drove it and fell in love with the car! The cash she “didn’t have” actually wasn’t needed for the new purchase. It was needed to cover the negative equity in her trade.

The manager then reminded Kyle what happened. After exhausting all other avenues, the manager had asked the young lady whether there might be a family member who needed transportation and could assume the payments on the trade, enabling her to buy the new vehicle. Her mother happened to be with her. The mother was co-signed on the trade, did need transportation and was willing to assume the payments on the trade. They sold the car. Here’s what Kyle then understood. They never would have sold that customer without first getting them to the dealership and thoroughly walking them through a subprime purchase process.

I could not recommend these Best Practices for Subprime more strongly. Implement them. You will sell more vehicles and make more money.

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