So much for background. I feel there are three keys to success that have permitted us to be productive and profitable. Production is 70 units per month. Profitability is measured at $2,500 per copy. First, I had to have the complete backing of the dealer principal.
Support from the owner came in the form of advertising, purchasing the right vehicles and properly rewarding those who produced. Advertising is currently in the form of a 30-minute infomercial that is filmed weekly and played six times a week, mailing 2,500 direct mail pieces weekly, a quarter page ad in a weekly newspaper, radio spots and daily newspaper ads. The bottom line here is you have to spend money to make money.
Secondly, I had to have input toward appraising and purchasing used vehicle inventory. Lastly, I had to have the trust and support of the sales staff. They, in particular, could make or break this venture. Those purchasing the inventory listened to us when we suggested the type of vehicles we needed to stock for our special finance endeavors. Most owners and/or auction buyers purchase/appraise vehicles using the Black Book. This is certainly a good depiction as to the value of a vehicle BUT in the world of special finance should only be used as a guide. Since most all finance companies lend according to NADA, it was imperative to insure that vehicles being appraised/purchased be within certain NADA trade-in parameters. The one most critical parameter is that the dollar amount fall about $1,000 below base trade-in value if the vehicle has a value less than $14,000. Anything over $14,000 could be at trade-in value. This allows room for pack, shop and the ability to make the aforementioned $2,500 per copy since most finance companies advances 115 percent to 125 percent of trade-in. Finance companies have production quotas too and are only too happy to give up an extra half-point to one-point of rate to secure the deal as well as shaving off $100 to $250 of some acquisition fee. The key is to pick up the phone and capitalize on that relationship you should have developed since day one. I have the luxury to do this because I have an assistant that does all the contracting and stip chasing. Do not accept lender callbacks as gold.
Lastly, the support of the sales staff is imperative. They need to believe you can get the job done and at the same time generate the aforementioned $2,500 per copy so that they get paid. We set up a pay plan as follows:
1. The salesperson gets the entire stroke towards any and all production quotas.
This supports his/her drive towards a “fast start” bonus, half way through the month bonus, towards a “fast finish” and/or salesperson of the month bonus.
2. The sales person splits the 30 percent commission with the special finance manager.
In order to support this, you must have a productive range of finance companies that supports a 350 beacon as well as a 650. We have that here.
For those who have not been successful with a SF department (either separate or integrated), might I suggest to you to look at your hiring practices, inventory and sales department attitude. Perhaps it is time to get a new GSM, buy cheaper (smaller payment) vehicles and adjust the attitude of your sales staff. It all starts from the top. Look within.
Vol 2, Issue 12