What do we want Auto Credit Sales to be? An nondescript used car lot or a profitable,

stand-out, outstanding car dealership?

Auto Credit Sales Operations, Analysis & Recommedation Prepared by Frederick Manfred Simon for Neil Quaintance General Manager Auto Credit Sales October 23, 2015 Updated November 20, 2015

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Preamble I am certain that you did not hire me because you felt sorry for me, nor that you hired me for my relative competence, but for my business competence. Thus, this report is based on my hard fought for experience from my own life of owning and operating a handsomely profitable company. Personally being involved in sales and marketing, personnel management, day-to-day operations, finance (forecasting, accounts receivables and payables), time and motion studies, equipment and physical plant maintenance, inventory management (i.e., just-in-time), sales agent management, web presence, and overall vision for the company. The rest is history as you are well aware of. Now, as an employee I have a vested interest in selling as many vehicles as possible by and through all professional sales methods that ensure customers receive par excellence service and value for their money. So I considered what I observed as if it were my own company – as any employee worth his weight in salt should – and started taking notes. Over the first week of my employment, I have observed and noticed various issues that may be impairing our ability to increase sales just as I have identified opportunities to increase revenue that have not been exploited which, if they were exploited, would increase sales: the main objective of any profitable business. My candidness is with all due respect and a common interest in generating as much revenue as possible. Undoubtedly there will be additional areas that I can and will identify that need attention to arrive at the goal of increasing sales. Thus, this report is the impetus and first step to achieving that goal and should be considered as an incomplete and flexible working document. Therefore, I respectfully submit: We need fresh ideas: not old school. The niveau must be raised not one or two levels but several. Many of these ideas and sales enhancement tools you – by being in this arcane business – already know about, but need to be implemented. This report outlines some of those ideas and observations as a feasible means to an end and to a viable, profitable future. To-wit: We must look toward new car dealerships and how they treat their customers. We can learn a lot at no direct cost to us simply by investigating and paying attention. This may seem and sound naïve at first glance, but the way Americans buy vehicles has and is continually, fundamentally changing. It is a proven fact that those who do not change will never lead nor will they enjoy the benefit of a strong customer base. So I pose not one, but two cardinal questions:

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1. “What do we want Auto Credit Sales to be? Just another used car lot or a stand-out, outstanding car dealership?”

2. What sets or will set Auto Credit Sales apart from the rest of the hundreds and hundreds of car lots in Spokane and the surrounding area?

The inherently dubious nature of used car sales must be weaned from company culture and philosophy. We shouldn’t have to try to sell anything. Customers should want to buy from us without wanting to shop around for any reason without using the usual used car sales tactics, but honest, earnest, (mission statement) salesmanship, in turn creating satisfied customers. This will take a strong but temperate, persistent, detail oriented, multi-tasking personality to implement: an “Assistant” as you had mentioned. I propose that you allow me to implement these necessary, attainable, and most importantly, positive measures. For the next three months I would draw a minimum wage. If at the end then sales and the overall face of the company has not noticeably improved, I will walk away. If sales noticeably improve a competitive contract would be negotiated to maintain and continue to increase sales and customer base. As a reference point, I offer my initial (not necessarily globally representative) snapshot of one week of operation of the Sprague store (aka Auto Credit Sales (Lot) 1).

October 13 there were four (4) “ups” October 14 there were five (5) “ups” October 15 there were eighteen (18) “up” October 16 there were twelve (12) “ups” October 17 there were nineteen (19) “ups” October 18 there were twelve (12) “ups” October 19 there were six (6) “ups” Total Sales for that week = 4-6 vehicles Even if the lot were to reach its hopeful goal of 110 vehicles sold at $2,000 average profit the result would be a meager $40,000 gross profit for the month. There should be at a minimum 100+ potential customers coming through the store in a 24-hour period with the majority being customers who are easily qualified. Though I am sure there are times when there are “heavy” days and times of the year. A “bad” day should still see a minimum of 100 real customers through the (each) store with a minimum 20%+ completed sales average with an average

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gross profit margin of $2,000 per vehicle = $40,000 per day or $1,250,000 gross per month. Presently, there are between 9-12 sales personnel and management staff combined with fixed infrastructure and operating costs which make the overhead vs. profit margin very tight. Can’t sell without traffic. We are – relative to my own sales experience – dealing with relatively small amounts of money and even smaller amounts of profit which requires sales volume to generate and keep generating cash flow. Zero vehicles sold just for one day costs the company money. Three to four vehicles a day isn’t enough. It’s hard to “get in front of people” when there are no people to get in front of. There must be sufficient traffic so we can afford to – but won’t – turn away customers who are difficult to qualify and/or take too much time to qualify as those who do qualify and are buyers of higher-end vehicles.

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Synopsis: The entire appearance of the company from sales personnel to management to its web presence to the physical plant to the vehicles themselves must exude an aura of professionalism which necessarily requires that there are no weak links in the chain that end with a sale to a satisfied customer who in turn makes us his preferred dealer and recommends us to his family and friends. The objective is to continually make improvements which enable us to anticipate, understand, and fulfill the customer’s expectations so that we earn their business, repeatedly. I cite Auto Credit Sales Mission Statement: “It is the mission of Auto Credit to present a professional auto sales company to the public, its customers and its employees. Purchasing a vehicle is often an exciting and anxious time for people and it is the goal of Auto Credit Sales to make the purchasing process as streamlined and straightforward as possible. Recognizing that excellent customer service is critical to a company’s success Auto Credit embraces a blend of professionalism and personal care that respects the integrity and individuality of its customers and employees.” To that extent, I have broken down the report in specific categories and sub-categories. Some categorical entries will overlap and seem redundant. However, they are addressed nonetheless as they pertain to the specific and relative category for purposes of identifying them accordingly. I have held each respective point relatively short so as not to narrow the scope thereof, but to allow for out-of-the-box thinking rather than restraining the remedy to a specific resolution. This allows for brainstorming and the possibility for additional ideas and considerations which have yet to be flushed out at the appropriate time. Let’s get started!

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Observations, Analysis, and Recommendations:

Showroom (Ambiance) Sales Counter

Mission Statement should be conspicuously hung from the ceiling above sales counter. The area should always be clean and free from clutter and debris. Back side of the sales counter should be covered with a curtain for aesthetics and cleanliness. A reader board should be installed behind the sales counter for additional advertising purposes. A bulletin board should be installed behind the sales counter upon which items that would be of interest to customers regarding sales. In boxes for sales personal for messages and documents receiving and prompt processing should be mounted behind the sales counter.

Calls (Incoming and Outgoing) Need a functional phone system with four lines capable of on hold music and advertising. Call receiving etiquette will need to be instituted. A female with a pleasing voice should be answering calls and be proficient in handling multiple calls efficiently, to take complete messages, to delegate trivial customer issues or concerns amicably, scheduling appointments and conduct soft selling. In the interim, message pads are needed upon which complete messages are taken and immediately delivered.

Customer Waiting Area Tables and chairs need to be replaced with comfortable, easy maintenance chairs and small cubicles to maintain customer confidentiality.

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Vending machines always full and operating properly (keep sufficient change on hand to make change for the customer to use machines. Coffee, donuts and popcorn, candies (on the sales counter). Newspaper for customers to read. Toys for customer children to play with. Cable TV/Movies for waiting customers and children. (The above should be in one designated area). Plants to enhance the environment as livable. Garbage receptacles.

Property (Physical Plant) Lot

Cigarette butts and trash on the lot. Especially in the customer parking/receiving area. There should be a designated smoke area and designated times with the exception of customer management. Contractors and service trucks park in back for deliveries or repairs. Entrance sign for westbound Sprague entrance and for the eastbound turn onto Fancher entrance. Suggest stacking two containers (or similar signage) at the end of the lot on Sprague with company details and letting customers know the entrance is 500 feet ahead. A blower should be used to clean the lot of debris, leaves, etc. When moving vehicles maintain a slow speed as there are children that run between the vehicles and could result in injury or worse, a lawsuit.

Garage-Workshop Appears to be a cross between a personal junkyard and a backyard mechanic operation.

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Myriad deleterious which appears as if it were dropped where or near where it was removed or fell off the vehicle. Overall disorganization prevails. Mechanics using a laptop that is barely on the work desk which is cluttered with rubbish and unknown parts. Unclean and unsanitary work environment. Conditions appear unprofessional and slipshod. All spares and reusable parts need to be properly stored in a secure on-site container. Are mechanics qualified and/or certified? If they are, is it posted?

Vehicles VIN Forms will be pre-prepared on a computer-based form (and all other forms) to be printed from a printer located at the sales counter. (see also Point-of-Sale and Intra-Company Document Management infra). Several vehicles have trash in them, especially the pickups which have not only trash and butts in them but leaves and dirt and residue. The appearance is that the vehicle is not clean and has not been serviced or checked out. Vehicles should be backed into the customer parking area: nose out is better than ass out. An overall QA/QC program should be developed to ensure a reasonable quality of vehicles thus guaranteeing customer satisfaction.

Employees Etiquette

Use of professional, competent communication, i.e., refrain from profanity or other abusive language. Confidential and sensitive customer and company communications will be conducted in appropriate areas relative to the subject matter.

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Note: I routinely saw sensitive customer info laying around for anyone to see and steal. Observed instances where this has not been done and may have resulted in an adverse customer reaction. I have withheld the names of the individuals, but these derogatory remarks (among numerous others) are nonetheless as they were uttered within earshot of customers.

The “website is a piece of shit!” “You guys don’t need to go ‘Jewells’ on us!” in reference to cleaning.

Notwithstanding there is much back biting, sarcasm, facetiousness, grumbling, intrigue and talking down by specific individuals.

Co-ed Sales Personnel We need women sales staff on the floor at each lot with established protocol for a co-ed work environment.

Grooming Clean shaven, trimmed beard, etc. Company shirt and slacks (no wrinkles) with appropriate shoes, i.e., dress code. Overall clean professional appearance and scent. Name tags (optional). An overall clean work environment – seen and unseen – should always be maintained.

Commissions Every sale should result in a $250 commission irrespective of the vehicle’s final sale price. This provides an incentive to sell any and all vehicles with equal vigor, e.g., a sale of a $1,000 vehicle will be sold with the same effort as one that sells for $10,000 or more.

Teamwork

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The lead sales person should have a morning meeting at which tasks, objectives are discussed with an open forum for candid discussions and problem resolution. Need an employee work area where employees can retreat to with access to a computer to manage contacts, contracts and follow up activities.

Website (Web Presence) Administration/Administrator

Liaison between Administrator and Auto Credit Sales to ensure inventory and information on the website are current, i.e., Company Website Content Manager.

Aesthetics and Appearance Add links to Google Maps, Twitter, Facebook and other beneficial apps. Pictures of vehicles need to be properly edited (“Photoshopped”). Vehicles need to fill the entire frame of the picture, i.e., properly photographed and photo software processed (see above)

Functionality and Navigation (Ease of Use) Cumbersome to navigate. Too slow, especially for slow internet connections. Browser compatibility. Some print too small (elderly and visually challenged would have difficulty navigating. Lots of wasted (dead) space. Spelling errors, typos, syntax issues. Consider how other new car dealerships have their pages set up: have spent tens of thousands of dollars to put their best face before the customer in the comfort of their home or on their smartphone. The lack of customer friendly options, e.g., the ability of the potential customer to make an appointment

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online to visit with a sales person and/or schedule a test drive.

Web Based Customer Queries Processing and response are far too slow and inefficient. Create or find free, downloadable mobile app that alerts potential customers looking for specific vehicles when matching vehicle is available. Our Web Site is the hardest working salesperson: on the job 24/7 with a bright and happy face ready to answer any and all questions instantly and competently. We need to give him every advantage to sell as many vehicles as possible. And, he will do it if it’s done right. Website hits are walk-ins. That is to say that anyone who visits our site is on all our lots simultaneously. So do we know how many hits (walk-ins) we have a day, a month on the website? How many of those hits actually call or actually ever come in. What is being done to follow up on those hits? More faces with customer testimonials on the website. Web site meta tabs to ensure superior search engine positioning. First seen, first called.

Customers Do we want to cater to borderline unqualified, time-consuming riffraff or more competent, qualified, no bullshit buyers…the amount of time needed to effect deals for borderline customers takes too much time when those who are qualified could be brought in and qualified in short order thus free up more time to sell to more of the same type of customers. Solid customers will bring more solid customers just as riffraff will bring more riffraff. Using “Bad Credit” terminology puts us in the basket with all the other car lots who deal primarily with high-risk/high-interest customers. This needs to be

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reworded and or embellished with legal hyperbole. Say something different. More dignified. Customer follow-up and the database should be managed electronically using Outlook, Contact, or a similar customer management program which can be viewed by sales personnel and management equally. Thus negating the need for a log book, etc. Without being fully informed, sales personnel can be embarrassed by competent customers.

Case-in-Point: A 2000 Jeep Cherokee Sport which we have listed - “on sale” - for $4,995 is, according to Kelly Blue Book for dealer retail sale is pegged at +/-$3,500. The customer is a cash buyer at that price and yet we try to negotiate a higher price. Do we sit on it or sell it? The customer already knew it had been on the lot for some time by the mileage accumulation since it was bought by us (200 mi.). The battery was dead when he asked to take it out on a drive. It makes the sales person and Auto Credit look unprofessional. The lot by should be making sure all vehicles are always charged so that does not happen. The sales person should not have to come with a jump to get the vehicle running. These things are preventable and are unnecessarily embarrassing.

Point-of-Sale and Intra-Company Document Management (between stores and Phoenix Financial)

Paperwork processing (paperless) inclusive contracts and contacts management for efficiency. Sales process must become more streamlined, less hassle, less “painful”, more enjoyable for the customer. Employee Folder in which customer and pending customer files are preserved accessible by Management for review (intra-lot network).

Promotional Materials Calendars, pens, pen holders, notepads, etc.

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Aesthetically redesign business cards with names printed on them (e.g., Frederick M. Simon, Inventory Manager, store number, cell number, email, etc.)

Traffic Management Map coming off the freeway in both directions: posted on the website. Install intelligent sign on the uprights. Lot traffic is at a trickle, however with a concerted effort, ads and upgrading website need to be accomplished as soon as feasible in order to harvest potential customers visiting our website. A concerted effort should be made for outside sales, i.e., website sales and off duty sales as well as networking sales. Drive in customers and sales are only scratching the surface of the potential that lies untapped.

Sales Sales Tools

AutoCheck and TrueCar (optional, see Kelly Blue Book below)– Every vehicle will have this and made available to the customer for review. Kelly Blue Book – Every vehicle will have this and available to the customer for review. QR Code – Allows both customer to instantly access all the details of the vehicle as well as sales personnel. 101 Point In-House Inspection (form) – Every vehicle will have this and made available to the expectant customer. Safety Service Test at OEM (premium optional). BBB: We have three poor customer claims/complaints (regardless if true or not) and no positive comments. People remember bad experiences more than they remember good experiences when they look us up. Therefore, it is important for us to have customers take the time to

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rate us on the BBB website. Give them an incentive to do so. On a personal note. My business troubles started when a customer complained to the BBB about the delivery of $5,000 worth of product which was satisfactorily resolved but nonetheless caused irreparable damage. Sales personnel should have access to inventory spreadsheet to immediately answer customer questions and to determine if a sale can be made based on the customer’s offer. Customer “Friends” (referrals) incentive (in effect but should be reviewed to expand).

Test Drive Protocol Before sending the customer out on a test drive:

Ensure all lights are in working order. Tires are properly inflated. Windshield/windows are cleaned. Start and warm up or cool of the inside of the vehicle. Ensure dealer plate affixed. Speedup/Automate the Test Drive paperwork (license copy).

Vehicle Delivery Protocol (Same as Test Drive Protocol but includes)

Wash vehicle. Apply temp plate. Ensure gas is topped off. Provide customer with signed delivery checklist. Certificate from a business partner (to be identified).

Conclusion It is my professional opinion that these observations and recommendations be implemented in order to raise the volume of sales

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which necessarily requires that the customer base be substantially increased and that such customer base consist predominantly of qualified buyers instead of questionable buyers who, on average, require sales and management staff to expend time which would be better used towards qualified customers, follow-ups and marketing (contact and leads management), and housekeeping. Many of these recommendations can be implemented at reasonable, if not relative cost to the company. Our philosophy should be to make the customer want to buy from us without shopping around; as if he has done himself a good turn by buying from us and, thus, recommends us to his family and friends. The investment versus return will be measurable and exponential with short-term and more importantly, long-term, positive results. Respectfully submitted by:

Frederick M. Simon (509) 368-4621 kaput.gerat.lupinum@gmail.com (Updated on 05 November 2015)

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Addendum (Post-Report Miscellaneous)

There should be customer contact forms Active solicitation of business partnerships and concentrated

sales and marketing aimed at demographics which are and could be our customer base, e.g., military (FAFB).

There should be a customer confidentiality form An SOP should be developed for orientation and as a vade

mecum. There should be a checklist on customer service. Mailers for potential customers who have come in but have not

purchased from us as well as those who have purchased. “Contact” email software. Phone on the showroom table(s) There should be customer contact follow up form for initial

gathering of information for later input into a customer contact program.

A single comprehensive checklist of all possible documentation which may be required of any customer at any given time regardless if not needed for every customer. This can be used as a marketing tool which shows the customer that we are thorough and that we are working for him in order to earn their business. It would also include them in the process as if a joint checklist of accomplishments that both the salesperson and the customer can work on together.

Customers and their files should be given an alphanumeric code for ease of filing and retrieval, e.g., 011115-AB = DD/MM/YY-Customer Initials. Each document in the customer’s file including the file itself should have this code conspicuously displayed.

One master form should be developed which includes all information necessary of which multiple (a specified number) can be made for distribution to all involved parties.