Innovations Abound for Special Finance Departments

Every year at our Special Finance Conference, I learn from the dealers, finance companies and vendors, and this year was no different. I almost always leave the convention armed with another new piece of information that more than makes it worth my time. This year was different, however. This year, it wasn’t just one idea, but indeed three separate products or services that can really made me stand up, take notice and say, “Wow, these are no-brainers!”

For years, dealers have written or called nearly every day wanting to know what the latest and greatest thing in marketing is or where they can find vehicles that will work with their mix of customers and financing. These products literally address these questions in some form or fashion.

I frequently hear dealers or used car managers say their area of the country is different and you just can’t find inventory that will work with their store and their customers in special finance. Yeah, right. The dealer next door or across the street is able to fill their lot up with inventory. My comment is always, “Work smarter, not harder.” OK, it may have more of an edge than that, but it really just takes being smarter than the average bear.

So how do you do that? I have found two products that accomplish that.

Auto Auction Insider
The first is from ProMax Unlimited, a company that has been around SF a long time. The product is called Auto Auction Insider (AAI). There are a number of reasons why I like AAI. First, it is a standalone product; you don’t have to be a ProMax Unlimited user if you just want the auction tool. Second, it is inexpensive. At the time this article was written, their website offered it for just $195 per month. Basically, the gross generated from one car deal pays for it for an entire year, or probably more aptly, what you save by avoiding one purchasing mistake more than covers the annual fee.

It works by integrating and updating the NADA, Kelley Blue Book and Black Book values weekly and comparing these values to actual auction sales. It then allows you to see which vehicles compare best to the book values on a region-by-region basis to offer the most profit potential. Additionally, it allows you to filter the comparison between class type (mid-size, SUV, etc.) and make and model going back to the 2004 model year. Finally, it will even allow you to filter it by monthly payment.

At the end of the day, this powerful tool will tell any buyer which year, make and model vehicles offer the best profit potential based on class or payment range, as well as where in the country to buy them. Did I mention you can download an iPhone app for this as well? Now you can take this information with you on the road. As I said, work smarter, not harder, and through this, you will see that you really can find the inventory you need not only to put SF deals together, but with benchmark gross profit potential.

Now that you have found a particular auction or area of the country for inventory, you have to actually buy it. As good as AAI is, it doesn’t take auction-lane mistakes out of the game. I remember standing in the auction lane 15 years ago using some now-antiquated hand-held device trying to quickly book out a vehicle and process the information through a buying matrix that I had built in Excel to determine what I should pay for a specific vehicle based on its equipment and mileage and which finance company program I was trying to buy it for. Trust me, there weren’t many people trying to do that back then.

Bidzpin
Now there is an iPhone app that does it all and takes it one step further. Bidzpin is a product that was recently released and I think back to all of the hours of homework my buyers and I did before auctions and just wish I had this product.

Just as I used to do, you put in your predetermined settings: the minimum gross profit you’ll accept, average minimum down payment, average reconditioning cost, doc fee and sales tax. Finally, you select the top six finance companies to consider. The only difference is now this can be done in seconds and is accurate to the penny; my matrix was close, but not dead-on.

Now you walk into the auction lane (or online auction) and inspect the vehicle. Either by VIN or year, make and model (both entered in seconds), you dial the vehicle in, along with any additional equipment. Add the mileage and you are all set. You can “spin” the purchase price and see exactly how it impacts the gross profit across all six finance companies. Better yet, it uses colors so that you can quickly see whether a vehicle meets your criteria. As they say, “Green is clean and red is dead.” It offers even more neat and powerful tools, but this is certainly the key.

My buyers and I would have given our eye teeth for this way back when! At only $395 a month, it will pay for itself tenfold at the first auction you go to. Yeah, I am advocating spending nearly $600 a month to help you buy the right inventory, but so many dealers and buyers can’t accomplish this, and if you can’t find vehicles using these tools, you shouldn’t ever step foot in an auction lane.

VegasFlyTrap
This may be the best marketing tool I have seen in a long, long time. Today, talk to anyone with any digital marketing savvy and they will tell you that you have to drive more traffic to your website. I won’t disagree, that is very important. What is much more important is to turn that website traffic into actual leads (real people’s names with their contact information). There are a lot of theories on how to do that, but VegasFlyTrap is the best tool I have ever seen to accomplish it.

This new product uses an old hook – games – and turns website visits into leads. Auto Dealer Monthly will feature an article later this year about a Honda VW dealership in Port Charlotte, Fla., using this product to turn nearly 4 percent (249 last month) of their unique website visits into leads with complete customer data. Better yet, when scrubbed against their CRM database, it provided only one duplicate for an entire month. What does that mean? It means it is converting visitors who would otherwise not be leaving their contact information into leads!

Now for the proof in the pudding: the dealership and its BDC is converting 33 percent of the leads into dealership visits and 10 percent of them into sales! That is staggering. Do the math. The software is imbedded into your dealership website for $1,995 a month. Yes, it may seem pricey, but upon further review, if you are getting 4,000 unique visitors per month between your website, Facebook fan page and Craigslist listings (yes, it can go on all three) and you are able to just turn 4 percent of those into actual leads that you wouldn’t have otherwise had before, that would be 160 new leads. If you are able to convert just 5 percent, which is eight extra deals per month. At just $2,500 per deal, that is $20,000 in extra gross profit per month. That makes the cost well below benchmark. Now these aren’t just SF leads, but certainly a dealership with a good phone process or call center will absolutely eat these up. I absolutely love it, and best yet, it has very high accountability!

So there you have it. The three best things I came away with from the 2011 Special Finance Conference. If you have more questions, feel free to drop me a line!

Until next month,
Great Selling!

Vol. 8, Issue 10