Steve's dealership happens to be one of the franchises that have struggled in recent years.
So Steve decided to supplement his bottom line by proactively pursuing subprime sales.
Our regional manager, Bob, had been to the dealership to train Steve's managers and staff, even though subprime was not entirely new to them.
We put toll-free numbers and marketing in place. Our operators were taking initial customer interviews. Steve's staff was working leads. New sales had already more than paid for his initial investment.
Steve was returning a call because Bob had reached him with a concern that his staff was not maximizing sales opportunities. Bob was out of the office and Steve was calling me to find out the reasons for the concern.
In the “Notes” section of our customer relationship management system, Bob saw a number of pre-qualifying questions that the staff had asked when making initial follow-up calls to customers.
The notes showed questions about down payments, co-signers, stipulations, 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 once. Single messages had been left asking the customers to call the dealership.
Steve asked if Bob and I could stop by to talk to his staff and review best practices.
After asking clarifying questions, we began to critique their process. We focused on their pre-qualifying prospects. Here are five subprime best practices we discussed:
- Consider your leads as “ups.” You would not ignore an “up” on the lot. Don't ignore “leads” either.
- Follow up quickly and persistently set appointments. As hours pass, your chance of selling the customer diminishes. It may take 6-8 phone calls, but it 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 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 stipulation, 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 customers. Get them to the dealership and get off the phone.
Steve admitted he tended to approach subprime customers with prejudice. That often led him to pre-qualify the customer before completely working them through a subprime sales process.
One dealership veteran, Kyle, continued to struggle. He didn't believe in these modern practices. Then one of the managers spoke up and helped an old car dog learn new tricks.
He reminded Kyle of a young woman who had come in with rough credit, no cash down and a lot of negative equity on her potential trade-in.
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?
Despite her poor credit, 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. But 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 asked the woman if 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 fit the bill. The car was sold. Here's what Kyle then understood: They never would have sold that customer without walking her through a subprime purchase process.
Try it. It works and sells more cars.
Tim Shea is President of Great Direct Concepts, a subprime consulting firm to auto dealers. He is at [email protected] and 800-430 5484.
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