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Dealership Recruiting Dealership Training Economy F&I

Three Steps to Maximizing Dealership Profitability

Contributing Author: John StephensOn the other end of a harsh economic recession, it’s become very clear that Americans of today are drastically different from Americans in 2008. People not only tightened their belts over the past four years, they also completely changed their relationship with retail. And, today’s consumers are focused on keeping their savings intact, companies are concerned with fortifying their business to survive future economic challenges. One way companies like Apple and Google achieved this was through providing more value to their customers through enhanced service offerings such as cloud computing, which made it easier for customers to upgrade mobile technology with a free service which made back-ups and syncing easier and more efficient.

So, let’s stop and think about the retail automotive industry for a second.

Whether the economy is good or bad, consumers will still be in the market for a car. However, their needs for said vehicle may change. For example, with the latest recession, we saw the trend of consumers purchasing cars that last longer with better gas mileage. They didn’t stop buying, they just changed what they bought and how often they bought it. They also became less brand-loyal.

The search for more value now extends beyond the car itself to the dealership experience. With so many dealerships to choose from and less brand loyalty, you actually have a greater chance of increasing foot traffic to your store by focusing on your value proposition.

The first step to fortify your value proposition is to go back to the basics:

  • Hire Top Performers that consistently deliver results on the sales floor and in the F&I office.
  • Place those Top Performers in roles where they will thrive and train them to maximize their strengths.
  • Focus on customer service, not just the sale. The best sales people see themselves as advisers. They listen to the customer and address their needs with courtesy and respect.
  • Position your dealership as providing value beyond low interest rates. This ties back into customer service and bridges into the F&I office. Consumers are paying more attention to their return on investment just like businesses. Provide products and service that reflect their need to keep their savings intact.

Elementary right? Don’t kid yourself. You might be surprised on how little time gets spent on the basics of right people, right position, right training.

Next, re-evaluate the value you provide in the F&I office. You consistently review how many deals your sales team closes in a month, your product penetration, web traffic, etc. When it comes to analyzing your F&I products, are you taking a strategic approach to analyzing their benefits for your dealership?

Strong F&I products do much more than sell. They:

  • differentiate your dealership in the market;
  • help build customer relationships;
  • are designed with the customer experience in mind; and,
  • increase service retention.

When evaluating your mix of F&I products, think beyond product penetration to how your products enhance gross dealership profit by creating a customer experience that fosters lasting relationships and repeat sales.

Lastly, pay attention to your online presence. According to a 2014 DealerTrack study, consumers now visit 1.2 showrooms before making a decision. This represents a paradigm shift in the way today’s consumers shop for a vehicle. Gone are the days of consumers spending their weekends visiting one dealership after another before a final decision is made. Now, the majority of that research is conducted online.

With the majority of customers browsing dealership websites and customer review sites before walking into on average, one showroom, it’s vital that your dealership has a healthy reputation. A good online reputation relies on the active management of customer review sites. While gaining positive reviews is the immediate goal with these sites, the second most important aspect is responding to negative reviews. Negative reviews don’t necessarily have to give dealerships a negative image. By addressing the customer’s concern and taking the conversation offline, dealerships have a great opportunity to turn that negative review into a positive experience. Customers expect to see negative reviews on these sites, but what they pay the most attention to is how the dealership handles them.

Beyond customer review sites, it is also important to optimize your social media assets. Facebook and Twitter have become two of the biggest platforms for consumers to directly interact with companies. Big or small, companies from all industries utilize these sites to inform the public about new products, receive feedback, conduct product promotions, etc. A well-developed social media presence is much more than creating a page and posting content. It involves engaging the audience with content that’s relevant to them, encouraging discussions, and responding to their inquiries or concerns.

Your online presence, F&I product mix, and commitment to customer service each demonstrate a different aspect of how your dealership provides value. Online, you have the chance to provide that excellent customer service to both current and potential customers, further developing lasting relationships and increasing long-term profit. With strategic F&I products, you have better opportunity to maximize unit sales and dealership profitability while offering customers tools to protect their bank account from unforeseen circumstances. Meanwhile, by focusing on the basics of hiring and cultivating top performers, you significantly increase your opportunities to close sales and drive customer retention.

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EFG Companies F&I

EFG Positions Independent Dealers to Capture Greater Share of Wallet

Specialized VSC Provides New Avenue into Under-Served Consumer Market

EFG Companies, the innovators behind the award-winning Hyundai Assurance program, announced today the launch of a new product designed to increase avenues of finance income into a severely under-served consumer market – Best ReGuards.

Best ReGuards is an extensive vehicle service contract from EFG, designed specifically for independent dealers, many of whom have a very loyal and referral-centric customer base, but often don’t have a deep bench of F&I products. This program sets the stage for independent dealers to capture a greater share of wallet by meeting their customer’s economic and vehicle protection needs.

EFG custom-developed Best ReGuards according to the needs of the independent dealership’s customer base by focusing on the most critical components of a used vehicle that are often the most costly to repair:

  • Transmission
  • A/C
  • Engine
  • Electrical
  • Seals/Gaskets

According to “FORBES”, many consumers are spending as their incomes rise, but are unwilling to borrow more money than absolutely necessary. When weighing the pros and cons of purchasing a used car with more years and higher miles, customers of independent dealers are concerned with not only price, but what the dealership can offer them at a reasonable price that others don’t, such as consumer protection products. These consumers may not be able to afford a traditional vehicle service contract, but they are still very interested in purchasing mechanical breakdown protection for their vehicle.

Independent dealerships are well positioned to tap into this growing consumer market. NADA predicts 2014 used car sales to top 42 million units nationwide, setting the stage for more intense competition.

“The independent dealership segment provides EFG a strategic opportunity to take what we’ve done extremely well for 37 years and immediately answer a rapidly-growing demand in the market,” said John Pappanastos, President and CEO of EFG Companies.  “Our products give independent dealers a more valuable toolkit to address each customer’s specific need when it comes to taking care of their vehicle and protecting their pocketbook.  We also act as a very strong extension of the dealer’s customer service through our in-house claims administration group that operates according to above-industry standard target SLAs.  This translates to enhanced customer retention and loyalty.”

Bill Gusa, Managing Partner of Olympic Dealer Marketing, worked closely with EFG on the development of Best ReGuards. “As supply is expected to outpace demand in 2014, our independent dealership partners needed to expand their product portfolio,” Gusa said. “Considering how few independent dealers have the access to provide F&I products, our desire was to give our clients the opportunity to increase their product portfolio and generate greater profits by providing a quality consumer protection product.”

EFG plans to launch a Best ReGuards limited powertrain warranty companion product in the second half of 2014.

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EFG Companies F&I Featured

EFG and AFG Partner to Expand Balloon Financing with DrivingSense™

Hybrid financing product gives consumers the protection of a lease, lower fees and a title that is in their name.

EFG Companies, the innovators behind the award-winning Hyundai Assurance program, announced today a strategic partnership with Auto Financial Group to increase market share for its DrivingSense™ program, a highly relevant, post-recession consumer finance product.

DrivingSense is a residual based, walk-away, balloon loan program that provides consumers a more friendly financing option with no down-payment and lower monthly payments. Currently, residual-based financing accounts for almost 30 percent of the new vehicle market. While consumers look to their financial institutions for the best rates on conventional loans, they frequently choose captives or other competitors for residual-based financing options. With DrivingSense, financial institutions are now positioned to recapture those consumers’ loans by providing a credible residual-based financing option from a source they trust.

“Lenders and Dealerships are hungry for new financing programs that increase sales and loan volume by directly addressing the consumer needs” said Stephen Roennau, Vice President, EFG Companies’ Transcend Group. “With that in mind, DrivingSense is primed to tip the market.

To understand DrivingSense, consider the difference between balloon financing and leasing. With balloon financing, consumers can make a very low down payment, or have no down payment at all. They get the vehicle’s title in their name and agree to make small monthly payments over the term of the loan. The last payment, known as the balloon or residual, is one large payment at the end of the term that pays off the loan.

Consumers typically have three options prior to loan maturity and at loan maturity:

  • trade in the vehicle, i.e. sell it and use the vehicles end-of-term value to pay off the loan;
  • refinance the vehicle; or,
  • pay the vehicle off and keep it.

DrivingSense provides the same protection to the consumer as a lease with the guaranteed future value, but the vehicle is titled in the consumer’s name giving them the tax benefits of balloon financing. DrivingSense also has lower fees than traditional leasing and lower costs for excess mileage.

“We approached EFG not only because of their demonstrated success in implementing distinctive market-differentiation programs and customized training, but also because of their strong engagement model,” said Richard Epley, CEO, Auto Financial Group. “EFG understands how to successfully position game-changing products and penetrate the market aggressively.”

AFG is partnering with EFG to provide ongoing training for their lenders and their indirect dealership clients to increase their market-share in residual-based lending with DrivivingSense. EFG is developing a behaviorally-based guided-discovery training curriculum for market implementation. The hands on training includes how to present the DrivingSense option to consumers and how to quote payments using AFG’s user-friendly customized web-based CarBuilder calculator.

DrivingSense is available on both new and pre-owned vehicles up to 4 years old. With mileage terms of 12,000, 15,000 and 18,000 and finance terms of 24-72 months DrivingSense will make sense to any consumer!

Contact EFG to find out more about this ground-breaking partnership!