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Make the Total Commitment to Special Finance

The first in a series on the 10 Critical Components of Special Finance Success

Eighty percent of all dealers in the country have been in the Special Finance business to some degree at some point in time.  Less than one in five dealers is currently active in Special Finance.  There are markets that seem flooded, but there are many markets where virtually no one is them.  Of those dealers that are actively engaged in SF, only half of them are actually excelling in it, meaning that less than 10 percent of all dealers are successful in Special Finance.

“How can that be?” you may be thinking. 

It starts with the basics – 10 Critical Components – and the very first component, the most important of them all, is Commitment.  There must be total commitment to the initiative from the dealer principal all the way through the organization to sales personnel and receptionists.

It is amazing how difficult it can be to achieve total commitment.  It might be simplistic, but the lack of commitment comes from two primary areas – capital or fear.

A dealer who lacks commitment based on a lack of capital is understandable.  I always remind people that growth is never free.  You must be able to afford the additional capital that will become “frozen” within the dealership when the inevitable rise in contracts in transit occurs.

Fear is different.  Whether it is the fear of change, failure, losing control or loss of income, fear seems to be a driving force among management and sales personnel.  How else can you explain it when astute professionals armed with the knowledge of the enormous opportunities of SF, and both the skills and training to carry it out, seemingly ignore the edict of the executive level?

Recently, I was speaking with a friend of mine.  This friend owns a domestic, single-point dealership in the heartland of the country.  He is as sharp of a dealer as you’ll ever meet and has an extremely profitable and respected operation that is made up of some of the finest professionals in the business.  So, what’s the problem?  His store keeps spinning its wheels trying to get SF off the ground.

It isn’t the market – his area is a hotbed of SF activity.  It isn’t a lack of leads.  They have more than they can handle.  It isn’t a lack of knowledge, as they have trained and trained and trained.  It is simply the lack of total commitment on the part of their team – despite the dealer’s knowledge that their single biggest opportunity is in Special Finance.

Case in point.  We were chatting about how well the store had finished November, and the subject of Special Finance came up.  They were still floundering, in my perspective, even while trying to focus on the enormous opportunity of sub prime credit customers already coming in their front door.

His simple goal was to effectively implement a green balloon/red balloon qualifying question early in the sales process to be able to identify those customers which needed to be directed to the SF team. 

His store tracks its activities as well as any store I have ever seen.  The prior day they had 24 selling opportunities in the dealership.  They had pulled credit bureaus on 12 of them and had only managed to turn a single customer over to SF, despite the fact that well over 50 percent of the customers coming into the dealership that day had sub prime credit.  That most likely means five customers were worked on the wrong vehicle and with the wrong sales process (which means they didn’t take delivery).

I told my friend that it doesn’t take a brain surgeon, or even me, to track where the problem originates.  They can identify every time they pull a bureau with a credit score or file that indicates sub prime credit where the customer was worked as a prime credit vehicle (likely a new vehicle).  From this, it is simple to identify the manager and team leader that worked the deal.  Once the problem is identified, it either becomes an additional training issue, or more likely a meeting of the minds.  Hopefully, a discussion will determine just where the fear lies.  Often, it can be overcome with additional knowledge.  Ultimately, they must either buy in or be removed from the process – which usually means removing them from the team.

Total commitment is also required to ensure that all other components of the SF department are present.  An example would be the commitment to maintain the proper inventory, which is the second most important component (behind commitment). 

A used car buyer or manager unfamiliar with the particular needs of a SF department may be reluctant to find the specific units at the price points necessary for success or sometimes even claim it is impossible.  This is due to the fact that SF units are not the units the traditional buyer or manager frequently buys or stocks.  Just as frequently as I see the lack of commitment to the proper sales process, I see dealers experiencing the same issue with their inventory – which ultimately can make it nearly impossible to put together a SF deal.

Special Finance deals can detonate through more than just the lack of commitment to inventory or the processes.  Commitment is required for the remaining nine critical components.  Special Finance deals don’t happen by themselves, and similarly, SF departments don’t become successful without work.  Successful dealers know how hard they must work with each of their profit centers for them to sustain excellence.  Why should it be any different with your SF department? 

As you read this, the new year has arrived. It is the time of the year where, good or bad, you wipe the slate clean and start fresh.  Last year was a polarizing year.  In general, those owning foreign franchises had terrific years, while the domestics struggled to maintain market share and profits.  It makes no difference whether yours was a banner or bear year.  With over half of the car buyers in this country falling into the sub prime credit category, the choice is yours.  Special Finance offers nearly every dealership the opportunity to add hundreds of thousands, if not millions, of gross profit dollars to your dealership.

It all starts with the total commitment to make it happen … everyday by everyone. 

Until next month,
Good Selling!

P.S. – If you wonder how much capital you must have available to grow your Special Finance department, e-mail me and I will be happy to send you my worksheet.

Vol 4, Issue 1



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