LAS VEGAS - Today at Industry Summit 2012, being held at the Paris Hotel and Convention Center here, was the busiest day of the show, with the most packed schedule. Since we couldn't be in every session (many of them were going on concurrently), here is a taste of some of the highlights.
One of the opening keynotes this morning was given by Jim Ganther, Mosaic Compliance Services. He focused on dealership closures and how they effect the industry overall. He dropped what was a surprising statistic on the audience - the decline in the number of dealerships isn't anything new. In fact, since the 1950s, his research showed that there has been only one, single year where the number of dealerships increased. The amount of decline varies from year to year, and, as he pointed out, as historically been tied somewhat to current events of the time period, showing a greater volatility in times of uncertainty. Looking at today's market, the industry lost 3,660 dealerships in the five year period from 2008-2012 YTD. In the five years prior to that, however, 2003-2007, the industry lost just 525 dealerships. However, that doesn't change the fact that there is a constant trend of contraction that is nothing new.
"I believe the contraction will slow down," Ganther noted. "In the next 50 years, dealerships will become larger, more efficient and stronger." He went on to note that this is already starting to happen, with the top 100 dealerships in the country owning an average of 22 locations - a number that, he said, is already looking to increase by the time 2012 numbers are final.
For agents, especially, he noted that this means there is a constant increase in competition. "If you aren't growing, you're shrinking," he told attendees, pointing out that in today's market, he doesn't believe anyone can simply stay in a neutral position.Compliance Takes the Stage
Another interesting session was given by Peter DeLongchamps, Group 1 Automotive, on compliance. He began his session by asking attendees to think about classic songs, and think about whether or not they really understood the meaning behind them. In the automotive industry, he noted, it's not enough to simply go through the motions, you have to understand the compliance requirements inside and out. "We are charged with being experts on the meaning behind the terms," he noted.
The key to getting a high rating on compliance is to make it non-negotiable. He listed integrity, transparency, professionalism and teamwork as the key ingredients to a successful, profitable team, and if any one member doesn't hold up their end of the deal, they are terminated.
This might sound a bit harsh, but he noted that 15% of the revenue of a dealership - the F&I department - actually generates nearly 65% of the gross profits. This means that compliance with various regulations are paramount to keep a dealership growing and vital. To get to that point, however, it takes the time and combined effort of every member of the team, including a regular and rigorous training schedule. "Regulation and compliance is what keeps me up at night," DeLongchamps said. "And the number one excuse for non-compliance is that it was 'the new guy,' which means we weren't doing a very good job of training." Group 1, he noted, created a Webinar along with a test that every new employee must pass before they are allowed to work. It has made a huge difference, he said.
"F&I has become increasingly complex," he said, pointing out that if the industry doesn't make more of an effort to be compliant, letting errors and problems slip through, it will just invite further regulation, which would be good for no one.Rethinking Leasing
Gerry Gould, United Development Systems, took the stage to look at leasing as a buying option that is making a comeback in the industry, and one that more F&I departments should embrace as another option to offer customers.
While there are a wide range of pros and cons to leasing, instead of cash or financing, Gould told attendees to first listen to the customer to determine if they are even a candidate. Factors such as whether or not they tend to be short-term owners, if they drive less than 18,000 miles per year, and whether or not the car will be used for business or pleasure can all help determine whether that customer is a good candidate for the leasing option or not. "It all goes back to listening to a customer's needs," he said, "and offering them plans geared toward those needs."
For the F&I department, there is money to be made as well, contrary to popular opinion. Products such as excess wear and tear, maintenance plans, tire and wheel, fabric and paint, windshield and key replacement are all things a lease customer can benefit from.Creating a Strong Sales Team
Luis Garcia, Safe-Guard Products International, Gave a well-attended session on the top 10 ideas for training your sales force.
1. Train personnel on the F&I process. "Tell them what we do in finance," Garcia said. By fostering a relationship, and an environment where everyone is working together will lead to happier customers and more profit all around.
2. Give them product knowledge. It's not enough, he noted, to simply tell them about what F&I is all about. You have to train them on the products their dealership, specifically, offers. If they don't know the answers to questions, he told the audience, then it hurts their credibility, and that hurts the credibility of everyone down the line. Not only that, but it teaches them a certain amount of respect for the products themselves. "We don't sell snake oil anymore," Garcia said. "We sell products that bring value to the customer."
3. Offer walk around training. The art of the "walk around" has been lost, Garcia noted, and many sales people today don't go over every inch of the car with a customer before sitting down to look at paperwork. This is a mistake, because, he noted, the walk-around is a perfect place to start planting the seeds of F&I. Sales people can point out features, such as the tires, noting that those are covered in a warranty plan for example. It creates an environment where customers are already starting to think about F&I - whether they know it or not - before they even sit down to fill anything out.
4. Get the sales people involved in the interview process. Talking to the customer before they get back to the finance office, and taking advantage of the raport the sales person has already spent hours building is a key factor. If sales people are trained to not simply bring a customer back and drop them off, but to engage the F&I manager and customer in a dialogue before that walk to the office even begins, the customer will be more relaxed, and more likely to be receptive to what the F&I department has to offer.
5. Review the paid claims with your sales staff. If the sales people can see the evidence of the claims paid to their clients, and how much money it has saved those clients, it will help them fully understand the value of the products. And if they understand and appreciate the value, they will pass that to the customers.
6. Review the F&I performance of individual sales people. "Sales is more than just selling cars. See who's driving the profits [of the overall dealership] down," Garcia said. There are always a few in any dealership who either don't sell F&I, or worse, actively tell customers not to purchase the products. By going over everyone's performance with team, together, you can start to educate them. Make sure they understand that, for the dealership, around 25 cents of every dollar is profit on the sale of a new car; when it comes to F&I products, the profit margin is 75 cents on every dollar.
7. Tie the products back to retention. Every sales person wants to build a network of clients who not only return to them when it's time to buy a new car, but who also refer friends and family. When an F&I claim is paid, that customer is 98% more likely to not only purchase that product on another vehicle, but their satisfaction tends to increase exponentially. "Make sure the sales people know that these products can make them look like the hero," Garcia noted.
8. Don't forget about the service department. While it's all well and good for the sales and F&I departments to be on the same page selling product, it will be the service department who has to process those claims. Don't forget about them - take the time to train them on the ins and outs of the product, and how to submit claims, making their lives as easy as possible. It will make them happier, which in turn leads to faster, less confusing service, and happier customers.
9. Host "bottom feeder" training. Garcia noted that no one likes to be shamed, and in this case, he's advocating that you make a habit of calling out the sales people who are under-performing in F&I sales to a high degree, and having them go through "bottom feeder" training. He noted that you have to be consistent in it, and that you might have some of the same people in the training over and over at first. But, he told attendees, no one likes to be known as the "bottom feeder" and will, in time, bring their performance up to par to avoid being called out.
10. "Persistence wears down resistance." Training, Garcia told attendees, isn't a one-time thing. It has to be a regular occurrence, and, at first, the odds are that no one will want you there, because no one wants to believe they have a problem. But, he noted, by being persistent, the sales team will start to see a rise in their own profits, and will realize the value training brings to the table. You just have to stick with it.Stay Tuned
Tomorrow we'll be wrapping up the show with a few more highlights. And don't forget, if you see something on the show floor, at a session, or just around the conference that you'd like to see included in tomorrow's wrap up, e-mail it to Managing Editor Toni McQuilken, [email protected], or find her at the show!