January 2010, Auto Dealer Today - WebXclusive
New Technology Offers an Innovative Approach to Green and Red Balloons
The seasons are changing, and judging by my phone and e-mail messages, so is the climate for special finance. As inquiries pick up, I can tell more focus and effort is returning to the market.
I have been receiving calls from people wanting to drive traffic of “improved” quality, as well as calls from those who are struggling from the inability to structure profitable deals. The underlying current with these calls is that the dealers have SF traffic; in fact, it really has never gone away. The issue is the traffic has been C- and D-tier credit customers, which are often too tough to structure an approval for.
Much of this stems from the sales process, which in many stores has been hindered due to reasons such as staffing cutbacks, lack of focus and in general, taking shortcuts. With many stores having cut out their dedicated SF personnel, they are now running SF through their conventional finance offices and sales desks. Subprime credit buyers are mistakenly being worked as prime credit and landed on vehicles they cannot qualify for. This obviously does no good for either customer or dealership.
I maintain that to make SF work, you need to be able to quickly and unoffensively ask customers a qualifying question or two. I call it the green balloon/red balloon process; the analogy would be getting a customer to arrive at the store and select a balloon based on their credit (green = prime, red = subprime) to walk around the store with. For whatever reason, be it lack of training or supervision, I often find sales personnel are reluctant to ask the appropriate question, and unfortunately Idoubt you could get away with the balloon thing.
I seldom recommend products or services. When I do, it has to be something that is unique and really works. There is now a product that solves the Red balloon/Green balloon dilemma without requiring the salesperson ask qualifying questions. This new product is called Instant Screen. It was created by John Palmer, CEO of ProMax Online, in conjunction with TransUnion. Basically, all you need is a customer’s driver’s license to scan (or name and address) to soft-pull a credit bureau to learn the customer’s credit score range and which financing programs they will most likely qualify for. In my humble opinion, this is a slick deal. It takes the most often botched interaction – prequalifying – and turns it into a breeze.
As the recently-departed Billy Mays would say, “But wait, it gets better!” Tired of working mind-numbing hordes of infomercial leads or cheap Internet leads that come in masses and all seem to have tier-4 credit or worse? Wouldn’t it be nice to focus first on the leads that have the best chance of being able to be approved? You can run any Internet lead through Instant Screen and find the same information to prioritize your calls. I still maintain you call them all, but work the best ones first.
Now, I will admit to being cynical, but does it really work? In my routine calls talking to dealerships around the country about SF, I’ve asked. Do you use it? If so, how does it work?
The first person I talked with is a sharp SF dealer in Danville, Ill. Jason Toellner is GM of Carmack’s Car Captial which routinely does 60-plus SF deals a month out of what was a Chrysler store until June 9. He said he has been using it for almost three months and absolutely loves it – instant qualification (including his e-leads) and he doesn’t have to pull a credit bureau now on most customers. It has taken the situation of having the customer on the wrong car almost completely out of the equation. Later I talked with Roger Rudin, the GM of Willowbrook Ford. He was very excited about the program too. Being on the southwest side of Chicago, the dealership sees plenty of SF customers. He has been relying on Instant Screen to ensure the customers aren’t shown the wrong car, and it’s working. He also said that it is just as important with his prime and near-prime customers. The dealership’s business has been strong, bucking the national trend, and this certainly was a big reason.
When I hear dealers and managers complaining that they can’t get deals approved with the same SF companies that everyone else is, I know it is almost always revolves around a poorly structured deal. If you can better qualify the customer up front, you have the best chance for success.
Today, payment-to-income and loan-to-value ratios are critical. It isn’t so much that customers can’t be approved, but rather they can’t be approved on the vehicle and deal structure they’re being submitted on. That is why the sales process is so important. If you know going in that a deal must fit within certain criteria, it is much, much easier to steer the customer to the more appropriate vehicles and structure a profitable and approvable deal.
I promise the finance companies are buying deals! I am not trying to become a salesman for Instant Screen, but I recognize an innovative product when I see it, and if it helps dealers of all types close more deals, I am all for it. Whether you do it the tried and true way of asking solid, qualifying questions or you take advantage of new technology, make sure you do the green balloon/red balloon test, and start more approvable deals today.
Until next month,
Vol. 6, Issue 11