Dealers are always asking what type of marketing and advertising they should be doing to drive special finance customers to their websites or through their doors. In response, I always ask the same question: “How much traffic do you currently have, and how are you staffed to handle it?” Usually a lot of hemming and hawing takes place at that point, or I get a lot of numbers that end in zeros or fifties.

The reason I ask about staffing is that dealers tend to be rather urgent people. We ask questions like, “What can we do to put that deal together today?” Similarly, when they decide an opportunity exists, they are ready to roll out an advertising or marketing campaign instantly. I often call that approach, “FIRE, ready, aim!”

There are some dealers — many of our own clients among them — who are really making the subprime needle move in a big way. Whether they are using conventional media, digital media or a combination of both, they are successfully driving traffic and converting sales. There are several dealers generating year-over-year increases in SF, with some growing in leaps and bounds. Upon hearing that, their colleagues wish to cash in as well — urgently.

The problem is most dealers are just not ready to do something like that ... yet. Yes, they may be able to create astounding traffic, but unless they have the proper staffing, systems and processes in place, when the traffic hits, it either cripples the dealership (or department) or upsets the customers, or both.

The Marketing Paradox
There are a lot of talented marketing people around our industry, and there are just as many clever and ingenious dealers. By mixing the two, you can often create magic when it comes to floor or Web traffic.

The marketers get paid when dealers advertise, so they fan the flames to entice the dealers to undertake and expand campaigns. Although it is the marketer’s job to create traffic, the dealer is the one who must convert that traffic into sales. Too often, the organization just isn’t equipped to handle all the new shoppers, especially when it comes to special finance. And when the campaign ends, all that remains is disappointment and finger pointing because the sales didn’t ratchet up proportionately with the advertising spend.

That’s why you must first build the foundation of special finance. The need to have all 10 Critical Components of Special Finance in place (shoot me an email to get the full list) is absolutely essential in order to excel. Even if you have a special finance department already, over time, personnel turnover and weak systems and processes cause the effectiveness of the department to diminish. The basic knowledge of how to structure a profitable and approvable deal may still exist, but everything else may have disappeared, and it’s not easy to resurrect overnight.

Start with commitment. It seems like that should be easy, but that is not always so, especially if someone spends a walletful of money on a marketing campaign that generates traffic but doesn’t result in deliveries. As a dealer or general manager, are you really ready to recommit to the budget increases necessary for inventory, staff or technology to make SF work?

If the answer is “Yes,” then do your homework. Before you go too far, you need to conduct a credit demographic analysis of your customers — and not just your sold customers. Knowing who is coming through your door already and what their credit demographic is will arm you with the information you need to close sales.

Finance companies that serve the subprime market tend to set certain parameters for vehicles, and no two programs are the same. Proper inventory is crucial to the success of any SF campaign.

Finance companies that serve the subprime market tend to set certain parameters for vehicles, and no two programs are the same. Proper inventory is crucial to the success of any SF campaign. 

Finance Partners, Inventory and Personnel
From the analysis, you will also learn whether you have the proper mix of finance companies on board. If you have a niche of customers you don’t have good financing solutions for, you need to take action before you push the marketing button. After all, how much fun is it to have a showroom full of customers you can’t get financed?

Once you have the finance companies in place, you will know what inventory matches up with their programs. No inventory, no collateral; no collateral, no way to structure deals. It is that simple. Once you acquire the inventory, you must also have a system (either manual or automated) to quickly match each SF customer’s credit profile with the appropriate vehicle for the appropriate finance company.

Personnel follows next. Remember, the average salesperson can effectively work 75-80 new opportunities per month. That is why you have to know what the current traffic count is and how many people are on staff to work the leads. Certainly a call center or BDC will change the dynamics and allow a dealership to process more leads, but it is still very easy to overwhelm either your sales team or your finance desk.

Training and Compensation
If you already have the people aboard, are they properly trained? Is your staff quickly qualifying traffic to ensure the correct sales process is used? More importantly, are they using a standard sales process specifically designed for the subprime customer? Are they trained to get a complete credit application? Will they conduct a solid credit interview that will provide the finance desk with the best possible opportunity to get the deal approved?

With a rock-solid process in place, you must develop a pay plan that prevents any conflicts of interest. If one manager or salesperson must lose the deal for another to win, you are headed for trouble. The same is true if you penalize your F&I managers for structuring a highly profitable front-end deal for the store where no back end is possible.

Finally, is your team able to quickly and accurately structure a deal so it can be approved and at the same time achieve benchmark gross profits? This would seem like an easy task, but in our workshops and conferences, the majority of people will leave money on the table when we work our sample deals. If that is happening in our workshops, you can bet it is happening in your stores.

Finally, your managers must understand that the work is not over when the deal is sold. Contracts must be turned to cash quickly. How many days does it take you to fund a deal now? Do you have the systems and processes in place to ensure that you have clean (and compliant) paperwork? If not, potentially doubling your sales volume could cripple your cash flow, and who can stand for that?

The steps listed above are a good start, but these are but a few of the issues we uncover when working with dealers. Many dealers naïvely think they can just sell their way through any marketing expansion. Occasionally, you can; even so, what opportunities are you giving up to do so?

I am all for creating excitement and selling vehicles, especially through special finance. I encourage you to take advantage of the opportunities in the market today and go after them with gusto. Just be sure you have a foundation in place that will allow you to capitalize and create happy customers and employees at the same time.

Greg Goebel is the CEO of DealerStrong and the industry’s leading special finance trainer since 1989. He is an 18-year former dealer principal and a highly sought-after speaker, author and consultant. [email protected]