IIADA July/August 2012

Curbstoningpage 14What’s Being Done?

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I L L I N O I S I N D E P E N D E N T A U T O M O B I L E D E A L E R S A S S O C I A T I O N

DEALER’S EDGEJULY/AUGUST 2012

FORMULA FOR SUMMER SELLING WHAT YOUR CUSTOMERS REALLY WANT COMPLIANCE OVERDRIVE

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JULY/AUGUST 2012 T H E D E A L E R ’ S E D G E

3

w w w . i l - i a d a . o r g

Person to Contact:Dail Hughes, ID#02-37367Tax Law SpecialistTelephone Numbers:1(866)270-0733 option# 3 or(313)2346146Refer Reply to:SE: S:/FBSA:PO:DCC: CTRSG120487Date: April 5, 2012

Dear Sir or Madam,The Financial Crimes Enforcement Network

(FinCEN), via the Internal Revenue Service Enterprise Computing Center-Detroit (ECC-D), has received the Form(s) 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business, dated February 27, 2012. We are unable to process the Form(s) 8300 because you did not submit the correct form version. FinCEN updates

Bank Secrecy Act forms approximately HYHU\�WKUHH�\HDUV�DQG�¿QDQFLDO�LQVWLWXWLRQV�must submit the most current version of a form. Please resubmit the form(s) as soon as possible and no later than 10 business days upon receipt of this letter. Failure to properly ¿OH�D�%6$�IRUP�PD\�UHVXOW�LQ�¿QHV�RU�RWKHU�penalties.

If you need to resubmit this form(s) on paper, please visit FinCEN’s website to obtain and download the most current version of WKH�IRUP��KWWS��ZZZ�¿QFHQ�JRY�IRUPV�bsaforms/. Make sure that you mail the IRUP�V��WR�WKH�DGGUHVV�LGHQWL¿HG�LQ�WKH�³:KHQ�and Where to File” section of the particular form. Do not mail the form(s) to the address at the top of this letter.

If you have any questions about this letter, please contact Dail Hughes @ 1 (866) 270-0733 option #3.

Thank you for your assistance.

DEPARTMENT OF THE TREASURYIRS ENTERPRISE COMPUTING CENTERP.O. BOX 33116DETROIT, MI 48232-0116

IRS Form 8300 Rev. Nov. 2011

ChairmanRandy CraseCrase Auto Connection25355 E. Ames St.Channahon, IL [email protected]

PresidentGordon TormohlenTormohlen’s Good People Automotive1800 S. Ihm Blvd.Freeport, IL [email protected]

1st Vice PresidentAnthony FerraroPayless Motorsport13449 S. Pulaski RoadRobbins, IL 60472708-388-2300 [email protected]

TreasurerLori Chignoli-CoraChignoli Auto Sales1850 Essington RoadJoliet, IL [email protected]

SecretaryEric NelsonNelson Automotive Inc.1801 S. BusseMt Prospect, IL [email protected]

Directors:Mark AlcornCarlyle Auto Sales1708 BroadwayRockford, IL [email protected]

Paul GluchowskiTurner Acceptance4454 N. Western Ave.Chicago, IL [email protected]

Melanie BrownChicago Car Auction2731 Belvidere RoadWaukegan, IL [email protected]

Amy Goodnight Lohman Companies 3901 15th St.Moline, IL [email protected]

Alex TovstanovskyPrestige Motor Works Inc.8959 Hanslik CourtNaperville, IL [email protected]

Janette PeakPJP Auto Enterprise3100 S. Douglas Spring!eld, IL [email protected]

For information on how to become a member of IIADA, please contact Bruce Eklund at 800-987-6627 or [email protected].

Board of Directors

JULY 10 at the Manheim Arena Auto Auction BHPH ROUNDTABLE

AUG. 14 at the Greater Rockford Auto Auction BHPH ROUNDTABLE

SEPT. 12 at the Morton Auto Auction IS RENTAL FOR YOU?

OCT. 16 at the Manheim Arena Auto Auction DEALER MANAGEMENT SYSTEMS

You Have a Date 2012 Educational and Training Opportunities for IIADAThe educational training is hosted by the Illinois Independent Automobile Dealers Association (IIADA) and includes expert trainers in each !eld, with an opportunity to become a Certi!ed Master Dealer.

NOV. 15 at the St. Louis Auto Auction COMPLIANCE ISSUES

DEC. 10 in Oak Park at the Training CenterREVIEW OF ALL TRAINING

FOR INFORMATION, VISIT WWW.IL-IADA.ORG.We have created an education and training program with a mission to promote, educate and advance the independent dealer. We will make available a core of quality education and training opportunities that responds to current dealership needs.

WHAT’S NEW

MAGAZINE CONTENTS

ADVERTISERS INDEX

04 Formula for Summer Selling06 Go All In on Service10 What Customers Really Want12 Avoid Marketing Potholes14 Curbstoning: What’s Being Done20 Mobile Ads a Must for Dealers22 Compliance Overdrive

NATIONAL INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION

NIADA HEADQUARTERS:

FOR ADVERTISING INFORMATION CONTACT: TROY GRAFF

The Dealer’s Edge is published bi-monthly by the National Independent Automobile Dealers Association Services Corporation, 2521 Brown Blvd., Arlington, TX 76006-5203; phone (817)640-3838. Periodicals postage paid at Dallas, TX and at additional of!ces. POSTMASTER: Send address changes to NIADA State Publications, 2521 Brown Blvd., Arlington, TX 76006-5203. The statements and opinions expressed herein are those of the individual authors and do not necessarily represent the views of The Dealer’s Edge, the Illinois Independent Automobile Dealers Association, or the National Independent Automobile Dealers Association. Likewise, the appearance of advertisers, or their identi!cation as members of IIADA or NIADA, does not constitute an endorsement of the products or services featured. Copyright © 2012 by NIADA Services, Inc. All rights reserved. Visit the NIADA Web site at www.niada.com. STATE MAGAZINE MGR./SALES EDITOR ART/PRODUCTION MGR. PRINTING Nieman Printing

OFFICEFOR INFORMATION ON HOW TO BECOME A MEMBER OF IIADA, PLEASE CONTACT BRUCE EKLUND

AFC ......................................................Inside Front CoverAlly ......................................................................7AutoTrader.com .....................................Back CoverDyer Auto Auction ..............................................18Insurance Auto Auctions ....................................19Kelley Blue Book ...............................................13Lohman Companies ....................Inside Back CoverManheim.com ......................................................9Manheim Minneapolis ..........................................5 NIADA Certi!ed ..................................................19Nowcom ............................................................11Protective ..........................................................15United Acceptance .............................................17Voisys ................................................................22

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Sirius XM Satellite Radio is America’s satellite radio company. Independent dealerships can now offer a free SiriusXM three-month trial on all pre-owned vehicles with factory-equipped satellite radio. In addition to selling your customers a quality vehicle, you’ll be giving them the opportunity to enjoy satellite radio. And there’s no cost to your customer. Visit www.siriusxm.com/niadaprogram to enroll your dealership today!

NIADA Member Health Plans, administered by JLBG Health, bring you choice and "exibility when designing your personal health plan while providing potential savings of thousands of dollars annually. To review the plan details and receive an instant online rate, visit www.NIADAHealthPlans.com or call 1-888-308-9340.

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T H E D E A L E R ’ S E D G E JULY/AUGUST 2012

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Formula for Selling in the Dog Days of SummerThe dog days of summer are here.

The time to make hay while the sun was

shining has come and gone.

The typical Buy Here-Pay Here

dealer will sell 40-45 percent of his

DQQXDO�XQLWV�LQ�WKH�¿UVW�WKUHH�PRQWKV�of the year. He will also realize about

the same percentage of his annual

SUR¿W�LQ�WKRVH�WKUHH�PRQWKV�So if you got off to a slow start in

2012, the dog days of summer could

be the only way to salvage your year.

Because we all know the last three

months are not time to try to make

your year.

Being able to sell in the dog days is

really no different than selling in the

heydays. The same four key ingredients

to selling are the same. The only

difference is the focus has to be there.

In the heydays, selling is pretty easy.

Customers have money. You have

inventory. All is right with the world.

But come the dog days, customers have

less money. And they seem to be harder

WR�¿QG��7KH�¿UVW��DQG�PRVW�LPSRUWDQW��RI�WKH�

key ingredients to selling in the dog days

is training. Well-trained salespeople can

sell any time of year. You should always

be training your staff, always honing

their skills. Both phone training and

basic sales skills training should be done

weekly, at a minimum.

Work with staff on overcoming

objections – role-playing is a good way

to accomplish that. When it comes to

phone training, work on how to set

HIIHFWLYH�DSSRLQWPHQWV��/RW�WUDI¿F�LV�at a premium during the dog days, so

your people had better know how to

effectively handle it.

The second ingredient is appearance.

Now, I’m not necessarily talking about

your employees’ appearance, which

should always be neat and professional,

but your overall lot appearance. The

No. 1 reason customers list as the

reason they come in is “drive by.” So if

that is the case, why wouldn’t you want

your lot to look the best in town?

The lot should always be neat and

orderly, not with vehicles facing all

four directions of the compass and

then some. Vehicles should be spaced

evenly, with a good mix of colors and

styles.

A lot party or lot rodeo should

be done at least once a week, if not

more. It will really go a long way

to making your lot look fresh. You

should consider the vehicles on your

lot your mannequins and treat them

WKH�ZD\�¿QH�GHSDUWPHQW�VWRUHV�WUHDW�theirs. Keep them fresh, neat, clean

and always ready to sell. That goes for

overall lot appearance as well. A fresh

coat of paint and some weed killer can

do wonders.

Marketing is the next key ingredient.

$JDLQ��ZLWK�WUDI¿F�EHLQJ�DW�D�SUHPLXP��this is the time when repeat and

referral programs really pay dividends.

It’s a good time of year to focus on

referrals, not just with your customer

base but with outside companies and

people as well. If you are not already

paying referrals to non-customers,

it’s something you should seriously

consider. I can assure you some, if not

all, of your competitors are.

Marketing also extends to your web

presence. Make sure your website is up

to date, especially if you are displaying

inventory. I was on a dealer client’s

website the other day and he had

pictures of some of his inventory with

snow on it.

In addition to the inventory, make

sure all other aspects of your site

are up to date. That includes any

advertised specials, about us sections

and employee introduction sections.

You wouldn’t want someone calling

or coming in asking for someone or

something that is no longer there.

The last key ingredient in the dog

days selling formula is advertising.

In this very competitive industry,

advertising in some form or fashion is

almost a must. The thing that makes

advertising effective is reaching the

right folks with the right message.

The two most popular media are, of

course, television and radio. There is

a thought people watch less television

and listen to more radio in the summer,

but that is just not the case. Studies

have shown television viewing doesn’t

drop off at all during the summer, and

the same goes for radio listening.

The important thing to remember

about advertising on both those

media is to remember you are not

your customer, so don’t advertise to

yourself. Chances are your customers

watch different television stations

and listen to different radio stations

than you do, so make sure the

stations you are on are the ones your

customers are watching and listening

to. Customer surveys from new and

existing customers are the best way to

gauge their entertainment preferences.

Simply put, just ask.

As with marketing, your web

presence is also a way to advertise.

The use of your website, as well as

Facebook and even Twitter can be ways

to get your message out. I wouldn’t

necessarily count on those selling

more cars, but they are perfect ways to

advertise new inventory or special sales

promotions.

The formula for selling in the dog

days is the same as selling in the

heydays. It just takes a little more

attention to detail. There are usually

fewer opportunities in the dog days,

so capitalizing on them is much more

important.

Remember, the two most important

ingredients in the formula are the two

most inexpensive. Hopefully, you have

the right mix of all the ingredients to

keep the dogs at bay.

BY BRENT CARMICHAELEXECUTIVE CONFERENCE MODERATORNCM ASSOCIATES [email protected]

B E I N G A B L E T O S E L L I N T H E D O G DAYS I S R E A L LY N O D I F F E R E N T T H A N S E L L I N G I N T H E H E Y DAYS .

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C O N T I N U E D O N PAG E 8

For independent dealers, having a service department isn’t something that should be taken lightly.

Not all dealerships offer service – it isn’t for everybody – but for those that do it should be an integral part of the business, used to give the dealer an opportunity to attract, retain and better understand customers.

Joe Lescota, the NIADA’s new director of dealer development, said he knows many dealers who lose money in the service department because the money that comes in through service goes into one big pot.³7KHUH¶V�D�ZKROH�SURFHVV�LQ�

operating a service department,” said Lescota, the longtime instructor IRU�1,$'$¶V�&HUWL¿HG�0DVWHU�'HDOHU�SURJUDP��³'HDOHUV�WKLQN�WKH\�DUH�selling service when what they’re really doing is selling time.³$�GHDOHUVKLS�RQO\�KDV�VR�PDQ\�

hours in the day to operate. So a dealer should take the number of techs he has and multiply that number by the number of hours in operation. So a dealer might have 80 hours a day of WLPH�WR�VHOO��)URP�D�SUR¿W�VWDQGSRLQW��it doesn’t matter if the dealer is changing oil or dropping an engine.”

Doug and Nyla Borgmann, owners of Creighton Auto, Inc., in Creighton, Neb., manage to keep their mechanic and their body man pretty busy, which is good for their business.

That means doing repairs for everyone, not just customers.³2IIHULQJ�VHUYLFH�ZRUNV�IRU�XV�´�

'RXJ�%RUJPDQQ�VDLG��³:H�DGYHUWLVH�on our store sign. Service accounts for between 25 and 30 percent of business. Our mechanic has been with us since the early 1980s. He’ll retire LQ�IRXU�RU�¿YH�\HDUV�DQG�WKDW�KDV�PH�worried. Replacing him will be hard. Our body man has been with us for about three years. Before getting him, we had a hard time getting someone full time to do our body work.”

J.R. Westbrook, owner of Tyro Auto Sales in Bay City, Texas, has been offering service at his store since 1971. He does outside work in addition to working on the cars of customers, but he doesn’t advertise. He depends on word of mouth.

Westbrook has kept his technician for years, operating on the theory that it’s easier to keep the person you have KDSS\�WKDQ�JR�RXW�DQG�¿QG�QHZ�SHRSOH�

Staff is a key component to offering a good service department.

Getting good help was one of the reasons Randy Yates, owner of Yates Motors in Gering, Neb., closed his service center.

Yates is a third-generation dealer. His lot has been around for 66 years, and for much of that time, it offered service. Eventually, though, it wasn’t worth the trouble.³:H�JRW�ULG�RI�RXU�ROG�VHUYLFH�FHQWHU��

must be around nine years ago,” Yates VDLG��³,W�ZDV�KDUG�JHWWLQJ�DQG�NHHSLQJ�good people. I’d train people and they would get the skills they needed to do the job. But then they’d go to

dealerships, often franchise operations, that would pay better wages and I’d have to start the process all over again.”

Yates said he realized he was better off if he stuck to what he did best – sell cars. Now he sends his cars to EH�¿[HG�E\�SHRSOH�ZKR�GR�ZKDW�WKH\�do best – repair and recondition cars. By letting the work get done by specialists, he doesn’t have to bother with the hassle of hiring and training technicians, then replacing them as they leave his business.

Yates said he ended up spending a lot of time trying to drum up business for his mechanics instead of selling cars.³,I�WKH�PHFKDQLFV�DUHQ¶W�EXV\�DOO�WKH�

time, then they aren’t making as much money as they could be,” Yates said. ³,W�¿QDOO\�FDPH�WR�WKH�SRLQW�ZKHUH�LW�EHFDPH�WRR�PXFK�ZRUN�IRU�PH�WR�¿QG�work for them and for myself. Now I have less headaches just selling the cars and farming any mechanical work out.”

He also didn’t have to keep up with the expense of getting new equipment all the time. For one thing, the types of tools a service provider must own has changed dramatically. Gone are the days when a mechanic could do all his work with a lift and some wrenches. Cars now are computerized, and dealers and shop owners have to invest their own money in the purchase of scanners and other electronic devices used to communicate with a vehicle’s electronics.

Lescota said Yates’ situation UHÀHFWV�D�UHDOLW\�RI�RSHUDWLQJ�D�VHUYLFH�department – it’s not easy. But, he

A Service Department Can Be a Big Edge for Dealers Willing to Make the Commitment

B AC K T O T H E B A S I C S : G O A L L I N

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I I A D A G O L F T O U R N A M E N T - A W A R D S D A Y - T R A D E S H O W

added, the payoff can be tremendous when the job is done right.³,W¶V�DOZD\V�D�FKDOOHQJH�WR�JHW�

good technicians,” Lescota said. ³6R�,�VXJJHVW�WKDW�GHDOHUV�JR�WKH�technical schools and start grooming technicians before they even graduate. Also, you have to give someone a reason to stay at your dealership.”

Usually that means giving them enough to do. As Yates discovered, if technicians don’t have enough to do, they’ll go somewhere where their skills will be in more demand.

It might also mean giving them more money. After all, technicians have to eat too, Lescota said.³:KHQ�,�KHDU�WKDW�D�GHDOHU�FDQ¶W�NHHS�

D�WHFKQLFLDQ��P\�WKRXJKWV�¿UVW�UXQ�WR�him not getting either enough work RU�HQRXJK�PRQH\�´�/HVFRWD�VDLG��³$QG�you can’t cheat on the equipment. It’s the cheap man who pays the most for things. By trying to save money on new equipment needed to work on today’s computerized cars, a dealer will end up having to spend a lot of money trying to keep technicians.³3HRSOH�OLNH�WR�ZRUN�LQ�FRPIRUWDEOH�

environments and technicians are no different from anyone else. I always say if a dealer can’t keep good mechanics, it can usually be traced back to poor lighting, poor parts and poor work conditions. There’s a demand for technicians and they’ll go where they feel most comfortable.”

Having a service department is a full commitment, Lescota said. And getting good technicians is a competitive sport between dealers. Maybe that tech left to go to a franchise operation because the boss there promised to send him to an $6(�FHUWL¿HG�SURJUDP��ZKHUH�WKH�WHFK�could improve his skill set. Independent dealers should consider similar actions.

Bill Elliff, owner of Elliff Motors in Harlingen, Texas, is an example of a dealer who is committed to his service department. His lot provides a full variety of services, and he long ago realized that in order to have a service department, he had to have enough service work to keep his employees busy.

To better service his customers, his dealership can do anything from changing oil to engine replacement. He owns a couple of lots with a total

of seven service bays and 10 people working them. He advertises in print and on the signage around his lots. +H�VDLG�¿QGLQJ�TXDOL¿HG�SHRSOH�LVQ¶W�

WKDW�KDUG��)LQGLQJ�TXDOL¿HG�SHRSOH�ZKR�are dependable and can be counted on to show up on time ready to work every day is the tough part, Elliff said.

But the effort is worth it. By hiring the right people, a dealer can have a service department that drives potential customers to the store, Elliff said. While they’re getting their car worked on, many of his service customers will wander around the lot and take a look at inventory. Maybe that person is looking for something new, and if he sees something he likes that service customer can be converted into a vehicle customer.

Elliff estimates his service department accounts for about 20 percent of his total business. He said some of his fellow dealers don’t realize that a service department has to be able to make it on its own. It shouldn’t be a loss leader.

Additionally, he sees dealers actually short-changing themselves when it comes to pricing their cars. A dealer might, for example, put $100 worth of reconditioning in a car he bought for, say, $5,000. When it comes time to price the car, he’ll ZDQW��SUR¿W��6R�KH¶OO�SULFH�the vehicle at $6,100, Elliff said.

That’s a mistake. Any work put into a vehicle using the dealership’s own service department should be UHÀHFWHG�SRVLWLYHO\�LQ�WKH�SULFH�RI�WKH�vehicle. If $100 of work was put into the car, that should translate into adding, say, $200 to the back-end value of the vehicle. So that car should be priced at $6,200, not $6,100.³$V�DQ�RZQHU��\RX�KDYH�WR�SXW�WKH�

money in to develop the infrastructure needed to run a good service GHSDUWPHQW�´�(OOLII�VDLG��³7KDW�PHDQV�having the latest diagnostic equipment. But if you charge right for your services, you will always come out ahead.”

Ultimately, having a good service department should mean more than another revenue source, Lescota said. By having a service department aimed at serving the public at large and not just his current customer base, Elliff is bringing in new potential buyers to look at his inventory.

He’s creating a captive audience.But a good service department can

do even more. When a customer brings in a car, a dealer can glean all sorts of information about the customer. It’s built-in market research.³7KH�VPDUW�GHDOHU�VKRXOG�QRZ�NQRZ�

all sorts of things about that customer,” /HVFRWD�VDLG��³7KH�GHDOHU�VKRXOG�NQRZ�how that service customer uses his car. Does he baby it or does he really run it through the ringer and wear it out? With that knowledge, the dealer can better help the customer make an informed decision on the best vehicle to buy when it comes time to get another car.”

By having a complete service department, a dealer can get a customer used to bringing his vehicle to his dealership. Need an oil change? Bring the car to good old Joe’s. In an accident? Have the car towed to Joe’s. Need some engine work? Go to Joe’s. ³7KHUH�FRPHV�D�WLPH�LQ�HYHU\�FDU¶V�OLIH�

when it becomes counter-productive to keep putting more money in that YHKLFOH�´�/HVFRWD�VDLG��³,I�\RX�KDYH�D�good relationship with your customers, and they bring their cars to you for service, you can tell that customer when it’s time to get a new car.”

A service department can also help Buy Here-Pay Here dealers with their bottom line, Lescota said. It’s a rule of that segment of the used car business that when a car stops running, the payments stop coming.

If a dealer has a service department, the customer can bring the car in to JHW�¿[HG�DQG�WKH�FRVW�RI�UHSDLUV�FDQ�be added to the payment schedule. A customer might not have $300 on him right then and there, but he can usually make his payments if that $300 is spread out over the rest of the payment schedule.³$�JRRG�VHUYLFH�GHSDUWPHQW�JLYHV�

GHDOHUV�FRQWURO�´�/HVFRWD�VDLG��³,W�JLYHV�the customer a reason to keep coming back to you. But if you’re going to have a service department, you can’t go in half-hearted. As they say in poker, you have to go all in – but the rewards can be huge.³7KHVH�GD\V��GHDOHUV�QHHG�HYHU\�

edge they can get. Now more than ever, dealers who don’t keep up, fall behind and go out of business.”

BY JIM STICKFORD

C O N T I N U E D F RO M PAG E 6| A Service Department Can Be a Big Edge for Dealers Willing to Make the Commitment | B AC K T O T H E B A S I C S : G O A L L I N

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What Your Customers Really WantHow many times do you hear,

³&XVWRPHUV�RQO\�FDUH�DERXW�WKH�SULFH´"Most dealers will say they hear it

all the time. But price is only an issue when it is presented as the only or SULPDU\�EHQH¿W��

Regardless of the industry, product or economy, a company does not need professional salespeople to sell price. For that, all they need is a website or catalog and a payment processor.

If a company wants to increase sales and margin, it needs to teach the sales team how to establish real value. Once that happens, they need to practice doing it over and over.

The difference between an amateur and a professional is a professional practices his skills – he doesn’t just play the game or go on sales calls assuming the sales call is practice. The key to overcoming price is not a scripted catchphrase. Rather, it is learning how to create a real value partnership. In order to do that, one must practice.

Selling value is more than making VWDWHPHQWV�OLNH��³:H�RIIHU�JUHDW�FXVWRPHU�VHUYLFH�´�RU��³:H�KDYH�H[SHULHQFH�DQG�H[SHUWLVH�´�RU��³2XU�SHRSOH�PDNH�WKH�difference.”

When salespeople are asked about the value offered, those are the most common answers given.

That’s no different than a person going on a job interview and telling the interviewer he should be hired because he is a self-starter, a team player, a people person, motivated and loyal. Those answers are generic and do not differentiate you from the next person.

Value is determined by the prospect. ³:KDW�YDOXH�GR�\RX�DGG"´�LV�D�WULFN�question because it can only be answered after the sales professional understands ZKDW�WKH�SURVSHFW�RU�FOLHQW�GH¿QHV�DV�value.

To determine what the customer

perceives as value, a sales professional must ask the prospective customer purposeful questions and ask a lot of them.

The more the sales professional learns and understands, the more likely he will be able to establish value according to the prospect. Though many salespeople know that, very few truly implement it. 7RR�PDQ\�VDOHVSHRSOH�ÀRRG�D�SURVSHFW�with information about what they have to offer without knowing whether what they are saying will be of value to a client or prospect.

It cannot be stressed enough – ask TXHVWLRQV�¿UVW�EHIRUH�H[SODLQLQJ�WKH�YDOXH�you bring.

Asking questions is more than just asking open-ended or leading questions. Most salespeople ask questions like, ³:RXOG�LW�EH�D�EHQH¿W�WR�\RX�LI�ZH�FRXOG�give you more of this for less money?” In most cases it is a rhetorical question – the customer has no choice but to respond, ³<HV�´�7KDW�LV�OLNH�DVNLQJ�D�FKLOG�LI�KH¶G�OLNH�to have more candy, play all day and not do homework.

Asking purposeful questions allows the sales professional to truly understand a prospect, not just his service needs so he FDQ�³VHOO´�KLP��

Here are three easy steps to make sure you’re able to sell on true value and not price.

Write down your questions and take them with you: This does not make a salesperson less of a professional or less of an expert. In fact, this will allow you to show a client or prospect how important it is to fully understand their needs and desires. The order of your questions is important as well. Start your questions wide – industry-company-SHUVRQ�FXUUHQW�YHQGRU��WKHQ�¿QDOO\�DERXW�the product or service.

Help the prospect understand what makes you and your company

successful: A partnership is a two-way street – remember the sales professional is responsible for both ways. That means a sales professional shares with the prospect what makes him successful without PDNLQJ�LW�GLI¿FXOW�RU�LQFRQYHQLHQW�DQG�shows the why and value for both sides.

Practice, practice, practice: Practice your sales every day beforehand rather than talking about it afterward and calling it practice.

That goes for all sales managers, too. If the sales leader does not mandate ongoing practice and get involved himself, it will never happen. It’s just like a sports team that will not practice if the coach does not UHTXLUH�LW�DQG�JHW�RQ�WKH�¿HOG�WR�ZRUN�ZLWK�the team.

If the prospect cannot truly afford the product being offered, do not lower the price and the perceived value. Instead, ¿QG�D�QHZ�SURVSHFW��%\�DGPLWWLQJ�\RXU�SURGXFW�LV�QRW�D�¿W��\RX�ZLOO�JDLQ�PRUH�buyers long-term than you will by force-feeding a product or service and losing value along the way.

Every customer wants the most for the lowest price. That is not a bad thing once a sales professional learns how to help the prospect understand he really wants success for the best price. Success cannot be provided by just a vendor. It can only be provided by a true partner.

Sales professionals need to prepare and practice so the next time the SURVSHFW�VD\V��³,�ZDQW�WKH�FKHDSHVW�SULFH�´�WKH�VDOHVSHUVRQ�LV�FRQ¿GHQW�DQG�ready to take control of the situation, and will never sell (or lose) on price again.

BY NATHAN JAMAILNATHAN JAMAIL, BEST-SELLING AUTHOR OF THE PLAYBOOK SERIES, IS A MOTIVATIONAL SPEAKER, ENTREPRENEUR AND CORPORATE COACH. THE FORMER EXECUTIVE FOR FORTUNE 500 COMPANIES AND OWNER OF SEVERAL SMALL BUSINESSES, TRAVELS THE COUNTRY HELPING INDIVIDUALS AND ORGANIZATIONS ACHIEVE SUCCESS. FOR MORE INFORMATION, VISIT WWW.NATHANJAMAIL.COM OR CALL (972) 377-0030.

L E A R N H OW T O S E L L B A S E D O N VA LU E , N O T P R I C E

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12


It seems as though every day, new marketing technologies and trends emerge as the hottest thing around.

From Google Analytics to Twitter to personalized URLs, something is always changing in sales and marketing. While that provides many new options and opportunities, it can also be overwhelming and confusing for dealers.

So how do you know where, how and when to spend your marketing dollars to get the best return on investment? And how do you know what to avoid?

The answer is simple – data is king, and the good news is used car dealers have been dealing with it for years, tracking, testing and tailoring data to predict sales and budget. Marketing strategies and technology should deliver more data, telling you more about what’s working and what is not.

There are still potholes in the road, but if you steer clear of the four biggest marketing potholes you will see the impact on your growth and bottom line.

Not knowing your dataDo not make any marketing

GHFLVLRQV�ZLWKRXW�¿UVW�XQGHUVWDQGLQJ�your data. That is crucial. Track your data every week, or even more often, so you can be proactive with any potential costly marketing mistakes. Track how many potential buyers are calling your dealership or submitting lead forms daily, monthly and yearly. If you don’t track those items you will never know how or if your marketing campaigns are working.

Use Google Analytics. It’s a free service that can show you important information about how people are using your website. You can track how much WUDI¿F�LV�FRPLQJ�WR�\RXU�VLWH��KRZ�ORQJ�viewers are there and which pages are

most popular. It can also show you problem areas like high bounce rates, low time on site and poor goal conversions.

You also need to know if you have inventory people are looking for. Consistently review your SRP to tell you if you have the vehicles people want and if you’re merchandising your cars properly.

On average, you should be getting twice the number of Internet and phone leads as your traditional UPs. If your numbers are not close, you should work with someone to better analyze your data to see what is not working and make changes. The worst thing you can do with poor results is ignore them.

Ignoring Google PlacesYou only get one chance to make a

JUHDW�¿UVW�LPSUHVVLRQ��7KLV�LV�DOVR�WUXH�for your image on the web. Google has changed its algorithm so the Google Place pages, which include business reviews, are high atop the search engine results.1R�DPRXQW�RI�SDLG�DGV�ZLOO�¿[�WKLV�LQ�

the long term. If your Google reviews are negative, your buyers will look elsewhere for their cars. You want to get your existing customers to give you positive reviews when they are most likely to do so – when they’ve just bought their car. Incentivize it by offering them a review card that will give them discounts on service at very little cost to you.

Not having a search engine strategySearch Engine Optimization is

key. If you are optimized, you should show up on page one of any search.

Accomplishing that requires a long-term strategy. You cannot rely on ranking alone. Your strategy needs to include proper keyword research, updated and useful content, and conversion tracking.

Consumers search in many different ways so you need to build landing pages and write copy for websites to make sure all search results are covered.

Not having a solid media strategy

Today, you need to have a social media presence. If you don’t, you’re missing out on some big opportunities.

The bigger problem is using social media without a cohesive strategy. You need a plan for Facebook, Twitter and Pinterest, not just an account where you randomly post and tweet. )RU�SHRSOH�WR�³/LNH´�\RX�RQ�)DFHERRN�or follow you on Twitter, you need to give the consumer value.

Research shows the top three reasons people connect with brands on Facebook and other social media are for the games, contests and promotions; to learn about new products; and to show they are fans. Use this information to create an engagement strategy and study the results.

It is all about getting consumers involved, not trying to sell them. Extend your brand through social media, but also be sure to take advantage of all the free monitoring and data analysis tools the social media channels offer.

Don’t get your business caught up in these common marketing mistakes. If you feel you are stuck, re-evaluate what you are doing and make strategy changes for the long term based on hard facts.

With changes in these four areas, you will see improvement in all aspects of your business.

Avoid These Marketing Potholes

BY BRIAN BAKER BRIAN BAKER IS EXECUTIVE VICE PRESIDENT AND CHIEF CLIENT OFFICER FOR STREAM COMPANIES, HANDLING STRATEGIC PLANNING AND DAY-TO-DAY OPERATIONS FOR THE AUTOMOTIVE SALES AND CLIENT SERVICES TEAMS.

D O N O T M A K E A N Y M A R K E T I N G D E C I S I O N S W I T H O U T F I R S T U N D E R S TA N D I N G YO U R DATA .

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14


CARFAX Helps TV Station Take Aim at CurbstonerEditor’s note: Curbstoning – sales

of vehicles by unlicensed dealers – is a national problem that takes advantage of consumers and takes money away from state and local governments as well as legitimate dealers. This report from Memphis television station WMC-TV exposing a local curbstoner and explaining the issue to the public is a direct result of the commitment of vehicle history UHSRUW�SURYLGHU�&$5)$;�WR�¿JKWLQJ�curbstoning.

“We brought the issue to the station’s attention,” CARFAX public relations manager Chris Basso said. “Tennessee is one of the biggest hotbeds for curbstoning, but it’s a nationwide problem. Whenever we hear about curbstoners in a particular area, we work to get the word out about the potential problems with the cars these people are selling and how to avoid them.

“Most curbstoners are selling cars reputable dealers won’t touch – cars with hidden damage or rolled-back odometers or such – because they’re trying to make a quick sale. Anyone buying a used car needs to be wary of not only the car but of who they’re buying it from.”

Basso said CARFAX has contacted other media outlets, including stations in Nashville and Phoenix, with similar tips, as part of the company’s ongoing efforts to help educate and warn consumers and dealers about emerging issues involving used cars in their area.

By Andy WiseAction News 5/WMC-TV

A police report revealed a car buyer

intends to press theft charges against the

son of a woman who is fronting used car

sales from her home for a dealership, a

practice called “curbstoning.”

%LOO�6XOOLYDQ�¿OHG�D�FRPSODLQW�ZLWK�WKH�Germantown (Tenn.) Police Department

on May 23. The complaint alleged he

gave $4,500 to Thomas Coleman, son of

Deborah Coleman, to purchase

three vehicles.

When their delivery was delayed,

Sullivan pressured Coleman to produce

the cars’ sales documents. Once Coleman

¿QDOO\�SUHVHQWHG�WKH�VDOHV�GRFXPHQWV��Sullivan said they revealed something else.

“The cars were never purchased by them

on my behalf,” Sullivan said. “They were

purchased by somebody else.”

According to the sales documents, that

“somebody else” was The Auto Connection,

an auto dealership at 1419 E. Broadway St.

in West Memphis, Ark.

Sullivan’s police report alleged

Coleman pocketed his $4,500 and never

purchased any cars with his money.

The cars the Colemans claimed to have

purchased with his money, Sullivan said,

were actually cars they sold on behalf of

The Auto Connection.

“Correct,” Sullivan acknowledged. “They

VSOLW�WKH�SUR¿WV�´The Action News 5 Investigators

pinpointed Deborah Coleman as a

curbstoner when the vehicle history

tracker CARFAX warned that unlicensed

or unforthcoming auto dealers have agents

posing as private sellers on CraigsList and

LQ�FODVVL¿HG�DGV�“Somewhere between 80 and 90 percent

RI�>DXWR�VDOHV@�FODVVL¿HG�DGV�DUH�EHOLHYHG�to be curbstoners,” CARFAX’s Chris Basso

said. “These are dealers posing as private

sellers who are selling cars that have a lot of

hidden problems.”

Coleman has posted numerous listings

for used car sales on CraigsList, all found

while running searches based on her

cellphone number.

Kayce Wyatt of Arlington, Tenn.,

answered one of Coleman’s ads for a 2001

Nissan Maxima, thinking Coleman was

the vehicle’s private owner putting it up

for sale.

She met Coleman at Coleman’s

home. That’s where the car was stored,

Wyatt said.

After taking a test drive and negotiating

the deal – but failing to run a vehicle

history report or to have the car inspected

– Wyatt paid $3,500 for the car, according

to the paperwork.

It’s when Coleman handed Wyatt the

title that Wyatt realized something was up.

“I got the title, and it said, ‘The Auto

Connection,’ ” Wyatt said.

The dealership, owned by Jimmy Smith,

is licensed with the Arkansas State Police

to sell used cars in Arkansas.

But according to the records of the

Tennessee Motor Vehicle Commission, The

Auto Connection is not licensed to sell cars,

new or used, in Tennessee.

It wasn’t long until Wyatt started having

trouble with the Maxima. The “Service

Engine Soon” light stayed on. The radio’s

power switch malfunctioned. The brakes,

pads, rotors, spark plug and oxygen sensor

had to be replaced.

She nearly paid as much to repair the car

as she did to buy the car.

If she had run a vehicle history report,

she would have discovered The Auto

Connection had Deborah Coleman

curbstone Wyatt a car that had been in an

accident in Michigan.

Neither Coleman nor The Auto

Connection disclosed the accident

to Wyatt.

“So it’s been wrecked,” Wyatt said. “I

cried and cried and cried about it, but I had

to do what I had to do. I didn’t have a way

out of it.”

An undercover producer of The Action

News 5 Investigators answered one of

Coleman’s ads for a Volkswagen Jetta. The

test drive revealed the “Service Engine

Soon” light was on.

“That’s because it’s due for an oil

change,” Coleman said to our producer.

A CARFAX report revealed nothing of

concern with the vehicle’s history.

Both the Jetta and a Cadillac Coleman

was selling outside her home had Arkansas

dealer temporary tags. When our producer

asked about the out-of-state tags, Coleman

admitted she was selling the vehicles for

The Auto Connection.

“[The] business is over in Arkansas, and

it just saves all the [document] fees, and it

saves me about $1,500-$1,600 dollars per

car,” said Coleman, who is also not licensed

to sell automobiles in Tennessee, according

to state records.

U N L I C E N S E D O R U N FO R T H C O M I N G D E A L E R S H AV E AG E N T S P O S I N G A S P R I VAT E S E L L E R S I N C L A S S I F I E D A D S .

C O N T I N U E D O N PAG E 16

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16


According to the Tennessee Code $QQRWDWHG��³LW�LV�XQODZIXO�IRU�DQ\�person to engage in business … as a motor vehicle dealer [or] motor vehicle salesperson ��ZLWKRXW�¿UVW�REWDLQLQJ�D�OLFHQVH�DV�UHTXLUHG�in this part.”³7HQQHVVHH�ODZ�VD\V�WKDW�LI�\RX�VHOO�

PRUH�WKDQ�¿YH�YHKLFOHV�LQ�D�\HDU��\RX�have to have a dealer’s license,” Basso VDLG��³7KHVH�DUH�SHRSOH�ZKR�DUH�VNLUWLQJ�that law, selling hundreds of cars without getting a dealer’s license, costing the state and local dealers hundreds of thousands of dollars” in tax revenue.

Coleman refused to answer questions when confronted. Smith agreed to an on-camera interview, then abruptly canceled the interview the next day.2Q�WKH�SKRQH��KH�VDLG�&ROHPDQ�³LV�P\�

agent. She sells cars for me. Sometimes it’s from her own driveway. Sometimes it’s from a [drug store] parking lot. She’s just trying to feed her kids.”

Germantown police department records revealed another car buyer reported Coleman in December 2010.

According to the complaint, the buyer blew the whistle on Coleman after he said he witnessed her and her son altering a temporary drive-out tag on a vehicle. &ROHPDQ�WROG�WKH�SROLFH�RI¿FHU�ZKR�ZURWH�WKH�report that she sold the car on behalf of Star Auto Mart, in Collierville, Tenn.³1R��VLU�´�6WDU�$XWR�0DUW�RZQHU�'DYLG�

)OHPLQJ�VDLG��³6KH¶V�QHYHU�VROG�IRU�PH��Never had a salesman’s license here. Never anything.”

Germantown police determined there wasn’t enough evidence to charge Coleman with a crime and decided it was a civil issue.³,W¶V�D�ORVH�ORVH�VLWXDWLRQ�ZLWK�

FXUEVWRQLQJ�´�%DVVR�VDLG��³7KH�VWDWH�ORVHV�money. The [licensed] dealers lose money and the consumer gets ripped off.³,I�\RX¶UH�ORRNLQJ�RQOLQH��HVSHFLDOO\�

through sites like CraigsList, you really need to be careful about what you’re buying.”

Coleman’s curbstoning operation may be in violation of a Germantown city RUGLQDQFH�WKDW�SURKLELWV�³UHFHLYLQJ�SHUVRQV�at a residential property for the purpose of buying, selling, ordering or picking up products in connection with a business.”³&RGH�FRPSOLDQFH�KDV�KDG�FRQWDFW�ZLWK�

[Coleman] in the past,” said Stacey Ewell, spokesperson for the city of Germantown. ³:H�GLG�SURYLGH�QRWLFH�IRU�XQOLFHQVHG�vehicles in the street in November of 2010 but have not had anything vehicle-related since. In addition, there is no business license for” Coleman’s address.

C O N T I N U E D F RO M PAG E 1 4CARFAX Helps TV Station Take Aim at Curbstoner

Report Shows Auto Credit Loosening Average credit scores for consumers buying a vehicle have drop to near

SUHUHFHVVLRQ�OHYHOV�LQ�WKH�¿UVW�TXDUWHU�RI��([SHULDQ�$XWRPRWLYH�reported.

According to Experian’s quarterly automotive credit analysis, the average FUHGLW�VFRUH�IRU�¿QDQFLQJ�D�QHZ�YHKLFOH�GURSSHG�VL[�SRLQWV�WR��DQG�IHOO�four points to 659 for used vehicles. For comparison, average credit scores for WKH�¿UVW�TXDUWHU�RI��MXVW�EHIRUH�WKH�HFRQRP\�VDJJHG��ZHUH��IRU�QHZ�vehicles and 653 for used.

Lenders continued to set favorable terms for consumers during Q1 of 2012. ,QWHUHVW�UDWHV�ZHUH�ORZHU�DQG�ORDQ�WHUPV�ORQJHU�WKDW�LQ�WKH�¿UVW�TXDUWHU�ODVW�year, giving consumers access to potentially lower monthly payments. The average interest rate dropped to 4.56 percent for new vehicle loans and 9.02 percent for used, while the average loan term increased by one month for both new (64 months) and used (59 months) vehicles.³2XU�UHSRUW�VKRZV�DXWRPRWLYH�OHQGLQJ�LV�DV�KHDOWK\�DV�LW¶V�EHHQ�VLQFH�

the market bottomed out in 2008,” Experian director of automotive credit 0HOLQGD�=DEULWVNL�VDLG��³:LWK�FRQVXPHUV�GRLQJ�D�JRRG�MRE�RI�SD\LQJ�EDFN�loans on time and the percentage of dollars at risk reaching its lowest point in six years, lenders are able to extend terms and provide lower rates.³7KLV�WKDZLQJ�RI�WKH�FUHGLW�SLSHOLQH�KDV�EHHQ�JRRG�IRU�HYHU\RQH��IURP�

consumers to lenders to automotive.”7KH�DQDO\VLV�DOVR�VKRZHG�DQ�LQFUHDVH�LQ�WKH�DYHUDJH�DPRXQW�¿QDQFHG��

which rose $589 to $25,995 for new vehicles and $411 to $17,050 for used vehicles.

Pace of Dealers Adding Inventory Slows Used car dealers have become less aggressive in bidding for inventory at

wholesale auctions in recent weeks, Black Book vice president and managing editor Ricky Beggs said.

Beggs noted that the retail market has backed off slightly and dealers have gotten less aggressive with bidding activity for the latest model years. Every car segment showed rate of decline and only two truck segments – compact SUVs and full-size crossovers – were up in May. ³:KLOH�WKHUH�DUH�VHDVRQDOLW\�WUHQGV�FXUUHQWO\�WDNLQJ�SODFH�LQ�WKH�UHWDLO�

PDUNHWV��ZH¶UH�VWDUWLQJ�WR�VHH�KHVLWDQFH�RI�GHDOHUV�WR�UH¿OO�XVHG�FDU�DQG�WUXFN�LQYHQWRU\�´�%HJJV�VDLG��³6RPH�RI�WKH�UHQWDO�FRPSDQLHV�DUH�SXVKLQJ�D�IHZ�PRUH�models into the market with a lesser demand for the 2012s and 2011 models, thus getting less aggressive bidding activity for the latest model years.”

I N D U S T RY C O R N E R

Rising Sales Lift Floorplans5LVLQJ�8�6��QHZ�DQG�XVHG�DXWR�VDOHV�KDYH�ERRVWHG�GHDOHUVKLS�SUR¿WV�LQ��

DQG�DUH�VWUHQJWKHQLQJ�DOUHDG\�VROLG�SHUIRUPDQFH�RI�GHDOHU�ÀRRUSODQ�DVVHW�EDFNHG�VHFXULWLHV��WKH�¿QDQFLDO�UDWLQJV�VHUYLFH�)LWFK�UHSRUWHG��'HDOHU�ÀRRUSODQ�DVVHW�SHUIRUPDQFH�KDV�EHHQ�VROLG�WKLV�\HDU��ZLWK�PRVW�WUXVW�

performance metrics at some of the strongest levels seen in the sector. Monthly payment rates are elevated above historical levels, dealer inventory agings are very low and dealer defaults are at record lows for most of the trusts.

Given the favorable conditions currently supporting U.S. auto dealership networks, Fitch’s outlook for both asset and ratings performance in 2012 is stable.

The report also discusses the health of U.S. auto dealerships in 2012, LQFOXGLQJ�VDOHV�OHYHOV��H[SHQVHV�DQG�SUR¿WDELOLW\��DORQJ�ZLWK�GHWDLOLQJ�RWKHU�¿QDQFLDO�GHDOHU�PHWULFV�DQG�RYHUDOO�LQGXVWU\�KHDOWK��7KH�UHSRUW��³8�6��'HDOHU�)ORRUSODQ�$%6��5REXVW�'HDOHUV�LQ��´�LV�

DYDLODEOH�DW�ZZZ�¿WFKUDWLQJV�FRP��

IL_0712.indd 16 6/20/12 11:23 AM


17


CARFAX has launched its newest wave of television ads as part of the national ³6KRZ�0H�WKH�&$5)$;´�FDPSDLJQ�

Starring again in all of the ads to deliver the message of smarter used car shopping is the knowledgeable Car Fox. The spots, which humorously depict people buying used cars from various types of sellers, illustrate how CARFAX YHKLFOH�KLVWRU\�UHSRUWV�FDQ�EXLOG�FRQ¿GHQFH�LQ�WKH�FDUV�SHRSOH�EX\�DV�ZHOO�DV�the dealers from whom they’re buying. Car Fox issues a friendly reminder for consumers to make an educated buying decision from a trusted seller by saying, ³6KRZ�0H�WKH�&$5)$;�´�³6PDUW�XVHG�FDU�VKRSSHUV�PDNH�JRRG�EX\LQJ�GHFLVLRQV�E\�FRQVXOWLQJ�WKH�H[SHUWV�

¿UVW�´�&$5)$;�FRPPXQLFDWLRQV�GLUHFWRU�/DUU\�*DPDFKH�VDLG��³$Q�LQVSHFWLRQ�E\�D�TXDOL¿HG�PHFKDQLF�DQG�D�WUXVWHG�&$5)$;�5HSRUW�LV�WKH�EHVW�RQH�WZR�SXQFK��³:H¶YH�ZDWFKHG�&DU�)R[�KHOS�ERRVW�WUDI¿F�DW�GHDOHUVKLSV�DQG�EXLOG�FRQ¿GHQFH�

ZLWK�FRQVXPHUV�HYHU\ZKHUH�VLQFH�KH�EHFDPH�SDUW�RI�WKH�µ6KRZ�0H�WKH�&$5)$;¶�campaign. We fully expect that success to increase with these latest ads.”

The new ads can be viewed on the CARFAX channel on YouTube or the company’s website, carfax.com.�³7KH�DGV�IHDWXULQJ�&DU�)R[�KDYH�EHHQ�ZLOGO\�VXFFHVVIXO�´�VDLG�=HYLQ�$XHUEDFK��

D�FUHDWLYH�SDUWQHU�DW�=LPPHUPDQ�$GYHUWLVLQJ��³7KH�QHZ�VHULHV�ZLOO�JLYH�IDQV�something to really look forward to. In essence, they’re mini-TV shows with a car dealer as a recurring character. The imaginative dealer is constantly trying to RXWIR[�&DU�)R[�ZLWK�D�VHULHV�RI�JLPPLFNV�OLNH�D�µVHDO�RI�DSSURYDO�¶�ZKLFK�LV�DFWXDOO\�D�live sea lion.�³2I�FRXUVH�DW�WKH�HQG��WKH�FXVWRPHU�VD\V�µ6KRZ�PH�WKH�&$5)$;�¶�DV�RXU�GHDOHU�

makes one last humorous attempt to provide an alternative.”Carfax gives free marketing materials featuring Car Fox to dealers, including an

LQÀDWDEOH�&DU�)R[�IRU�&DUID[�$GYDQWDJH�'HDOHUV��

CARFAX Introduces Its Latest TV AdsT H E L AT E S T | visit carfax.com

IL_0712.indd 17 6/20/12 11:23 AM


18


At the recent National Alliance of Buy

Here-Pay Here Dealers (NABD) Dealer

Academy in Las Vegas, NIADA and NABD

jointly announced the details of their

LQDXJXUDO�%+3+�&HUWL¿HG�0DVWHU�'HDOHU�training program, scheduled to be held in

September in Dallas.

Though NIADA has been conducting

LWV�VXFFHVVIXO�&HUWL¿HG�0DVWHU�'HDOHU�retail program for several years, this new

LQLWLDWLYH�PDUNV�WKH�LQGXVWU\¶V�¿UVW�%+3+�FHUWL¿FDWLRQ�SURJUDP�

At a very important time, during

which the BHPH industry faces many

challenging legal and regulatory issues,

WKLV�FHUWL¿FDWLRQ�SURJUDP�LV�GHVLJQHG�WR�KHOS�HVWDEOLVK�QHZ�RSHUDWLQJ�DQG�¿QDQFLDO�standards for industry leaders. Participants

in the inaugural training program must

meet certain operational standards,

including, but not limited to:

��Five years of successful operating

performance

��0HPEHUVKLS�LQ�JRRG�VWDQGLQJ�LQ�1,$'$��NABD or both

��+DYLQJ�D�FKLHI�FRPSOLDQFH�RI¿FHU��$I¿UPLQJ�WKDW�DOO�GHDOHUVKLS�RSHUDWLRQDO�

documents and transactional forms

have had a positive legal and compliance

UHYLHZ�IURP�D�TXDOL¿HG�DWWRUQH\��0DLQWDLQLQJ�¿QDQFLDO�VWDWHPHQWV�

prepared in accordance with generally

accepted accounting principles.

In addition, the dealer’s historical

performance must approximate the key

industry benchmarks published annually

by NABD and Subprime Analytics for

debt/equity ratio, allowance for bad

debts, average cash in deal, average gross

SUR¿W�SHU�YHKLFOH�VROG��DYHUDJH�SRUWIROLR�delinquency, average net loss per charge off

and average default rate.

A complete copy of the most recent

BHPH industry benchmarks can be

downloaded free at www.subanalytics.com

or by obtaining a copy of NIADA’s Used

Car Industry Report for 2012, for more

information, visit www.niada.com.

The eligibility criteria were established

with an emphasis toward encouraging

compliance with all industry laws and

UHJXODWLRQV��SUXGHQW�¿QDQFLDO�PDQDJHPHQW�and successful operating performance, and

sound systems and processes. Those traits

will distinguish graduates to both capital

providers and their industry peers.

The inaugural session is planned for

2 1/2 days at a training site in the Dallas

area to be announced in the near future.

The program goal is to provide training

for outstanding operators in the BHPH

industry. As a result of the training and

their commitment to ethical practices and

high business standards, graduates should

become even more successful.

%HFRPLQJ�D�%+3+�&HUWL¿HG�0DVWHU�Dealer is recognition of a dealer’s

dedication to the industry and his or her

record of proven stability, reliability and

ethical business practices.

The instructors include several of the

nation’s leading experts and most successful

operators. The course curriculum provides

interactive training and networking and

will initially include:

��Economic overview, benchmarks and

trends

��Financial management, accounting,

taxes and metrics

��Vehicle acquisition and reconditioning

��Keeping vehicles running and

customers paying

��Sales and marketing strategies

�� Underwriting best practices

��Collection best practices

��0D[LPL]LQJ�UHFRYHULHV��Legal and compliance

��Systems/processes/technology

��0XFK��PXFK�PRUH

B H P H C E R T I F I E D M A S T E R D E A L E R P RO G R A M S E T T O K I C K O F FBHPH Perspectives

IL_0712.indd 18 6/21/12 9:46 AM


19


It is contemplated that changes will be made to the curriculum in the future based on input from the participants. The curriculum is designed for graduates to enhance their management skills, improve WKHLU�DGYHUWLVLQJ�DQG�¿QDQFLDO�management, build more positive consumer relationships and stay compliant.

Graduates will receive their %+3+�&HUWL¿HG�0DVWHU�'HDOHU�GHVLJQDWLRQ�DQG�XVH�RI�WKH�&0'�seal for a period of 36 months. Each &0'�JUDGXDWH�PXVW�VXEVHTXHQWO\�obtain a minimum of 12 credit KRXUV�RI�1,$'$�1$%'�DSSURYHG�continuing education during each ��PRQWK�SHULRG�LQ�RUGHU�WR�UHWDLQ�the designation. At least 12 hours of continuing education opportunities will be offered throughout the year.

It is expected that some of these hours can be earned by attending WKH�1,$'$�&RQYHQWLRQ�DQG�1$%'�WUDLQLQJ�HYHQWV��1$%'�ZLOO�KROG�an East Coast National BHPH &RQIHUHQFH�LQ�$WODQWD�RQ�2FWREHU��23, 2012.7KH�%+3+�EXVLQHVV�UHTXLUHV�

specialized training and this program offers advanced sessions focused on DFKLHYLQJ�RSHUDWLQJ�DQG�¿QDQFLDO�excellence. Operators who strive to distinguish themselves from their industry peers are urged to participate.

Operators interested in participating can obtain an application E\�FDOOLQJ�1,$'$�DW��or emailing [email protected], by FRQWDFWLQJ�1$%'�DW��or by emailing Joe Kearse at [email protected]. Space is limited.

BY KENNETH SHILSONKENNETH SHILSON, CPA, IS PRESIDENT OF SUBPRIME ANALYTICS (WWW.SUBANALYTICS.COM), A CONSULTING COMPANY THAT PROVIDES PORTFOLIO ANALYSIS SERVICES AND CUSTOM CREDIT SCORING SOLUTIONS, AND IS PRESIDENT AND FOUNDER OF THE NATIONAL ALLIANCE OF BUY HERE-PAY HERE DEALERS (WWW.BHPHINFO.COM). HE CAN BE REACHED AT [email protected]. UPCOMING NABD CONFERENCES INCLUDE THE EAST COAST BHPH CONFERENCE AT THE GEORGIA INTERNATIONAL CONVENTION CENTER IN ATLANTA ON OCTOBER 21-23, 2012. FOR MORE INFORMATION, VISIT WWW.BHPHINFO.COM OR CALL (832) 767-4759.

Fastenal, a national distributor of industrial and construction supplies, has introduced an expense reduction program for auto dealerships to save owners time and money related to their shop supplies and essential tools. 7KH�FHQWHUSLHFH�LV�)DVWHQDO¶V�)$67�6ROXWLRQVɉ�LQGXVWULDO�YHQGLQJ�V\VWHP��7R�

GDWH��SOXV�PDFKLQHV�KDYH�EHHQ�LQVWDOOHG�WR�KHOS�RUJDQL]DWLRQV�UHGXFH�VXSSO\�consumption, move the cost of inventory to Fastenal, and increase worker productivity. 7R�DFFHVV�SURGXFWV��ZRUNHUV�HQWHU�DQ�,'�FRGH�DQG�D�UHSDLU�RUGHU�QXPEHU��WKHQ�

PDNH�D�VHOHFWLRQ��,I�WKH�UHTXHVW�LV�DXWKRUL]HG��WKH�PDFKLQH�GLVSHQVHV�WKH�SURGXFW�DQG�automatically reports the details of the transaction, making workers accountable for what they use. Controls can also be established so that workers only have access to the SURGXFWV��DQG�DPRXQWV��QHHGHG�WR�GR�WKHLU�MREV�

For more information, visit www.fastenal.com.

Fastenal Launches Expense Reduction ProgramI N T H E K N OW

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According to sales statistics for the ¿UVW�TXDUWHU�RI��VKLSPHQWV�RI�desktop and laptop PCs fell another 5 percent, and tablets and smartphones are cannibalizing PC sales by 50 percent.

Just another reason for car dealerships to optimize websites for mobile devices and include mobile advertising in their monthly budget.

Many mobile users are cruising FODVVL¿HG�VLWHV�DQG�VRFLDO�PHGLD�VLWHV�from their smart devices. Therefore, it is imperative for car dealers to get inventory on all of those sites, such as Craigslist and Backpage. Those FODVVL¿HG�VLWHV�DUH�JURZLQJ�UDSLGO\�with inventory and shoppers, and since posting on them is free, the return on investment is phenomenal.

In its Internet and American Life 3URMHFW��LQ�D�VWXG\�FDOOHG�³$PHULFDQV�DQG�Their Cellphones,” the Pew Research Center found mobile phones have become a nearly ubiquitous tool for information-seeking and communicating – 83 percent of American adults own some kind of cellphone – and they have an impact on many aspects of their owners’ daily lives.

Cellphones are useful for quick information retrieval, so much so that their absence can cause problems. More than half of all adult cell owners had used their phone at least once to get information they needed right away. More than one fourth said they experienced a situation in the previous month in which they had trouble doing something because they did not have their phone at hand.

Cellphones are important tools in emergency situations – 40 percent of cell owners said they found themselves in an emergency in which having their phone with them helped. Cell phones can help stave off boredom – 42 percent of cell owners used their phone for entertainment when they were bored.

Despite the advantages, some cellphone owners need an occasional break – 29 percent of cell owners turned their phone

off for a period of time just to get a break from using it. Even the advantages can cause frustration – 20 percent of cell owners experienced frustration because their phone was taking too long to download something, 16 percent KDG�GLI¿FXOW\�UHDGLQJ�VRPHWKLQJ�RQ�their phone because the screen was WRR�VPDOO�DQG��SHUFHQW�KDG�GLI¿FXOW\�entering a lot of text on their phone.

Cellphones can help prevent unwanted personal interactions – 13 percent of cell owners pretended to be using their phone in order to avoid interacting with people around them.

Text messaging and picture-taking continue to top the list of ways Americans use their mobile phones, with 75 percent of all cell owners using their phones for those purposes. Other relatively common activities include sending photos or videos to others (54 percent of cell owners do this) as well as accessing the Internet (44 percent)7KLUW\�¿YH�SHUFHQW�RI�$PHULFDQ�DGXOWV�

own a smartphone of some kind, and they take advantage of a wide range of their phones’ capabilities. Nine of 10 smartphone owners use text messaging or take pictures with their phones, and eight in 10 use the phone to go online or send photos or videos to others. Many activities — downloading apps, watching videos, accessing social networking sites or posting multimedia content RQOLQH�²�DUH�DOPRVW�HQWLUHO\�FRQ¿QHG�to the smartphone population.

The statistics make it easy to see that mobile advertising is becoming increasingly important, and focusing on rich media advertising is even more important. Rich media ads offer more in-app interactivity via video, sound, gaming and so on.

The aesthetic value is an obvious advantage that will attract advertisers and ad creators. Furthermore, with the growing adoption of smartphones as the device of choice, rich media is the natural

progression toward more engaging ads on free sites, which captures a captive audience. The engagement rates are as high as 33 percent on rich media ads.

If a car dealership depends on its web presence in any way, it’s important to start thinking about mobile now. Check how the website looks and works – or doesn’t – on mobile devices. Mobile Internet use is growing faster than anyone realizes.

Don’t wait until 75 percent of your website visitors are using handhelds. That’s like waiting until PRVW�RI�\RXU�EDFN\DUG�LV�RQ�¿UH�before grabbing a water hose.

Start thinking now about how to make your website work hard for you on mobile devices, as well as getting ads developed for your dealership to run mobile campaigns. Mobile campaigns are used widely by manufacturers but can be brought to a local level with VRPH�JHR�VSHFL¿F�WDUJHWLQJ��7KDW�means ads can be targeted to certain zip codes to run in your local area in order to attract more local business for your sales and service department.

Running coupon ads, loss leaders and teaser ads on mobile devices seem to be the most effective ways to attract local customers. The use of QR codes in paper advertisements can drive customers to either a mobile landing page or a video about your sales or service specials.

With the explosion of Internet video FRQVXPSWLRQ��LW�LV�FRQ¿UPHG�PRELOH�video has largely been adopted. While video isn’t a huge focus for advertisers right now – many cite broadband and technology inadequacies as barriers – many static stats tell the story of video’s increasing importance for car dealers and salesmen.

Mobile Advertising a Must for Car Dealers

BY DANI LUNSFORDDANI LUNSFORD IS A NATIONAL SALES AND MARKETING EXECUTIVE WITH SHOWCASE PUBLICATIONS, INC. SHE HAS BEEN IN THE RETAIL AUTOMOTIVE INDUSTRY FOR 14 YEARS, WORKING IN SALES, SERVICE, E-COMMERCE MANAGEMENT AND AS A CONSULTANT TO IT COMPANIES AND DEALER GROUPS. SHE CAN BE REACHED AT [email protected].

D O N ’ T WA I T U N T I L 7 5 P E RC E N T O F YO U R W E B S I T E V I S I T O R S A R E U S I N G H A N D H E L D S .

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I N D U S T RY T I P S

If you are a small employer with fewer than 25 full-time equivalent employees who earn an average wage of less than $50,000 per year, and you pay at least half of employee health insurance premiums, there is a tax credit that can put money in your pocket.

The Small Business Health Care Tax &UHGLW�LV�VSHFL¿FDOO\�WDUJHWHG�WR�KHOS�VPDOO�businesses and tax-exempt organizations. The credit can enable small businesses and small tax-exempt organizations to offer health insurance coverage for the ¿UVW�WLPH��,W�DOVR�KHOSV�WKRVH�DOUHDG\�offering health insurance coverage maintain the coverage they already have.

Here is what small employers need to know so they don’t miss out on the credit for tax year 2011:��4XDOLI\LQJ�EXVLQHVVHV�FDOFXODWH�WKH�

Small Business Health Care Credit on Form 8941, Credit for Small Employer Health Insurance Premiums, and claim it as part of the general business credit on Form 3800, General Business Credit, which they would include with their tax return.��7D[�H[HPSW�RUJDQL]DWLRQV�FDQ�

use Form 8941 to calculate the credit and then claim the credit on Form 990-T, Exempt Organization Business Income Tax Return, Line 44f.��%XVLQHVVHV�WKDW�FRXOGQ¶W�XVH�WKH�FUHGLW�

in 2011 may be eligible to claim it in future years. Eligible small employers can claim the credit for 2010 through 2013 and for two additional years beginning in 2014.

For tax years 2010 to 2013, the maximum credit for eligible small business employers is 35 percent of premiums paid. For eligible tax-exempt employers the maximum credit is 25 percent of premiums paid. Beginning in 2014, the maximum credit will go up to 50 percent of qualifying premiums paid by eligible small business employers and 35 percent of qualifying premiums paid by eligible tax-exempt organizations.

Additional information about eligibility requirements and calculating the credit can be found on the Small Business Health Care Tax Credit for Small Employers page of IRS.gov.

IRS Tax Tip: Claiming the Small Business Health Care Tax Credit

M O N A RC H AU T O SA L E S OW N E R DAV I D L A N Z E R ( S E C O N D F RO M L E F T ) , W I T H S TA F F M E M B E R S ( F RO M L E F T ) A L E X B O D I FO R D , T E R RY L A N Z E R A N D R AYS H AW N J U M P E R .

Adding Rentals Can Help Drive SalesDavid Lanzer sells used cars. That’s the primary mission of Monarch Auto Sales, the

dealership he owns and operates in Greensboro, N.C.

But Lanzer also rents used cars through a franchise with Rent-A-Wreck, which, he said,

¿WV�QHDWO\�ZLWK�PLVVLRQ�1R��“For the retail used car dealer, there’s so much synergy it’s not even funny,” Lanzer

said. “Our rental customer is that same customer we end up selling a car to. They come to

5HQW�$�:UHFN�EHFDXVH�WKHLU��\HDU�ROG�FDU�ZLWK��PLOHV�RQ�LW�MXVW�GLHG�DQG�WKH\¶UH�stuck for a car.”

That makes the rental operation a magnet that attracts prime prospects for sales, and

Lanzer said he takes full advantage of the opportunities it provides. Throughout the rental

process, the dealer considers every rental customer to be a potential sales customer, too.

“We market car sales hard to every rental customer that walks in the door,” he said.

³:H�PDNH�LW�FOHDU�WKDW�DOO�RI�RXU�FDUV�DUH�IRU�VDOH��DQG�ZH�WDON�WR�RXU�FXVWRPHUV��:H�¿QG�RXW�ZK\�WKH\�QHHG�WR�UHQW�WKH�FDU��DQG�ZH�VHOO�DERXW��FDUV�D�\HDU�MXVW�WR�RXU�UHQWDO�customers. That sales volume has been consistent for us for years.

“We do insurance replacement rentals where a customer will have just gotten into an

accident, and before that customer is even in buying mode, we’re planting the seed that

KLV�UHQWDO�LV�DYDLODEOH�IRU�VDOH�DQG�¿QGLQJ�RXW�ZKDW�KH¶V�ORRNLQJ�IRU�LQ�KLV�QH[W�FDU��:H¶OO�entice him with a rental ‘test drive,’ where we’ll put the cost of the rental toward the car if

they wind up buying.”

Lanzer said the rental operation has also helped him with inventory for his retail

dealership, a big advantage given the current short supply and high price of quality

inventory.

³7KH�FDUV�ZH�ÀHHW�DV�UHQWDOV�HQG�XS�DV�SHUIHFW�UHWDLO�XQLWV�IRU�RXU�FXVWRPHUV�´�KH�H[SODLQHG��³:H�ÀHHW�D��\HDU�ROG�FDU��UXQ�LW�SUR¿WDEO\�LQ�RXU�UHQWDO�ÀHHW�IRU��PRQWKV�WR�WZR�\HDUV��WKHQ�ZH¶UH�OHIW�ZLWK�D��\HDU�ROG�FDU�DQG�WKRVH�DUH�YHU\�GHVLUDEOH�DQG�LQ�VKRUW�supply at the auctions now.”

Lanzer said the rental business does require a dealer to make some adjustments from

WKH�W\SLFDO�GHDOHUVKLS�PRGHO��)RU�H[DPSOH��KH�VDLG�WKH�W\SLFDO�GHDOHU�ÀRRU�SODQ�LV�IRU��GD\V��ZKLOH�D�W\SLFDO�UHQWDO�ÀRRU�SODQ�LV�PXFK�ORQJHU�±�PRUH�OLNH��PRQWKV�,Q��SHUFHQW�RI�1DWLRQDO�,$'$�PHPEHUV�RIIHUHG�UHQWDO�FDUV�DW�WKHLU�GHDOHUVKLSV��

GRZQ�IURP��SHUFHQW�LQ��2I�WKRVH��SHUFHQW�UDQ�DQ�LQGHSHQGHQW�UHQWDO�RSHUDWLRQ�ZKLOH��SHUFHQW�±�LQFOXGLQJ�/DQ]HU�±�ZRUNHG�WKURXJK�D�IUDQFKLVH�

Lanzer said he prefers the franchise route because of the support offered.

“Rent-A-Wreck earns every dime of the royalties I pay them,” he said. “The systems

they have in place to deliver reservations and market you on the Internet and travel

websites, the support they provide you as a franchise on everything from your insurance

WR�\RXU�¿QDQFLQJ��WKH�OHJDO�VWXII��WKH�RSHUDWLRQV�DQG�EXVLQHVV�PDQDJHPHQW�VRIWZDUH��FRDFKLQJ�DQG�WKH�FRPSDQ\�VSRQVRUHG�GHDOHU��JURXSV�±�WKRVH�DUH�DOO�WKLQJV�DQ�independent would have to do for themselves on their own. “

5HQW�$�:UHFN�LV�FXUUHQWO\�RIIHULQJ�D��GLVFRXQW�IRU�VWDWH�,$'$�PHPEHUV�WKURXJK�WKH�HQG�RI�WKH�\HDU��DQG�WKH�FRPSDQ\�VDLG�LW�ZLOO�GRQDWH��WR�WKH�GHDOHU¶V�VWDWH�association for every franchise sold to an IADA member.

BY ANDY IATRIDIS ANDY IATRIDIS IS FRANCHISE DEVELOPMENT MANAGER FOR RENT-A-WRECK. TO CONTACT HIM OR GET INFORMATION ABOUT ADDING A RENT-A-WRECK FRANCHISE, CALL (469) 939-6132 OR EMAIL [email protected].

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BY CHIP ZYVOLOSKICHIP ZYVOLOSKI IS A SENIOR ATTORNEY FOR INDIRECT LENDING AT WOLTERS KLUWER FINANCIAL SERVICES. FOR MORE INFORMATION, VISIT WWW.WOLTERSKLUWERFS.COM/INDIRECT.

When I attend industry events, I enjoy meeting dealers and hearing their takes on current challenges and trends facing the industry.

One topic that has come up recently is leasing. I have heard a number of dealers comment on how they would like to expand their dealership and start leasing vehicles. While that may sound like a natural step in growing a business, dealers must consider the differences between selling and leasing.7R�EH�FOHDU��E\�³OHDVH�´�,�PHDQ�D�FRQWUDFW�

allowing a customer to use your vehicle for a period of time (minimum: four months). At the end of the lease, the customer returns the vehicle and doesn’t owe you any more money as long as the vehicle has only reasonable wear and tear and was driven no more than the agreed mileage.

If there is an option to purchase, the option price bears some relation to the vehicle’s expected market value at the time the option is exercised. In other words, the lessee doesn’t have the option to purchase for $1 because that would really be a sale, disguised as a lease.

Adding leasing to an independent

Look Before You Leasedealership might sound simple. You’re already arranging loans and payments for the vehicles you sell, so why not expand \RXU�LQ�KRXVH�¿QDQFLQJ�WR�RIIHU�FXVWRPHUV�another option?

But it’s not as easy as it looks. Here are key areas to consider when making your decision.

Licensing: Make sure your license for selling vehicles also allows you to lease vehicles. Your current license might not be broad enough to authorize leasing.

Insurance: When you sell a car, the title is transferred to the buyer. You focus on UHFHLYLQJ�WLPHO\�SD\PHQWV�DQG�FRQ¿UPLQJ�WKH�EX\HU�KDV�VXI¿FLHQW�LQVXUDQFH�WR�SURWHFW�\RXU�security interest in the vehicle. You probably have property and liability insurance to protect your inventory and sales.

However, when a dealer leases a car, he still owns it. If the vehicle is involved in an accident, you might be subject to liability as the owner. As part of researching a leasing operation, meet with your legal counsel and insurance carrier to make sure you protect against liability exposure with appropriate insurance coverage.

Pricing: Determining the sales price of a vehicle is pretty straightforward. You know your costs to purchase and prepare WKH�YHKLFOH�IRU�VDOH��VDOHV�FRVWV�DQG�SUR¿W�margins, and sell the vehicle for more than your costs. You know at the time of sale whether you are making money on the deal.

With a lease, the calculations are more complicated. It might be easy to determine what the vehicle is worth today, but how do you know what it will be worth when the lease is up, say, two or three years from now? That depends on factors such as how many miles it will be driven and how well it is maintained.

There are also unknown variables. What if gas prices rise drastically and the vehicle is a gas-guzzler? That could impact the market value at the end of the lease (residual value). In most consumer leases, the dealer is on the hook if the residual value is less than predicted.

You won’t really know if you’re making PRQH\�RQ�D�OHDVH�XQWLO�\RX�¿QG�RXW�KRZ�well you predicted the residual value. You might be two or three years into the lease program before you realize you’ve set your residual values too high – and by then it’s too late.

Documentation and disclosures: You can’t just modify a retail sales contract to make it a lease. If you are planning to include leasing, you must make sure your documents meet state and federal

consumer lease requirements.The federal Consumer Leasing Act and

its implementing Regulation M are the lease disclosure equivalents of the Truth in Lending Act and Regulation Z for consumer lending. Reg M requires dealers to provide D�JUHDW�GHDO�RI�VSHFL¿F�SULFLQJ�LQIRUPDWLRQ�in lease contracts. Many states require additional disclosures and consumer protections. As part of your leasing startup, you will need to create a unique document set of disclosures and contracts.

Taxes: In a lease you retain ownership, so you might roll your sales taxes to purchase the vehicle into your costs and lease calculations, but you might also need to collect use or other taxes on the payments throughout the lease term. Contact your accountant and/or the state to understand your tax obligations and how they differ for leases.

Collections: If a buyer doesn’t make timely retail contract payments, you can repossess the car. Fear of losing the car can help motivate a buyer into making past due payments. In a lease, the lessee doesn’t own the car and may expect to return it and walk away at the end. That might make it a little easier for the lessee to emotionally handle repossession, but it might mean the lessee isn’t afraid of having the car repossessed and isn’t as motivated to make past due SD\PHQWV��$V�ZLWK�D�¿QDQFHG�VDOH��RQFH�\RX�repossess a vehicle, the lessee has even less motivation to pay any balance still due.

If a car is returned with wear or damage beyond what’s agreed on in the lease, it FDQ�EH�GLI¿FXOW�WR�FROOHFW�PRQH\�WR�FRYHU�those costs. You can use the lessee’s damage deposit, so make sure you set it at a practical amount – it might be the only money you end up recovering for excess wear and tear.

These are only some issues to consider when starting a lease program. You can identify more by simply reading a motor vehicle lease contract.

The differences between selling and leasing are dramatic and can’t be overlooked. Your operations and compliance can be affected by the type of transaction, the vehicle and the state in which you are doing business.

C O M P L I A N C E OV E R D R I V E

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Documents

IIADA July/August 2012