Training » Is You Lot Traffic Walking Off With Your Gross Profit?

Is Your Lot Traffic Walking Off With Your Gross Profit?

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Follow this brief scenario. A vehicle pulls on to your lot and parks. A customer gets out of the vehicle and begins to walk toward your inventory. They appear purposeful and interested in a vehicle. One of your sales reps quickly moves toward the customer to “Meet and Greet” their new prospect.

This scenario happens everyday… hopefully many times! This is exactly what we want. A customer has come to the dealership with an interest in purchasing a vehicle. However, in the next few moments… a very important question will be answered. It is not a question that will be answered by the customer. The question is whether your sales rep knows, and will ask, the proper “Discovery” questions to insure your customer is not “walking off with your Gross Profit”!

If they fail to ask the right questions, the next step in the sales process may have your sales rep walking your customer away from your ability to maximize your Closing Ratio and Gross Profit! For some customers, the direction they should be walking is toward the vehicle they are interested in buying. For others, they should actually be walked away from vehicles and into the showroom.

What makes the difference? It has to do with your customer’s credit worthiness. When you sell a vehicle to a customer who has had a challenge with their credit, an additional controlling factor is introduced into the sales process. However, it is factor that neither you, nor your customer directly control. The new factor is the “Payment Call” your lender will approve the customer for and it has significant ramifications on which step should be the next step in your sales cycle. Our normal habit in the sales process is to Meet/Greet, ask Discovery questions, engage our prospects in a Product Decision and then discuss Price and Financing. If those prospects happen to have good credit, then we have acted correctly. If however they fall in that percentage of business that is subprime (~50% in most markets), we have not. Prime prospects should be engaged in product decisions early in the sales process. Subprime prospects should not. Sub-prime prospects should first be engaged and then kept in a credit decision until the appropriate time comes to move them to a product decision. Once you’ve worked with a lender to secure an approval and payment call, then direct your prospects to “the vehicles the finance company has approved for your budget”. Two primary problems arise if we fail to follow this procedure. First, our closing ratio with sub-prime prospects suffers. How many times have you had a prospect land on a vehicle only later to discover they are credit challenged? You may be successful in getting them approved with a subprime lender, but a problem arises when the payment call structures for a used program vehicle and not the SUV they have landed on. It is difficult to move that customer once their expectation is set. Landing subprime prospects on “finance appropriate” vehicles first will improve your closing ratio. A second problem arising from pre-maturely allowing subprime prospects to engage in product decisions is that gross profit will suffer. Often, just to make a sale, we force ourselves into taking a small gross deal just to keep the customer from buying elsewhere. By working our prospects first through the credit process and then engaging in “finance appropriate” product decisions, we will also increase gross profit.

Here is a simple suggestion that will pay huge dividends. Close more sales and make more gross profit by having your sales reps ask a few non-offensive “credit” questions during the Discovery phase of the sales cycle. Why do I say non-offensive? Recently, I was with a GM at a dealership and as I made this suggestion he reacted strongly saying he “didn’t want to offend his 700+ Beacon scores by asking about credit”. I agreed! However, there is a way to discover the needed information without having to ask “how is your credit”. Simply ask Discovery questions that uncover their “values” and/or who their “current” or “last” vehicle was financed with.

Discovery Questions
• Did you come in today looking for a new or used vehicle?
• What factors are most important to you in making your purchase decision?
• Is there a vehicle you plan to trade?
• Do you own that vehicle outright or are you still making payments on it?
• Who is that vehicle financed with?
• Had you planned to pay cash for your new vehicle or would you be interested in looking at some of our finance plans?
• Have you previously financed an automobile?
• Who did you finance that vehicle with?

To your customer’s with good credit, none of these questions will be offensive. If your rep hears no mention of credit to the “values” question and only the name of a prime lender, move deeper into Discovery questions concerning their vehicle choice and into the Product Decision phase of the sale cycle. If, however, your rep hears the name of a sub-prime lender or the customer provides other information suggesting they may be subprime, your sales staff will now know to immediately transition the customer into the Finance phase of the sales pr
ocess.

Transition Question “Mr. Customer may I make a suggestion? To save you time, I’ve found that it is helpful to first get some information that will allow our finance department to begin the process of securing your financing. Why don’t we go inside, get that done, and then begin the process of selecting your vehicle?”

In most cases, when you are working with someone with challenged credit, the customer will flow with this process. Think also about this. It also genuinely serves if you spend the time practicing, drilling and rehearsing the customer. Put yourself in their shoes, would you like to walk through the sales process and have your expectations set on a particular vehicle you would like to buy, only later to find that you cannot buy it? You know you wouldn’t.

I’d suggest you train your reps to ask the proper Discovery questions. Why? Because by doing so, both of you will close more deals and make more gross profit. If you have to change your current sales culture, consider paying a spiff for a month or two, for every subprime customer who is brought to the “finance office” before being shown vehicles. As your reps paychecks grow, they will quickly learn the benefit of doing so. It is important that your reps understand “Why” this process needs to be done and “How”. They should also be familiar with the top subprime lenders doing business in your area. If you would like, e-mail me and we can provide a one-page handout that provides this information which you can use in a sales meeting. If you spend the time practicing, drilling and rehearsing this with your sales reps, you won’t be disappointed with the results!


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