This is the second of six articles that will document the process being used to develop a startup special finance operation inside an already successful independent dealership, located on the fringe of one of the major metro markets in the United States. While the names and locations are being changed to protect the company’s privacy, we will spare no detail as to the plan, the strategies, the successes and the challenges encountered over a six-month period, with the end goal of the new department reaching a monthly sales volume of 70 deals at over $230,000 total gross by the end of that period.
It was a Monday, the third day of the month, when DealerStrong’s executive trainer, Shawn Foster, and I walked into “Champion Motors” full of anticipation and a tad bit of uncertainty. The anticipation was fueled from working with dealer partners “Clay Rodgers” and “Aaron Matthews” for 30 days already as we were laying out the foundation of their soon-to-be special finance department. The uncertainty was from having never physically visited their dealership and having hired or come to terms with two new employees that we also had never physically met, along with a couple individuals that were in the last stages of the interview process.
More uncertainty was established as Rodgers and Matthews had initiated a full-scale facilities remodel in the 20 days prior to us arriving to make room for the new special finance team, including building out a BDC. I fully expected to find studs and roughed-in electrical and was prepared to make the best of it. Did I mention that Matthews was off for 11 days in Europe for his honeymoon during the construction time?
Oh yeah, one last detail. In the days before we arrived, they had been scheduled to finish their ProMax installation. The trainer from ProMax walked in the door at the same time we did — meaning no one in the dealership, except for me, had a clue about how to use their CRM and desking system. Just a bit of uncertainty — but truly nothing life or death.
With all the big pieces in place, it was time to get busy with personnel, finance companies, inventory and, finally, the launch.
To our delight, all the new team members expected were present and accounted for. The new SF director, who has 15-plus years as an independent dealer in the same general market, had been working as a dealership consultant for the last three years. The positives included that he certainly knew subprime and he also had been exposed to an assortment of technology and ideas in the stores he had been working with. He also had done quite a bit of training and team building, and with hiring a new staff with little expected retail auto experience, that was important. The biggest negative — or at least surprise — was it turned out he had not sat in a SF director seat to speak of in at least three years, so there was more rust in his desking practices than we might have wanted. Nonetheless, it was nothing we felt he couldn’t overcome.
Our sales staff were the hardest to hire from a distance. We began with one on “Opening Day” and with two more that their notice required a later start date. The good fortune was that we were able to bring in one new team member that had actually worked SF deals from start to finish — albeit not in great volume.
A week later, the new BDC team members arrived, and three out of three (we actually could have hired a fourth) were present and accounted for. We did lose one the first day, but we had expected attrition built in and as a result, it was not a significant setback. We quickly added a third BDR, who appears to be a significant upgrade.
Realizing that the first day of a new hire’s employment is the most important day in establishing the culture and easing their fears, we customized DealerStrong’s Onboarding Manual and had a much scripted day of welcoming/training, including presentations by both of the partners, various managers, ourselves and the dealer’s HR manager. It was followed by another two weeks of training to both make our team competent and confident ahead of our mid-month launch.
I must compliment Dwayne Bennett of ProMax. He did a great job of orienting both the prime and the subprime staffs on their product, and thorough training as well. It is rare when I am onsite with a client during a CRM install. Even with the normal hiccups in setup that you naturally expect, it really went well.
2. Finance Companies
I had given Matthews a punch list of special finance companies and credit unions that they needed to get signed up with in the month before we arrived. To his credit, he had accomplished far more than I imagined. As we started, we had nearly every finance company that we needed, plus most of my “wish list.”
Fortunately, my own long-term relationships with some of the top finance companies that I have done a lot of training for helped us get their premium programs, so as we started business, we weren’t going to lose any deals to any other dealer that had a better selection of finance companies. We will be adding a few additional niche finance companies, but we were certainly in a good place to get started.
Rodgers is the partner in charge of inventory and he really sunk his teeth in. As detailed last month, we were in a really good spot to begin with. Even though their 200-plus units in inventory had been sourced for prime credit luxury and highline customers, we quickly found nearly 20 units that made very good SF vehicles from a cost and spread-against-the-book standpoint. The bonus was they were not run-of the-mill, off-rental units, which made them very easy to present to aspiring subprime credit customers. Rodgers quickly caught onto what was needed for the bread-and-butter SF inventory and immediately started using his connections to bring the needed stock to 30 units.
After nearly two weeks of orientation and training, the department launched on the 13th day of the month. Bumps? Sure. Stumbles? Sure. But along with them came the smiles. The first car out the door was anything but the traditional SF inventory. Availing ourselves of the Diamond status bestowed by Capital One, we sent a super-sweet, seven-year-old BMW 5 Series down the road to customers that traded in another vehicle that will be a perfect Tier 3 or T4 unit, and who that same evening gave us two outstanding reviews online. We patted ourselves on the back for exceeding benchmarks as well. Deal No. 2 the next day was a three-year-old BMW X5, as a healthy down payment allowed us to reduce a customer’s payment to fit the required payment-to-income ratio.
As we go to press, the switch has been flipped for Focus leads. We are trying to hire one additional business development representative and are getting ready to shoot footage to use with our Nation’s Premier Auto Dealer direct response program, which will launch in about 30 days. Our conservative target stated last month was to get the facility built, staffed, BDC launched and sell five units, at above benchmark gross profits. Realistically, we want 15. We certainly believe 30 by month’s end is doable. Now all we have to do is make sure that the team has got their funding system ready to go. Time will tell, but so far, so good.
Stay tuned to watch it grow, and if you have any questions as to why or what we are doing, drop me a message at [email protected].
Until next month, great selling!
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.