(Author’s Note: This is the third in the series of articles detailing the Ten Critical Components of Special Finance. It is an updated version of an article I wrote years ago, published in March 2007, and it is still just as timely now as it was then.)

Owners and general managers still roll their eyes when I say that personnel is the third of the Ten Critical Components for success in Special Finance. I always preface it by saying inventory is really “2A” and personnel becomes “2B.” You have to have inventory to be able to sell vehicles in SF, but you certainly have to have people to sell them.

Personnel is a complex issue. First, you must know the number of people required. Then, you have to know where to find them and how to hire them. Of course, you must also have suitable compensation plans. Then have to have the proper departmental structure and train everyone involved. Dealers who put all these pieces together are generally rewarded with a department that not only functions well, but also stays intact.

Let’s first address the personnel quantity issue. Growth is always accompanied by cost, and in the case of the SF department, it is through added personnel. Keep in mind that every time you contract a SF deal a tree dies due to all of the paper required to copy the stips. The laborious process to sign and fund a deal takes time and manpower.

Many dealers create a department with one or two people, give them some finance companies to work with and say, “Go get ‘em!” Of course, they have heard about their buddy’s store that does 50 SF deals per month and expect the same results out of the newly-anointed department. Guess what? It isn’t going to happen.

The average person can handle about 75 new leads per month, 125 at the most. Any way you view it, if you expect to add incremental growth, then you have to have more people lest you cannibalize your existing business. Keep in mind the benchmark SF closing ratio of 13 percent—or roughly one out of eight leads—meaning on average, one person in SF will deliver 10 or so units per month.

So now that you have an idea of how many people are needed in the department, you need to know where to look for them. Remember the Goebelism, “I have never seen a high-dive by the talent pool in the car business, as it tends to be incredibly shallow.”

Special Finance Manager
I believe you should first look internally. Look to hire, develop and promote. You are looking for someone who possesses the following traits. First they must have integrity, then the ability to read and call credit, as well as apply it to the various programs offered by the available finance companies. They also need to be organized and must be able to structure deals for maximum gross profit. (Have you figured out yet these people don’t grow on trees?)

One of these traits – the ability to read and call credit – can be maddening to find. I certainly believe it is an innate ability. One of the most frustrating things I have attempted is to try to teach someone how to call credit. I once had an F&I manager who had a master’s degree in business. No matter what, he could never grasp how to read a bureau and customer statement and deduce whether a finance company’s program applied. If they have the ability, they will show it quickly. If not, look out.

Often the person you are looking for may already be sitting in the F&I chair, or backing that person up. It could be a sales manager or desk manager as well. The key is that they already are part of your dealership’s organization and culture. You know them and they know you. Every time you go outside your organization, you chance running into the infamous 90-day-wonder. You know, the one you hire and in 90 days, after much agony and frustration, you wonder what on earth you were thinking when you hired him and you wonder how on earth you will ever undo the mess he created.

What if you don’t have that person currently on staff to promote? Then you have to look outside. Generally, the person you are looking for isn’t going to be found at another dealership. Occasionally you will get lucky, but recruiting from another dealership often offers more pain than success.

There are two industries that tend to have employees with the skill set you are looking for. First are mortgage brokers (and even loan processors) generally possess the necessary credit skills as well as the communication skills. It is not a significant issue to teach them “cars.”

The other source is the personnel working for the various finance companies. Branch managers, credit analysts and even their marketing representatives can be excellent candidates. Of course, it may not endear you to their buyers. Many of them become weary of traveling, territories being changed or internal program changes. They almost always have the ability to read and call credit, as well as the ability to speak the language, which can be an asset when selling a deal to a finance company.

Special Finance Sales Personnel
Now that we have addressed the SF manager, where do we look for capable sales consultants? Personally, I have a strong belief that you are better to look outside the industry to find quality people than to try to retrain retreads. I always suggest you go “shopping” for salespeople. It certainly worked for my stores.

First of all, let’s define who it is we are looking for. Give me someone with integrity, desire, and the ability to learn, follow instructions and communicate well, and I can teach them to sell. Next, you have to find someone with those traits who is motivated to enter the retail car business. That is where it tends to get dicey.

So where do you shop for salespeople? First of all, while many of us who have spent years in the business may agree that sometimes our hours are long, there are certainly other businesses that have much worse hours.

Think of the restaurant and hotel industries. When you get off work and go to dinner, there is still someone serving at your favorite restaurant. Servers and hostesses have all been selected for and trained to provide excellent customer service. Additionally, they must all be able to communicate well. Are there servers who have waited on you frequently and always delivered first-rate service? If so, your hours have to be better, and I bet your pay is too.

Hotel clerks often work 12-hour shifts, and they must be able to think on their feet when confronted with awkward situations while at the same time delivering first-rate customer service. Again, our industry offers better hours and better pay.

Also, consider other retail stores. I can’t count the number of times my managers were asked to leave Best Buy or Office Depot while recruiting a salesperson—er, I mean, shopping for a computer.

Essentially, anywhere you shop, you meet potential prospects. Keep a business card with you with the following written on the back: “I just want to let you know that you do a tremendous job. If you are ever interested in a career change with a higher earnings potential, please give me a call.” You cannot find enough good people with character and drive to fill your dealerships. Never quit looking.

Along with hiring or promoting people comes the issue of compensation. This is as important as hiring the right person. Without a fair compensation plan that works for both sides, any success will be short-lived. Rather than try to build a specific pay plan in this short space, I will give you some general parameters.

First, the benchmark guide for total compensation for both sales and management is roughly 25 percent of the departmental gross profit give or take a tenth or two. That means that your goal is to fit both the manager’s pay and any sales personnel pay inside that box. Average is 30 percent. This means that you cannot simply pay the first person you hire 25 percent of the combined gross. If you do, and you want to grow past 15 deals, you have no money to pay anyone else you may need to bring on board.

While structuring compensation plans, keep in mind that the SF manager is generally the one responsible for structuring deals and holding gross profit. The salesperson is responsible for obtaining the credit history, collecting stips, showing appropriate vehicles suggested by the desk and asking for down payment. When establishing compensation plans, keep those roles in perspective and reward each side commensurately.

Finally, be mindful of a common scenario in dealerships. Some dealerships actually make it a disincentive for a salesperson to sell or refer a SF deal because they pay less (often significantly) for a SF deal. This either causes the salesperson to try to push a deal through prime (which is nearly always a train wreck) or refer it to another dealership which pays handsome referral fees (i.e., larger than your own commissions).

So now you have determined how many people you need, have an idea of where to find them and know how to pay them. All that is left is training. I hope you are up to the challenge, as most successful special finance dealers I have worked with train their staffs daily. Yes, I said daily. I know all the reasons why you think that it isn’t possible, but somehow the dealership always makes time for the daily bank deposit. Why is it so hard to make time to train? Is it less important?

So how do you train? The method I used and recommend is simple. Keep the training meetings short (20 to 30 minutes). They can be conducted by different people, even salespeople. At each meeting, work from a one-page, three-hole-punched agenda (to go in each individual’s training binder). Have three to five bullet points outlined on the page, and leave room for notes. Cover your training points and conclude. These are teaching and role-playing sessions, not carping or save-a-deal sessions. Those are handled separately.

What material do you use to teach with? For starters, you are holding in your hands a great source of material. Both this magazine and our online version, AutoDealerMonthly.com, are filled with articles by dealers and industry experts from which to learn and teach. And they are free! Of course, there are a multitude of training workshops you can send SF personnel to, including the one I’m teaching entitled, “Special Finance Made Simple,” this month (April 24 and 25) in Chicago Or the Subprime Conference Sept 10-12, held in Las Vegas.

The bottom line is that a training program doesn’t have to be elaborate. It doesn’t have to be expensive. It need not even include DVDs or videos. It just has to be done. Most importantly, it needs to be done in manageable bites and done consistently.

So there you have it. A staff defined, hired, paid and trained. Simple, huh? I realize that I have covered a highly complex component with more generalities than I prefer to. As always, questions are welcomed, and you can address them to [email protected].

Next issue I will cover the fourth Critical Component – the special finance companies – and it will be all new!

Until then,
Hire and train well!

Vol. 9, Issue 4

About the author
Greg Goebel

Greg Goebel


View Bio