Guest post today from our General Manager, Tom Feary. He's noticed a significant disconnect between online marketing practices and dealer operations that has popped up in the field.

The question for the month is… Do your finance people talk to your marketing and Internet people?   Many of our customers invest in used and new car leads right along with auto finance leads.  Yet the expectation of how finance leads are filtered and delivered can vary, sometimes dramatically.

An example is geographical targeting.  Your finance manager may request leads from less than 10 miles away but your marketing and Internet teams are targeting and optimizing for greater distances, such as 30 and 50 miles.  These teams invest in advertising and Internet tactics to attract a larger footprint.  Yet a finance manager can place hand-cuffs on your spending by restricting the targeting area.

One of the great things I love about the web is the ability to trip over things.  Nothing is more exciting to me than conducting a search and finding a good morsel of information by accident.  Search results and online advertising are delivered to a user based on sophisticated reasoning and calculations.  Each vendor, whether it is a search engine or ad server, has a different slant and that’s why there is opportunity everywhere.

Geo targeting on the web is just one of many slants.  For one channel, 10 miles may be a margin of error.  For another channel, 10 miles may be impossible.  And the more calculations, the more precise… the more cost.  Not cash cost, but lost opportunity because a programmer’s math determines a lead just 9 miles away looks like its 19 miles away.

So where’s the real opportunity for your finance team?  Why will an Internet sales manager work a lead from 30 or 50 miles away but a finance manager turn away a lead just several miles down the road?  How is that good for the dealer?

We’re sincere with our questions and look forward to your comments.

Tom Feary is General Manager for Interactive Financial Marketing Group, an online marketing firm serving car dealers under the Carloan.com brand.  Dealers can learn more on our web site for dealers.  You can follow Tom on Twitter @tomfeary.

The question that dealers consistently ask me is “what are the keys to success on your special finance leads program,” or “how do dealers close 15% or higher of your auto finance leads when we struggle to close 5%?”  Obviously access to lenders and inventory are key, but let’s assume that we are talking about a dealership that is committed to subprime with the knowledge and resources to get credit challenged customers approved.

Possibly the easiest way to identify the keys to success is to first identify the recipe for failure. 

Typically failing dealers have a few things in common: 1.) They do not contact the leads in a timely fashion 2.) They prequalify the customers before they contact them. 3.)  When they do contact the customer, they try to sell the car not the appointment.

For now, I would like to focus on the last of these issues.

The first thing that we have to realize is that it doesn’t matter what a customer’s credit score, income, or cash down situation is if we cannot get that customer into the dealership.  One common mistake that experienced sales or finance people make is to get into too much detail over the phone.  Talking about cash down or specific inventory will do nothing more than discourage a customer from coming in to the dealership.

Once a customer is face-to-face, it is much easier to control the situation and direct the individual towards a car that not only fits their needs but is a finance-able option.  When the customer is able to feel, touch and experience the car, they are much more likely to find extra money down or convince someone to cosign for them.

Some dealers attempt to get a customer approved before they set an appointment and bring them in.  The major issue with that is when you tell a customer they are approved,  you take someone who thought no one could help them and turn them into a shopper that will go to any dealer across town.  The key is to sell the appointment and take the customer out of the market.  Invite the customer down and let them know that you have access to a wide variety of used cars as well as a variety of lenders who are experienced in working with less than perfect credit.

Create a sense of urgency by letting them know you need to verify their information in order to secure financing and set an appointment within 48 hours.  Going into any further detail with the customer will only limit opportunities and result in fewer car sales.  So remember SELL THE APPOINTMENT NOT THE CAR!!

Brian Matthews is an account executive for Carloan.com. He has been helping dealers with their sales and marketing processes since 2007. You can reach Brian at 804-521-8569 or bmatthewsATcarloan.com.

I spent part of last week at the annual F&I Magazine Conference and Expo, and had a conversation that has been stuck in my head ever since I got back. I was speaking with a finance manager I’ve known for years, who told me how much he misses our auto finance leads and wishes that he could sign us up at his store.

The surprising thing is that when I asked why he couldn’t, his answer had nothing to do with budget or lead availability. He said that he couldn’t sign us up because he’s at a Toyota store, and there’s just no way that special finance can work in a store that isn’t domestic.

I know that opinion isn’t uncommon, but I’m here to tell you folks it’s just plain wrong. Special finance is thriving in stores across the country, from Cadillac dealers to Ford, and from Lexus to Kia, and everything in between. We do business with a good number of high line dealerships, and they all say that they love the idea of third-party leads, because it allows them to tap into a hugely profitable revenue opportunity without having to advertise their brand.

An Infiniti dealership in California did 30+ special finance deals last month, and their only means of driving that traffic into the store is third-party leads. The owner likes to laugh and say that even the stores next to him don’t know how he didn’t take the beating they did during the downturn, or who is buying all the Sentras and Hyundais he keeps out back.

As previously written, success in subprime demands a commitment from the top of the organization down, but your franchise affiliation has nothing to do with whether you can make a go of it or not. If it’s not your thing, no problem, but if you’ve had success working with challenged credit in the past and are steering clear because you don’t think you’re in the right kind of store, think again.

The money is out there for the taking, it’s just a matter of who’s going to get it.

I spent a couple of days last month at the Washington DC edition of the 4^th annual ADM conference.  This was the first year they had split the conference up into different markets, but I was still able to learn quite a bit from chatting with the 9 dealers and the lenders in attendance.

Luckily the assembled cast represented the full spectrum, from polished special finance professionals looking to hone their skills to a dealer principal who knows that he needs spi fi but doesn’t know how to get it up and running.  When I came back to the office here at Carloan.com and started reading through the notes I had taken, the generally accepted ingredients for success were:

• The store must commit to sub prime from the top down
• Have the right cars
• Have the right banks and understand their programs
• Constantly train your people

This seems so simple on paper, but every dealer I speak to that tells me they can’t make special finance work is deficient in one of these areas, often without realizing it.  Lenders really seem to be the biggest stumbling block, and the differentiator between successful special finance shops and those that struggle.  This was pointed out in stark detail as I listened to three folks discuss the same lender.  All three were from the same state, but all had very different experiences.

Dealer A said that they couldn’t get a deal hung with the bank to save their life, Dealer B said they were OK, but didn’t buy a majority of the deals she sent, but Dealer C swore by the bank and said that if not for this bank their secondary department would be in trouble.  Same state, same bank, same program, very different results, so why such different results?  Dealer C knows the bank’s programs inside and out, and structures his deals to fall in their sweet spot, while the other two structure their deals generically and shoot them to a few banks hoping for a good call.

If you haven’t spoken to your bank reps in a while, take a few minutes to pick up the phone and call them.  Find out what their perfect deal looks like, and how you can tweak what you’ve been sending to get some better calls.  Remember, those folks get paid on how many deals they book, so they want your business and will take all the time necessary to help you understand their programs.

Bob Harwood is the National Sales Manager for Carloan.com.  Carloan.com has been generating auto finance leads and special finance leads since 1989.