In late September 2002, incoming General Manager Stuart Landsverk stepped out and looked across a lot of dusty vehicles, hoping he had made the right decision.
Landsverk had just taken over the reins of the newest jewel of the Russ Darrow Group, Inc. dealership collection, Russ Darrow Mazda-Suzuki in Greenfield, Wis., just south of Milwaukee. In doing so, he inherited a store that had been selling a total of just 30 new and used units per month, and was three months away from moving into a new facility, then under construction.
Conquering challenges is nothing new to the Russ Darrow organization, which was founded in 1965 by Russ Darrow Jr., now the company’s CEO. From the two gas crises in the 1970s, 20 percent interest rates in the early 1980s to the erosion of the domestic’s stranglehold on the industry, challenges are just an assumed way of doing business to the company.
The Russ Darrow Group, headquartered in Milwaukee, WI, holds 12 franchises in 13 different locations in east-central Wisconsin. Additionally, the organization owns and operates six J.D. Byrider franchises. Total combined sales in 2002 were $326.5 million.
While conquering challenges was nothing new for the auto group, you couldn’t blame Landsverk if he were a little gun shy. As a 20-year business veteran, nearly all being in sub-prime and used cars, he was looking at a pile of dirt, a mobile office and a store that didn’t yet have a service and parts department.
Undaunted, Landsverk knew if he was to be a success at this venture, he would need to forge forward with a plan of something that he was very familiar with, and that works in virtually every environment – special finance.
In his previous position with the Russ Darrow Group, Landsverk had served as the corporate special finance director. In doing so, he was responsible for the bottom line of the total special finance effort for all the Russ Darrow stores in the group, including advertising, budgeting, inventory management, staffing, training and structuring the teams. He knew it offered both a safe haven and an above group-average gross profits – what a dealership without fixed operations would require.
Little did Landsverk know how well his strategy would pay off. The construction was finally complete in January 2003, and Russ Darrow Mazda-Suzuki moved into their striking new facility. By February, special finance was in peak season, and the store was quickly building a team. Landsverk relates his hiring philosophy, “We hire people with good communications skills and good math skills, who are computer savvy, we train them well and train them some more.”
“At Russ Darrow Mazda-Suzuki sales training means becoming certified in Mazdas, Suzukis and yes, special finance. Our entire sales staff works every sales opportunity the same way. Each is trained to sell to a prime-plus credit buyer, or the D-credit buyer,” Landsverk said. “It makes no difference, and that is one reason we are so successful. Our goal is to ‘see the deal,’ looking for every way to structure a deal, no matter what the credit is. There is a car deal with everyone who walks in, we just have to dig deep to find it.”
As a result, sales personnel and managers are not at odds trying to figure out “which department” should be working a deal. Everyone is working to accomplish the same thing.
An additional factor is that the Darrow team invites all customers to come to the dealership, regardless of their credit scores. “We don’t care if they have a 350 Beacon score, or an 800, we invite them all in. With the array of lenders that we have, you just can’t prejudge and write someone off. You just never know who might have a co-buyer or be able to come up with a substantial down payment allowing us to put a deal together,” Landsverk said.
“We had one customer that was in just recently, and they had terrible credit. We treated them with respect and like a buyer, but in the end we told them that it would take nearly $6,000 down to put a deal together – which they didn’t have. That weekend they went to the casino and hit the jackpot. They came back the next day to buy a one-year old minivan. That deal doesn’t happen if you never invite them in.”
Landsverk believes that you show every customer what options are available, even if it means just referring him or her to a dealer’s BHPH operation.
In terms of customers, Landsverk has used a multi-dimensional media approach, including a package designed to specifically draw the sub-prime credit buyer.
“Yes, we use television and newspaper, but to bring in the special finance customer, we first buy leads, rather than advertise. We have become proficient with the Internet leads, using companies like AfterBK, Inc., Cyberlead, InterActive Financial and Driverloans.com,” Landsverk said.
While personnel struggle at times to keep up with them due to sheer quantity, they still manage to deliver between 10 percent and 12 percent of all Internet leads they receive.
Direct mail has also been an important part of the mix. Landsverk targets recent bankrupt customers and prefers Beacon score based mailers, targeted for the 550 to 650 range customers. The caveat is that the only direct mail he will utilize is that which will qualify for the advertising co-op money offered by his manufacturers, thus helping keep his advertising cost per sale to a minimum.
Landsverk’s approach has provided a large stream of sales opportunities. Because of that, following up is extremely important. He said, “We are all over follow up. The Darrow organization does a great job of staying on the cutting edge with tools. We manage our customer contacts using AutoBase. Stored templates make follow-up letters and e-mail a cinch.”
“We also use an inventory tool called Inventory Manager, based in Royal Oak, Mich. It is an outstanding system. It integrates with our ADP system and allows us to load both our inventory and lenders. This allows us to manage a deal by matching both with a customer’s credit criteria to help select the best vehicle to show them. It is a key for our desk process.
Sales personnel are taught to immediately begin qualifying all customers, those with good and bad credit, approaching them the same way. “Everything is worked through the desk,” Landsverk said. “By the time the sales person brings the guest sheet to the desk, it usually includes a customer statement. The bottom line is that we quickly find out whether they are a prime or sub-prime customer and then suggest vehicles that will fit their financial situation. That way, there are fewer surprises in the finance office.”
The results of these strategies have spoken for themselves. Almost in spite of his heavy used car heritage, Landsverk has led the fledgling Russ Darrow Mazda-Suzuki to some lofty achievements.
By mid-2003 they had already become the No. 1 retailer of Mazda Proteges in America (which by no coincidence are vehicles that worked well with special finance).
As 2003 closed, the dealership had become the No. 1 retailer of Mazdas in all of Wisconsin, Illinois, Indiana and Iowa, selling 642 Mazdas for the year. This represents a Herculean achievement when realizing that one year prior they were lucky to total just 30 new and used units per month.
While it may not be the normal tact for all dealerships, COO and President Russ Darrow III, and brother (and Vice President) Mike Darrow can take pride in their latest shining jewel in their collection of dealerships. They can also take pride in having one of the finer special finance operations in the country. A great success story for all!
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