Correcting My Contribution to the Battle Between Buyer and Seller

I spent 31 years in automotive retail, in every variable role from used car salesperson to GSM, then GM and Dealer Principal.

For most of that time, I was a part of and supported the combative culture the car business created.

• - I was a master of small print.
• - I mislead in my marketing with unattainable prices and payments.
• - My radio and tv ads ended with rapid-fire disclosures about the misleading promises just played.
• - My sales meetings were focused on how to overcome the BS I advertised.
• - We used aggressive language in describing the customer experience in the “box”— I bet you know what I mean (I am embarrassed to actually write that stuff down).
• - I trained the team to “put” people in the car we wanted to sell, not necessarily the best choice for them.
• - My best salespeople were rewarded for taking advantage when they could, and I paid them stupid money for creating big profits on one-time customers.
• - I encouraged longer and longer finance and lease terms at immoral rates when we could “get away with it.”
• - I was dedicated to aggressive pencil techniques designed to overcome the customer’s caution.
• - ….and, oh, by the way, it worked. We all made a lot of money in this culture.

Negotiation breeds battlegrounds…

Why did I think I had to do all this? Our customers had learned that car dealers were out to get them, and entered the buying process with battle armor on. They were often just as aggressive in their approach to us, as we were to them! Instead of using the opportunity to change that environment, I tried to have stronger battle armor than the customer (combatant?).  When I left the media world and took my first job selling used cars in 1977, my mother actually asked me not to tell any of her friends. She would not talk about it with her friends. And by the way, my first year I made 10x my previous salary. I was blinded by the light.

How did all this start?

I tell the story (totally fiction) that on April 1, 1956, Joe from Joe’s Chevrolet got pissed off when Larry opened a Chevy store 3 miles away. Joe decided he’d welcome him by advertising $100 discounts on his cars….and Larry came back with $150 discounts and the car sales world changed forever.

Now we live in a world that has ushered in customers’ protection services that we actually pay for!! True Car, Cars.Com, Edmunds, CarFax, and all the rest are making billions from us to protect our customers from……...us. Read that again and ponder for a moment.

I came to my senses and now believe that I owe it to my mom and the industry to help change the automotive customer experience to the culture customers are starting to demand. Sure, there are many dealers dedicated to the old way, in part because they continue in some cases to make big money. That will change, is changing, and has changed. Dealers who don’t meet the customer where they are demanding to be met are feeling the pain.

Mark Rikess in Wards Auto from 2014 called the ball early on. A few of his early points were:

“Sales-cycle efficiency. Research has shown 70% of auto sales take more than four hours. The time it takes to sell a vehicle is a No.1 customer complaint. A one-price process typically takes two hours or less. That time reduction increases the productivity of top salespeople because they get to see more prospects. And dealers get happier customers as a result of the outstanding sales experience."

“Transaction costs go down. Most stores have one manager (including the finance and insurance department and business development center) for every 2.5 sales consultants.  No other retail industry has this level of management. One-price stores are 1:4 or better.  Moreover, traditional stores must pay a premium for managers with outstanding negotiating skills. In a one-price store, managers’ primary goals are to develop people and manage a well-defined sales process. Traditional stores have deal managers, not people developers.”

So, as Carmax, AutoNation, the Rydell Group and so many more have all gone down the path of allowing your grandmother and your lawyer to get the same price every time without the battle. Dealership’s sales teams can now provide the SME role needed to guide the customer to the best purchase for their needs. The selling environment attracts a different personality to represent you, often at much less compensation percentage and way higher customer and sales team retention.

There is the additional value of the CSI allowing you a chance to retain your customers in your service department…adding real margin and making that customer literally 86 times more likely to buy from you again!  

Or…. you could just do this because it’s the right thing to do.

A great article in CBT News cites that almost half of customers who state they are loyal to the selling dealer go elsewhere to service their vehicle. Only one-third of all vehicle services are performed at automotive dealerships. And we know brand loyalty and dealership loyalty measurements are fleeting and hard to rely on.

Now---really think about this for a minute---it’s kind of overwhelming: According to DMEautomotive, customers that service their vehicles at your dealership are 86 times more likely to buy their cars (plural) from you! Keep in mind that new customers cost up to 25 times as much as retaining existing customers!!

Driving retention is not a new idea for anyone. You have likely spent boatloads of money training your team in the service introduction, offering significant discounts and coupons, post-sale communication techniques, fleets of loaner cars……all key ingredients to retention success.

You can always do more. There are two basic steps we must achieve…first, get the customer in for their first service visit, and second make that visit a great experience for the customer so you set the next appointment and start the long-term relationship.

Some considerations you may want to take in this process you already have could look like this:

 - Lose the discussion about the first oil change—that is often 10,000 miles away! Consider language like "Remember your first service appointment is super important! This is your vehicle's break-in period where you get to know it, and it gets to know you. We will want to make sure everything is working as it should be.”

 - Set the appointment 3 months out with the customer at delivery (in your CRM or service system) and assure the customer that your team will call the week ahead to confirm or reschedule.

 - Offer to pick up the vehicle and leave a loaner when possible, and at the very least, offer a loaner. This is a 1-hour service so many will be happy to wait, but it never hurts to show how far you will go to make their lives easier and earn their business.

 - Be sure the selling sales representative as well as the service team are expecting the customer’s arrival. Greet them by name. Acknowledge how great it is to see them again. Ask how they are enjoying the vehicle.

 - Set the next service with them in the same manner when they are there. Avoid yes or no questions like “Can we set up your next appointment?” Instead try, “Based on your average mileage we have set an appointment for you on Jan 4th at the same time you set for today. Of course, we will call the week ahead to confirm or reset and we will arrange transportation for you then.”

Be creative---there is no more important road to success in this market than super customer retention. Take these considerations into account and keep what’s yours; don’t donate customers to your competition!

Happy customers, happy sales teams, happy dealers

I will keep this brief, (I hear ya sayin …”YEAH RIGHT!”) in fact I will likely struggle to get in 3 or 4 paragraphs…the idea is super simple, but could be very impactful for most dealers.

As you know, margins continue to shrink in new car sales, and we struggle to keep our once high-income sales teams from rapid turn-over. Add to that the fact that the cost of used cars in the market has skyrocketed, while availability has dramatically dropped. According to AutoList, the average length of ownership is now about 6 years, around the same as the average loan.

It’s time to fine tune every opportunity to add income, and to add it transparently, from willing and happy customers! Like all successful processes, this one must be applied 100% of the time for maximum impact

Here we go---every time there is a trade involved in a new or used car sale, make this a required process to be executed by your sales representatives. You may already have a question list regarding the trade with the more traditional questions that help with settlement and reduced CIT issues like:

• Do you have your title with you today? 

Is the trade titled in your name?
Any other names on the title?
Do you have your registration with you? 
What state is your trade titled in?
Is there an open loan on your trade?

Now comes the critical 5 questions that will foreshadow your additional sales opportunities when the customer goes to the business office for settlement:

• Did you purchase an Extended Warranty when you bought your trade?
• Did you service your vehicle at the selling dealer?
  • Do you have any of the service records?
• Did you purchase an Environmental Protection Package (Paint Sealant and Interior Protection)?
• Did you purchase Tire and Wheel Protection?
• Do you have a Dent Protection package?

When the customer says “yes” to any of these questions, it’s helpful to let them know that it positively impacts the value of the trade.  You may want to consider presenting a trade increase coupon at that time?

Your customer now has an incentive to consider protecting their new vehicle when the opportunity is presented. He or she may also be more likely to set their first service appointment with you, and give you the chance to earn their ongoing service business. Do not forget to share the revenue to keep the process in motion and to keep a focused sales team!

By the way, I cannot tell you how it kills me when I hear a dealer say “It’s a great idea, but I can’t get my team to follow my current processes.” Don’t say that…fix it!

Ok… that was about 8 paragraphs… but if you add these procedures or a custom version fitting your store’s M.O., you will likely experience a PVR increase of several hundred dollars and increase your service and sales retention. It’s the super simple idea that works.

Creator Lindsay Automotive Realizes $800 Increase in PVR Profit and Up to 28% Increase in Protection Product Sales Using ZipDeal’s Personalized Customer-Driven Delivery Process

Columbus, OH – August 3, 2020 – ZipDeal, a streamlined, post-sale, pre-F&I vehicle delivery system for automotive dealers, launched today. Created by dealership owner Steve Lindsay, and helmed by industry veterans Chip King and Tony Gomez, ZipDeal streamlines and monetizes the frustrating downtime between when a customer says "yes" to a deal and enters the F&I office. It uses a series of interactive questions that simplify paperwork and save the customer time while creating a 100 percent personalized delivery process, increased dealership profits, higher CSI, and greater customer retention.  

Lindsay created ZipDeal in 2017 for Lindsay Automotive which includes Lindsay Honda, the top volume Honda dealer in the Midwest, and among the top ten in the country. Lindsay's goal was to improve the major pain point of the vehicle delivery process for his sales staff and customers with a consistent, personalized presentation that put the customer in the driver's seat. ZipDeal is unique because it links six pre-delivery customer touchpoints into one customer-driven interactive tool. 

“We perfected a system that greatly enhances the customer experience and helps us gain control over the end of the sale. It also addresses additional sales opportunities, including protection products, that often weren't presented before," said Lindsay. "With dealer front-end profits as low as 3%, we can't count on sales staff to just sell cars anymore. ZipDeal makes sure our sales staff present every product and accessory, every time for additional revenue streams while giving consumers the control they want over the process."

Customers proceed at their own pace through a series on online questions and options that address these key areas:

• *New deal and trade-in paperwork – Customers complete key deal details which eliminate sloppy paperwork and decreases contracts-in-transit, so dealers get paid faster. 
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• *Insurance options – Customers can shop their existing provider against a host of competitors to acquire the best possible terms and conditions. 
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• *Finance and protection products – The presentation of F&I and protection products includes videos, product images, and detailed product descriptions so customers can educate themselves on their own time without a high-pressure sales environment. 
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• *Feature functionality – Every vehicle feature is explained and explored so customers can leverage all the features available.  
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• *Personalized vehicle settings – A deep dive into vehicle customization ensures settings are personalized for customers before they drive off the lot, from auto-lock features to programming preferred radio stations. 

*Online review – At the conclusion of the ZipDeal delivery experience, customers rate the dealership and if the rating is positive are automatically asked to post a review. Managers are notified in real-time of negative ratings so they can rectify issues while the customer is still in the store, avoiding a negative review and poor CSI.

ZipDeal is available for both desktop computers and tablets. The collected data is either printed out automatically for placement in the deal jacket or pushed to a dealer’s DMS for the F&I manager to review and tailor the F&I menu and delivery experience to a customer’s needs.

Lindsay Automotive piloted ZipDeal with the top five sales staff at each of its two locations. Staff was trained on accessories and protection products (paint and fabric) and earned commissions on sales. Within three months, protection product sales increased from 5% to over 33%, and reps were earning as much as $3,000 a month in extra commissions. 

Also, the dealership reduced the frustrating downtime between the end of price negotiations and the F&I process. This was due, in part, to inviting the customer to engage in the delivery process. The dealership also increased Finance PVR profit by over $200 and boosted positive online reviews by 500%These gains were a direct result of presenting every product to every customer every time, an area where dealers have historically struggled. 

Lindsay Automotive’s success inspired automotive industry powerhouse duo Chip King and Tony Gomez to bring ZipDeal to market as they realized its potential to improve the customer experience, impact a dealer’s bottom line, and provide a competitive advantage in today’s market.

Commenting on the launch of ZipDeal, King stated, “This tool pulls all of the processes together and puts the customer in the driver’s seat like nothing else out there. The average dealer is making less than $300 in front-end gross profit on new vehicles. ZipDeal reconnects customers with protection products, accessories, and insurance options, for more revenue streams and back-end profits. Customers get a consistent, personalized process that puts them in control, and dealers make more profit. It’s a win-win.” 

Gomez added, "Having spent the last year in a high-volume retail environment, one of the biggest challenges is the downtime between consummating the deal and getting the customer into the F&I office. ZipDeal's delivery system focuses on engaging the customer during that time and exposing them to every opportunity, which is critical to customer satisfaction and the dealer's profitability.

For additional information and to schedule a demonstration call: 877-699-7770, or visit www.zipdeal.com 

About ZipDeal: 

Based in Columbus OH, ZipDeal is the first online tool to link all of the processes between the end of vehicle negotiations and entering the F&I office on one customer-facing platform. It

leads customers through the titling and registration process, insurance information, finance and protection products, vehicle features, personal vehicle settings, and posting online reviews. By putting customers in the driver's seat, dealerships deliver a consistent and personalized delivery experience that increases F&I profits, improves cash flow, boosts CSI, and a dealership's online reputation while mitigating frustrating customer downtime.

The average dealer leaves over $250,000 on the table each year for every 100 units sold per month. That’s right, a quarter-million dollars. Surprised? That’s what your dealership sacrifices when you don’t offer Environmental Protection Packages (EPP), also called paint & fabric packages, to 100% of customers 100% of the time. Consider these facts:

• * Sadly, the average number of car buyers in the US that choose to protect their investment with an EPP product is only 11% ** (Automotive News)
• * The root of the problem is that only 31% of all car buyers in the US are even offered the opportunity to purchase the protection! ** (Automotive News).

* Now, consider that of the 31% that are offered the product, 42% say yes! Think about this…of every 100 customers, only 31 are offered the product but 13 elect to add it to their purchase…if we simply offered it to all 100, 42 would elect to purchase it…and that is largely with “traditional” sales methods that leave much room for improvement as we discuss here** (Automotive News).
* EPP is # 3 in PVR profit, following only warranty and gap products.
* EPP is not ‘snake oil’ but rather a hugely valuable product that really works. No customer should leave without protecting the 2nd highest investment for the average family.
* EPP product warranties have an absolutely negligible claims ratio from a re-insurance perspective.

What are we doing? We are failing to help our customers and our bottom line. Why? It’s fairly simple…we don’t offer it!

What are the remedies?

First, consider this: have you ever met a high-performing finance manager or sales representative that didn’t work their pay plan to a “tee?”

If dealerships motivate the key people who can get passionate about this super valuable product, they will present it more and get more sales. Good F&I managers always could stretch the boundaries, right?

Now’s the time to start selling more EPP. Here’s how you do it:

Create a true motivational compensation plan

The lack of consistent execution or absence of key processes is the primary reason salespeople traditionally struggle with selling ancillary products like EPP. However, the underlying issue is that they don’t want to upset the stability of the sale. They already earned one ‘yes’ from the customer. The one that matters the most. The fear is that pursuing another ‘yes’ might put the entire sale at risk.

To clear that fear hurdle, you have to motivate salespeople to take the risk. It’s not always enough to pay an equivalent to the commission. Sometimes you have to over-incent to change behavior. We’ve seen dealerships compensate in varying ways depending on whether they post EPP to an addendum on every vehicle, or have a checks-and-balance system that ensures consistent presentation execution.  Here are two options:

• Flat Bonus – This works best if you have an addendum on every vehicle with an EPP applied with an opportunity for the customer to upgrade the warranty period in F&I. In this scenario, the goal is to incent the salesperson to endorse and set-up the product.

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• The flat bonus:
  • * Should be equivalent to a higher % than they receive on the commission of the vehicle. For example, if you pay a 20% vehicle commission, consider paying a 25% flat bonus on the sale of an EPP. This can be funded by off-setting the F&I commission.

* Should be paid weekly in cash in a sales meeting environment where you can recognize and celebrate high-performers. Cash is king!

• Commission-Based – If you have a sound process and system in place that ensures a consistent and effective presentation of the EPP, you can include it in the regular commission structure in your store.

There is a lot of profit to be made from EPP.  At $349 average profit per policy in the US, it’s plain to see the product is way undervalued. With an average cost of under $300 (re-insured), that means the average selling price is in the $600 range. When well presented, this product is worth much more.

Paint a picture worth a thousand words

Visual sales tools are the way to sell the value to customers. Think physical samples of real body panels that have and have not been protected, video presentations, and pictures.

In a fantastic article in F&I Showroom, (I highly recommend a read!) F&I development manager Rick McCormick suggested another great visual technique. Hand the customer a golf ball and explain the minor pits and valleys are what vehicle paint looks like under a microscope. While the finish may look uniform, these divots collect water, dirt, and road salts when the protective wax finish wears off in six to eight weeks. These elements can eat through the clear coat and damage vulnerable paint. That’s why EPP is critical.

Don’t forget to always start with the “why” before the “what.” Emphasize that these products keep vehicles looking showroom ready. Tailor your presentation to your region and time of year. In sunnier locales, talk about the degrading effects of year-round sunshine. In colder climates, point out the negative effects of salt kicked-up from snowy and icy streets.

Make your presentations personal

Today’s customers roll their eyes at cookie-cutter presentations. Your “why” has to be personal so customers can see how EPP makes sense for their unique situation. This is selling 101. Utilize the normal Finance Questionnaire questions to find the right product for every customer.

Questions may include:

• * Is this a family vehicle?
• Is this a work vehicle?
• How many miles do you drive per week?
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• * Do you generally drive around town, on expressways, on unpaved roads?

* Do you park in a garage or on the street?
* Will you likely sell or trade your vehicle, or pass it down to a family member when you reach the time to replace it?

This last question is key. It’s been proven that EPP helps retain vehicle value and results in a higher appraisal price. That’s an added value every customer will understand.

On that point, when preparing your customer for the appraisal of their trade, add a few questions to the process to allow foreshadowing additional sales opportunities:

• * When you purchased your current vehicle, did you elect to have the paint and interior protected? Do you happen to have the paperwork?
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• What type of warranty did you elect when you purchased your trade?
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• * Did you service your vehicle at the selling dealer? Do you happen to have the service records?

* Consider offering a trade bonus voucher for “Yes “answers

Double down on EPP

If your customer sees the value on their new vehicle purchase, why would they not want to add it to their other vehicle? The average household in the US has at least two vehicles, if not more. You can offer significant discounts for insuring more than one vehicle. F&I trainer John Tabar offers a great F&I Tip of the Week explaining how to double down on appearance protection.

The facts prove that dealerships leave money on the table every day when it comes to EPP. Be the dealership that doesn’t. Train your influence team on the facts, benefits, and effective sales techniques. After all, we’re talking about adding more than $250,000 to your bottom-line every year.  

References:

**F&I Best Practices from Zurich, Automotive News

** Fico Decisions, Global Consumer Survey of Vehicle Finance Perceptions

Chip King explains why making your inbound phone processes can cost you sales if you don’t change your phone process.

Chip King explains the importance & benefit of treating people right on the telephone and how it can improve a dealership’s results.