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Dave Erickson

Dave Erickson Internet Sales Director

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Death of a Finance Man

Our finance guy pours out of his sales office, hands down by his sides as if defeated in horrific ways we'd never want to know about. He looks like he's about to walk out the door and down the street, occasionally stopping to heave his chest up and down and hoping some little old New Jersey lady might see him from her window and offer to make him a "sangwitch." 

"What do you expect? I don't have any leg. What can I do?"

There's no little old lady there to tell him it's going to be okay – no sangwitch, no glass of milk, no cookie – just the disappointed look of his GSM. A look that might say something about finding his replacement. 

For the next deal, the finance guy tries to sell an alarm, but the customer tells him the car already has one – the salesperson said so.

For the next deal, he "gives away" a warranty and the desk manager yells at him because they're backed up five people deep and what the hell is wrong with him? 

Before he even looks at his next deal, he takes a heat call from a customer asking what a VIN etching is, why it costs $495 – and for his money back. 

I have to wonder why we do this to the poor guy, but what I will propose isn't going to make it much better for him.

I've worked in a few stores over the past several years. From my experience, the more an internet department grows, the more critical the penetration issue becomes. The only stores that seem indifferent to their finance department's performance also seem to have a non-performing, token internet department. Ironically, these stores are also quickly losing their foothold in their respective district rankings, but that would be another topic on another morning. Not this morning. Not on this cup of coffee.

What I'm about to propose may seem insane. You may shake your head and stop reading. However, it would be equally insane to think we can fix our dilemma by adjusting the poor finance fellow's pay plan to encourage a higher penetration ratio, while patting ourselves on the back: 

"That should do it. Now we'll see some results out of finance."

"How's that, sir?"

"I adjusted his pay plan. If he doesn't give me what I need, he won't earn any money."

"Sir, you're a pretty smart guy."

"I know, now tuck in your shirt and get back to work."

Of course, nothing changes. Maybe a new finance person joins the team, or maybe a new GM or GSM. The problems remain the same, just with different faces trying to solve them.

So, what I'm about to propose doesn't stem from work experience. It's reinforced by something I do on my days off. On those days, I usually go to Barnes & Noble and The Apple Store. Lately, I've expanded this to include Lululemon Athletica. I go to B&N to look at books, but at the other stores I observe and learn. As salespeople, we should follow and learn as much as possible about successful companies. If you're a sales samurai, learning about successful companies and successful processes is part of your job.

What I've learned in my samurai studies at Apple will startle and baffle us in the car industry. I've been making little notes here and there, and I noticed something. It didn't occur to me for awhile, but lingering around the store confirmed it.

The Apple Store closes almost 50% of their customers on extended warranties. These warranty costs are about 15%-20% of the price of the computer, and the questions and objections I heard there are the same ones I hear in the dealership.

"I don't need that."

"I can buy it later."

"I don't have enough money right now." 

"It already comes with a warranty." 

"But does it cover X, Y, and Z?"

The salespeople overcome the objections and close warranties on about half their computer sales. Not only that, they never reduce the cost of the warranty. It's full pop or nothing. 

Why can't we close like that? We're the sales pros, right? Our finance guys have years of sales experience under their belts, right? They can't be outsold by some kid making $15 an hour with tattoos slathered up and down her arms, right? Our guy has a suit, an office, and gets to spend time with his customers in private, but the Apple kid closes right there on the showroom. 

How does she do it, you may ask? And how can we sell extended warranties to nearly 50% of our customers? Maybe even at full pop?

The answer is very simple. We need to abandon our unsuccessful model. Forget everything about how we normally sell back-end products. Forget trying to pencil it in the payment. Forget trying to let the finance guy sell it. Forget all of it. In the end, our finance guy is more like a cashier if he's not selling warranties and other back-end services. But isn't that what he is anyway?

Since you can't separate Apple's result from their process, here it is as I see it – and why it works. It's worth repeating that we shouldn't expect similar results if we don't follow a similar process. In fact, I'd follow it exactly.

Why are warranty sales successful?
Trust.
It's not sold by another person. It's sold by the person they established trust with – the person they've been talking to about their computer. Not only does the customer trust the salesperson, they trust the brand. For us, this trust also needs to extend to the dealership.

If our customer agrees to buy the car from the salesperson, he trusts his salesperson. If he's buying a car, he obviously trusts the brand, and hopefully he's there because he read about us online and trusts the dealership. We have two of the three things working in our favor every time, no matter what. In fact, every dealer does – it's just that we usually strip away the most important piece: the value of the trust between the salesman and the customer.

How is this warranty sold? 
On value.

The salesperson illustrates this value to customers, through examples. It's not sold on price. It isn't slipped in. It's sold 100% on value. The customer wants to buy it.

What do dealers do? 

Create a distrustful situation, independent of value.

The customer builds a relationship with the salesperson – no one else. As a result, the person selling the warranty must appeal to emotion rather than logic. Time constraints prevent them from developing their own relationship with the customer. In turn, the dealer attempts to pack it in more, creating a hit or miss situation – and we know the misses usually turn ugly.

We should train our salespeople on warranties, and on a different sales process. One that might lead with, "I'm glad you want the car! We're getting it cleaned up right now. I'd like to also tell you about our maintenance plan and HondaCare… With our maintenance plan you will get… "

What other benefits might we see? How about less wait? When the customer agrees, he could walk straight over to finance. Do we really need an hour or even a 10-minute wait? Why not an open checkout counter? Samurai the entire process. 

Finance personnel costs will lower significantly. You can pay salespeople more, which lowers turnover, creating a more talented workforce and more positive online reviews, referrals, and so on.

What of our fine Finance fellow? He served us so well in different times. We do him no honor by blaming him, accusing him of victimizing us, of letting him wither inside his office. 

I found this samurai poem, by Minamoto Yorimasa (1104-1180), along with the fate of the man: 

Like a rotten log
half buried in the ground-
my life, which
has not flowered, comes
to this sad end. 

Let's not leave our warrior half buried in the ground. His skills, knowledge, and assets will prove invaluable to the new process. Let us who begin to forge ahead pool our knowledge, our successes, our failures, and lastly some money so that we may kindly fly out some little old New Jersey ladies and have them deliver sangwitches to our competitors. 

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