Training » What Business Are You In?

What Business Are You In?

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Do you know what business you are in?… and are you properly controlling its sales process? These might sound like strange questions and yet they are very important ones to answer. The business you are in can change with every customer you work with!

If properly managed, “sales” in the automobile industry falls into three different businesses:

   1. If working with customers that have “A” credit (Prime), you are in fact in
       the automobile business.
   2. If working with customers that have “B-D” credit (Subprime), you are first
       in the loan origination business.
   3. If working with customers that have “E-Z” credit (BHPH), you are first in
       the collection business.

So which business are you in? Many dealerships make the mistake of believing they are only in the automobile business - selling new and used vehicles. The problem with that is that many of their customers fall in the two non-prime categories of credit. As a result, those dealerships mismanage prospects and miss opportunities to sell some units and lose gross profit on others. Consider it “not seeing the forest for the trees”. If you are selling vehicles to customers that have less than perfect credit, you must also see yourself in the loan origination and/or collection business.

Why is it important to understand this? It comes down to control. Properly managed, Subprime customers are sold completely backwards from Prime customers. To sell those customers backwards, it is critical that you first take control of the sales process. Control means you direct the timing of product decisions.

To affect control, you must first consider whether your subprime sales are “reactive” or “proactive”. Reactive business comes from lot traffic. Practically every dealership in the country sees this business as a by-product of the credit demographics in their market. In April, I wrote about the importance of properly handling your reactive subprime business – your lot traffic. To handle it properly, it is critical that you ask a few “non-offensive credit questions” during the Discovery phase of the sales cycle. The purpose of asking those questions is to control the timing of product decisions with your reactive Subprime sales.

So what about the other side of Subprime sales¬ – proactive sales? Proactive sales come from advertising that targets Subprime customers. It is equally important that you control the sales process with this part of your business. Below are several Best Practices that will help you control the timing of product decisions with your proactive Subprime sales.

   1. Separate initial customer interviews from the sales process. The use of toll
      -free numbers in your advertising and the purchase of auto finance internet leads
      are the most effective ways to do this. Have someone else take your initial
      customer interviews for you. You can then enter the sales process, sell the       customer “backwards” and “land the finance appropriate vehicle on the customer”.
   2. Advertise specifically for Subprime sales. In your normal advertising that brands
      the dealership, quietly mention, “Bad Credit – No Credit – We Can Help”. You want
      to let the people who are specifically looking to buy your franchise’s product know
      that you can help them. So tell them.
   3. The majority of your Subprime advertising should be “blind”. Blind advertising
      will not mention your dealership or franchise by name. It engages prospects in a
      credit (not product) decision. Think of it as a secret strategic “control” weapon.
      Blind Advertising will also expand your market share across franchise lines and
      protect your dealership’s reputation.
   4. Don’t drive proactive traffic to your lot. Make sure your advertising directs your
      Subprime prospects directly to your Subprime staff. You can do this by driving
      response to a toll free number which then delivers customer interviews directly to
      your subprime staff. Doing this will minimize the possibility of your customer landing
      on a vehicle prematurely.
   5. Create a “credit counseling” culture within your Subprime finance and sales
      staff. If your staff believes their responsibility is to help customers “re-establish
      credit”, they willcontrol the customer properly through the sales process and make
      more gross profit.

I highly recommend that you implement these Best Practices for Subprime. They will allow you to control your proactive subprime sales process. Do so and you will sell more vehicles and make more money. If you would like to learn more, e-mail me and I’ll be glad to send a checklist of 49.5 Best Practices to SUPERCHARGE your Subprime Sales & Profits.


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