WELCOME TO THE Learn How Bethany Johnson, Jon Hazelwood and the Rest of the RBM North Team Powered Through Early Challenges to Become One of Their City’s Top High-Line Dealerships Take an Exclusive Look Inside the Playbook of All-Star Special Finance Manager Greg Alore New to Automotive Finance? Expert Breaks Down 10 Rules No F&I Manager Can Ignore FEBRUARY 2011 $10.00 A BOBIT PUBLICATION FI-MAGAZINE.COM WHAT A EDITOR: THE EVIDENCE ‘GAP’ | MAD MARV: CHARGE-BACK CONTROL | LEGAL: BRAVE NEW WORLD
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Transcript
WELCOME TO
THE
Learn How Bethany Johnson, Jon Hazelwood and the Rest of the RBM North Team Powered Through Early Challenges
to Become One of Their City’s Top High-Line Dealerships
Take an Exclusive Look Inside the Playbook of All-Star Special Finance Manager Greg Alore
New to Automotive Finance? Expert Breaks Down 10 Rules No F&I Manager Can Ignore
FEBRUARY 2011 $10.00
A BOBIT PUBLICATION FI-MAGAZINE.COM
WHAT A
EDITOR: THE EVIDENCE ‘GAP’ | MAD MARV: CHARGE-BACK CONTROL | LEGAL: BRAVE NEW WORLD
12 Climb to the TopRBM North overcame an undeveloped market and stiff competition to become one of the top-rated high-line dealerships in the greater Atlanta area.
Finance and Insurance
18 F&I’s 10 CommandmentsStarting out in F&I is never easy, but the magazine’s resident expert lays out a game plan to get F&I “newbies” off on the right foot.
Q&A
24 Product PlacementShould the base payment be displayed on the menu? Offi cials with IAS offer their take on that hot-button issue and more.
Special Finance
26 Go Long!At Longmont Ford, Greg Alore relies on a roster of lenders, lead providers and satisfi ed customers to help his special fi nance team rack up hall-of-fame numbers.
Dealer Management
30 Pay Plan RebootThe Department of Labor is gearing up. The question is, will your pay plans be ready? Here’s a primer to help you get them up to speed.
4 Letters
6 Editorial Page
8 Developments
34 Sales Driver
36 Mad Marv
38 Legal
39 Bottomliners
40 Ad Index
44 Industry Trends
Departments
Features
F&I and Showroom (ISSN 2154-1728) (USPS 018-706) (CDN IPM# 40013413) is published monthly, by Bobit Business Media, 3520 Challenger Street, Torrance, California 905031-1640. Periodicals Postage Paid at Torrance, California 90503-9998 and additional mailing offi ces. POSTMASTER: Send address changes to F&I and Showroom, P.O. Box 1068 Skokie, IL 60076-8068. Please allow six to eight weeks for address changes to take effect. Subscription Prices: United States $20 per year; Canada $35 per year; Foreign: $35 per year. Single copy price: $10; Fact Book: $30. Please allow six to eight weeks to receive your fi rst issue. Bobit Business Media reserves the right to refuse nonqualifi ed subscriptions. Please address editorial and advertising correspondence to the executive offi ces at 3520 Challenger Street, Torrance, California 90503-1640. The contents of this publication may not be reproduced either in whole or in part without the consent of Bobit Business Media. All statements made, although based on information believed to be reliable and accurate, cannot be guaranteed and no fault or liability can be accepted for error or omission.
12
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26
Contents Endorsed as the offi cial publication
of the Association of Finance & Insurance Professionals
The End of Sales vs. FinanceTO “MAD” MARV ELEAZER: Your De-
cember column (“Who Needs ’Em?”)
couldn’t be more spot on. I have been
a fi nance manager for 28 years and
have gone from being really diffi cult
with salespeople to having a very
good relationship with them. We’ve
realized that we have to work to-
gether in order to deliver a vehicle,
because, as you said, if the sales
force and F&I manager can’t work
together, it will surely spell doom for
the sales process.
Harvey CoopersmithBusiness Manager
Mercedes-Benz of Atlantic City (N.J.)
Thanks for the note, Harvey! I too have sown bad seeds that I’m still reaping. But I press onward, realiz-ing it’s not about me. I can’t tell you how much I appreciate when a sales-person gets excited over a deal I put together that he or she would never have been able to do. Sales staffers are real people who need manage-rial involvement — not managerial bullying. — Marv Eleazer
Compliance Survives When Deals DieTO MICHAEL BENOIT: At my dealership,
we scan completed and delivered
deal jackets and will soon be scan-
ning “dead” fi les. I have a couple of
questions about this process:
■ If we scan a deal jacket contain-
ing a customer’s personal informa-
tion, how long do I need to keep the
paper fi le before I can shred it?
■ Do I still have to keep the paper
fi le even if I have an electronic fi le
that follows state and federal record-
keeping guidelines?
I have visited the Federal Trade
Commission’s Website and other
resource sites, but I can’t get a clear
answer.
Vern SternCompliance Manager
Dave Smith Motors Kellogg, Idaho
Vern, the only issue is whether a state law requires the retention of “origi-nals.” This is true in the case of install-ment sale contracts in some states (i.e., the fi nance company that bought the contract might be required to re-turn the “original” marked “paid” to the buyer). That wouldn’t gener-ally apply in a deal jacket, except in a buy-here, pay-here or related fi nance company situation.
Your question requires answers as to what’s permitted in Idaho. Most states’ “rules of evidence” will per-mit you to use a scanned copy as the “best evidence” available when the originals have been destroyed. Your corporate counsel should know if this is the case in Idaho.
Counsel also should review the Idaho Credit Code for retention re-quirements relating to credit sale documents. Idaho’s dealer code also may indicate a restriction on scan-ning and destroying originals.
Federal law doesn’t restrict the practice of scanning and destroy-ing originals; however, you’ll want to verify with your counsel that the federal rules of evidence allow you to present scans as evidence in litigation. — Michael Benoit
New Rule, No ProblemTO THE EDITOR: Greg, you were right
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F&I Training I Advanced F&I Technology
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The Fed sure isn’t hiding its disdain for credit insurance with its proposed changes to Reg. Z. Then again, it might just be an information gap at work. By Gregory Arroyo
Prices Fall, Incentives Increase for DecemberTRUECAR.COM HAS ESTIMATED
that the average transaction price for light vehicles in the United States was $29,358 in December 2010, down $276 (0.9 percent) from December 2009 and down $95 (0.3 per-cent) from November 2010.
The estimated average transaction price for all vehicle types was $29,070 in 2010, up 4.7 percent from 2009’s aver-age transaction price of $27,757.
GAP providers in California
are racing to notify deal-
ers that one of the key sell-
ing features of GAP might be barred
since a new law took effect on Jan. 1.
In late September, Gov. Arnold
Schwarzenegger signed AB 2782
into law. The Omnibus bill included
a new licensing requirement for sell-
ers of accident and health insurance.
How GAP got thrown in is a case of
unintended consequences.
According to executives at San Di-
ego-based OwnerGUARD, the state
dealership association asked the Cal-
ifornia Department of Insurance to
clarify whether a GAP waiver would
fall under the new requirement. In its
response, the state agency said GAP
waivers could not cover a customer’s
deductible.
Fortunately for the industry, the
state’s department of insurance has
delayed enforcement of the new law
because many broker agents were un-
aware of the new requirement.
“GAP sales can continue, but the
law is what the law is,” said Michelle
Dicks, general counsel for Owner-
GUARD. “The Department of Insur-
ance has agreed to delay enforcement
through March 31, which means the
department, in looking at GAP waiv-
er forms, is not going to fi ne someone
or haul them into court for having a
form that indicates that the deduct-
ible will be covered. However, you
can’t cover the deductible.”
If left unchanged, California deal-
ers will be prohibited from selling de-
ductible coverage through GAP with-
out an agent license. In the meantime,
providers are adding language to their
agreements that informs consumers
that deductible coverage is void.
OwnerGUARD is working with the
state’s dealer association and the in-
surance agency on new legislation to
solve the deductible problem. “We’re
really close to having language that
will fi x this legislation,” Dicks said.
OwnerGUARD is also working
with John Norwood, a noted Cali-
fornia lobbyist who specializes in the
state’s insurance and fi nancial sector.
The company hopes he can clear the
way for the state legislature to vote and
pass its drafted legislation by June, but
company offi cials admit there are sev-
eral hurdles standing in the way.
“Our goal is to, hopefully, see
something in June, but nothing is ever
certain,” said Dicks. “If it doesn’t
work the way we’re anticipating, we
might be looking at a September vote.
But if our legislation is not labeled as
an emergency measure, we could be
looking at Jan. 1, 2012.”
APRs Hit All-Time Low in DecemberCAR BUYERS ENJOYED THE LOWEST-
ever average annual percentage rate (APR) on their auto loans in December 2010, according to Edmunds.com.
The average loan carried an APR of 4.16 percent that month, down 0.33 points from November and 0.55 points from December 2009. An estimated 15.4 percent of all loans carried zero interest, the third highest monthly pace in 2010.
Only 4 percent of all loans car-ried an APR higher than 10 percent in December 2010, the lowest pro-portion seen by Edmunds.com since
it started gather-ing data in this category in 2004.
A major contribu-
tor to the low December interest
rates was the luxury market, which is generally driven by an affl uent, fi scally stable set of consumers, Edmunds.com said. The average APR for fi nanced sales of the top seven luxury brands was 2.9 percent, the lowest monthly rate of 2010.
The top three makes with deals fi nanced at zero percent were Buick, Toyota and Cadillac.
California Law Threatens GAP Deductible Coverage
Sacramento, Calif.
2011 Buick Regal
Developments
8 F&I and Showroom February 2011 CALIFORNIA STATE CAPITOL PHOTO BY COOL CEASAR
Services has completed the Reynolds Certifi ed Interface (RCI) program. As a certifi ed vendor, Ristken’s retail automo-tive software now has the ability to exchange data within Reynolds’ dealer management system. Certifi cation also ensures the security, integrity and privacy of dealership data. Through the approved interface, Ristken will also be able to better service, sup-port and control dealers’ information with the Ristken application.
Impact Group Connects IAS Products to Fusion MenuTHE IMPACT GROUP’S
Fusion menu now offers e-rating and e-con-tracting capabilities for Innovative Aftermar-ket System (IAS)’s F&I product line. Users can now rate all available IAS
product plans through the Fusion menu, as well as automatically update the dealer manage-ment software, print the selected contracts, and remit deal information to IAS for processing.
GWC Warranty, Tidewater Announce PartnershipDUE TO A NEW
partnership, Tidewater Motor Credit is now offering GWC Warranty Corp.’s vehicle service contracts. The subprime
lender made GWC’s product available through its dealer network in January.
Fortegra Acquires Auto Knight Motor ClubFORTEGRA FINANCIAL
Corp. has acquired the Palm Springs, Calif.-based Auto Knight Motor Club Inc. The acquisition expands Fortegra’s geo-graphic reach to Canada, where Auto Knight offers vehicle service plans and tire-and-wheel programs
through a network of dealerships.
DataScan Field Services Adds Clubb Finance Corp.DATASCAN FIELD SERVICES
was selected by Clubb Finance Corp. to provide fl oorplan verifi cation services for its dealer networks in Canada. Clubb provides short-term fl oorplan fi nanc-ing to independent and franchised automobile dealers, brokers and wholesalers.
Reynolds to Continue as Website Provider for Asbury THE REYNOLDS AND
Reynolds Co. has ex-tended its relationship with Asbury Automotive Group Inc. Reynolds Web Solutions will continue to provide its Web technolo-gy platform and dedicat-ed Web support team to Asbury’s 84 dealerships in the United States.
Dealer.com, a provider of online marketing solutions for the auto-motive industry, has expanded its leadership team by naming fi ve new executives.
Kristin Halpin, who joined Dealer.com in 2009, will serve as vice president of human resources.
Dan Jackson, who spent the last fi ve years managing the company’s OEM and dealer relationships,
will now serve as vice president of account management.
Tom O’Leary, who fi rst joined the company in 2009, takes over as vice president of sales.
Bryan Landerman, who has been with the company for three years, assumes the title of vice president
of engineering.
Additionally, Chris Stephenson, who joined the company in 2007, will serve as vice president of
business solutions.
Developments
10 F&I and Showroom February 2011
Moves and Hires
CONSUMER BANKRUPT-
cies were up 9 percent nationwide in 2010 from the previous year, according to the Ameri-can Bankruptcy Institute. Overall consumer fi lings reached more than 1.5 million in 2010, up from the 1.4 million fi lings in 2009. Consumer fi lings reached 118,146
last December, a 4 per-cent increase from the 113,274 fi lings recorded in December 2009.
Consumer Bankruptcy FilingsIncrease 9 Percent in 2010
CarMor® is the product marketing name used by Allstate Dealer Services. Allstate Dealer Services is a marketing name for Pablo Creek Services, Inc., E.R.J. Insurance Group, Inc. (d/b/a
American Heritage Insurance Services), the dealer services division of American Heritage Life Insurance Company (Home Office: Jacksonville, FL), Northbrook Indemnity Company,
(Home Office: Northbrook, IL) and First Colonial Insurance Company (Home Office: Jacksonville, FL); each of these entities is a part of the Allstate family of companies.
Timing is EverythingRBM North’s location wasn’t initial-
ly a cause for concern, which is why
Mercedes-Benz targeted the location
in the fi rst place. “This area, because
of the growth, affl uence and school
systems, represented an ideal spot for
a new dealership,” Powell says.
The dealership, which is 22 miles
north of Atlanta, primarily serves
customers in Forsyth, Cherokee,
Cobb and North Fulton counties,
areas that began to fl ourish after
the 1996 Summer Olympics in At-
lanta. In fact, in 2010, Forbes maga-
zine named Forsyth County, which
has a median household income of
$86,938, as the 20th richest county in
the United States. Additionally, the
U.S. Census Bureau named Forsyth
and neighboring Cherokee County
as the nation’s sixth- and 29th-largest
growing counties, respectively.
The area is also home to the cor-
porate headquarters of several major
corporations, including The Coca-
Cola Company, The Home Depot
and Delta Air Lines. According to
Powell, many top executives, busi-
ness professionals and their families
have moved outside city limits, cre-
ating a potential market for luxury
dealerships in the suburbs.
RBM North overcame an undeveloped market and stiff competition to become one of the top-rated high-line dealerships in the greater Atlanta area. By Justina Ly
Left to right: General Manager Randy Powell, Internet Manager Bethany Johnson and F&I Director Jon Hazelwood are part of RBM North’s management team.
Get your profit motor running with AUL.Give us a call or visit us online and we’ll share our story of industry leadership, and more importantly, our passion for relentless customer service.
Integrated solutions personalized for your dealership We offer integrated solutions to help dealers sell more cars, finance floorplans and real estate, and gain efficiencies in their business operation — while delivering a level of local, personalized customer service that’s unmatched in the industry.
Boosting CPO Sales Internet marketing also proved useful
when the dealership looked to boost
its certifi ed pre-owned (CPO) sales to
offset the recession-induced decline
in new-car sales. Powell even used the
medium to increase business in the
service drive. “We realized that, with
this decrease in business, people were
going to start reevaluating their car
needs,” Powell recalls.
Sensing this shift, he aggressively
marketed the dealership’s used-vehi-
cle inventory through third-party sites
such as eBay.com and AutoTrader.
com. Powell even offered free ship-
ping to customers. “We were ship-
ping cars to Montana and Seattle …
but mostly we sold in our area to help
grow our service business,” he says.
In addition, RBM North marketed
its inventory to leaseholders who were
near the end of their terms and wanted
vehicles that were “a little less expen-
sive and a little less ostentatious.”
By 2009, RBM North was one of
the Top 10 dealerships in the area in
terms of pre-owned vehicle volume.
“We had adjusted to that ahead of the
rest of the market,” says Powell. “So
we sold a lot of certifi ed pre-owned
cars in the fi rst year — more than we
sold new, which is pretty unusual for
a new-car dealer.”
Recession’s Impact on F&I The dealership’s average monthly
volume currently stands at 60 new
vehicles, 60 pre-owned units and 15
Sprinter vans, according to Powell.
Those fi gures have translated into a
solid performance for the F&I de-
partment. “Everything around us has
gone really bad, and we’ve done re-
ally well,” says Jon Hazelwood, the
dealership’s F&I director.
The store’s profi t per retail unit
averages around $1,000-$1,200 on
new vehicles and $500-$799 on CPO
vehicles. Hazelwood says most of his
customers have credit scores in the
700-800 range, with about 60 per-
cent of his customers opting for deal-
ership fi nancing. The rest of the deals
are cash. The dealership’s primary
lender is Mercedes-Benz Financial
Services (MBFS), but Hazelwood
also counts on Bank of America,
Wells Fargo and Chase to fi nance his
customers’ vehicles.
Most of RBM North’s F&I prod-
ucts carry the MBFS brand. Tire-
and-wheel protection leads the way
with a 40 percent acceptance rate.
Dent repair touts a 30 percent sell-
through, followed by GAP and CPO
extended warranties at 20 percent
each. Hazelwood says the dealership
also sells MBFS-branded interior/
exterior protection and a service con-
tract through Norcross, Ga.-based
EasyCare, which benefi ts trade-in
customers who want extra coverage.
Looking AheadDespite RBM North’s early strug-
gles, the store is now poised to make
greater strides this year. Powell says
he has no plan to change his Internet
marketing strategies, but he wants
to see a 10 to 12 percent increase in
new-vehicle sales. “I think the per-
centage of new versus pre-owned
will move back toward new, because
there is still pent-up demand in the
marketplace,” he says.
The economy’s slow recovery is
a cause for concern, but Powell is
hopeful that his dealership’s strong
Web presence and the continued sup-
port of his staff and dealer principal
will help RBM North achieve its
goals this year.
“Without that [economic] growth,
it’s going to continue to be a chal-
lenge for us, so we have to work hard-
er,” he says. “I look forward to the
day where we are surrounded by oth-
er businesses and this area becomes
more of a destination. In one way,
we’re a destination point now. That’s
because if you’re coming to us, you’re
looking for us.”
16 F&I and Showroom February 2011
Dealer Profile
RBM North sells Mercedes-Benz brand accessories, such as hats, T-shirts and teddy bears, at its boutique. Customers also can get complimentary drinks and snacks at the dealership’s café and lounge area (inset).
3500 Piedmont Road NE, Suite 400, Atlanta, GA 30305 | [email protected] | www.safe-guardproducts.com
One Company. One Solution.
Depend on Safe-Guard to deliver the exceptionalservice and innovative products that are essentialin today’s changing F&I environment.• Competitive pricing.
Practice PurposefullyIf you ever played Little League,
you’ll remember the phrase, “Prac-
tice like you play.” Well, skills that
are not practiced will never fi nd their
way into your customer interactions.
That’s why it’s important to attend
every training class you can, whether
in person or online. And once the
lesson is done, be sure to practice
what you learned so you can reach a
comfort level that will allow you to
put your newfound techniques to use
with real customers. Practice doesn’t
always make perfect, but profession-
als who practice purposefully pro-
duce more profi ts.
Go the Extra Mile for Your Dealer and Your Customer Anyone can do what is expected of
them. However, it takes commitment
to go the extra mile. Enterprise be-
came the nation’s No. 1 car rental
company by telling its employees,
“You can rise through the ranks and
make remarkable money, but only
after you demonstrate an ability to
knock the socks off every customer
that comes through the door.” So,
knock the socks off your internal
(i.e., your dealership colleagues) and
external customers and your value
will increase. Remember, great com-
panies and great F&I managers pro-
vide great customer service.
Stay Focused On What You Can Control Don’t waste time trying to fi x things
you can’t control. Yes, there always
will be issues of concern, but don’t
let them distract you from your main
purpose — which is to help custom-
ers make good decisions. Focus on
coming up with more effective ways
to sell your products. Yes, customers
are more reluctant to buy F&I prod-
ucts, but that’s easily overcome with
a selling process that draws interac-
tion from the customer. Remember,
an active customer is one who is more
willing to buy.
Choose Your Associates Wisely Who you spend time with during the
workday will have a huge impact on
your outlook. Every company has its
fair share of whiners and complain-
ers, so be sure to avoid that crowd.
They have a tendency to destroy their
coworkers’ motivation. Instead, seek
out those with a more positive out-
look, those who are always looking
to improve their skills. Better yet,
why not try to become that person at
your dealership?
Lose Productively How you react to setbacks and losses
will do more to shape your career
than almost anything else. Every
sales position — especially those
that sell intangibles — will experi-
ence a slump. It’s how you react to a
slump, not the cause, that will deter-
mine its length and depth. So, rather
than get down on yourself, use the
slump as an opportunity to review
your process. Role-play your presen-
tation, record it and review the video.
Remember, setbacks should make
you better, not bitter.
Never Stop Learning A recent survey revealed that 42 per-
cent of former college students never
pick up a book after they graduate. I
guess it’s because they learned it all
in college. Well, that can’t be the case
in the F&I offi ce. Being motivated to
learn all you can about your products
and why people buy isn’t a problem
when you’re new. It’s when you’ve
been around the block a few times
that learning tends to lose its luster.
So, make it your goal to read a book
about sales each quarter. Devour
F&I and Showroom magazine every
month and engage in the magazine’s
F&I Forum to exchange ideas with
other F&I managers.
Next, visit your dealership’s service
department and learn about at least
two parts on a vehicle. Make sure
you know what they do, what hap-
pens when they fail and what the cost
is to replace them. Remember, the
more you learn the more convincing
you’ll be when explaining why your
customer needs your products.
Seek Input From Others S. Truett Cathy, the 89-year-old
founder of Chick-fi l-A, recently gave
a presentation to high-level execu-
tives. After he was done, someone
from the audience came up to thank
him for his presentation. After thank-
ing him, Cathy said, “Please tell me
one thing I could have done better.”
You see, Mr. Cathy has been ask-
ing that question since the day he
launched his restaurant chain, and it
has been one of the keys to his suc-
cess. It takes a humble individual to
open up himself to the input of oth-
ers. But to be good at what you do,
you need to strive to be that person.
Regularly reviewing these 10 com-
mandments will defi nitely help an
F&I “newbie” get off to a great start.
But even a seasoned veteran can ben-
efi t from doing the same. Heck, it
might be exactly what you need to get
your career back on track.
Rick McCormick is the national ac-count development manager for Reahard & Associates Inc., which provides customized F&I training for dealerships throughout the United States and Canada. E-mail him at [email protected].
20 F&I and Showroom February 2011
Finance and Insurance
Customers are more reluctant to buy F&I products, but that’s
easily overcome with a selling process that draws
interaction from the customer. Remember, an
active customer is one who is more willing to buy.
At Longmont Ford, Greg Alore relies on a roster of lenders, lead providers and satisfi ed customers to help his special fi nance team rack up hall-of-fame numbers. By Tariq Kamal
Misconception No. 3: “Oh, everyone in my 20 Group does this.”
Reality: The “everyone else does it”
excuse doesn’t provide you with any
protection, because regulations vary
from state to state.
Misconception No. 4: “This is an ‘at will’ state.” Reality: Yes, a manager can change
his pay plan tomorrow, but he can’t
go back, change the pay plan and
make it retroactive to the fi rst of the
month. A change to a pay plan can
only apply to future earnings.
Misconception No. 5: “He’s paid a salary, so he’s exempt from overtime.”
Reality: That’s the furthest from the
truth. Before we get into some best
practices, there are two things you
need to remember about pay plans:
First, pay plans are wage and hour
documents that have to comply with
both state and federal wage and hour
laws. Second, pay plans are con-
tracts. When you write up a pay plan
and hand it to your employee, you are
effectively telling him or her, “If you
do these things, I will pay you this
much money.” Not only is that docu-
ment legally binding, it’s enforceable
in court. Even if it’s not in writing,
it’s at least a verbal contract which is
enforceable in court.
One thing people don’t realize is
a contract is construed against the
party that drafted it. That being said,
let’s review some best practices:
■ EVERY employee should have
a written pay plan that’s signed and
dated by the employee.
■ The pay plan should be drafted
so that even a layperson who is unfa-
miliar with the car business can un-
derstand what it means.
■ The pay plan should spell out in
detail how the employee will be paid
— salary, draw or commission — and
how the money will be calculated.
■ The pay plan should include all
aspects of the compensation: hourly,
salary, commissions, bonuses and
spiffs. If it’s not clearly delineated in
the pay plan contract, there could be
a problem.
■ If there are special contests that
aren’t in the pay plan, they should be
documented with the same amount of
seriousness and accuracy as a regular
pay plan.
■ If a guarantee is included, make
sure the plan states that it is a guar-
antee of compensation, not employ-
ment.
■ Decide if the employee is exempt
from overtime or not, and be sure he
or she is aware as well.
■ Pay plans shouldn’t contain non-
pay-related matters such as vacation
or insurance. Those items should be
covered in your employee handbook.
■ Pay plans are prospective in
nature. The contract is formed the
moment the salesperson sells a car
and the business is obligated to pay
in accordance with that sale.
■ Revise and resign a pay plan
whenever there is a change. Don’t issue
amendments on top of amendments.
I know it’s mind boggling to sift
through all these misconceptions
and best practices, so let me leave
you with some excellent advice to get
your pay plans up to speed. First, call
your local or state dealer associations
and fi nd out what requirements apply
to your state. Then pull up all of your
pay plans and review them to make
sure they’re up to date.
If they’re not up to date, fi x them. It
doesn’t have to be today, but make it
your goal to have all pay plans up-
dated and signed by employees by
early 2011. You won’t just be clean-
ing up your fi les from 2010; you’ll be
starting the new year off cool, calm
and compliant.
Lon Leneve is president & CEO of Compli, a provider of human resourc-es and compliance management software for auto dealerships. E-mail him at [email protected]. Noth-ing in this article is intended to be legal advice and should not be taken as such. All legal questions should be addressed to competent counsel.
All the issues discussed in this article are addressed in the “Pay Plans: Best Practices, Rules & Misconceptions” Webinar. To watch for free, visit: http://bit.ly/buu7T3.
32 F&I and Showroom February 2011
Dealer Management
When you write up a pay plan and hand it to your employee, you are effec-tively telling him or her, “If you do these things, I will pay you this much money.” Not only is that
document legally binding, it’s enforceable in court.
Working a prospect over the phone requires a different skill set than welcoming an ‘up’ in to the showroom. Sales expert shows you how it’s done. By Cory Mosley
Charge-backs are diffi cult to control, but our in-the-trenches columnist says there are ways to prevent them from getting out of hand. By Marv Eleazer
There’s no greater feeling than
watching a customer sign off
on a platinum menu option
that includes every product you have
to offer. You’re so excited after the
customer signs the contract and goes
motoring down the road that you
check your back-end profi t and poke
your chest out a bit, right? Well, what
happens 18 months later when that
customer loses his or her job or fi les
for divorce?
Ah, the charge-back. It’s a nasty
word, right? It’s a sobering reality,
because it “ain’t” what you gross that
matters; it’s what you keep.
There isn’t much you can do in
situations like the one I described.
The loan goes into default, the ve-
hicle winds up on the auction block
after being repossessed, and a huge
charge-back makes its way onto your
dealer’s fi nancial statement. Now,
guess whose check will be affected
at the end of the month? Again, not
much you can do here. However,
there are some scenarios you can
at least prevent. The following is a
short checklist of areas you need to
monitor to cut down on those pesky
charge-backs.
System CheckBelieve it or not, today’s dealership
management systems don’t always
get it right. That’s why it’s important
you obtain from your controlling of-
fi ce a copy of all bank reserve state-
ments at month’s end and compare
them to the anticipated reserve. If
the two don’t match, compare the
buy rate you entered into your DMS
against the lender’s approval. If they
match up, then call your provider and
have them review your system’s in-
ternal reserve calculations to correct
any mistakes. You also need to be
certain that the VSI (vendor’s single
insurance) fee some fi nance sources
charge is printed on the contract. If
it isn’t, the lender will short you at
funding time, so get it fi xed.
Check Your SourcesFinance sources aren’t perfect either.
When a lender sends you a charge-
back, make sure their product re-
fund calculations matches the refund
you’re expecting from your product
vendor. This is especially true for
lenders that include a clause in their
dealer agreement that allows them to
calculate their refund for cancelled
products when a vehicle is repos-
sessed and add it to your monthly
statement. From there, it’s up to you
to get a refund from your provider.
Again, although charge-backs due
to repossession may be beyond your
control, you need to examine the
lender’s refund request carefully. Be
certain their calculations are accu-
rate and that their expected refund
matches what you’re expecting back
from your product provider.
Special fi nance-related lender fees
are another hot spot. Some sources
have multiple fees, so be certain
you’ve entered the correct amounts.
Quite often, the fee on the callback
may not include the “assignment
fee,” so review your lender policy
guidelines to make sure everything
is in order before sending it to your
accounting offi ce.
Checking Product ProvidersIt’s critical that you review the vari-
Can you eliminate charge-backs? Not unless you’re writing deals with no profi t. An achiev-able goal is to keep charge-backs within 5 to 7 percent of your departmental gross profi t.
The fed and consumer advocates are at it again. The magazine’s legal expert tackles the latest attacks on fi nance reserve and spot deliveries. By Michael A. Benoit
vAuto Inc.’s used-car inven-tory management system is now available for Android mobile devices. The mobile app is available at no addi-tional monthly subscription charge for vAuto clients and is compatible with Android 2.1 or higher operating systems. The app features the new barcode VIN capture method that automatical-
ly decodes and uploads to vAuto. In addition, the app offers third-party guide-books, auction values, live market pricing and vAuto’s
“heat sheet” and buy list, which identifi es which cars
are hot in a dealer’s market and how to fi nd them. The app is available for download from the Android Market.
vAuto Releases Mobile Android App
MediaTrac Releases Customer Loyalty e-BookMarketing technology provider MediaTrac LLC has released a new e-book about customer loyalty programs. “Driving Optimum Cus-
tomer Retention and Profi tability with an Ef-fective Loyalty Program” provides suggestions for creating a program that emphasizes the connec-tion between employee loyalty and customer
loyalty, and offers ideas for setting up more effective management mechanisms for loyalty programs. The e-book can be downloaded for free under the “News” tab at media-trac.com.
700Credit Releases Risk-Based Pricing Solution700Credit LLC is now offering an automated solution to help dealers comply with the new Risk-Based Pricing Rule, which went into effect Jan. 1. The credit reporting and compliance tool provider’s solution automatically generates a credit score disclosure notice with each credit report request. It also tracks when reports are printed and will automatically generate the required notice when a score is not returned by a credit bureau. For more infor-mation, visit 700credit.com.
Compli Offers Accounting and Tax e-Counsel ServiceUsers of Compli’s Account and Tax e-Counsel service will now have access to accounting experts from Crowe Horwath LLP. Dealers can submit questions electronically to the accounting fi rm’s team of ex-perts and receive feedback within 24 hours. Questions can be related to accounting matters, inventory control, tax preparation and succes-sion planning issues. For more infor-mation, visit www.compli.com.
Finance Express Offers New Compliance ToolsFinance Express has released a new compliance tool to help dealers comply with the Risk-Based Pricing Rule and the new privacy policy requirement. Both rules went into effect on Jan. 1. Dealers will now have access to credit score disclosure notices, which can be handed to customers who apply for credit — a requirement under the RBP Rule. Finance Express also partnered with ComplyNet, a risk-management company that works with dealers, to launch www.dealerprivacynotice.com. The new site provides information on the Federal Trade Commission’s new model privacy notice and ongoing updates and support to users.
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February 2011 F&I and Showroom 41
Classifi eds
A D V E R T I S E M E N T
Sales Tip #32: F&I Best Practice Technique
Early & Often…Understanding Triggers and Anchors Paul Webb Training - Techniques That Build Stronger Relationships
Instead of selling customized training in this advertisement … here is a sample of the training that Paul Webb Training provides.
What happens when you smell Suntan Lotion? Where did you “go” inside your head? That’s right … the beach or lake!
When a smell triggers a past experience (and it happens really fast) … an immediate memory comes to mind. Perhaps it’s baby powder or a relative’s perfume … or a cooking smell. When the past experience is activated from the smell, you’ve experienced the process of “Triggers and Anchors.” The smell is the Trigger and the past experience (or “state”) is the Anchor.
Most of us have had the experience, in communicating with clients, friends or associates, reaching a certain level of rapport and under-standing that was a very positive resource for both of you. THIS USUALLY HAPPENS EARLY IN THE SALES PROCESS. Later on, however, the fl ow of conversation, discussion or negotiation changes and be-comes strained. (It usually happens when we get to the numbers). The interaction becomes more tense, strained or diffi cult, and you wish you had a way of re-accessing the positive experiences you shared before. Using Triggers and Anchors is a process that allows you to do this.
Whenever any portion of a particular experience is reintroduced, other portions of that experience will be reproduced to some degree. Any portion of a particular experience, then, may be used as a trigger to access another portion of that experience – or anchor. What does this have to do with selling?
It has been proven that when Sales Managers comes out and introduce themselves to the customers – early in the sales process – and make non-threatening and pleasant introductions (anchors) using smiles and handshakes (triggers) …they unconsciously set a pleasant “state” that is used later in the sales process when they are asked for help on the “T.O.” That smile and handshake “trigger” the good feeling “anchor” they experienced earlier.
SALES MANAGERS THAT PRACTICE THIS TECHNIQUE HAVE REPORTED INCREASED
PROFITS IN THEIR DEALERSHIPS. IT’S A FACT. YOU CAN’T ARGUE WITH FACTS.
What’s the point? F&I Managers who come out from their desk…wan-der around the showroom…making pleasant introductions (anchors) using smiles and handshakes (triggers) early in the sales process…
benefi t the same as Sales Managers.
We call it “Early & Often.” Purchase a bottle of suntan lotion and keep it on your desk. Whenever you look at it … it will remind you to GET OUT FROM BEHIND YOUR DESK AND MEET CUSTOMERS EARLY IN THE SALES PROCESS!
In creating an anchor, timing application of the trigger stimulus precisely to associate it with the state you want is critical. The follow-ing diagram illustrates the ideal timing which corresponds to the fi nal increase, and peaking, of the intensity of the state you are capturing with the anchor. Customers are “usually” in a better mood (state) towards the early stages of the sales process. So remember … GET OUT FROM BEHIND YOUR DESK AND MEET CUSTOMERS EARLY IN THE SALES PROCESS!
ANCHORINGINSTALLATION OF AN ANCHOR
SURE … some of you have known this for years. But are you doing it? You don’t know it unless your action shows it!
Some F&I Managers use a “Customer Situation Profi le” sheet.” A “FORM” that makes the process a little more formal.
• CSP sheet should always be conversational not interrogatory • Write complete answers down • Don’t try to sell products during CSP
So remember … purchase a bottle of suntan lotion. Place it on your desk. Every time you look at it … it reminds you to “Get out there and meet customers early in the sales process.” Practice the “Early & Often” technique of setting Triggers and Anchors. It works great with Sales Managers and it works great with F&I Managers. Good selling. - Paul H. Webb
Paul H. Webb, is the CEO / Founder of Paul Webb Training / WebbVT / I.T.S., Inc., (www.PaulWebbTraining.com ) an automotive performance improvement company. Mr. Webb also shares his ideas for improving pro-duction with OEMs, 20 Groups, state – metro – and national conventions, NADA management seminars, dealer groups , individual dealerships, F&I companies, support vendors, service providers and fi nancial institutions. To arrange for Mr. Webb to speak at your F&I meeting or training event, call: 888-469-7117 * Email Margaret: [email protected].
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44 F&I and Showroom February 2011
Videos are a great way to market your dealership. But to be truly successful, they need to be shared. A new study lends some insights on how to make that happen.
Social video, a cross between
online video advertising and
social networking, could be
the next big thing for marketing in-
ventory online. A New York-based
social video company has offered
a few insights on what works and
what doesn’t. One of its conclusions
is that people are not only viewing
brands’ videos, they’re sharing them
with their friends and driving further
views and engagement.
Jun Group, which has handled cli-
ents like Gatorade and Nike, com-
pleted a study that sampled more
than six million user-initiated video
views of about a dozen social video
campaigns the company executed for
Fortune 500 companies. The analy-
sis was conducted during the second
half of 2010. “Social video is one of
the most effective ways advertisers
can reach their consumers on social
networks,” says Mitchell Reichgut,
Jun Group’s founder and CEO. “It’s
an exciting new medium that brings
guaranteed engagements and tremen-
dous amounts of sharing.”
The following are some of the
fi ndings the study identifi ed on how
viewers interact with social videos:
■ Shorter is better: Social video
ads of 15 seconds or less are shared
nearly 37 percent more than those
between 30 seconds and one minute,
and 18 percent more than videos of
more than a minute.
■ Facebook dominates: With
more than 500 million people on this
social network, Facebook dominates
this new marketing medium. People
share videos on Facebook more than
three times as often as they do via
Twitter and e-mail combined.
■ CPGs leading the way: Con-
sumer packaged goods companies,
which offer items that must be re-
placed frequently, are driving 19
percent more social video views than
consumer electronics, retail and me-
dia, and entertainment brands com-
bined. Food and beverage brands are
also embracing social media, but
drove less than one-third of the views
CPG companies are experiencing.
Cars and trucks, which are not
considered CPGs, failed to move
the study’s viewing needle, but the
opportunity to market dealership
offerings through this medium ap-
pears to be ripe for the picking.
The study also revealed the fol-
lowing demographic and geograph-
ic insights related to social video
campaigns:
■ Generation Y: More than 55
percent of social videos are viewed
by 18- to 34-year-olds. Additionally,
the average age of social video con-
sumers stood at 27 years old.
■ Girl power: Women account
for nearly 57 percent of social video
views. They also share social videos
30 percent more often than men.
■ Southerners watch and Mid-westerners share: People in the