This is the fourth article in a six-part series chronicling the launch of a special finance operation at an established independent dealership located on the fringe of a major metro market. Our end goal for the new department is to reach a monthly sales volume of 70 deals at over $230,000 total gross by the end of the six-month launch period.

At the Halfway Point and Very Optimistic

As we passed the halfway point of the launch, the “Red Team” was beginning to gel. Certainly, as with any new location or department, there exists ebbs and flows — and certainly uncaptured opportunities. In looking at the body of work, we have to be pleased. Here is a summary of the highs and lows we experienced in Month Three.

1. The highs: With DealerStrong’s executive trainer, Shawn Foster, on site often this month, the sales management team really came together. No different than any other dealership, personnel will make or break the team. After struggling harder than ever in any market to get quality people hired and trained, we finally turned the corner. The management team appears to be solid with our Red Team director and credit managers working well together. Each has their strengths and weaknesses, but they are pushing each other to be better and ultimately, closed 41 sales out of 114 total showroom visits for a 36% closing ratio — a full 8% over the benchmark!

The sales personnel team stabilized with the hire of one new sales consultant, replacing one who just couldn’t quite get over the hump. Through our daily 15- to 20-minute training program, the staff are getting better and better at consistently executing their activities — which, ultimately, produces results. All three sales consultants are keepers and we will look to add a fourth.

Although buying the correct inventory for subprime has not been difficult, the “get-ready” has. It has taken more than a month to put some units on the front line. The dealership, which has 200-plus units in stock, added a new inventory management software, Rapid Recon, and it appears that it is certainly helping speed the process up. By the end of the month, new processes were in place in the service department to streamline the reconditioning process.

Our investment in broadcast television marketing has paid off. Our goal was to get the business development center (BDC) ready, then push the “Go” button. We launched a two-week test of the Nation’s Premier Auto Dealer program in the prior month. It worked very well, which allowed us to budget $25,000 in Month Three. The goal was to generate 400 trackable incoming phone calls. We hit 447 — 10% more than expected — in an expensive TV market. That will bode well for the upcoming months!

Craigslist became a terrific lead source. We paid the son of one of the Red Team employees to post ads. We posted 446 vehicles and received 106 leads. The (ineffective) BDC got 24 into the store, and we sold 11, or 46%. Total cost was $2,680 for all the fees and posting. Pretty darn good ROI!

ProMax is working well and the team has embraced it and is using it very well. For a completely new team that has had little to no experience on ProMax and less experience tracking, they are doing a superb job. It makes it so easy to manage with good data.

2. The lows: Ultimately, our Achilles heel was the BDC. After ramping up to four BDC team members, we unexpectedly lost one. Additionally, we had hoped to see a BDC agent distinguish themselves through their performance and leadership. None have demonstrated that to this point. Finally, DealerStrong’s BDC trainer, Wendy Reeves, had a full plate with our other consulting clients this month, so the time she was able to spend with a leaderless team was limited. As a result, the BDC’s appointments-to-show production was abysmal: just 14% of total leads and 15% on incoming calls (as opposed to the expected 49%). That will be remedied in Month Four with Wendy onsite again and more phone training available.

Our website to this point has been a dismal failure. Through some communication issues, features that we expected were omitted. “Champion Motors” finished the month without the Google Places page showing yet. The highest the website has placed in search was Page Five — even with a direct search of the dealership name — and, as a result, we only had 30 website leads. We were expecting that many per day. Additionally, we know it had to impact the walk-in traffic. People who can’t find the dealership’s website have to wonder whether it is legitimate. To the vendor’s credit, they are working diligently, and a pay-per-click (PPC) ad campaign that we launched at the end of the month did bear some fruit, so we roll into Month Four with hope.

The one third-party lead provider we opted for was a total disappointment. Virtually all the leads were bogus. They even used their BDC to verify them and confirmed our results. To the company’s credit, the owner did not invoice us for a single lead, and made that decision without any question from the store. They are a class company that I have used for a long time and will use again — just not in this market, at least until they can figure out why the leads were bad. The good news is it cost us nothing but the BDC’s time. The bad news is that I would have really rather had the expense and the extra leads.

The Bottom Line

While at this writing, the net profit (total Red Team revenue less all Red Team expenses, including advertising, payroll, bonuses and payroll taxes) for the month hasn’t been finalized. The month was deemed a success as the department exceeded its sales volume forecast with 41 units and average total deal gross profit of $3,201. We expect the net to come in similar to Month Two, when we generated an additional $57,766 for the store.

While sales volume increased 17%, our gross per deal dropped as the department helped the “Green Team” retail out of some of their aged inventory that wasn’t purchased for SF. Additionally, as stated earlier, even with a mountain of leads and calls, the ineffective BDC didn’t turn a sufficient number of leads in to showroom visits, thereby driving up the advertising cost per sale. Nonetheless, even with the missed opportunity, but with another $50,000-plus profit in just the second full month of operation, smiles abound.

We know we can fix the BDC, and we will, quickly. We also know the website will soon start indexing and, with the TV spots running, our lead count will soar. Finally, we know if we can simply get them in the door, the sales team will close them. At this writing, the department has been functioning from a clean sheet of paper for just 90 days with a staggering closing ratio. We can’t wait for next month, for which we have a forecasted sales volume of 50 units with three fewer selling days!

If you have any questions on how our project might relate to yours, feel free to reach out. In the meantime, stay tuned and we will be reporting again next month. Until then, 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. [email protected]