September 2009, Auto Dealer Today - WebXclusive
It’s not unusual for a visitor to Jennifer’s Auto Sales and Service, an independent dealership in Spokane Valley, Wash., to find Dealer Jennifer Johnson in her facility’s fully-equipped kitchen cooking up a pot of spaghetti or baking cookies for her staff and customers. That’s the first clue that things are a little different at Jennifer’s Auto Sales. While Johnson puts a lot of emphasis on traditional values like family and community, she’s not exactly your traditional used car dealer and her dealership is definitely not a traditional used car operation.
Johnson has thrived in a business that, when she got into it 33 years ago, was very male-dominated. “When I first got in the car business, it was unheard of for a woman to be a salesperson,” she remarked. It was a snowy day in 1977 when Johnson, a single mother with no college education, arrived at a Chevrolet dealership to apply for a job in response to an ad that promised $250 a week and a car. Upon her arrival at the dealership, she was told she was too late and all the hiring had been done. She then informed them she wasn’t leaving because her car, which was covered in snow and was missing its windshield wipers, had actually broken down in their driveway. She ended up driving away that evening with a new car and a job. “I drove out in a new Monte Carlo and I’ve never looked back,” she laughed.
Johnson quickly became a top salesperson and eventually went on to hold positions in a couple of other franchise dealerships as used car manager, sales manager, general sales manager and general manager. For years, she dreamed of having her own dealership. “I always wanted to run my own business.” Eventually, she said, “I finally got enough gumption together to do it … I just thought it was time to be my own boss.” In February of 1997, after borrowing against her credit cards and obtaining a loan from the bank, she opened a little store called Jennifer’s Greenacres Auto Sales.
She started with a 1,500-square-foot building on less than a quarter-of-an-acre, two employees, a little bit of capital and about $50,000 worth of inventory. In a little over a decade, the business had grown enough to necessitate the move into a larger facility in November 2007. Today the dealership, now going by the moniker “Jennifer’s Auto Sales and Service,” has a total of 18 employees, a 10,000-square-foot building on five-and-a-half acres and an eight-bay service shop with ASE-certified technicians. The dealership moves an average of 80 units a month, of which roughly 15 are special finance.
Like many dealers, Johnson has found subprime particularly challenging of late. The two main issues are finding the right inventory and having a finance source to buy the deal. “I wish we had more banks that would take care of [special finance customers] because I think that they’re deserving,” she said. “If you’ve got somebody that’s hardworking, has a new job, but has had some stumbles and bumps, I think they deserve a car just like anyone else, and a good one.”
“If anyone needs a car that’s going to be a good-running car, it’s somebody that’s subprime because they can’t afford to fix it if it breaks, so they deserve the best product that we can give them for the best price that we can get them in,” she said. “It’s just hard finding that inventory that’s under $6,000 that’s going to be really reliable and finding the bank that’ll take the loan.” Johnson believed she could pull in several more subprime deals each month with a larger base of finance sources, adding that it has become more difficult to get deals bought for customers with scores between 580 and 640. However, Johnson and her staff keep on pushing. “We just really, really work hard to make the deal happen in any way we can. We try to say, ‘Yes’ to everybody,” she said.
Johnson said that even though sales are down about 30 percent from last year, “We haven’t had a losing month.” Part of what has helped the business stay in the black during challenging economic times is Johnson’s extremely successful branding of her dealership. The “Save Your Green” advertising campaign has been going strong for eight years now with commercials on both radio and television. The branding has been so successful, in fact, that Johnson has become a little bit of a local celebrity. People in the community now personally associate her with her store’s “Save Your Green” slogan.
Her commitment to offering affordable pricing has helped keep the sales numbers up. Johnson refuses to take a huge markup on her vehicles, and the typical car on her lot is priced around $8,000. “I just think that if you mark yourself up too high, you’re just not a player,” she said. “We try very hard to keep our prices in a structure I think is acceptable.” She added that she has always favored volume over gross and doesn’t believe in getting too greedy about gross per unit, citing “the old cliché that pigs get fat but hogs get slaughtered.”
Johnson said inventory is an important factor in the dealership’s success. She stays away from higher-mileage vehicles for special finance and said trade-ins are her best source of that kind of inventory. Every vehicle goes through a full inspection in the service department, and the average reconditioning cost per vehicle is $550. She keeps the inventory on a 45-day turn; in the rare instance a car reaches the 90-day mark, it goes to auction. Her buyer stays informed on the local market and attends the auction twice a week to keep the inventory fresh. “He always stays abreast of what the market is and changes with what the needs are, and the [salesmen] let him know what people are looking for,” she said. Inventory is listed on both AutoTrader and cars.com.
Interestingly, Johnson does not require her salespeople to follow a particular sales process, only that they aim for 16 units a month and sell a minimum of 12. “The people I hired are professionals at what they do,” she said. “I hired people that already know the industry and have sold before and I allow them to do it the way that makes them money because it makes me money.” However, she does not favor any high-pressure tactics. “People love coming in because there’s no pressure,” she said. “If they don’t want to buy a car from me, I can’t force them to. I don’t want to; I want them to want to buy something.”
Johnson knows customers are not the only people in the dealership who dislike a high-pressure environment. She has taken care to create a more relaxed work environment and help her employees maintain a healthy work-life balance, a luxury she did not have herself when she first started in the business. The salespeople have a 35-hour week and the store is closed on Sundays. “When I was in this industry as a salesperson, I had to put in 60-plus hours a week, every week,” she recalled. “When I opened my own store I did not want any of that. I wanted it just to be a whole different way to do business.”
Indeed, the atmosphere at Jennifer’s Auto Sales is not one seen in many dealerships. It’s almost a home away from home. Johnson’s dog, only a puppy when the business began, often accompanies her to work and practically grew up in the store. The store’s finance manager brought her newborn to work with her every day for the first six months of the child’s life. “It’s a very, very open environment,” Johnson said.
The kitchen is at the heart of the store and serves as a gathering place for much of the staff. “Your service department tends to stay by itself in most dealerships and the sales department is by itself and they don’t intertwine very often, but that kitchen in the middle seems to pull everybody together,” she said. It’s not uncommon for Johnson to invite a customer back for a sandwich or to get a snack for a hungry child when their parents have been there for a while deliberating on a purchase.
While such a laid-back attitude might not work well at other, more traditional stores, it works well for Johnson. Employee turnover is practically nonexistent. “I’ve been very fortunate to have the crew that I have,” she said. “They’re wonderful, honest, good, hardworking guys.” Many of her employees have been there for around eight years; the two employees she started with in 1997 are still with her. “We treat them well and they treat the customer well,” she said.
Providing great customer service and maintaining the store’s good reputation are of the highest importance to Johnson, who is a lifelong resident of the Spokane Valley area. “I think that if you take good care of people, they take care of you and they send in their friends, and if you take advantage of someone, they tell so many people. You want people to know the good about you,” she said. “I don’t want to go into a grocery store and have somebody follow me around saying, ‘She sold me a bad car.’” Johnson added, “It’s easier to solve [problems] right up front … I can replace a car; I can’t replace a customer.”
With the turbulent credit environment and wildly fluctuating values on used vehicles creating such a challenging environment for car sales, Johnson said now is the time to get back to the basics. “I think when times are like this, you go to your old-fashioned values, you take care of that customer the best you can and you work harder with them to try to fulfill their needs,” she said. “If you don’t, you’re going to lose. You can’t be greedy … If we do the job we know how to do every day, we will be profitable.”
Special Finance Insider Vol. 3, Issue 4