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Category Archive: Variable Operations

Alan Ram

You Lose 40% of Your Customers Each Month. Here’s How to Get Them Back.

Customer choosing to write satisfied face over unhappy face

I want to talk to you about the importance of having someone—in addition to your sales staff—following up with each and every unsold client. That’s right: not instead of, but in addition to! I would also encourage you to do it internally versus farming it out and having someone do it for you; I’ll get to why in a minute.

Who owns the sale: You or your salespeople?

So, I get it. Someone comes into your dealership, and you naturally expect the salesperson to follow up with that individual. Here’s one problem with that: Our data indicates that 39% of customers who visit a dealership won’t return to that dealership because they don’t like the salesperson.

Why don’t they like the salesperson? Could be anything: personality differences; they thought the rep was too tall, too short; maybe they smelled like smoke or made an inappropriate comment. Whatever the reason, the clients decided that they just don’t like the salesperson. But their dislike of your staff doesn’t mean you don’t want to sell them a car—of course, you do!

Personality fit matters.

Here’s the problem. Based on my experience with salespeople, if the salesperson wasn’t necessarily feeling the love with a particular client, they’re probably not going to make that big of an effort to get back in touch. Even if they do reach the client, that person will rarely tell the salesperson “We didn’t like you.” Instead, if the salesperson can, in fact, even reach them, they’ll say …

“We decided to hold off.”

“We’re not going to buy anything right now.”

“We already bought something.”

… even if they didn’t! They won’t tell the salesperson they didn’t like him or her, but they will tell someone else. That’s why I recommend having someone in addition to the salesperson following up each and every guest to your showroom.

How many sales have you lost?

Let’s do the math—

Say you get 600 floor ups per month. Of those, 300 either do buy or can’t buy for whatever reason right off the bat. That leaves you 300 be-back opportunities—or does it? If 39% of those 300 don’t like the salesperson, for whatever reason, he or she has zero chance of getting about 120 of those people back in.

Now let’s imagine a scenario when a well-trained client service specialist or BDC agent calls those clients. Of 120 clients, they should be able to get about 25-35% of them back in. That would be about 35 people showing back up at your dealership who would not have shown up otherwise. And you should have a much higher closing percentage on those 35 than you would on any regular be-back. Why? Because when they come back in, in many cases they buy out of spite. Thirty-five be-backs could very easily translate into 20 plus deals. Those are deals you would not have otherwise had.

The point is this: You have lost sales.

I’m sure that many people have found a new or pre-owned vehicle at your dealership but were turned off by the salesperson to the point where they said, “While I like the vehicle, I’m not buying anything from that guy!” That’s why it’s critical to have someone in addition to salespeople follow-up each and every customer. Many of you will tell me that your managers are the ones making these calls, and that’s great in theory, but not quite as good in reality. Most managers will make one attempt to get someone, leave a message, and then move on. I’ve found that a well-trained business development center representative or Client Service Specialist can be much more persistent and get just as good of results if trained properly. (Also, many times it’s a manager the client didn’t like.)

Train your staff to make the call.

I realize there are outside services that will make these calls for you. In many cases, they make a warm fuzzy call that identifies the objection and then rely on management to call these clients back. I always encourage dealerships to teach their BDC representatives and client service specialists how to handle the call from A to Z (Z being when the buyer shows up at your dealership).

There are fewer moving parts this way, and there tends to be much better communication with management when this role is handled internally. So get your staff ready to follow up on each and every unsold client to ensure that 39% of your possible deals aren’t being mishandled!

Check out in-person training options through NCM Associates, and discover our online platform, NCM OnDemandAlan Ram’s Management by Fire course offers additional tools for your dealership training needs.

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Rebecca Chernek

Turbocharge Your Profits by Extracting the Sales Bottleneck


Bottlenecks are the killers of progress and productivity. Where there’s a bottleneck, there’s a problem! Unfortunately, the vast majority of dealerships aren’t aware that their biggest bottleneck—the one that exists between sales and F&I and brings things to a crawl—can be removed. How? By seamlessly integrating the two processes.

Getting to the root of the problem

Think about how many customers these days are flocking to third-party platforms like TrueCar. The reason why is easy to understand: Buyers have grown tired of the century-old model of traditional auto sales. They want transparency and straight talk. And when given the opportunity to participate in a buying process that offers this—especially a car buying experience that doesn’t require them to sit in the dealership for hours on end waiting for financial approval—they’re only all too eager to snatch it up!


So what’s the best way for dealerships to combat lost business to third parties? It’s certainly not to go on the offensive against the likes of TrueCar and CarMax. These companies are only offering a service that people want. Instead, the answer is to look within and to take decisive action to enact changes that will bring your dealership up to speed with the most highly performing auto sellers on the planet.

It takes two to tango!

As with all collaborative efforts, the success of my approach hinges on teamwork. Without cooperation between sales managers and F&I managers, success simply will not happen. This is why I urge dealerships to encourage their departments to work together.

It isn’t always an easy task to break tradition, though, so I often recommend that representatives from both departments attend a retreat or workshop together. The NCM Institute makes it easy to get everyone to class with their buy one, get one free option. If you commit to sending someone from each department, they’ll let you send one of them for free!

Not only does the experience serve as a way of building camaraderie, but each will learn how to communicate about the issues related to both of their divisions. Once everyone gets on the same page and stays there, you will begin to see results!

Digital retailing and dealer expectations

Digital retailing puts the customer firmly in the driver’s seat by allowing them to not only shop for cars online but also the ability to secure financing online. Companies like Vroom, Carvana, CARite, and a growing number of large auto dealerships across the country are implementing this radical new approach. In expanding their presence to the digital landscape, these companies are poised to cash in on the long-held desires of auto buyers everywhere: the desire to do much of the heavy lifting themselves—not to mention the ability to walk away if the deal they find doesn’t match their precise needs. Forward-thinking companies and dealerships will secure their position at the head of the pack by adopting these processes and maximizing their profits.

Key elements for desking and F&I success

Once everyone is on board, and a genuine sense of team play has been implemented, the next step is to consider which tasks you want each individual team member to do so that everyone pulls in the same direction. Bear in mind that the approach your dealership takes will vary by your product and marketing, but I recommend that all dealers consider these essential steps:

  • Establish credit criteria early in the sales process. Among one of the most important changes a dealership should consider is when to discuss credit criteria. Perhaps it might be best to bring it up earlier in the sale if the customer has mentioned past credit problems. It certainly makes sense before the customer is landed on the wrong vehicle and either financing is not available or payments are out of reach.
  • Determine the best time to talk payments. Is it something best discussed up front in sales, or is it a conversation more suited to the F&I office? When it comes to selling vehicles, there’s no room for ambiguity. You must decide how sales and F&I can position you for success in menu presentation and improve profit.
  • Identify “The Interview” and clarify why it is so important. An essential component to expediting the sale (and, in turn, cutting delivery time in half) is something I call “The Interview”—a question and answer phase that starts at the initial meet-and-greet. This includes having the F&I manager engage in conversation with the customer early on in discussions to learn the reasons behind potential low credit ratings and slow pay histories. What’s the best way for this team to determine customer creditworthiness and plant the seeds for menu sales further in the process?
  • Getting the paperwork straight the first time. Sending a client into F&I with an incomplete deal checklist and no idea if they will be approved for credit is one of the principal contributors to the dreaded bottleneck. In my workshop, participants will gain an understanding of the importance of getting paperwork right the first time.

Ready to solve your Desking and F&I bottleneck? Join Becky Chernek for her upcoming NCMi® class, Desking and F&I Integration. In this workshop, you’ll learn how to develop a seamless transition that results not only in happier customers but also in dramatically improved sales and profit.

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Steve Kain

Why Your Dealership Needs an Ups System


There are only two categories of dealerships: Those that use an ups system and those that don’t. Today, I’m going to explain why you might want to change your mind if you’re in the latter category.

No ups system = No system at all

Dealerships without an ups system tend to have a manager who “came up” through the ranks in a similar environment. Alternatively, management believes that their sales staff will wait more quickly on customers without a formal system in place. And, in some cases, they view an informal system as a way to reward the go-getters: Their most aggressive salespeople will get the most ups.

The problem with operating without an ups system is that your least productive people—those always standing on the point smoking and joking—end up waiting on the majority of your lot traffic. Meanwhile, your most productive people are following up with unsold prospects, contacting their sold customers and studying product knowledge: meaning that this approach rewards the wrong staff.

Even worse is the fact no system means no accountability. How often do you find yourself asking, “Is there anybody waiting on that customer?” You don’t know because there is no system that defines who actually should be waiting on that client. In addition, the aggressive non-productive salesperson waiting on your customer today will be the same salesperson not following up on that same non-sold customer tomorrow.

Take back control over sales

With an ups system, management maintains control of salesperson activity. A sound system creates a balance between face-to-face time assisting customers on the lot and time to follow up on unsold prospects, staying in contact with customers and asking for referrals, and studying product knowledge materials. Another key advantage is that sales people have no more excuses about not being able to do the things that make a salesperson successful because they don’t have the time—with no more burning through ups all day long, they should have plenty of time to do other work.

If you want to take your dealership to the next level, now is the time to implement a written ups system that will make your sales staff accountable for their time at your dealership. Good luck and great selling!

Learn more about Steve Kain and how he and his NCM colleagues can help your dealership through 20 Groups and in-dealership consulting. Don’t forget to check out these exclusive Kain Automotive courses only offered through the NCM Institute: Mastering Internet Sales and How to Lead in the Digital Marketplace.

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Chris Kahrs

Don’t Let a Volume-First Culture Distract from Maximizing Gross


With the rising pressure to hit volume objectives in the new vehicle operations, have you developed a volume-first culture? If so, it might be leading you astray.

Now, I’m not suggesting you abandon volume. That would be absurd. However, I am suggesting that you look at your processes to maximize every opportunity while simultaneously obtaining volume objectives and inventory turn.

A volume-first culture may cause inconsistency in your deals.

On the first of the month, you have established your new vehicle target number with your management team; yet, if you are like a lot of dealerships, you work the deals differently on Day 1 than on Day 30.

At the beginning of the month, we are more focused on the gross of the deal. We tend to work each deal to the end and try to maximize every dollar that we can and no matter what, make the deal.

As the month progresses, though, we lose that focus and begin to take each deal without maximizing the opportunity. By the time the last day of the month arrives, we have now become order takers rather than deal makers. If you closely watch your monthly trend report, you’ll see that the pacing of volume and gross becomes quite different by the last few days of the month. In most cases, the volume tracks upward while the gross trends downward.

It’s not just volume—gross matters, too!

What’s the difference between Day 1 of the month and Day 30 of the month? Your focus on the bigger picture. Yes, the team is meeting the volume goals set earlier in the month, but they’ve achieved volume at the cost of revenue.

The trick to reaching volume and maximizing income is to stay true to your processes. Here are my suggestions:

  • Recognize that you are going to take the deal.
    • If there is a way to make the deal, you are going to take it.
    • Negotiating the deal is not a bad thing: Remember, you are going to take it anyway!
  • Start each deal like you have already hit the month’s volume objective.
    • No matter what day of the month it is, adopt the mindset that you have hit the number and are going to maximize each opportunity. (Remember, you are going to take the deal. We both know it.)
  • Stabilize the desking process.
    • Your desking process is your process and shouldn’t change, regardless of the day of the month.
    • Make sure everyone that works a deal knows the process inside and out to maintain consistency
  • Don’t change your T.O. process.
    • Your manager intervention/T.O. process should remain the same no matter what.
    • Establish who is best for each situation.
  • Stick to your finance process.
    • You have your submission, introduction process and reset processes set. Use them 100% of the time.
    • Make sure your process is sustainable through slow and extremely busy times. There can’t be a weakness or shortcut to this process.

Volume and gross create strong margins

You already have the mindset to take every deal. And, you do that to meet volume objectives. That’s fine, but that volume-first approach doesn’t mean you have to lose the gross opportunity, too.

How much more money would you have made last month if you would have added $100, $200, $300 or more to each new vehicle you delivered? Now, look at the last ten days of the month and compare to the first ten: How do the grosses look? Are they similar or drastically different? You still took the deal on Day 1 as you did on the last day of the month. How did your processes change between the two? Most likely a lot.

You can’t afford to cultivate just a volume-first culture. Instead, adopt a philosophy that your dealership will maximize every opportunity and follow your processes to drop more money to the bottom line and still obtain your volume objective.

What have been the impacts of a volume-first approach at your dealership? How do you balance gross with volume? Tell us below.

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Laura Madison

A Personal Brand: Why Automotive Salespeople Should Go For It

Personal Brand

A personal brand is an incredibly powerful tool for salespeople to increase visibility with prospective clients and increase sales, so why aren’t more salespeople taking action? Perhaps because automotive salespeople do not realize how creating and maximizing a personal brand can solve two important challenges they face. Here are two problems having a strong personal brand can solve:

Challenge #1 – Leads

A common complaint among car salespeople is there are too few leads to keep them busy. A number of factors can be blamed for this complaint; slow phone traffic, a quiet season, or minimal walk-in showroom traffic.

How a personal brand can solve this challenge:

A personal brand is an opportunity for salespeople to come out of obscurity. Salespeople can use social media sites like Facebook and YouTube to promote themselves and their role selling cars to begin to gain local visibility. Participating on social platforms allows salespeople to connect with prospective customers and ultimately motivate them through the front door. Social media is also a phenomenal way for salespeople to build and maintain relationships with previous customers, so they’ll never forget who to refer and work with on the next purchase.

Challenge #2 – Differentiation

Differentiation may be the largest problem a salesperson faces. Whether the challenge is an inability to differentiate their Toyota store from the one down the street, or the Toyota Camry from the Honda, or differentiate themselves from other salespeople on staff, differentiation is an enormous salesman struggle.

How a personal brand can solve this challenge:

By creating and using a personal brand salespeople are building value in themselves. They are introducing themselves to prospective buyers and utilizing a platform to speak with customers genuinely, on a human-to-human level. An opportunity for an automotive salesperson to speak with prospects about what differentiates himself, his store, and the product is invaluable.

A personal brand puts a salesperson’s face in front of a prospect and begins building trust and relationship. By the time that customer comes into the dealership, he will know how to ask for and recognize his automotive professional and online connection. Creating a quick video, for example, to follow up an incoming internet lead can be an extremely powerful differentiator. If the customer submitted leads to five stores, the salesperson maximizing personal branding will likely be the only who has used something like video to communicate, and begin to build trust with, this customer. Building this type of value can not only earn a sale, but also make a customer fiercely loyal in the future.

In summary, a personal brand can help salespeople create a pipeline outside the walls of the dealership and build value in themselves, their dealership, and their product. That should be enough motivation to begin encouraging salespeople to create a strong personal brand on social media, so get to it!

UV Training

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Tom Hopkins

Diagnosing Your Clients’ Needs


When people think about making a vehicle purchase, they aren’t likely to compare talking with you to going to the doctor, but you should make that comparison when preparing to talk with clients. People trust doctors. They usually accept the diagnosis and prescription for wellness with few questions asked. That’s because they recognize doctors as experts in their fields. Your goal is to have your clients see you the same way. When they have an ache or pain related to their mode of transportation, they should immediately think of calling you. That’s because they’ll be confident you have the right prescription for their ailment.

To earn this level of respect and trust, you need to start every relationship with the right skills. These skills include a caring manner, a confident air, and your diagnostic tools. The tools you use in diagnosing the automotive needs of your clients may be as simple as a pad of paper and your product knowledge. They may include your past client experiences, personal experiences, or memories.

The most powerful diagnostic tools used by all people in sales are questions. Like a doctor, your use of questions begins with general areas of need. Then, based on the answers you are given, you narrow your questions down to where you can readily determine the right cure or solution for the clients’ needs.

Average car salespeople have this fantasy in which they think they should be able to simply present the wonderful features of their vehicles and the customer, seeing the value, says, “I’ll take it.” If customers made buying decisions based on features alone, that might work, but it’s a rare occasion when that happens.

The reality of it is that most buying decisions are based on past experiences, the experiences of others the client trusts, advertising, gut feelings, and hundreds of other factors that you can’t do much about. So, you have to start with questions to get them talking about their needs, wants, and perceptions of your product or service. The answers to these questions will help you put yourself in their shoes. Once you’re there, you’ll see what steps you need to take in order to help them make a sound buying decision.

Be sure to ask, “What past experience do you have with this type of vehicle?” It could be that they’re very well-versed on the features of an SUV or luxury sedan, even owned one in the past, and are seeking a new one of the same type. If they know little or nothing about the vehicle they’ve come to see, you’ll have to invest a bit more time in educating them as to the features and what they can expect.

Ask very specifically what they hope to accomplish with an investment in this particular type of vehicle. It could be that one of your vehicle’s key benefits is sought after by most clients. However, that feature does nothing for this particular client. You won’t want to turn them off by talking about something that doesn’t matter to them.

I like to use the analogy of a torpedo when talking about this subject. A torpedo leaves a ship in the general direction of its intended target. It bounces a signal off in the target direction. If the signal doesn’t come back, it corrects its direction to get back on course and sends another signal seeking feedback.

That’s what questioning does for you. You take off in a general direction with your questions. The answers you receive either tell you that you’re on target or that you need to take another track. Rarely will you take a direct course from initial contact to the vehicle sale. More often than not, you’ll find yourself zig-zagging but all the while heading in the general direction of the sale until you find just the right answer for each and every client.

Take a moment to think about the quality of the questions you are asking. How quickly and accurately are they bringing you back the information you need to move forward with a sale? If you continually get hung up in one aspect of your presentation, invest some non-client time writing out the questions you’re using now. Then, think about how you could rephrase them to get better feedback. An even better strategy is to make a list of all the information you need to have before asking for a decision. Then, work backwards, writing out the questions that will provide those answers. Either way, you’ll soon find yourself with better questions to ask, and a shorter, more efficient sales process.

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Jody DeVere

Is Buying a Car a Battle of the Sexes?

business team

Is Buying a Car a Battle of the Sexes?

Shopping for a new car is still a hassle for many women. Women purchase more than 50% of all new cars or influence the purchasing of about 85% of all new cars sold in the US and 48% in Canada. Many women don’t even look to a man for opinions on what to purchase because they are single or run the house.

Topping the list of gripes: Time. 21% say buying a car is not quick and effortless.

Of the women surveyed, 15% said they didn’t like or trust their salesperson.

When women decide to go out to a local car dealership to buy a car, they are most often ignored as if invisible. If they do bring a man (just to get noticed!) but try to dominate the sale (because it’s their car, after all), they are treated like a mouthy kid, or worse yet, expected to allow the man to do all the talking.

In today’s competitive auto industry, I can’t understand how salespeople can discriminate based on gender. If anything, they should cater to women or risk missing a sale and the opportunity to recruit a loyal customer. With so much information available to women to conduct research before they buy a new car, women are becoming much more car savvy and they deserve the respect of car dealerships.

Here are some facts about women car buyers:

  • Women spend approximately 17 weeks on the new car buying process (3 weeks longer than men.)
  • Women are more inclined to purchase cars that they consider fun to drive and that are well made. In contrast, men prefer vehicles that are a good value for the money, are comfortable, have nice exterior styling, good fuel economy, and display a certain image.
  • Women, more than men, place a high value on a vehicle’s reliability, durability, passenger seating capacity, safety features, and availability of four-wheel drive.
    Women rate safety as the most important aspect when shopping for new vehicles.
  • Female buyers seek advice from automotive authorities (57%) before buying a new car.
  • Female auto buyers will shop an average of 3 dealerships for best price and best treatment.
  • 1/3 of female buyers read an average of 4 automotive magazines for 12 months before purchase.
  • Females place the most importance on dependability, functionality, and economic factors when buying.

With these facts in mind, what is your dealership doing to attract, sell, retain and, create loyalty with women car buyers?

Being properly armed with the right tools and training your dealership can increase its share of the largest and fastest growing demographic of new vehicle buyers in the US – Women Consumers. The Ask Patty Certified Dealer program was designed specifically for car dealerships to attract, sell, retain and, keep loyal women consumers.

What Is An Ask Patty Certified Female Friendly Dealer?

An Ask Patty certified dealer is a dealer that creates a safe and comfortable environment where women feel welcome, while making the experience of purchasing and maintaining her vehicle a pleasant one. Ask Patty trained and certified dealers are held to a high level of customer satisfaction for women consumers. To find out how to become an Ask, Inc. certified dealer, email us or contact us at: or phone 888-745-1928.

Jody DeVere – CEO
Ask, Inc.

Data Sources:, Road and Travel Magazine, Detroit News, CARMAX Survey 2013, LipSticking – Marketing to Women Online



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Russell Grant

Five Must-Ask Questions to Better Position Your Marketing Spread

puzzleAs I speak to dealers it is clear that it is becoming increasingly difficult to develop a marketing strategy as more and more services and programs are being offered. Innovation due to big data has flooded the marketplace with plenty of marketing options. Dealers are left with tough decisions with respect to their ad spend.

Here are Five Questions to Consider with your Marketing Budget

1. Are you at the front of the food chain? Not a day that goes by that a dealer doesn’t tell me that more and more customers are shopping them on the Internet. Because of this, once the customer gets to the dealership the profit in the deal is minimal. Even this is a best case scenario because sometimes the customer doesn’t even get to the dealership. This is when I ask dealers this question: Tell me about your lead generation and your spend?

Dealers usually tell me how much they spend on 3rd party leads and how frustrating it is. I ask them about using their owner data so they achieve more 1st party leads than 3rd party leads. The key is using the data to drive your marketing so that you can identify your customer at the front of the buying cycle. The more 1st party leads you create, the less 3rd party leads you will need. Remember, a 3rd party lead has been passed out to several other dealers. Your success rate and ability to make more gross is diminished the further down the line you are.

2. Are you spending the majority of your budget on the people with whom you will have the greatest impact? I would compare this to politics. The first goal is to rally and excite your base. Second is to go after the swing votes. The further you move from left to right or right to left, the less impact you will have. The same is true in marketing. Start with an Owner Marketing Plan. Next, look at becoming more strategic with conquest marketing. Conquesting has become more cost effective with digital techniques. In the future, this will become more advantageous as you will be able to use better data to streamline your efforts.

3. Are you staying in front of customers who have shown interest? This has become a point of emphasis as dealers can drive a lot of visitors to their website, but conversion to an actual appointment is often low. Retargeting has become a great way to stay in front of these customers. Remember, customers are now in the market and doing research for up to 180 days before they buy. It is vital that we stay in front of this customer beyond initial contact. Email campaigns are a cost-effective way to accomplish this goal.

4. Are you making it easy to buy from your dealership? Great marketing should go beyond a response; it should also make it easier to buy from your dealership. When we get a customer response, if we don’t make it easy to buy, then it becomes too easy for the consumer to just go to another dealer’s website. Marketing has to push people down the sales funnel. By engaging your customer this way, it takes your customer to a deeper level within your dealership and diminishes the need for the customer to visit other dealership websites. We should value marketing that creates more dealership appointments and test drives.

5. Are we measuring correctly? Every dealer I speak to wants measurable results. Who can blame them? The challenge is: are we using measurements that correctly gauge how customers buy? Measuring customer timeframes will help us calculate the effectiveness of our spend. We should also calculate how much time on average it takes to close the sale. For example, if it takes an average of 62 days from initial contact to close of sale, then you need to figure how to lower the average number of days to close. Choose a sales process or marketing tool that will help you better track each customer, expedite the process and keep the sale in-house.

Look at your budget and ask these five questions, then look at programs for the future. This should give you a great start and, more importantly, a better position for your dealership’s budget. Innovation is coming to the marketplace – make sure you’re positioned to benefit from it.


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Dale Pollak

Dissecting the Two Different Types of Used Vehicle Retailers

used carsIn my conversations and travels, I encounter two different types of dealers.

The first group often struggles with aged units in their used vehicle inventories, persistent wholesale losses and an as-yet unfulfilled desire to increase their sales volumes and overall profitability.

The second group has what I might describe as “higher-order” issues: To be sure, they encounter occasional aged units and wholesale losses, but these aren’t persistent problems. Their biggest challenges relate to fine-tuning and managing processes to help them increase efficiencies, lower costs and maintain improved sales volumes.

In the past several months, I’ve been trying to better understand this disparity: What, exactly, separates these two groups of dealers? Why does one group seem bogged down with aged cars and wholesale losses, while the other appears to have largely found a way to avoid these problems?

I think I’ve found the simplest answer to these questions. The difference between the two groups of dealers boils down to a willingness to own up to mistakes, address them and move on. Put another way, one group of dealers is more willing to take a loss on a used vehicle, while the other resists a potential loss at every turn.

This realization hit home the other day after two distinctly different dealer conversations.

In the first discussion, I was talking to a Midwest dealer with nearly a quarter of his 150-car inventory at or beyond 90 days of age. He’d stocked up this past spring and was trying to “retail out of the problem.” We looked closer and saw that he hadn’t made the pricing adjustments that appeared necessary to actually sell the cars. Why? Because he’d take a loss. Likewise, he didn’t want to wholesale them because “I’d lose my shirt at the auction.”

The second conversation with a Florida dealer revealed a different problem. He wanted my guidance on ways to find more cars more quickly to feed his inventory. He’s got an aggressive 25-day retail window, and turns his 120-car inventory more than 15 times a year. We discussed ways he could expand his reach at auctions and tighten up his trade-in appraisal efforts.

Then I asked how he felt about taking a loss on a vehicle. “I view every loss as two opportunities,” he said. “First, it’s a chance to re-invest my money in a car with a better profit upside. Second, it’s an opportunity for us to figure out what we missed.”

Wow, I thought. This dealer’s definitely a “new school” used vehicle retailer. Unlike his more tradition-minded peers, he’s evolved beyond holding onto cars and hoping for a profit-positive deal. He recognizes losses for what they are — a failure in his team’s efforts to acquire, recondition, price and merchandise a used vehicle, and an opportunity to make his next used vehicle investment decision even better.

Both conversations crystallized my conclusion about the difference between the two types of dealers.

I asked the Florida dealer for three tips to help other dealers adopt some of his “new school” used vehicle management thinking. Here they are:

  1. Recognize the time-sensitive nature of your investment. This dealer’s decision to retail every used vehicle in 25 days is no accident. Previously, his retailing timeline ran 90 days, then 60 days and then 45 days. The dealer settled on 25 days to essentially retail fresh cars all the time. My recommendation for most dealers is a 45-day horizon to retail used vehicles. The dealer’s more aggressive because he believes the shorter window minimizes his exposure to market risks — the mark of a retailer who understands the fast-changing nature of today’s market.
  2. Apply a disciplined, “retail-first” strategy. The dealer doesn’t wholesale too many vehicles, given the store’s “retail-first” strategy. This approach requires disciplined pricing decisions that balance each car’s potential for gross profit against its shelf life as a retail unit. The dealer’s team monitors each vehicle’s online performance against the market of competing cars to calibrate pricing.
  3. Adopt a “total gross” mindset. Part of the reason the Florida dealer is willing to take an occasional loss is that he understands he’s already made money on the unit through reconditioning, and he believes the next car will deliver a greater amount of both back-end and front-end gross profit. Like many velocity dealers, his focus on “total gross” followed years of using “average front-end gross” as his chief management benchmark. “Front-end gross doesn’t give you the whole picture of each car’s value as an investment,” the dealer says. “Total gross is better barometer.”

I shared the Florida dealer’s tips with the Midwest dealer. His comment: “I’m glad that guy’s not in my market. He’d be eating my lunch.”

UV Training

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Rebecca Chernek

Sales Transparency Isn’t Passé

Cat Staring at GoldfishTransparency is the buzzword in political discourse these days. Transparency in auto dealership sales methods has been the buzzword for more than a decade. Although it’s ignored by far too many working in sales and finance, it has taken on an increasing importance that shouldn’t be overlooked.


Because customers can control the message about your brand across the broad spectrum of social platforms. Most social apps are available on their mobile smartphones already, and the rest will be by the end of the year. Customers use them.

Because, according to Reuters’ August 2013 statistics, more than 128 million Americans visit Facebook every day, and overall mobile usage exceeds computer ad traffic (your website). Wireless Intelligence forecasts that mobile social users will grow to 4 billion within the next five years. Howard Schultz, the CEO of Starbucks, said, “Mobile can’t be an afterthought. It has to be at front of the table.”

What’s this data got to do with dealership transparency? Everything. While the vast majority of dealerships have an online presence through a website and have set up methods for providing generalized information about their products and services, too many are still mired in gamesmanship bait-and-switch schemes when it comes to actually selling a potentially valuable customer a vehicle for the price quoted online.

Hiding behind a smile and fast talking in the finance office doesn’t work on social media, where customers in increasing numbers prefer to do business. Customers let their fingers do the walking, if they suspect an insincere sales pitch. And they don’t keep their disgust to themselves. They share it. Immediately. 

Jez Frampton, CEO of Interbrand, the world’s largest consultancy specializing in brand strategy and analytics, says “It’s no longer B2C; it’s now B and C.” Unless the dealership’s online team can conduct honest communication, the potential for fraudulent practices can get out of hand, all in the name of increasing profits. All it takes is one savvy customer to catch on or become burned by an overly zealous sales or finance staff member who plays the “gotcha games” of past sales maneuvers, and an angry complaint is sent out via Twitter or to a plethora of Facebook friends. The derisive comment about your dealership and staff can go viral in minutes and raise havoc. This happens every week to any sized business in every town or city nationwide. 

It can happen to your dealership, if you aren’t paying attention and mandating strict adherence to transparency in sales by all staff members. It must be a priority. Failure to enforce this policy could ruin your good name quicker than you can react with an apology. Competition for sales is as close as a finger touch on a smartphone screen and the media is quick to listen and report.

Online and in-house customers won’t tolerate even a hint of bait-and-switch sales strategies. They want honesty, integrity, a respectful dialogue that focuses on their particular needs, and superior customer service. They actively seek the opinions of current or former customers, rather than relying on a dealership ad.

It no longer works to tell customers your dealership is upfront and transparent in sales procedures. Actions still speak louder than words. At a recent sales conference on transparency-selling processes, a high-volume dealer insisted that the box-closing method he’s always used was “fair and upfront.” For readers who aren’t familiar with the term, a box closing is when the customer is closed on price, and the F&I manager closes on the payment. The payment is presented to the customer through payment packing for product options, commonly undisclosed.

A car dealership group with seven stores in Dayton, Ohio, is currently dealing with 16 civil lawsuits and five other complaints alleging “unfair and deceptive business practices.” The BBB is investigating and intends to lower the dealership’s A+ rating significantly. The finance manager was either fired or retired from his position. Customers are no longer biting their lips when their expectations aren’t met in the finance department.

A couple other old favorites of “experienced” personnel in sales and finance to deceive customers into buying more than they want include four-square and trade-difference techniques.

The four-square is confusing and manipulative and designed to entice customers into paying more and not realize what’s going on until they’ve unwittingly signed a contract. The sales manager disappears just long enough to scribble a few more figures in the four boxes drawn on a paper and returns to say he’s managed to get the monthly payment down to “$260, a mere $10 more” than the customer wanted, but that was the best he could do. “Close enough, right?” he’ll add, while nodding and smiling. The customer doesn’t realize she’s just handed the dealership several hundred extra in profit, when that $10 monthly payment bump is amortized over a 5-year loan. How can this system be called transparent?

In a trade difference the customer will close on the difference between the cost of a different vehicle less his trade, but won’t understand all the numbers when they’re computed in a future monthly payment rather than a total figure. If such a payment is handled in the F&I office, it can open a dealer to potential unethical practices charges.

Compliance to federal and state regulations and business practices doesn’t begin in the F&I office; it begins in the dealership office and on the sales lot at the meet-and-greet or on the website’s communication tools. Transparency is a store-wide commitment. Menu selling brings up net profits it doesn’t have to involve breaking laws or customer trust.

Auto giants, like AutoNation, CarMax, and Group 1 enforce a full, unabridged menu selling presentation that contains all the appropriate disclosures in clear and easily-understood language. Their shops continue to outperform those of most dealers nationwide. For them, transparency buys customer trust, loyalty, return business and social media praise.

  1. Transparency is the driver to whether or not the dealer maintains community and customer trust or goes out of business under the blight of social media chatter.
  2. Transparency is about being consistent in the sales process from start to finish, with all the cards on the table. It’s about making the conscious decision to ensure every customer has an incredible buying experience, determined from a value-driven proposition.
  3. Transparency means customers understand all the buying numbers prior to their transaction going into finance.

If the Consumer Finance Protection Bureau (CFPB) isn’t already knocking at your door, make it your priority this week to review the law, your written sales transparency policy and actual wink-wink practices, and all-company knowledge. Then send out a stern reminder that transparency in all sales and finance transactions will be vigorously enforced. All it takes is a single unhappy customer tweeting a single message or relating an experience of unsatisfactory service on Facebook to result in citywide exposure and sales ethics discourse.

Think about this. Transparency in car sales is a choice made by individuals. “Whoever is careless with the truth in small matters cannot be trusted with important matters.” ―Albert Einstein.

Rebecca Chernek is an Up To Speed Guest Expert in the area of automotive retail F&I best practices. She’ll be conducting her “Closing Tools Mastering Menu Sales Workshop” in October. To find out more or to contact Rebecca Chernek directly, call 404-276-4026 or email her at



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