December is a time for celebration and reflection. This is an article that I wrote a half-dozen or so years ago, but the message is timeless. I hope that you enjoy reading it and take a point or two as my Holiday Gift to you!
In Latin, decem means ten and, in fact, December was once the tenth month in the Roman calendar. This is ordinarily a month of celebration and in many quarters, this year will be no different. While we have much to be concerned about, in the automotive industry, we also have much to celebrate. At the same time, December is usually a month in which we look ahead and collectively develop our business plans for the New Year.
One of the current entertainment trends is the use of Top Ten lists or a litany of “you might be a _____ if” one-liners. So rather than skate the thin ice of 2013 projections, I am going to give you my list of reasons your operation may be in the December of its existence. Or “You might want to consider a different career if you have said . . . .”
I don’t like having that kind of customer in my store. This is not one that I hear as much anymore, but it still finds its way into occasional conversations. Please explain to me how you can distinguish, visually, a conventional from a Special Finance prospect? Are they purple? Special Finance customers hail from all walks of life. Teachers, salespeople, doctors, stockbrokers; you name it! The dealer who uses personal bias to filter his clientele should probably consider a different career path.
Boy did I whack that customer! That wreck will be an antique before they can afford to trade up. Please don’t send me any flaming email until you read this entire paragraph. I am one of the first to stand up and salute profit. I have been quoted, in training sessions, as saying that “Profit is not a four-letter word.” The occasional “home run” is a matter of pride in our industry. However, if you regularly and knowingly bury customers in a vehicle that you know will never “make it” you might be shortsighted and at risk of never selling that person or his family or his friends or his co-workers ever again. A Special Finance professional with little or no repeat or referral business might be wise to redirect his/her career path.
FCRA notices? That’s up to the banks. This is perhaps, one of the most misunderstood areas of our business. If you regularly reject applications after screening the prospect’s credit report, you are the lender and you must comply with the reporting requirements of the Fair Credit Reporting Act. Expect to find this as a favorite area of fines and damage awards in the coming years.
It has a Moon Roof, doesn’t it? They’ll never check! Famous last words! And funny until a representative of one of your banks walks into the office with an armful of allegedly fraudulent contracts and a 7-figure demand for repurchase. Fraud is fraud; no matter that it is just a little thing. The first time you head down this path, you are on your way to a different area of endeavor.
If you get them financed, it doesn’t matter what car they drive. This mind set is almost as old as I am. True, in the early days of the Special Finance industry, this may have been true. However, today Special Finance customers come from all walks of life with all kinds of different needs. Your inventory must reflect the diversity of your prospects. If you have an inventory of intermediate four-door sedans in a rainbow of color choices, you will also have a large file of undelivered approvals. In which case, you are working too hard for too little profit and might want to re-assess your career plans.
I don’t believe in selling warranties. This is a biggie! It doesn’t matter whether you are selling in a Special Finance or a BHPH environment; it holds true, in the majority of cases, that if the vehicle is not running, the customer is not paying. After you have taken their savings for a down payment and a good chunk of their paycheck for a monthly payment, your customers have little left for unexpected repairs. A small investment in gross to cover a warranty will pay you back exponentially in referral and repeat business. If you steadfastly refuse to include warranty coverage for your customers, you may not make it to the next mid-term election.
Newspaper ads/radio/internet leads/direct mail (add your own source) are the only leads that I need. Refusing to balance your advertising and lead generation budget is a huge mistake. Our prospects respond differently to all types of media and they respond in different formats. While the Internet is the darling of many, there are still a substantial number of folks who cannot or will not communicate online. Balance is important and if your business plan is lopsided in this area you are in danger of falling out of touch with potential customers.
Training is for new guys. This comment is guaranteed to get my attention. A sure sign of a train wreck heading on down the track. Training comes in many formats and does not always require traveling to some far away locale for a three-day seminar. Training is reading or listening to others on a regular basis, as well. I am married to a very talented attorney who has spent decades in her career. However, a month never goes by, that she does not attend one or two seminars or training sessions to sharpen her skills. Should we be doing less? The Special Finance professional that refuses to keep up to date will find themselves on the market with outdated skills.
We’ve never done it that way before. This is not new. They are not my words, but they should always be in plain sight of every manager in the world. I am not sure exactly who coined the phrase, but I believe it was from something called The Seven Last Words of a Dying Business. This last item in my list needs no additional comment. If you find yourself repeating these words, your days are numbered.
Have a Merry Christmas, a Happy Holiday Season and if you found yourself in any of the paragraphs above, take the time, as you make your 20013 plans, to make some changes in preparation for a truly Happy, Profitable and Special New Year.
Just my two cents worth.
About the author
Dick Hassberger, of Lake Orion, Michigan is a veteran of over 50 years in the Automotive Financing and Leasing industry, starting his career with the former Wayne Oakland Bank in September 1960. Dick is National Sales Director for VOISYS. He has held executive positions with Major Banks, Lending Institutions and Leasing companies and has accumulated a vast store of knowledge in the automotive financing industry, which he regularly shares with his client dealerships as well as readers of this blog. Dick was a regular author for World of Special Finance Magazine.