It looks like Christmas is on again this year. There were some who thought, with the current state of the economy, this might not be true, but I have heard from a good source that it is indeed on again for this year.
For those of us in the BHPH industry this is definitely good news. Yes, I said good news. This gives us a golden opportunity to finish the year strong from both the sales and collections sides of the business.

I know what you’re thinking: “Obviously this guy travels so much that he finally missed his flight back to reality.” When I first got into this industry I was told there were only two absolutes in the BHPH world – you can’t sell cars or collect money in December. It’s a time to just hang on and wait for tax season, and I bought into that philosophy for my first couple of years.

What changed my philosophy, you ask? Call it ego. Call it ignorance. But more than anything else, call it greed. I wanted the twelfth month to be just as profitable as the other 11.

The first thing you have to do to make December just as successful as the other months is get your mind right. Without accomplishing this first step, nothing else will matter. Believing it is a “hold on” month will always make it one. You know what they say: “Whether you think you can or can’t, you’re right.”

Now that we have the “I can” mentality, where do we start? We all know this is a collections business, but if we don’t sell some vehicles, there won’t be a whole lot to collect at some point. So let’s start with sales.

The biggest obstacle to selling a vehicle in our industry is not the sale price. It’s not the features and benefits, or lack thereof, of the vehicles we are selling. It’s the down payment. Of course, this is the time of year customers have the least amount available for a down payment, so to make it a successful month we have to be prepared to overcome that obstacle.

Now, don’t think I’m saying this is the time to offer zero downs. What I’m saying is this is the time of year to get creative in regards to downs. We all know the amount of down payment received has no bearing on how the customer will perform. If that was the case, the best paper we put on the books would be February deals. Sorry to say, those deals have the worst performance from a static pooling standpoint than any other month.

By creative I mean focusing on customer trade-ins, and not just vehicles. I work with quite a few successful dealers who will trade for anything—TVs, jewelry, video games, you name it. Anything of value. They assign the “trade” a dollar value and give the customer the opportunity to buy the “trade” back within a certain number of days.

Another avenue to overcome the down payment obstacle would be to offer a portion of the down payment be deferred until the customer receives their tax return. There are aggressive dealers out there not only doing this in December, but offering this as far back as late October and early November. There are tax services available that can estimate a prospective customer’s return based on their most recent paystub.

And of course there are always giveaway promotions. Since the money you want for their down payment would be the money they use for gifts, offering TVs, video games and gift cards could be a way of prying free those last needed down dollars. Now, the same can be said for trying to keep our customers in good standing from their payment standpoint. You have to have the right mindset and be creative.

Giveaways can work here as well. Gift cards, TVs, and video games can be given away on an arbitrary basis or after some sort of registration process. It gives the customer something to give as a gift and they will still be able to make their payment. Gift cards seem to work best for this type of promotion as the customer can spend it how they see fit.

Deferring of payments during the holidays is something that all the major finance companies have offered to their customers for years. It’s a benefit they offer to their good, paying customers to help this time of year. A word of caution here: This will definitely establish goodwill with your customers, but can be detrimental from a cash flow standpoint.

The point to all this is there is no reason for the holiday season to be a time of just hanging on. It should be no different than the other months of the year. The keys are to make this time of year a priority from both a sales and a collections standpoint.

There are customers in the market who need transportation, and those same customers will need the financing to obtain it and have the money available to not only purchase it but pay for it as well. The question is are you willing to be creative enough to capture and collect from those customers, or are you just willing to hang on?

Vol. 7, Issue 11

About the author
Brent Carmichael

Brent Carmichael

Executive Conference Moderator

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