TIPS TO CONVERT “CASH” CUSTOMERS TO DEALER FINANCE PROGRAMS

Welcome to Success Tips

From Business Managers across the country I often hear the following comment:

“My gross profit on finance deals is excellent, but my cash deals are terrible.” With increased competition in vehicle sales putting pressure on the sales departments‟ and vehicle gross profit, the need to improve performance with

“cash” deals is paramount.

Only 8% of the time, "CASH" customers are using a form of liquid cash to purchase their vehicle; namely their savings, RRSP‟s or investments. The other 92% of the time, "CASH" customers are using some form of financing to fund

their purchase in the form of a

Home Equity or Secured Line of Credit An Unsecured Line of Credit or A bank branch or credit union loan.

Most "CASH" deals are funded from some type of a line of credit.

By implementing a few simple strategies, you can convert more of these customers to a dealer plan solution while at the same time, sell more products.

Traditionally, Business Managers have been trained to attempt to convert customers to Dealer Plan financing as the first step of their turnover sales

process. Unfortunately, this can appear confrontational to your customer. This strategy may spoil the mood of the turnover and put you at a significant disadvantage. Try changing your strategy.

First determine the source of your customer‟s cash by asking politely. Here‟s an

example: “I understand that you‟ll be paying cash for your purchase here today. With your permission, there's a very good question that I‟d like to ask you.” Most of your customers will respond positively. “Was that cash coming from savings,

an RRSP, an investment cash-out or a bank product like a line of credit?” Most customers will respond indicating that they will be using their line of credit. Don‟t

attempt to convert the customer at this point but rather offer to provide the customer with some valuable information as follows: “As a courtesy to our customers, I would like to show you on my computer how long it will take you to

pay off your vehicle purchase using your line of credit and the payment that you would need to establish in order to pay it off in a time period that's comfortable

for you and your budget. Is your line secured or unsecured?... What percentage over prime are you paying? What period of time or term were you planning on to pay out your new vehicle?”

Plug in the interest rate of your customer‟s line of credit into your software and show your customer what their monthly payment would be using THEIR line of

credit over various terms.

Voila! At this point, you‟ve now created a payment buyer and you can now sell your products on payments - using their interest rate. Consider how much easier it will be to sell an extended service plan with the following close: “Mr. Jackson,

you can go with a 7 year or 140,000 km plan for just $47.50 per month or go with the 7 year or 160,000 km plan for just $5 more per month. Which one of these

would work best for you?” Using this strategy will allow you to sell more products to cash buyers who are using their line of credit.

O.K. You‟ve sold your Business Office products and services and still have a captive audience. Now attempt your conversion toward the end of your turnover.

At this point in your turnover you have developed rapport and trust with your customer and they may now be willing to learn of their Dealer Plan financing options. Prepare a CONSUMER ALERT BULLETIN that details the pitfalls of using

a line of credit for a vehicle purchase and review the disadvantages with your customer.

Offer an alternative solution to your customer with a Dealer Plan loan arrangement that will offer a definitive „get out of debt‟ date. Remain neutral,

objective and helpful. Do not appear to be trying to sell your solution but rather making other options available that might make better sense. Having your

customer pay for the vehicle with your Dealer Plan financing will allow them to keep their line of credit intact for what it was originally intended for-life emergencies or opportunities.

In order to help you convert more “CASH” customers, TD has developed the

industry‟s first variable rate auto finance product. This product will help you compete with other “float rate” products such as lines of credit that consumers often turn to when financing their vehicle purchases.

Let‟s remember that when you quoted the earlier line of credit payment on your

computer, it was a monthly payment. When you quote your dealer plan solution; change the payment frequency from a monthly payment to a biweekly. Since most customers get paid bi-weekly, they will prefer to pay that way as it makes

for easier budgeting.

Don‟t give up on cash deals. Start using different strategies and don‟t tell your customers that using their line of credit may not be in their best interest, rather SHOW THEM. Quantify your premises with facts, articles and most importantly,

use your computer screen to convert a line of credit customer. Many will take your valuable advice.

I‟m Chris Schulthies and see you next time for another Success Tip!