Inviting an outside company to your place of business to assist you with a sales event can be risky business if you don’t do your homework. Everyone hated homework in school and it doesn’t change as you get older, but it is necessary to minimize risk and protect your reputation.

Why hire a sales team?

Dealers turn to event sales for a variety of reasons. Several years ago during a major construction project, Keller Motors of Perryville, Mo. turned to event sales to drive new business to the store. It worked so well that they now have 25 to 30 sales under their belt. Why would you consider hiring a sales event company to do what you should be able to do on your own? Should is the operative word in that sentence. According to Tim Sethna, president of Overdrive Automotive Group, there are several reasons to make that decision. “If your staff is not as motivated as you would like to see them or if you have a glut of inventory that you don’t want to wholesale, an event sale can benefit you. Sometimes it takes hiring an “expert” to just jump start the excitement factor in your store.”

Who do you choose?

You’ve seen the ads and claims. GENERATE $1 MILLION; $100,000 GUARANTEED GROSS PROFIT; A MONTH’S WORTH OF GROSS PROFIT IN FOUR DAYS. How does a dealer choose among the several providers in the market? The #1 rule is check references. Would you hire a general manager or comptroller for your store without checking their references? It’s no different. The company that you choose will be representing you to your customers and your community. Often times the impression they leave, good or bad, will linger long after event is over and they are gone.

The typical argument against it is “They will only give me names of dealerships that are happy with them.” That might very well be true, but if you don’t call, you won’t know that. Alan Diehl with ASAP happily supplies references to every prospect but says that it is rare when anyone actually calls any of the references. “By speaking with a reference, a dealer can obtain a sense of how the company operates, what to expect in personnel, if the employees of the event worked well with the dealership personnel and much more.”

Ask the reference if they know of other dealers that utilized the same or another event sale company. If the dealer is part of a 20 group, state association or other group they might have swapped stories on companies they use. If this is the case, you will quickly hear who had good results and who had bad results.

“The number one reason a dealer doesn’t continue doing business with an event company is not that they didn’t make money. It is that they were unhappy with the way the dealership employees or customers were treated,” says Diehl.

Questions to ask the event company before making a decision:

1. How many people will come to my store?  And what are their roles?  Some teams bring F&I personnel, some don’t.  Two schools of thought exist there.  First is that no one knows your lenders and programs like you do, therefore you only need assistance and backup in F&I. The second thought is that due to the sheer number of sales they hold, an F&I person with
   the team is better qualified to handle the volume associated with the sale.
   

2. How does the staff get paid? Some companies pay their employees, meaning you write one check. Others insist that you write individual checks to each member of their team. This increases the burden on the dealership because the dealership is then responsible for verifying SSN and W-9’s, as well as providing 1099’s to several individuals at year end.
   

3. How much will I pay? You will pay the sales staff a percentage of their individual sales, usually comparable to what you would pay your own sales staff. You will pay the event company a percentage of all gross profit. You will also pay for the advertising.
   

4. What will your advertising consist of, and when and how will it get paid? Event sales employ a variety of advertising tactics from inserts in your local newspaper to direct mail programs. How are they targeting customers? Is the event company paying for your local advertising, or are you paying it direct? Would there be any impact to your ongoing relationship with your local media if it is not paid timely?
   

5. Are any specific results guaranteed? Some companies make guarantees based on specific criteria; others don’t. Guarantees vary from company to company and do not necessarily translate to higher grossing sales. Responsibility for the success or failure of any event is divided, although not necessarily evenly, between the event company and the dealership. Every company that offers a guarantee has had to reimburse a dealer along the way; they have to anticipate it because on occasion things just don’t turn out like everyone expects.

When will we settle compensation? This can be a source of friction for the dealer and should be clearly outlined in the beginning. The event team wants paid as soon as possible. They want to collect their money and move on to the next event. Some teams leave one individual behind after the sale to ensure that the paperwork including stipends gets completed so that they can get paid in full. Some will push to be paid the day after the sale when several spotted deals may be pending. Dealers should make payment as soon as reasonably possible, however never before the paperwork is completed and the funding is confirmed on the deals being paid (especially on Special Finance or questionable deals). It will be difficult to get any refund on any overpayment from a company that has teams on the road all year. The company would want to discuss it with your specific team who is now in another store focusing on another sale before issuing any refund, which could take some time.

Where to hold the sale

On-Site

Where will you hold your sales event? Most dealerships, 90 to 95 percent of them according event company reps, hold their events at the dealer’s current location. Hosting them at your location is easier by far and effective if you don’t hold them too often, your facility is large enough to accommodate the flood of customers and your dealership has a strong branded name in your area.

Off-Site

A small number of dealers hold very successful off-site sales. “The biggest reason to hold an off-site sale is lack of space in your current facility,” said Sethna. If your dealership has held several events and you aren’t seeing the results you once had, it might be worth looking at a high traffic site such as a Wal-Mart parking lot. An off-site sale requires a tremendous amount of planning and is generally better suited for independent dealers. Independent dealers typically have more flexibility, especially when it comes to their computer system issues.

Many state and local governments require licensing permits for off-site sales and take several weeks to procure. You will require a building, tent or other facility to house customers from the weather. Furniture, power, computers, phones and faxes have to be ordered and planned for in advance. Restrooms, water, security and additional staffing will likely be necessary. Plan to move large quantities of inventory in short amounts of time, while considering how you are going to keep all of the units clean and delivery-ready while away from your facility. It’s a big decision to decide on an off-site sale and one that requires careful consideration.

Ingredients for a success sale

“A very important ingredient for a successful sale is inventory,” states Sethna. “A dealer needs to have at least 70 to 75 front line ready units in stock to ensure a successful sale.” Late model, lower mileage units that work well with dealers’ available lending programs produce the best results.

Lenders are just as important. A dealer needs to have at least three strong prime lending sources, four to five secondary lenders, a specialty lender or two and if available, a captive lending source to ensure success.

The one thing that a successful sale won’t run without, however, is cooperation. The event team and the dealership have to work together. They both ultimately want the same thing – a huge grossing sale. “If the dealer can convey to his staff the importance of allowing us to do our job and following our procedures during the sale, it will go much smoother, and everyone will make more money,” said Diehl. That means every customer is turned over properly. Every customer is worked according to the plan of the event sale company. You are paying them for their expertise; use it!

Challenges of a sale

Backups in F&I, typically the dealership F& I manager(s), is not accustomed to the high volume of deals to structure in such a small amount of time. Customers may have to wait for longer periods of time to complete their purchase, so it is imperative that the sales professionals know how to handle this challenge.

Turnovers can be a problem. If the dealership sales staff has not completely bought into the sales event concept, they may not turn over every customer as directed. Your dealership may not have a strict turnover policy, however every sales team has a strict set of protocols that they follow allowing them to sell a large number of units with above average gross profits.

A very small item that can cause a big problem during a sale is a key. More specifically, car keys. What system do you have in place to keep track of your vehicle keys? How something so small can become such a big issue is hard to believe, but try telling that to the salesman who is on a roll and trying to sell his fifth unit of the day – the one with the keys missing.

Trade-ins that are not handled properly will cost you money days, weeks or even months after the sale. Who will be doing your trade appraising? Too much invested in a trade will cause losses after the sale. Too little may diminish the volume of sales. How motivated is the sales staff at ensuring that the proper title work is complete on trades? The last thing you need is a vehicle traded in that you can’t obtain a title to.

According to Steve Keller of Keller Motors, the biggest challenge is getting your staff involved at the necessary level by convincing the staff that the event will make everyone more money if they participate. “It’s about making money. If your staff does their part, everyone makes money. Our store does a great job of repeat and referral business, but we have to look for new business. Event sales are the avenue we have chosen to drive that new business.”

Keeping control

What is the most important role a dealer can plan in the sales event? The same role you play everyday, oversee your business. “Meet with the event company and set your ground rules,” says Keller. Every person you invite into your dealership reflects on your dealership. If you have specific titling protocols in your dealership, educate the team in advance to ensure that they follow your protocols or refer that item back to your staff. If you want strict policies on spot deliveries, goodwill or we owes, make sure the event company knows it, and don’t make exceptions during the event. Hold the event staff to at least the minimums in ethics and behavior that you hold your staff to. Anything less will create heat for you after the sales team is long gone.

Do your homework! Just like when you were in school, proper preparation increases the results exponentially. The top score, in this particular class, will be a high grossing sale that runs smoothly and leaves everyone happy.

Vol 2, Issue 11