-READY Chacon Auto’s Gary Chaney and Two Other Dealers Discuss How They’re Navigating the World of Online Reviews OF FIRST LINE Learn Why Experts Believe the New Risk-Based Pricing Rule Could be a Blessing in Disguise JANUARY 2011 $10.00 SALES DRIVER: 6 NEW SALES TIPS | MAD MARV: SQUISHING THE FLEA | LEGAL: FTC ON THE HUNT A BOBIT PUBLICATION FI-MAGAZINE.COM COMEBACK Experian Automotive Says Auto Finance Surged in 3Q2010 — Even for Below-Prime Buyers THE
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
-READYChacon Auto’s Gary Chaney and Two Other Dealers Discuss How They’re Navigating the World of Online Reviews
OF FIRST LINE
Learn Why Experts Believe the New Risk-Based Pricing Rule
Could be a Blessing in Disguise
JANUARY 2011 $10.00
SALES DRIVER: 6 NEW SALES TIPS | MAD MARV: SQUISHING THE FLEA | LEGAL: FTC ON THE HUNT
A BOBIT PUBLICATION FI-MAGAZINE.COM
COMEBACKExperian Automotive Says
Auto Finance Surged in 3Q2010 — Even for
Below-Prime Buyers
THE
FI0111cover.indd 991FI0111cover.indd 991 12/28/10 10:17:13 AM12/28/10 10:17:13 AM
FI0111cna.indd 1 12/17/10 8:36:06 AM FI0111cover.indd 1FI0111cover.indd 1 12/28/10 10:02:56 AM12/28/10 10:02:56 AM
2 F&I and Showroom January 2011
January 2011 Volume 14, Number 1
Technology
12 Your Online ReputationWord of mouth has always been the dealer’s best marketing tool, but the Internet age has changed the rules. Find out what dealers are doing to regain control of their reputations.
Auto Finance
16 Doors Open for Below-Prime BuyersIn the third quarter, subprime originations increased for the fi rst time since the credit crisis. Auto fi nance analyst breaks down the results.
Compliance
22 First Line of DefenseKarina Grile worked overtime to get Voss Auto Network’s stores in line with the industry’s newest rule — one that experts say could be a blessing in disguise.
Q&A
26 Getting ResourcefulThe magazine catches up with The Warranty Group’s Michael Frosch to discuss F&I, automotive retailing and the road ahead.
Special Finance
28 Direct Mail Mounts a ComebackMailers were the fi rst line item scratched from many dealers’ advertising budgets during the downturn. Marketing ace says it’s time to add them back.
4 Letters
6 Editorial Page
8 Developments
30 Sales Driver
31 Mad Marv
32 Legal
35 Bottomliners
37 Ad Index
40 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
26
28
22
Endorsed as the offi cial publication of the Association of Finance
& Insurance Professionals
Contents
FI0111toc.indd 2FI0111toc.indd 2 12/28/10 8:59:47 AM12/28/10 8:59:47 AM
FI0111toc.indd 3FI0111toc.indd 3 12/28/10 8:59:54 AM12/28/10 8:59:54 AM
Complying With the RBP RuleTO THE EDITOR: After reading Michael
Benoit’s column (“The Exception Is
the Rule”) in the December issue and
then reading all 200-plus pages of the
Risk-Based Pricing rule, I noticed the
FTC kept saying, “Final rules apply
to any person that uses a consumer
report in connection with …” If I
don’t pull a bureau on a customer, am
I exempted from both types of notic-
es? There are several of us F&I folks
out here that do not pull bureaus. We
merely send the credit application to
our lenders.
Michael WilsonFinance Director
What you have to remember is that pulling a credit report isn’t the trig-ger point for the rule. It’s the act of applying for credit. Now, in a two-party situation like you asked about, your dealership is acting as an agent for the fi nance source that engages in direct auto fi nancing. That means your dealership may be called upon to provide your consumer applicants with a credit score disclosure notice on behalf of the fi nance source. So, you may want to contact your fi nance sources to ask how they will comply with the rules. — Gregory Arroyo
Advertised Price vs. Selling PriceTO MICHAEL BENOIT: I’m a big fan of
your column and was hoping you
could answer a question for me. Most
dealers use a third-party service like
Dealer Specialties or AutoUplink to
pull their used-vehicle inventory and
feed it to the dealership’s Website
and used-car portals like Autotrader.
com, Cars.com and others.
Now, my understanding after read-
ing the FAQ section on the Federal
Trade Commission’s Website is that
the same rules that apply to tradition-
al advertising apply online. So, if a
dealer has a vehicle listed online and
a customer visits the store not know-
ing the price advertised on the Web,
would it be a violation if the customer
pays more than the price advertised
online? I would appreciate any com-
ments you can make.
Eric Damiani
Great question, Eric. The answer is that if you advertise the price (re-gardless of where you advertise it), you cannot sell it for more than the advertised price.
One caveat may be if you limit the amount of time the price is available, e.g., “This price is good through Dec. 2, 2010,” and treat it as a limited time only discounted price. Otherwise, if the advertisement is out there with-out a limit on the timeframe for which the price is good; don’t sell for more than the advertised price.
You’ll never be able to know for sure whether your shopper is aware of the advertised price, so the best practice is to assume he or she is aware. You’ll be happy you did if your customer turns out to be a FTC mystery shopper. — Michael Benoit
F&I Menu for Fleet SalesTO “MAD” MARV ELEAZER: I just read
your November column (“The Slump
Cure”) and the one thing that caught
my eye was what you said about the
menu. I work for an outfi t that’s strict-
ly a commercial dealer, where walk-in
and show-fl oor traffi c is non-existent.
Everything is outbound and we don’t
currently use a menu. Do you have
any menu and best practices recom-
mendations for a gig like mine?
Mike JohnsonCommercial Business Sales and Leasing
Boyer TrucksMinneapolis
Thanks for the note, Mike. I’ll be sending over some menu recommen-dations offl ine. In the meantime, I would suggest you utilize a process wherein the F&I department struc-tures the menu and e-mails it to the fl eet company’s purchasing agent. Then, you can make the presentation over the phone. — Marv Eleazer
FI0111letters.indd 4FI0111letters.indd 4 12/28/10 8:58:56 AM12/28/10 8:58:56 AM
Protective’s Dealer Participation Programs Have Earned Dealers
1 5 1 6 3 9 1$ ,, 7
Protective’s Dealer Participation Programs are profit sharing opportunities available to qualified dealers, offering underwriting profits and investment income.
One more rea$on to consider Protective!
Protective offers dealer participation programs for the following automotive products for both franchise and independent dealerships:
Vehicle Service Contracts • Lifetime Engine Warranty • Limited Warranty
GAP Coverage • Credit Life Insurance • Credit Disability Insurance
Protective’s Dealer Participation Programs total as of May 2010. Lifetime Engine Warranty, Limited Warranty, Vehicle Service Contracts (VSCs) and GAP are backed by Lyndon Property Insurance Company in all states except NY. In NY, VSCs are backed by Old Republic Insurance Company. GAP, Lifetime Engine Warranty and Limited Warranty are not available in NY. Credit Insurance is backed by Protective Life Insurance Company in all states except NY,
where it is backed by Protective Life and Annuity Insurance Company.
Vehicle Service Contracts I GAP Coverage I Credit Insurance
Lifetime Engine Warranty I Limited Warranty I Dealer Participation Programs
F&I Training I Advanced F&I Technology
866.751.2650www.protectiveassetprotection.com
We Listen • We Care • We Have Solutions
Get Started Today! Contact us to learn more about our profit sharing
plans exclusively designed for our automotive dealer customers.
FI0111letters.indd 5FI0111letters.indd 5 12/28/10 8:58:58 AM12/28/10 8:58:58 AM
Au
6 F&I and Showroom January 2011
I wrote it last year and I’ll write it
again: the Risk-Based Pricing Rule
(RBPR) represents our chance to
“uphold our job requirement.” I agree
that you shouldn’t be held responsible
for the fi nancial education of your
customers. However, just for a sec-
ond, think about the doors a conver-
sation about credit can open.
Before we get into that, there’s one
thing you need to understand about
this new rule: The Federal Trade
Commission (FTC) and the Federal
Reserve Board (FRB) went out of
their way to make complying with it
as easy as possible. Think about it:
You don’t have to evaluate the rate
your fi nance sources offer your cus-
tomers. Nor do you have to calculate
the impact of your markup on a deal-
by-deal basis. If you did, then I’d un-
derstand why many believed this rule
would be the death of F&I.
But you don’t. In fact, all you have
to do is present a credit score disclo-
sure notice to every one of your cus-
tomers who applies for credit. And
don’t forget about the host of compa-
nies lining up to help you automate
that process, as you’ll see on Page 22
of this issue.
Will it add to your process? Sure,
but let’s try to pull out some positives
here.
Take the dealer exception I just de-
scribed, which the National Automo-
bile Dealers Association lobbied for
on our behalf. Did the FTC and the
FRB have to listen? Did they really
have to consider what goes on inside
the dealership? No, they didn’t.
The agencies also listened when
dealers talked about how they might
not know the credit score their fi -
nance sources pull on their custom-
ers in cases of two-party fi nancing.
That’s why, if you’re handling the
notice on your lender’s behalf, as the
rule allows, you can use the credit
score you pulled, even if it’s differ-
ent from the one your fi nance source
pulled on your customer.
The FTC and the FRB also consid-
ered how you comply with the rule
when it comes to telephone and In-
ternet customers. They’re actually al-
lowing dealers to fi gure out when it is
“reasonably practical after the credit
score has been obtained” to hand the
notice to your customers. For out-
of-store customers, that could mean
mailing the notice or handing it to
the customer when he or she comes
to the dealership to consummate the
transaction — the rule specifi es that
the notice must be handed to the cus-
tomer before that point.
RouteOne recommends handing
the notice to the customer after an
approval decision is communicated
to the consumer; but, again, it’s up
to you to determine when it’s reason-
ably practical.
Now, let’s think about what this
rule is asking you to do — hand ev-
ery customer who applies for credit a
credit score disclosure notice. Yes, the
rule is set up so the customer, armed
with his or her credit information,
can walk out the door without ever
buying a thing. But seriously, how
many of your customers are really go-
ing to seek out better terms? I mean,
the California state vehicle code the
exception is modeled after has been
in effect since January 2006, and I
haven’t heard any complaints.
But let’s think about this notice for
a second. Can you think of a better
way to introduce the F&I process to
your customer than by handing them
this notice? After all, it lets them
know where they stand and that your
F&I guy or gal can arrange for fi -
nancing with one of the major auto
lenders, local banks and credit unions
— maybe even the one they already
belong to. That’s one heck of a cred-
ibility builder, don’t you think?
The new notice is going to be a real-
ity check for some of your customers,
especially for those below-prime cus-
tomers bent on buying a vehicle you
know they can’t get fi nanced on. So,
this notice may be your way to transi-
tion them into a more fi nance-appro-
priate vehicle. It could even represent
a nice segue into why your customer
may need your F&I products.
Hey, you guys are the experts on
the frontlines, so I’m sure you can
fi gure out a couple of ways to use
this rule to your advantage. Heck, I
bet someone will even come up with
a nice cash conversion technique
that utilizes these notices. And that’s
my point. It’s time we start making
these rules work for us, rather than
against us, and the RBPR is a great
place to start.
Customer Education Isn’t a Bad Thing
Letter from the Editor
It might seem like just another regulation targeting dealer-arranged fi nancing, but the editor believes the Risk-Based Pricing Rule might be the kind of icebreaker F&I managers have been seeking all along. By Gregory Arroyo
The notice is going to be a reality check for some of your customers. ... It could
even represent a nice segue into why your customer may
Chrysler ‘Showcase’ Dealership Set to Open in Downtown Los AngelesVISITORS TO THIS YEAR’S L.A. AUTO
Show were treated to the debut of a number of new models and concept vehicles in the cavernous confi nes of the Los Angeles Con-vention Center. A few blocks to the south, another attraction awaited
visitors: a “showcase” dealership that will house all four of Chrysler LLC’s vehicle brands, as well as a Mopar-branded service center and a FIAT franchise.
“The Los Angeles Motor Village goes above and beyond the tradi-tional Chrysler Group dealership,” said Peter Grady, Chrysler Group’s vice president of network develop-ment and fl eet. “Our customers will experience our brands in unique salons that refl ect each brand’s identity and character.”
Situated within sight of the Staples Center and convention center footprint, the dealership also will feature a fi ve-story glass tower topped with three large LED reader boards that will house vehicles from all fi ve brands. The tower faces the busy I-110 freeway, which hosts an average of more than 350,000 cars per day.
The store is the site of a 1920s-era Pierce-Arrow dealership, and its opening will mark Chrysler’s return to downtown L.A. after a 10-year absence. Chrysler offi cials planned to open the dealership this month.
TD Bank Acquires Chrysler Financial
Developments
8 F&I and Showroom January 2011
conti
Am
t
s
C
T
“
d to
f
m-
The opening of Chrysler’s Los Angeles Motor Village will mark the Detroit Three automaker’s return to down-town L.A. after a 10-year absence.
The latest fi gures from TransUnion show that more U.S. car buyers are making payments on time and reducing their loan balances.
Sixty-Day Delinquency Rate Up in 3Q, Down for 2010
TD BANK CENTRE PHOTO BY SCOTT PULSIFERTD BANK CENTRE PHOTO BY SCOTT PULSIFER
FI0111develop.indd 8FI0111develop.indd 8 12/28/10 9:12:30 AM12/28/10 9:12:30 AM
EXCLUSIONARY COVERAGEN0 AGE OR MILEAGE LIMIT
SIMPLE, ONE PAGE PRICINGBLENDED RATES ON 3/3 & 6/6 TERMS
QUARTERLY VOLUME INCENTIVESRETRO PARTICIPATION
5(;065(3
(<;646;0=,
,?7,9;:7,673,�796+<*;:�7,9-694(5*,�
;/,�>(@�0;�:/6<3+�),�
Vehicle & Motorcycle
Service Contracts
Limited Warranties
Warranty Forever™
No Use No Lose™
Windshield Protection
Dent & Ding Protection
Environmental Protection
Roadside Assistance
Theft Protection
Customizable Pre-Paid
Maintenance Programs
GAP
Key Replacement
Tire & Wheel Protection
800.810.8859WWW.NATIONALAUTOMOTIVEEXPERTS.COM
the COMPETITION!
HIGH MILEAGE CONTRACTS
FI0111develop.indd 9FI0111develop.indd 9 12/28/10 9:12:32 AM12/28/10 9:12:32 AM
Volvo Adds CPO Maintenance ProgramVOLVO CARS OF NORTH
America LLC has added a new maintenance package to its certifi ed pre-owned warranty pro-gram. “Protection Plus+” offers factory-backed coverage on thousands of components, systems and operations, coverage for defective components for up to six years or 100,000 miles, roadside assistance, transferability between owners and a CARFAX Buyback Guarantee.
Columbus Ups Advance for NIADA CPOsCOLUMBUS FINANCE INC.
will provide an additional 10 percent advance, or up to $1,000, on ve-hicles with the National
Independent Automobile Dealers Association certi-fi ed pre-owned warranty. Customers also will re-ceive a 1 percent discount
on CFI’s program rates. Administered by NAC, NIADA’s CPO program aims to help dealers offer their customers
high-quality pre-owned vehicles, get higher resale value and compete with factory certifi cation programs.
BofA Launches Car-Buying SiteBANK OF AMERICA HAS
rolled out a new online shopping site for new and used vehicles that links prospective buyers to the bank’s certifi ed dealers. The new Web-site, www.bankofameri-ca.com/carbuyingcenter, will provide consumers with an upfront price in writing, which will be honored by the more than 4,000 dealers certi-fi ed by Bank of America. The site was created by Zag, a division of True-Car Inc. and a provider of private-label online and mobile car-buying programs.
THE INAUGURAL CLASS
for the DeVos Graduate School of Management’s Dealership Executive MBA program received their diplomas during Northwood University’s commencement cer-emony on Dec. 11, 2010. Introduced in 2008, the
DEMBA program, which attracted students from a host of dealerships and industry companies, including Manheim, Credit Acceptance, and Ford Motor Credit, is an MBA program designed specifi cally for the auto retail market.
NAC, a service contract sales and administration company, has hired Henry Paoli as the company’s new
national business development manager. He will manage agents in Ohio and Michigan, recruiting new agents and focusing on current client relationships. He previously served as the southeastern U.S. regional sales manager for Warranty Solutions.
In addition, NAC hired Paul Leary as its new national sales manager. Leary, who will also serve as a strategic relationship
manager, will be responsible for working with agents in the western U.S. and building on NAC’s recent expansion initiative. He previously served as the national sales director and business development leader for Warranty Solutions.
JM&A Group, a provider of F&I and service-related products, has promoted Michael Stellmach to vice
president of sales and opera-tions. He will oversee and grow JM&A’s OEM relationships and manage the company’s reinsurance business and in-house training center. Stellmach has more than 20
years of industry experience and began his career at JM&A in 1999 as an F&I specialist. He recently served as division manager for the Georgia and South Carolina markets.
Ford Motor Co. named K.R. Kent, former CFO of Ford Motor Credit Co., to the newly created position of executive director of investor relations. Kent will lead the OEM’s efforts to further strengthen the investor relations function. He will report to Ford Vice President and Treasurer Neil Schloss. Replacing Kent is Michael Seneski, former controller of global and U.S. marketing and sales. He will report to Mike Bannister, chairman and CEO of Ford Credit.
Developments
10 F&I and Showroom January 2011
Northwood Graduates First Dealer MBA Class
Moves and Hires
FI0111develop.indd 10FI0111develop.indd 10 12/28/10 9:12:32 AM12/28/10 9:12:32 AM
Helping dealers carry home bigger profits for 20 years.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.
Service Contracts. It’s What We Do.®
800.826.3207www.aulcorp.com
20OF SERVICEYEARS
SE
RV
ICE
CO
NTRACTS. IT’S W
H
AT W
E D
O.®
AU
L ADMINISTRATO
RS
Visit us at booth #433SNADA Convention & ExpoJanuary 5 - 7, 2011 Moscone Center San Francisco, CA
FI0111develop.indd 11FI0111develop.indd 11 12/28/10 9:12:33 AM12/28/10 9:12:33 AM
12 F&I and Showroom January 2011
Technology
When it comes to
online reviews,
the stories being
told may not tell
the entire story.
Just ask the owners of Chacon
(pronounced “CHAY-con”) Autos, a
Dallas-based dealer group that lays
claim to six used-vehicle locations
and two Suzuki franchises in Texas.
Gary Chaney, the group’s CEO,
says customer satisfaction has al-
ways been the name of the game for
the 60-year-old operation, and it has
the awards to back it up. The dealer
group earned Suzuki’s President’s
Club Award in 2006 and 2007 for
sales and service. The dealership
also has been recognized by Baylor
University and the Texas Historical
Commission for its business success.
It even made Inc. magazine’s list of
the nation’s 5,000 fastest-growing
private companies.
“We like customer service,” Chaney
says. “We even try to keep the same
employees at each location, so when
customers come in they see the same
faces all the time.”
The problem is, that’s not the story
being told online.
A quick Google search reveals that
the dealer group received an aver-
age of two out of fi ve stars from 15
reviews. Customers either loved or
hated Chacon Autos.
Chaney says the reviews are the
byproduct of working in special fi -
nance, a market the dealer group was
founded on in 1950. Chaney points
out that many of the less favorable
reviews come from disgruntled cus-
tomers upset about their vehicle be-
ing repossessed. He understands their
frustration, but says the reviews don’t
tell the full story — especially con-
sidering the fact that nearly a third
of the dealership’s sales come from
repeat customers.
“I’ve never had a lot of confi dence
in those [ratings], because I know our
customers like us,” he says. “Thirty
percent of our business is repeat cus-
tomers. That’s what our business is
built on.”
Still, in today’s Internet age, Chaney
knows his organization needs to get
out in front of this new word-of-mouth
medium. That’s what Chaney’s daugh-
ter, Stefani Musick, the dealer group’s
controller, is now attempting to do. She
recently established accounts on Face-
book, Twitter and LinkedIn for Cha-
con Autos and says her goal is to use
those platforms to market the dealer
group, tout its vast inventory and dis-
tinguish it from the competition.
“Right now we’re using social me-
dia to market ourselves, to get some
followers,” Musick says. “I guess
we’re still in the infancy stage, but,
ultimately, it would be great to get
some customer feedback.”
New Media, New Management ToolsReputation management is not a new
concept to the industry. Manufactur-
ers frequently track what consum-
ers think of their vehicles and their
franchised dealerships. Dealers also
conduct their own surveys to learn
more about the experience they of-
fer consumers. The difference now
is that consumers can broadcast what
they think via blogs, social network-
ing sites like Facebook and Twitter
and, in some cases, the dealership’s
own Website.
“Consumers have always talked
about their experiences with brands
and products,” says Jared Hamilton,
founder of DrivingSales.com, a ven-
dor rating Website. “Now, with the
Internet, it’s in a public setting,”
More consumers are turning to
Your Online
Word of mouth has always been the dealer’s best marketing tool, but the Internet age has changed
the rules. Find out what dealers are doing to regain control of their reputations. By Justina Ly
PHOTO BY DAVID JOHNSTON
FI0111csi.indd 12FI0111csi.indd 12 12/28/10 9:12:57 AM12/28/10 9:12:57 AM
that public setting as part of the car-
shopping process. According to a re-
cent J.D. Power and Associates study,
about eight out of 10 new-vehicle
buyers who turn to the Web visit at
least one third-party site. One of the
most popular sites for doing just that
is Edmunds.com, which features cus-
tomer ratings and reviews of dealer-
ship sales and service departments.
A recent report by Cambridge,
Mass.-based Forrester Research also
points to the impact rating sites are
having on consumers. According to
the study, 49 percent of male Internet
users and 42 percent of female users
consult ratings and reviews at least
once a month. In contrast, 23 percent
of males and 17 percent of females
post ratings and reviews regularly.
The study also found that, while
consumers are not heavily infl uenced
by peer reviews, they still read them
before making a major purchase.
“People tend to seek out reviews when
they are about to purchase a big-ticket
item and they are reading the reviews
to make themselves feel more com-
fortable with spending that money —
like they have done their homework,”
Forrester’s Reineke Reitsma wrote
in a recent blog. “But, in the end, it’s
their own judgment they rely on.”
DrivingSales.com’s Hamilton says
customer ratings and reviews in to-
day’s social media world come in two
formats: structured and unstructured.
Structured reviews can be found on
Websites such as DealerRater.com, a
car dealer review site featuring more
than 30,000 U.S. and international
dealers. In these reviews, customers
grade dealerships based on customer
service, quality of work, friendliness,
price and overall experience.
It’s the unstructured reviews — in
which customers discuss their experi-
ence at a dealership with friends on
social networking sites like Facebook
— that Hamilton says dealers need
to pay attention to. “You need to be
cognizant of how people are talking
about you, even if they are not fi lling
out a form,” he says.
Some dealerships, like Chacon,
choose to manage their online reviews
in house, while others have turned to
third-party vendors. Hamilton offers
a bit of caution to dealers who have
opted to outsource their online efforts.
“Social media didn’t exist at this scale
three years ago,” he says. “These so-
lutions are just being invented.”
ADP Dealer Services and Reyn-
olds and Reynolds both offer online
reputation management solutions.
Aside from monitoring social media
sites, both companies’ solutions in-
clude consultation services that teach
January 2011 F&I and Showroom 13
e ReputationConfi dent in Chacon Autos’ long-standing tradition of stellar customer service, CEO Gary Chaney is willing to absorb the occasional negative review in the interest of serving Dallas’ special fi nance market.
FI0111csi.indd 13FI0111csi.indd 13 12/28/10 9:12:58 AM12/28/10 9:12:58 AM
dealers how to handle negative com-
mentary. They even offer recommen-
dations for attracting positive brand
awareness among consumers.
Another company offering similar
services is Riverside, Calif.-based
eXteresAUTO. It offers a solution
that aggregates reviews and com-
plaints, tracks social media sites and
sorts reviews based on keywords. The
company’s trainers then go one step
further, helping dealers organize the
reviews and use customizable e-mail
templates to send responses. Like
anything that goes on at the dealer-
ship, Merla Turner, director of dealer
training for eXteresAUTO, says suc-
cess with services like hers needs to
start from the top.
“We know we’re dead in the water if
we don’t get the owner or GM buying
in,” she says. “It really does require a
culture change at the dealership.”
Finding the Right VendorWhen it comes to selecting an online
reputation management company,
DrivingSales.com’s Hamilton says
dealers should be wary of companies
offering to “improve” or “fi x” their
dealership’s reputation. They may not
be able to deliver on that promise or,
even worse, may provide unexpected
and unwanted results.
BMW of San Antonio learned
that lesson the hard way. The store
was caught with fake online reviews
after an investigation by San An-
tonio’s ABC News affi liate, KSAT
12, revealed they came from a paid
service. When reporters contacted
the dealership’s general manager,
John Bruns, he confi rmed that the
dealership hired a company called
Review Boost to contact custom-
ers and generate actual reviews. He
said the dealership also questioned
the authenticity of the reviews after
viewing them online, and had since
canceled the service.
However, Hamilton says instances
like that will do little to curb the on-
line marketing race. “People are so-
cial beings. Whether they talk face
to face or online … they’ll always be
talking about the industry,” he says.
Three years ago, Randy Powell
was tasked with creating a positive
conversation about his dealership.
Powell is the general manager of
RBM Atlanta-North, a Mercedes-
Benz dealership in Alpharetta, Ga.,
22 miles north of Atlanta.
The dealership opened in late 2007
— at the start of the recession — and
faced an undeveloped market and
stiff competition from other local
high-line stores. “The fi rst year we
opened was a challenge,” he recalls.
“[We had] no client base. We knew
we needed a strong online presence.”
After a few false starts, the deal-
ership partnered with eXteresAuto.
Powell says he made it clear to the
company that he wanted authentic
and genuine survey results, not just
perfect fi ves across the board. He
adds that he now has a fi rm grasp of
how to handle negative comments.
“We generally don’t try to rebut it,
because it gives the comment a lot of
prominence,” he says. “We also will
adjust our templates to surround it with
love and a lot of good reviews to make
sure it’s not the most prominent.”
So far, the approach has led to
some positive results. “We have the
most reviews and better placement
than other stores,” says Powell, who
adds that the dealership has managed
to capture 20 percent of Alpharetta’s
new-vehicle market and 35 percent of
its used-vehicle market. Powell now
has his sights set on fi xed operations
and is employing eXteresAuto’s tools
to create e-mail campaigns he hopes
will boost business for RBM’s ser-
vice department.
George Grubbs III, executive man-
ager of Grubbs Infi niti in Euless,
Texas, managed his dealership’s on-
line reviews before he outsourced the
work to a third-party company. It was
hard work: At the end of each month,
he would compile a list of customers
who returned favorable manufacturer
surveys and contact them by e-mail.
He would include hyperlinks to sev-
eral highly traffi cked Websites and
ask the customers to post a review.
“I did this for a year, and the result
was very few [customers] taking me
up on my request,” he says. “Instead,
we got almost no good reviews and
most bad [reviews were] from upset
customers wanting to rant. There was
no balance.”
After doing some research, Grubbs
turned to Advantix Marketing, a Dal-
las-based Web marketing company.
“They take the same list I compile
at the end of the month and call the
customers to get permission to post a
review on their behalf using their ini-
tials,” he says. “Only those customers
they make contact with and get per-
mission from get reviews posted. … It
really is a clean process, one we could
do in house if we had the manpower.”
Providing great car-buying expe-
riences has always been part of the
game plan for Powell and Grubbs;
they just needed to make a little in-
vestment to make sure the experience
they offered was refl ected online.
“Two, three or fi ve years ago, [com-
plaints were] handled behind closed
doors. … Now, in 30 seconds fl at,
your customer can write a review and
air your dirty laundry,” says eXtere-
sAUTO’s Turner. “It’s time for deal-
ers to really embrace a new way of
doing business and a transparency
they haven’t done before.”
14 F&I and Showroom January 2011
Technology
After a year of soliciting customers to post favorable reviews online,
George Grubbs Infi niti’s George Grubbs III turned to a third-party
marketing company.
PHOTO COURTESY GRUBBS INFINITI
FI0111csi.indd 14FI0111csi.indd 14 12/28/10 9:12:59 AM12/28/10 9:12:59 AM
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.
Compliance Automating ComplianceTHE FTC WAS PRETTY SPECIFIC ABOUT what it expects from dealers opting for the dealer exception when com-plying with the Risk-Based Pricing Rule. In fact, the FTC’s 200-page rule summary includes model forms deal-ers can easily adapt to comply with the exception requirement — just as long as they are able to deliver the required content. The key ele-ment is the ability to show potential buyers how they stack up against other consumers in the same scoring pool, but there are 12 additional items that need to appear in these notices. That’s why software provid-ers are offering solutions to help automate that process. Here are fi ve companies that are doing just that:
CoreLogic Credco: The company provides an exception report free of charge with each Credco credit report ordered. The report includes
model forms prescribed in the 200-page rule summary published by the Federal Reserve Board and the FTC.
DealerTrack: The DealerTrack Performance Suite offers a RBP Rule compliance tool for free to all dealerships on the DealerTrack credit application network. Deal-ers will be able to print credit score disclosure notices prefi lled with all the required information, as well as exception notices on their lender’s behalf for two-party fi nancing. In addition, dealers subscribed to the DealerTrack Compliance Solu-tion will be able to electronically store and view status reports on all exception notices generated by the
dealership through the solution’s dashboard and audit tools.
Reynolds and Reynolds: Reynolds is offering exception notices with each credit bureau inquiry report a dealership pulls. The notice will contain all of the text and contents prescribed by the regulation.
RouteOne: The company is offering a complimentary Risk-Based Pricing Notice tool within its credit appli-cation management system. The company also offers a two-party fi nancing option whenever a dealer is issuing the exception notice on the lender’s behalf.
Wolters Kluwer Financial Services: Wolters Kluwer is offering the required credit score disclosure notice for dealers utilizing its AppOne credit platform.
“I think this is one of those rare federal rules that serves the intended purpose of the legislature and would be a
F&I: The Warranty Group and its Resource Automotive entity have been through a lot of changes. Can you get our readers caught up with where your company stands today?
Frosch: The big picture is The
Warranty Group, whether it’s in
China, Latin America or North
America, or whether we’re talking
protection products for electron-
ics, appliances, travel coverage or
automotive. Resource Automotive
simply represents the auto side of
our business.
F&I: What was the strategy during the downturn?Frosch: The strategy was to work
with the best of the best. It was about
helping dealers through automation,
enhancing our solutions and provid-
ing support to maximize the benefi t.
F&I: Your insurance carrier, Virginia Surety, defi nitely won some battles in the trenches
this year, picking up clients such as Safe-Guard and Interstate. What was behind that division’s success this year?
Frosch: There have been a lot of com-
panies that have come in and out of
our business. A lot of them thought
they could do it, but, in the end, they
couldn’t. Unfortunately, the only ones
who got hurt are the dealers and their
customers. So, what you saw
in 2008 and 2009 was re-
ally a fl ight to quality, which
obviously benefi ted us since
the clients we picked up were
looking for a partner with the
focus and experience in this
very specifi c business.
F&I: Talk about the company's ResourceVIP program, which you rolled out in 2004. If I’m not mistaken, it represents your fi rst foray into inventory management.
Frosch: Well, our mission is to maxi-
mize income for our clients on a
per-vehicle basis, and ResourceVIP
supports that concept. It’s a custom
program that helps dealers manage
their returns on their inventory and
allows them to see what’s moving,
when it’s moving and what the re-
quirements were for their inventory
to move.
F&I: Where do you stand on all this talk about dealers combining sales and F&I roles?
Frosch: We continue to see great val-
ue in the F&I model. It has worked
and it has been successful. How-
ever, we recognize that there is no
one-size-fi ts-all [solution], so we sup-
port our clients as they wish to be
supported.
F&I: I’ve noticed a real pickup in interest for reinsurance. What are you seeing?
Frosch: Reinsurance remains a suc-
cessful model in this industry, and it’s
an extremely valuable tool if you part-
ner with a company that understands
it, has experience with it, knows how
to handle claims, takes care of cus-
tomers, knows how to price and con-
fi gure the product and will act as a
partner to you. And that’s what we
bring to the market.
See, we’re not a monoline, one-
approach kind of company. We have
direct programs, reinsurance pro-
grams, dealer-obligor programs. We
are the underwriter, the actuary and
the administrative company, and we
own our own compliance groups and
entities. So, it really is about what our
Getting The magazine catches up
with The Warranty Group’s Michael Frosch to discuss F&I, automotive retailing and the
F&I: Just how badly did direct mail suffer as a result of the credit crisis?
Parker: Certainly, a number of deal-
ers cut back. But direct mail suffered
for other reasons as well. First, for
years, dealers had been doing direct
mail almost blindly, without any con-
sideration for whether the customer
could qualify. It’s known in the in-
dustry as saturation mail. Why, in to-
day’s economy, would a dealer want
to advertise to someone who simply
can’t qualify to buy?
Second, in talking to dealers over
the last two-plus years, it was evident
they felt opportunities were missed
when they were fi elding the inquiries
from customers on their direct mail.
See, during the downturn, many deal-
ers disbanded their BDCs, so their
salespeople had to answer phones.
F&I: In the third quarter 2009, subprime auto loan originations grew for the fi rst time since the onset of the credit crisis. Did you see more orders from dealers looking for special fi nance customers at that time?
Parker: Across the board, we started
to see an increase in activity. Lenders
still are asking more questions. Scor-
ing is in place for prime, but they’re
double-checking everybody else.
F&I: Do you think dealers will react to that news by sending more-targeted mailers and restaffi ng their BDCs?
Parker: Yes and no. I do expect deal-
ers to choose their campaigns more
carefully, and they’re going to want
to know exactly where they’re spend-
ing their money. As for the BDCs, we
have eliminated that concern because
we insist that our call center, which
is based in the United States, fi eld all
the calls and set appointments based
on a schedule the dealer provides. We
also follow up with any no-shows.
F&I: What types of campaign are you recommending for 2011? Parker: We don’t offer saturation mail,
only bankruptcy and credit score-
based direct mail. Frankly, we see
anywhere from three to six times bet-
ter results from the credit score-based
mail than the bankruptcy mail.
F&I: Why is that?
Parker: Just because a consumer
has a discharged bankruptcy doesn’t
mean they can qualify for an auto
loan. There are any number of factors
that may disqualify them, such as re-
cent derogatory credit items after the
fi ling, or multiple bankruptcies. Or
they may simply not meet the banks’
minimum credit criteria.
F&I: If you’re going by credit score, what’s your target range?
Parker: We let each dealer determine
the credit score range for his or her
campaign, but our history shows the
greatest success with scores between
525 and 675. There’s not much re-
sponse from consumers above 675.
However, if you have in-house fi -
nancing — or perhaps Credit Accep-
tance — and can do anything below
525, you can have a lot of fun with
this program. And, to my knowledge,
DealerLink’s credit score mail is the
only one in the industry that is willing
to guarantee the dealer’s investment.
F&I: What do you say to dealers who believe direct mail’s role is better fi lled by Internet and social media marketing?
Parker: Social media marketing is
certainly a medium in which every
dealer should have a presence, but the
consumers you reach through social
media marketing already know who
you are, and they may not qualify for
the fi nancing you’re advertising. The
consumers you get from our direct
mail programs are new to you, and
they absolutely will have the credit
required for you to sell them a car.
28 F&I and Showroom January 2011
Direct MailMailers were the fi rst
line item scratched from many dealers’ advertising
budgets during the downturn. Marketing ace says it’s time to add them
It’s easy to stay where you are because there is no suffering when we’re in our comfort zones. But ask yourself, are you satisfi ed with where you are?
Are you okay with not rising to the challenge in this new economy?
The FTC has been poking around at some dealerships in recent months. What is the agency looking for? The magazine’s legal expert weighs in. By Tom Hudson
After acquiring CoVideo and its streaming video e-mail technology in December, EasyCare is making the company’s proprietary communications platform available to its dealer customers. The new offering will allow dealers to create and send personalized video e-mails and embed links that direct recipi-
ents to the dealership’s Website or F&I microsite. Dealers can use the tech-nology to communicate with existing customers
or to create campaigns to attract new prospects. The platform also allows users to track the success of their campaigns. For more infor-mation, visit www.easycare.com or www.covideo.com
EasyCare Acquires CoVideo, Offers Video E-mail
CAR-Research XRM Adds Service Drive Module
CAR-Research XRM, a CRM solution provider, has added the Service Drive Control Manag-er module to its CRM. The new functionality
helps service technicians identify needed maintenance and repairs in their customers’ vehicles. The mod-ule, which is built into the CAR-Re-search CRM solution, also provides service departments with an online scheduling tool and a route sheet that automatically displays key information related to repair orders. For more information, visit www.CARResearchXRM.com
Counselor Library Releases RBP Rule GuideBook CounselorLibrary has launched, “Dealer Compliance Guide: Risk-Based Pricing,” which addresses the obligations of dealers under the new federal Risk-Based Pricing Rule, which was expected to go into effect on Jan. 1. The 53-page book focuses on best practices for compliance with the RBP Rule and provides an overview of the various compliance methods. To purchase the book, go to www.counselorlibrary.com/public/com-pliance_dealer.cfm.
ATcon Offers Updated RO Analysis ToolATcon, a consulting fi rm focused on fi xed operations, has launched Electronic Repair Order Analysis v5.0, a management tool that sorts through and analyzes thousands of repair orders to identify trends and deviations from best practices. The solution also can be used to create e-mail and direct mail campaigns using customized reports based on ZIP code, make/model, year and mileage. To download a free, 30-day trial of EROA, visit www.atconsse.com/TryTheEROA.
KBB Launches Free App for AndroidKelley Blue Book has launched a free, interactive app for Android mobile devices, which pro-vides car-buying and -selling information. Users gain access to new- and use-car values, including MSRP, invoice, fair purchase price and more. Dealers also can use this information in vehicle transaction negotiations. The app also offers directions to dealers, vehicle photos and video reviews. To download the app, visit http://market.android.com/details?id=com.kbb.mobile on any Android device.
High quality menu, report, and desking tools with your agencies look and feel at a very affordable price
Full-Time Toll Free Tech Support
Integration to most DMS’s
Integration to your product providers rate engines
And much more!
ATTENTION: INDEPENDENT AGENTS
To learn more call 1-800-413-9902
www.visionmenupro.com
We are currently interviewing top-performing agents who want to increase their business and revenue by 20% in 2011. Territories are being established through-out the Unites States Imagine a product that will not compete with any current offerings, yet still has a 20-30% penetration level. An agent with 20 dealers will see an additional $18,000 per month in additional residual income immediately. Repair Assurance is a brand new product and really, a new product category for F&I departments that you can bring to your current dealers. Repair Assurance also provides a powerful door opener for prospective dealer customers. It doesn’t re-place your current VSC but provides an F&I product you can sell to consumers who can’t or won’t buy a VSC. Repair Assurance also drives used car buyers back into your dealer’s Service Departments, resulting in a 60% increase in service revenue. Imagine the value you bring to your dealers current and potential with this powerful of a service. Find out more.