Are the headaches associated with bringing vehicles up to certified pre-owned (CPO) program standards worth it? For dealers, there’s certainly more work, money and time involved with finding, reconditioning and certifying vehicles for CPO programs.

On the surface, it may seem like the higher margins don’t really justify the higher cost of reconditioning and manufacturer fees involved.

But the financial equation isn’t that simple. The fact is, CPO programs attract a certain type of customer that is willing to pay a bit more for a used vehicle in good condition, along with a warranty, roadside service and other perks. This is exactly the type of customer you want in your database, and you have to look at the long-term value of that customer.

Additionally, CPO vehicles are typically sold with 12-month to 24-month warranties, which means you will have several opportunities to cultivate a service relationship with a new customer. What is that opportunity worth?

The key to making a CPO program successful is deciding that it’s going to be successful. Like any investment, the secret to maximizing ROI lies in your ability to streamline operations and create process efficiencies. This includes sourcing, reconditioning and marketing your CPO vehicles.  

Don’t Rely on Auctions

To maximize CPO gross margins, it’s important that you don’t pay too much for a vehicle to begin with. Sometimes you can find a good deal at an auction, but many times you can’t. Your used car manager should know how to spot a good deal and when to pass. If he doesn’t know, help him create a formula.

The best source of vehicles for a CPO program are the cars you have already sold. Do regular database searches to find vehicles that fit your manufacturer’s criteria. With the addition of an equity mining tool, it’s easy to identify former customers who are in a position to trade-in their vehicle.

Additionally, set up a vehicle exchange program in your service lane. Creating a process to approach and make offers to service customers will net a steady supply of vehicles for your CPO program.

Improve Your Recon Process

If you’re serious about maximizing the profitability of your CPO program, an efficient reconditioning process is an absolute must. The ability to track vehicle progress, set alerts at every stage and hold personnel accountable for deadlines is necessary.

One of the biggest benefits of a CPO program is that the vehicles sell quickly and deliver higher grosses. But you can’t sell a car that’s sitting in your shop. Every day it sits, you lose gross. In the event of a service backlog, you’re probably better off paying techs overtime so you can get your CPO vehicles turned in a timely manner. Do the math.

Promote Your CPO Program

Think of your CPO program as an investment. You have created an efficient process to source vehicles at a good price and push them through recon. You’ve paid the manufacturer fees, and you have a supply of excellent CPO vehicles on your lot ready to be sold.

The last piece needed to maximize your ROI is marketing. There’s demand for your product, but people can’t buy something they don’t know exists.

Many dealers are afraid to promote their CPO program, believing that some of their customers will buy a CPO instead of a new vehicle. You know what? They’re right.

At some point during the purchase process, some new car shoppers will decide that a CPO is a better option for them. That decision will be made by your customer based on their financial situation, not on anything your salesperson did or didn’t do. When a customer comes to this conclusion, your best salesperson will not be able to dissuade them, nor should they even try.

I’ve talked a lot about how the role of the salesperson is changing in the auto industry. We should not be selling; we should be helping the customer make a decision that’s best for them. If your salesperson tries to push a new vehicle that a customer doesn’t want, there’s a good chance that customer will leave and buy a CPO from your competitor.

Wouldn’t you rather get the CPO sale instead of no sale at all?

First, the margins are higher on CPOs so you’re netting more profit overall. Second, only a certain percentage of new car buyers will decide to buy a CPO, and you’re not losing them. You’re still selling a car and gaining a potential service customer. CPO sales should be celebrated, not treated like red-headed stepchildren.

Third, promoting your CPO program with marketing campaigns is going to create more new opportunities than it will ever cause you to lose. Think about consumers in your area and/or in your database who are still driving 2008, 2009 or 2010 vehicles. They are probably ready to upgrade soon. Chances are they won’t be buying a new vehicle, but they may be very excited about the opportunity to purchase a CPO. To them, a 2015 vehicle is new.

Finally, establishing your dealership as a trustworthy source for CPO vehicles is an extremely appealing value proposition for many consumers.

Don’t be afraid to invest in your CPO program. If you stay committed and create efficient processes, the gross profits returned will add substantially to your bottom line.

Many dealers prefer using internal BDCs so they can keep control of leads and processes. Other dealerships use an external BDC for cost, management and efficiency reasons. Just about every dealer believes it’s a choice: you either set up an internal BDC or outsource to a third-party virtual BDC.

Yet, some of the best efficiencies and results actually happen with a hybrid BDC solution. In a hybrid set up, an external BDC does most of the “heavy lifting” related to chasing down sales leads, then hands the hottest leads over to your internal BDC. On the service side, the external BDC handles most of your inbound calls, which many dealership service departments struggle to manage effectively.

A hybrid BDC solution is ideal for dealerships with size constraints on their internal BDC due to staffing, management and/or budget issues. Let’s say your dealership is an average store selling 100 to 150 cars per month. To handle 400 to 1,000 phone calls per week, you need four full-time people and one manager to oversee them.

Bottom line? It’s difficult to set up an internal BDC for less than $10,000 per month, and that’s on the shy side.

Of course, you could be one of those dealers that believe your salespeople should be able to make all the prospecting and campaign calls, and your service advisors should be able to handle all the inbound service inquiries. The reality is, most salespeople don’t have the personality, patience or phone skills necessary to make the requisite calls, and your service advisors should be spending their time with the customers in front of them, not on the phone setting appointments.

Now, let’s say you want to use a hybrid BDC solution. For about 25 to 30 percent of the cost of an internal BDC, you can outsource most of the heavy lifting type calls that include:

• Inbound service calls
• Outbound sales and service campaigns
• Sales and service appointment setting and confirmations
• Internet leads follow up
• Unsold showroom traffic follow up
• Declined service repairs follow up

Whenever an external BDC agent has a hot sales lead or sets a service appointment, they transfer the customer over to one of your internal BDC agents to finish the call. Your internal BDC agents deal with fewer calls and spend more time on the phone with your customers, delivering a better experience.

With this setup, the average dealership mentioned above could probably get by with two highly-skilled internal BDC agents, versus the four agents plus a manager. The cost may be the same or even slightly less, but your ROI will be significantly higher.

The nice thing about a hybrid BDC solution is that you can decide which tasks you want your internal BDC to perform based on your staff’s skill sets. For example, maybe your internal BDC takes and makes all inbound and outbound calls, while the external BDC follows up with Internet leads and unsold showroom traffic.

The key to maximizing your ROI is taking the time to identify the strengths and weaknesses inherent in your current phone processes. Then, outsource to an external BDC to cover areas of weakness, while freeing up your internal BDC to focus more time on areas of strength.  

After switching to a hybrid BDC solution, it’s not unusual for a dealership to see immediate increases in service and sales appointments, as well as RO count and corresponding revenue. Typical results include:

• 25% of outbound service calls are eliminated when an external BDC schedules and confirms service appointments
• 72% of inbound service calls are converted into appointments
• 97% of calls result in additional information gathering on customer
• 84% customer contact rate with two valid phone numbers

External BDC agents are trained to stick to scripts, and therefore tend to be more effective at collecting valuable customer data such as emails, phone numbers and current addresses. This data contributes to higher marketing campaign response rates.

But the primary reason why a hybrid BDC solution is so effective is that it allows your staff to focus their attention on the customers in front of them. You still get to keep control over your branding, messaging, lead-handling and other processes. Yet, instead of having to sort through 100 leads to find the hand-raisers, your external BDC does that for you, then hands over the 20 people who responded and are actively seeking assistance.

The next time your internal BDC is experiencing overwhelm, you may want to try a hybrid BDC solution to ease your load, improve customer experience and boost sales and service revenue.

Manufacturers, dealerships and vendors are all rolling out digital retailing initiatives to sell vehicles online. But some dealers remain skeptical and believe that their customers don’t really want to buy cars online, or aren’t ready for that step yet.

Car shoppers already use the Internet to research brands and models, buy insurance and look for dealers. How many consumers would start the purchase process online, if the option were available?

Let’s look at some research. According to Cox Automotive’s “Future of Digital Retail Study” released earlier this year, 83 percent of consumers want to do one or more steps of the purchase process online, and 85 percent said they would be more likely to buy from a dealership that offers at least one component of digital retailing.

In a separate 2017 survey conducted by Capgemini Consulting, just 42 percent of consumers said they were “likely” or “very likely” to buy a car online in the future. Another 2017 study by Root & Associates/CDK found that 53 percent of consumers said they were “very” or “extremely” likely to conduct the entire car purchase online.

I think one reason why there is so much disparity is because as an industry, there is very little consensus yet on what the online car-buying experience looks like. Everyone talks about the Amazon shopping experience, but we all know that buying a car is not as simple as placing it in a shopping cart and paying with a credit card.

Significant obstacles still exist for car shoppers who do want to buy online, including:

• Accurate, final price quotes that include all variables such as credit scores, local taxes and fees
• Precise trade-in valuations
• Consumer expectations of credit and financing abilities
• Compliance
• State laws that require documents to have a wet signature

However, new technology and tools have already eliminated, or are in the process of eliminating, these obstacles. So…assuming that in the next couple years none of these obstacles are an issue, does that mean 50 percent to 80 percent of customers will rush to purchase online?

Not likely. According to the Cox Automotive report, 89 percent of consumers said they would still want to sign final documents at the dealership, and 80 percent said they would never purchase without a test drive.

According to the Capgemini report, 71 percent of car buyers still want to take a test drive and see the car in real life.

At ELEAD1ONE, we project consumer adoption rates will be slow. Within two years, five to ten percent of consumers will complete some of the purchase process online. In three to five years, that will grow to 20 or 30 percent.

So, if you are skeptical about digital retailing, does this mean you are vindicated and that you don’t have to worry about offering an online car-buying solution?

I would argue, no. The vast majority of car shoppers are still unhappy with the car-purchasing process. The three major reasons they cite are time, convenience and pressure from car salespeople.

More than half of car buyers are willing to try a new solution if it will save them time, be more convenient and free them from the high-pressure environment of a dealership. Why not find a solution that works with, and can be integrated into, your current sales process to provide them with this experience?

Six out of ten consumers would still want help from the dealership staff, even if they could purchase online. Specifically, they want help from product and technology experts who can help them through online inventory selection, trade-in valuation and financing processes.

This still takes time, but remember that time is relative. People value their time at home differently than they value their time spent at a dealership. When they are ready, all they have to do is come in for a test drive, make the final decision, sign the papers and pick up the keys. This should reduce their total time in the dealership from two to three hours to half an hour or less.

Giving your customers more control over the purchasing process now will give your dealership the edge as purchasing online becomes more mainstream.

If you’re concerned that digital retailing will take away your control of the sales process or reduce profit margins, don’t be. Choose your solution wisely. Most digital retailing products in development are designed to keep dealerships involved in the purchase process. You can retain complete control over pricing. The only requirement will be designing a new approach to selling that’s more consultative in nature than closing.

Ultimately, this is what customers want and where the industry is going. The change is happening now and will continue over the next decade. The sooner you meet your customers’ expectations, the more benefits you will reap.

As a salesperson, do you wait for leads and ups, or do you go out and actively prospect for new customers?  No matter how great a salesperson you are, sales is a numbers game. If you want to sell more, you need to talk to more people. If you aren’t talking to enough people, you need to prospect.

I believe that for the most part, prospecting is a lost art. In today’s world, many salespeople believe that posting on social media constitutes prospecting. Although it could be considered a form of prospecting, it’s not nearly enough.

Nothing beats genuine, in-person connections. Prospecting is the art of cultivating mutually beneficial relationships, which means you should not be prospecting just so that you can make sales. That will happen as a byproduct, but it’s not your goal.

Prospecting is really about making friends—lots and lots of friends, and treating them well. Here are a few tips.

Talk to Strangers

We often tell our kids, “don’t talk to strangers,” but adults with successful sales careers know to skip this advice. You want to talk to as many people as possible, wherever you go.

Think about all the business establishments you frequent on a regular basis; restaurants, bars, dry cleaners, gas stations and banks, for example. Do you strike up friendly conversations with the people who work at these establishments? Do they know what you do for a living? Be proud of what you do. You provide a much-needed service. Almost everyone drives a car. 

Find the time to attend community and social events. Talk to people and take an interest in what they do. Don’t try to sell them anything. Offer to exchange contact information in case you can help each other out in the future. Then mean what you say. If you can help them out in any way, do so.

Be Social

Social media can be used as a tool to help you prospect, but you have to be careful what you post. Are you posting a lot of selfies standing in front of vehicles you want to sell? Are you posting messages advertising your dealership’s sales or promoting yourself as a salesperson?

Social media is for sharing, not selling. As a salesperson, use these platforms to share useful information that a car shopper might want to know. For example, what does MSRP mean? Tips for maintaining your car. Tips on how to find a great deal. If you provide genuine value to your network of family and friends, they will pay attention to you. 

Become a Subject Matter Expert (SME)

If you sell cars for a living, you should be an expert on cars. Share your knowledge without looking for a sale in return. When you are helpful and provide useful information, people will like you. If people like you, they will remember you when it’s time to buy a car, or when they hear that a friend wants to buy a car.

I have done this all my life. I try to help people get what they want. If someone needs something, I will point them in the direction of someone else who can help them, even if it does not benefit me at the time. Why? Because paying it forward brings good things back to you.

Ask for Referrals

Keep in touch with every customer to whom you sold a vehicle. At some point, you’ll ask them for a referral. Just don’t be a pain about it. Don’t always ask for a referral. Check in with your customers on a regular basis, and only ask for referrals every third or fourth time.  The worst they can say is no.

Know Your Numbers

How much income do you want to make? How many cars do you have to sell per month to make that income? Use the metrics in your dealership CRM to help you set some prospecting goals.

Your lead-to-appointment ratio and appointment closing ratio are probably pretty consistent. So, how many conversations with new prospects do you need on a monthly basis in order to set a certain number of appointments? One hundred? Two hundred?

Divide that number by working days in a month and make those conversations a priority. Know your number, whether it’s six or twelve conversations a day. Do whatever it takes to meet your goal on a daily basis.

If you want to be successful in sales, learning how to prospect is a must. Yes, it’s work, but it doesn’t have to be arduous. Talking to people, taking a genuine interest in what they do and helping them achieve their goals should be fun and rewarding, on a personal level as well as a professional level.

How many vehicles do you sell out of your service lane every month? What if you could doble that amount?

These days you need all the sales opportunities you can get. Next to digital leads and inbound calls, the service department provides the most sales opportunities. For every opportunity that comes in on the sales side, you may have three, five or even nine opportunities in the service department.

This is the low-hanging fruit. All it takes is the right in-store process, commitment and technology to create a vehicle exchange or trade-up program. With this type of program, we have seen dealers boost their overall new and used vehicle sales by 10 percent or greater within the first six months.

Here are the steps involved in creating a vehicle exchange program:

Find the Opportunities

Hire or assign someone in your store to be a vehicle exchange specialist. Every single day this person reviews all the day’s service appointments, ROs, vehicle details and the customers’ equity positions. The goal is to identify and target the best candidates to approach.

Not only should the customers be in an equity position, but they should also have vehicles that fit the profile you’re looking for. If you’re a Mercedes dealer, you don’t want to approach the owner of a 2008 Jeep with 140,000 miles. Your service advisors should also be aware of your used car stock plan and the top 10 makes/models you’re looking for.

Identify the best appointments in terms of equity position and vehicle type and do most of the preparation for the purchase offers before the customer arrives.

Dedicated Personnel

A vehicle exchange program requires dedicated sales personnel, so reward your best salespeople with permission to work in the service lane. That’s the kind of attitude you need to have about these opportunities—because they really are the best opportunities. I know of a few dealers that moved their used car buyer’s office to the service department.

When a vehicle arrives, this dedicated salesperson does an appraisal of the vehicle and completes the final details of the purchase offer. Then, they print out the purchase offer and either approach the owner of the vehicle if they’re waiting or place the purchase offer on the seat of the vehicle. This is a great, no-pressure method for starting a conversation. 

The Purchase Offer

The goal of the purchase offer is to create awareness and some pain in the customer’s mind. The best purchase offers compare the cost of ownership for their current vehicle to the cost of ownership for a new vehicle. If you can finagle it so that it clearly shows the cost is less to be in a newer car, the sale almost becomes a no-brainer.

Follow up is critical. You may get a lot of customers whose knee-jerk reaction is to say “no,” when first presented with the opportunity. But when they go home and look at their worksheet, they may start to think about it. A new car. Cheaper to own.

Follow up is critical. Create a process that includes email and phone scripts.

Goals and Expectations

A successful vehicle exchange program requires goals and expectations. As a general manager, you need to be clear and concise as to how many purchase offers and sales you expect to make off the program every day, every month and every year.

If you’re a 40 RO per day store, start with ten offers and two sales per day. If you’re a 200 RO per day store, 50 offers and five sales per day is completely achievable (I have seen it firsthand).

Make the goal realistic and attainable, but don’t sell yourself short, either. Remember that your service lane is one of your best lead generators.

Demand to see copies of every purchase offer with comparison worksheets, notes and outcomes on a daily basis. Review these deals in your daily save-a-deal or make-a-deal meetings. Keep your team accountable.

Feed the Monster

Once you have a successful vehicle exchange program up and running, you want to promote and market it. The more people that come into your service lane, the more sales opportunities you will create.

We recommend multi-channel marketing programs with a focus on the following types of service campaigns:

1. Defector prevention
2. Custom service/repairs
3. CSI surveys

Include information about your vehicle exchange program in all marketing communications, and send them to targeted lists, including all customers in an equity position. 

John Wooden once said, “Failure isn’t fatal, but failure to change might be.” I would argue that in today’s business climate, failure to change is absolutely fatal.

A vehicle exchange program requires some process change and a different mindset, but the good news is you will see results quickly and they’re easy to track. Within six months, expect an overall boost of 10 percent in new and used vehicle sales, if not significantly more.

Did you know that the self-improvement industry in the U.S. is a $10 billion market? That means there are a lot of people out there who are not achieving their goals. Of course, there are also dozens, if not hundreds of self-help gurus taking advantage of this situation and dishing out advice on how to be successful.

If only success were as simple as drinking a bottle of magic formula.

The reality is, whether you’re selling cars or performing oil changes, only you are in control of how successful you will be. Ultimately, it’s up to you to create your own formula for success. Expect it to take time and allow plenty of room for trial and error.

When I started selling cars many years ago, I learned about the three P’s: preparation, practice and persistence. In retrospect, this formula has served me very well throughout my career, so I thought I would share it with you.

Preparation

Success requires mastery. Mastery requires knowledge. To gain knowledge requires research and preparation. When you get an Internet lead, do you jump right on the phone to call the person or do you take a few minutes to review their questions and research the answers?

If you have a job interview scheduled, do you research the company’s products and services before your appointment? Do you prepare for the interview by creating and rehearsing answers to commonly asked questions?

Preparation is particularly vital if you are starting out in your career or starting a new position. As you gain mastery of an action and knowledge of a subject, you won’t have to spend as much time in preparation mode.

Take the time to research and prepare for phone calls, meetings, presentations and projects that are assigned to you. Preparedness elevates your image as a professional and helps you to appear calm, collected and knowledgeable. No matter how smart you are, “winging it” will only get you so far in life and in your career.

Practice

Everyone knows that the more you repeat an action, the better you will become at that action. This applies to selling cars, swinging at golf balls or reconciling balance sheets.

Yet, repetition alone is not guaranteed to improve your skill levels. You have to be able to evaluate your practice, identify and learn from mistakes, adjust your approach and try new methods. If you have a 12 handicap, you’ll never learn how to be a scratch golfer without making adjustments to your swing.

I call this proactive practice. If you practice something every day and don’t see an improvement in your results, you need to change something.

If you’re not sure what to change, identify several people who have achieved success in your field. Emulate and practice their actions. They say imitation is the sincerest form of flattery. There’s no need to re-invent the wheel when someone else has already figured out how to be successful at something. Practice, evaluate, identify, learn, adjust, try, repeat.

Persistence

One of the biggest mistakes I see young (and some mature) professionals make is to rely on motivation to propel them into action. Successful people never wait until they feel motivated to do something. Do you think you will ever feel motivated to make 50 sales calls? I never did.

Motivation does not fuel persistence. Persistence fuels motivation. Get on the phone and start making the calls, even if you really don’t feel like it. Start that horrible project you’ve been putting off even though you’d rather visit your dentist to get a tooth pulled.

When one of those calls turns into a sale, guess what? You’ll suddenly feel motivated to keep dialing. When the horrible project is finished, you’ll feel a huge sense of relief and ready to take on another, even bigger project.

The road to success is littered with tasks that are boring and mundane, but absolutely necessary. To be successful, you must do the things you don’t THINK you have time to do. If you take the time to do what others won't do, you will be miles ahead of them in terms of success. 

 Remember, nothing pays like persistence.

The three P’s are the primary ingredients in my magic formula for success. They have served me well, but ultimately, only you can decide what works for you. What’s in your bottle of magic formula?

Atlanta, GA – April 24, 2018 – ELEAD1ONE today released a free eBook called “The Auto Dealer’s Guide to Digital Retailing.” Designed to be a resource for dealers, the eBook presents an in-depth review of the challenges involved with purchasing a vehicle online, and of current consumer and dealer expectations. Additionally, the eBook shares practical tips on how to prepare a dealership for changes associated with digital retailing.

“Dealers can no longer ignore rising consumer demand to complete at least some of the vehicle purchase process online, but many dealers have concerns about the technology,” said Bill Wittenmyer, Partner of ELEAD1ONE. “Our vision is that dealerships will remain central to the online car-buying process. This eBook presents a business model that expands opportunities, not limits them.”

“The Auto Dealer’s Guide to Digital Retailing” provides guidance on how to integrate online car-buying with a dealership’s current sales process. Industry sales trainers Jim Ziegler and Mark Tewart contribute their insights and advice for dealers who are considering implementing a digital retailing solution.

The eBook addresses process changes that will inevitably occur due to an online car-buying process, including staff roles and responsibilities. A digital retailing solution checklist is provided for dealers in the process of researching vendors.

“Even though consumer adoption rates for complete transactions online will be relatively slow, dealers need to act quickly before third-party solutions gain brand awareness and market share among car shoppers,” said Wittenmyer.

Download your free eBook by clicking on this link: “The Auto Dealer’s Guide to Digital Retailing.”

For more information about ELEAD1ONE visit http://www.elead-crm.com.

About ELEAD1ONE

ELEAD1ONE, the benchmark in automotive software, helps dealers bridge the gap between sales, service, and marketing operations. The company’s automotive-only contact center, CRM, and service drive technologies are the foundations of their unique suite of products that drive its clients forward through strategic business advantage. Headquartered in Georgia, ELEAD1ONE has over 1,500 employees nationwide and serves more than 8,000 dealerships across the United States and Canada, including six of the top ten dealer groups.

ELEAD1ONE continues to lead the industry standard by providing insight to the community, identifying trends, and through the continuous development of personalized retail solutions that help dealers operate more profitably. For more information, visit our Website, like us on Facebook, YouTube, or follow us on LinkedIn, Twitter, and Instagram.

What does 6 degrees of separation mean to you? Well, to ELEAD1ONE Partner Bill Wittenmyer, it means the lost art of referrals and how everyone knows someone. This #FreebieFriday dives into the power of the lost art of the referral and what that means for dealership profits

When is it good to have the “it’s all about me” mentality? Not often, but in this week’s Witt’s Wise Words ELEAD1ONE Partner Bill Wittenmyer breaks down why it’s important to take the “it’s all about me” approach with customers.

In this #FreebieFriday, ELEAD1ONE Partner Bill Wittenmyer walks us through how you can make a good sales month great. It starts by doing the hard things first, but there’s much more to it than that. Find out what else can help you make a good month great.