Good people—in any business, this is a requirement. Your front-line people have to create a welcoming atmosphere so folks coming into your business feel comfortable. As the owner or manager, you have to work hard to train your people to represent your company the way you intended. From the top down everyone needs to be on the same page. You have to give your personnel the opportunity to succeed by recognizing strengths, weaknesses, desires and motivations. One very important aspect of your personnel is having them in the right positions. Monitoring and cross-training are important ways to judge who belongs in what job.
Let me tell you about our BHPH operation and the personnel we have. Like any car dealership, we have salespeople. We have a sales manager. We have a service department with a manager, an assistant and technicians. There are lot attendants who also detail cars. We have someone to handle title work and deal processing. The personnel we have that your standard dealer doesn’t have include an accounts manager (collector), a payment cashier and an underwriter.
In our operation, the store looks like a regular retail car dealership. Of course we sell cars and trucks. The differences in BHPH come from a completely different set of processes that require a different mindset at the point of contact with the customer. The salespeople have to be friendly, engaging and hard-working. They have to follow up and understand customer service. In BHPH, you do not need hard-selling, lot-lizard salespeople out front with their hair on fire. We do not hire "car salesmen," so that we can train our people in our business.
The salespeople are not selling cars. BHPH is about finding the right customer for our portfolio. The salesperson’s primary duty is to gather the information needed to assist in collecting the account after the sale. If the customer’s application meets our criteria and they can provide the stips needed, the salesperson can deliver a vehicle. Motivation comes from being on straight commission. One difference is that the majority of the commission comes from the down payment, which in BHPH is almost as important as gross to the portfolio.
In BHPH, someone has to be the underwriter. That someone has to put their name on the deal approval. You can sell lower price cars, use GPS units and approve everyone that fogs a mirror—that's one way to skin the cat. However, I believe that proper underwriting is necessary and requires diligence. Nothing rolls before we verify everything in a deal..
I have been involved with operations that had a loan buyer (usually an ex-collector). This created consistency problems for the dealership and power struggles within the store. We have policies for verification and guidelines for approvals. The sales team is responsible for putting together a good portfolio, not rolling iron. In our store, the sales manager also buys 75 percent of our vehicles. Since he doesn't have to pencil deals or take customer turns, he can spend his time verifying customer information and buying inventory. The sales team creates the portfolio that everyone else services.
As with any dealership operation, someone has to take care of the contracting. Since there is no real back-end, there is not a traditional F&I person. A manager closes the deals—usually the sales manager or the general manager (me), but our service manager can also handle a closing when needed—so we can speak candidly with the customers and make sure they understand the need to be successful with the loan. We offer an extended service plan (ESP) and a GAP product. The sales team and all of our advertising sell into the finance "package" and we have 99 percent penetration. The BHPH paperwork is basically the same as any other special finance deal, so the closer needs to be a detail-oriented person.
You may have a service cashier at your store. That is not the same as a payment cashier at the BHPH store. There are several ways to handle this. Some stores allow everyone to take payments. I have worked at stores where only the collectors took payments. Our payment cashier is a friendly, smiling person who takes care of 90 percent of our payments. This person is very aware of our collection process. She handles all of our title work, mail, answering phones and petty cash. This gives us a person at the payment window who understands collection procedures while giving customers a "friend" to talk with who's not the accounts manager.
The accounts manager keeps track of all the delinquent accounts. He has to make contact with all of our late-paying customers and be able to work with them in resolving their problem. The accounts manager needs to be diligent and organized. Our accounts manager is very successful due to his previous local business experience. It seems he has only three degrees of separation from everyone in the area. Most of my successful collectors over the years have come from rent-to-own or our competitors’ operations. They should always be from the area you are working.
In our service department, the majority of the activity is just like any dealership service department. The difference is that most of the work done is to maintain the portfolio. We do outside work, but our first priority is keeping our cars on the road so the customers pay. The service assistant helps with that activity, but he also works with the customers on getting us paid for repairs outside the ESP. We allow our customers to make payments on repairs separate from their regular loans. The service assistant writes payment contracts for repairs and handles the collections on that portfolio.
Success with BHPH personnel is about having the right people in the right jobs and knowing what positions you have and what duties need to be performed. These are some of your biggest challenges as an owner or manager. In BHPH, customer service means much more than just repeat and referral sales. It’s critical to your portfolio’s success.