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Dealership Training Economy

Make More Money on Returning Lessees

Contributing Author: Stephen RoennauRe-stating the obvious

  • Consumers held on to their cars much longer than normal during the recession or simply did without.
  • Post-recession consumers slowly came back into the car market. However, they were much more wary. Leases and used cars did better on average than new-vehicle sales.
  • Now, those lease terms are coming to a close, and dealerships can expect an influx of returning lessees, whom they can turn into new-vehicle owners.

What this means for 2014

According to “Automotive News”, General Motors saw those lessees start returning in November and they have only continued to grow.

Returning lessees pose a huge opportunity for dealership profit in 2014. Why? Because you’ve already done the legwork.

You’ve already built an ongoing relationship, bringing these consumers back to the dealership on a regular basis. Lease customers are on the hook, now you just have to reel them in with superior service and products.

What do we mean by service?

First there’s the follow-up. Evaluate your contact strategy for this audience. When do you begin contacting them? What is the contact frequency? What are your messages for this audience?

Remember, you don’t want to spam them, but you do want to stay top-of-mind. This is most easily done with your content rather than frequency. For example, many people, especially first-time lease customers, do not fully understand the process for lease-end. Educating them on the available options and inventory can go a long way toward influencing their purchase decisions.

You can also use your email communication to invite the customer in for a free trade appraisal to see how well the vehicle is holding its value. Simply getting them back to the dealership dramatically increases the chance of retaining lease customers. Remember, the customer who leased three years ago may be able to take advantage of better options. Many captives have stronger lease offers. Residual values in general have increased and the market has stabilized. Also, some lease programs waive the acquisition fee or security deposit on a re-lease or have other incentives for loyal lease customers. All these things add up to a greater opportunity for you to retain that customer.

In addition, it’s important to evaluate their experience in the showroom. You already have a database filled with information about their needs.

  • You know the current make and model of their car.
  • You know how many miles they drive.
  • You know their service history.

With these data points in mind, you can do much more than show them the new version of their car. You can offer suggestions on other makes, products, or financing options that might fit their needs better. When they come in, how prepared is your sales staff to meet their needs and exceed their expectations?

What about those products?

As with every customer in your dealership, returning lessees want the most for their money. After all, that’s the whole reason they chose to lease in the first place. Now is the perfect time to re-evaluate your F&I products and your provider. So, talk to your service advisers. They can tell you how quickly claims are processed, whether your admin is professional and courteous, and how many claims are approved. Those F&I products not only reflect back on you. Outside of the upsell opportunity, they can also help or harm your service drive, depending on how much red tape your service advisors deal with on a daily basis.

EFG Companies knows the importance of customer service combined with superior products. Everything from training to product administration has a single goal in mind – to be your partner for go-to-market success. Our agile product innovation and customization is backed by unmatched partner engagement and industry leading claims administration.

Make EFG your key to driving business. Contact us today.

Categories
Dealership Training EFG Companies F&I

CFPB Crackdown – What You Need to be Compliant

Contributing Author: John StephensIn December 2013, the Consumer Protection Financial Bureau’s first blow to the automotive financing industry hit – and it hit hard. After an in-depth investigation, the CFPB ordered Ally Financial to pay $80 million in consumer restitution and another $18 million in civil penalties for having practices that made discrimination possible in their partner dealerships.

According to some consumer advocates, those dealership partners could now be sued by the same consumer’s receiving a refund check from Ally Financial. Why? Consider this situation.

Sally checks the mail one day and receives a letter stating that the lender backing her auto loan was forced to reimburse her and others who were discriminated against when purchasing their vehicle. She now has proof that the dealership where she purchased her vehicle employed discriminatory practices against her. With hard proof in the form of a check from Ally Financial, she contacts a lawyer and puts together a class action with all the other consumers the dealership allegedly discriminated against.

Now, another blow is about to hit. A consumer advocacy group in California is trying to place a proposal on the state’s November 2014 ballot that would prohibit dealerships from marking up interest rates on their auto loans. If this bill passes, it could provide the tipping point for lenders to change their policies and disallow dealerships from increasing their interest rates.

With the industry avidly watching to see how this will play out, now is the time to ensure the highest standard of compliance practices in your dealership. So ask yourself:

Do you have a compliance officer at your dealership? A compliance officer takes ownership of dealership compliance. They are responsible for the compliance strategy or business plan, determining holes, and the best and most efficient way to plug those holes.

How often do you provide compliance training? Automotive retail has always been a high turnover industry. Compliance training needs to be at the forefront as you add new employees, promote, and add new rooftops, etc. If your people don’t know the ever-fluctuating rules, how can they ensure they are abiding by them?

Do you perform regular compliance audits? By performing regular audits, you can be on top off inconsistencies within your dealership and address them before they get out of hand.

With this highly regulated industry, compliance is nothing new. However, the vague guidelines from the CFPB leave a lot to be desired in forming hard- and-fast rules. The best thing to do is consult with your legal counsel to ensure that your compliance strategy incorporates practices relative to the CFPB and general discriminatory laws. Some examples of these practices include:

  • Establish a published internal and external audit process that includes specific guidelines on the consequences of compliance violation.
  • Publish a schedule of training for both new and veteran employees to ensure all personnel are aware of the established guidelines.
  • Provide evidence of proper consumer disclosure.
  • Establish a “code of ethics” reviewing the policies and procedures signed off by all employees and new hires.

In addition, it is equally important to conduct thorough due diligence that all service providers, not just lenders, understand and are capable of complying with all state and federal laws by:

  • requesting and reviewing the service provider’s policies, procedures, internal controls, and training materials to ensure that the service provider conducts appropriate training and oversight of employees or agents who have consumer contact or compliance responsibilities;
  • ensuring the contract with the service provider includes clear expectations about compliance, as well as appropriate and enforceable consequences for violating any compliance-related responsibilities;
  • establishing internal controls and on-going monitoring to determine whether the service provider is in compliance; and,
  • taking prompt action to address any problems identified through the monitoring process.

With over 36 years in innovating and implementing proven go-to-market strategies in the dealership space, EFG Companies has made compliance a core facet of their business, influencing everything from product development to claims and client support.

Find out how compliance training from EFG can fortify your business to thrive while remaining compliant with current and future regulations.

Categories
Agency Services EFG Companies

3 Tips to Insulate Your Agency from Dealership Consolidation

Contributing Author: Paul RobersOver the past three years, market consolidation in the retail automotive space has been a trend that has continued to gain momentum.  For example, in 2011, Penske Automotive owned 166 franchises in the U.S. and today, that number has grown to 173. Large, privately-held dealership groups have rapidly acquired rooftops across the country throughout 2012 and 2013. As the economy continues to recover and people return to purchasing cars, it stands to reason that dealership consolidation will continue to escalate.

As a dealership agent, you are probably focused on what this means for you. You have probably felt the sting, or know someone who has, when one of your dealership clients gets bought out by one of the large dealership groups. Unless, that dealership group uses your services, you automatically lose that business.

It might be tempting to fall prey to the idea that there’s nothing you can do about this. You have no control over dealership consolidation. But, there is something you can do. In fact, there are three definitive actions that can make a difference.

Diversification

While it’s true you have no control over which dealerships groups like AutoNation, Penske or any of the other large dealership group take over. You do have control over your own business. So how do you insulate your business from consolidation? It’s simple. Always be diversifying.

When business is soaring, it’s easy to sit back and enjoy the fruits of your labor. However, it’s better to always assume this time will end all too quickly. Don’t get tied down with simply servicing your clients. Every client has a lifespan. While servicing your clients and maintaining relationships is important, it’s equally important to always work to expand your business.

Network

You’ve secured a client and established relationships with the top brass. However, while the dealer principal and GM are important, lower-level employees could provide inroads to future business. While servicing that client, you also need to fortify relationships with other sales managers, F&I directors, and general employees. You never know when lower level employees will become decision-makers and you want to have positive relationships built up by the time they reach the top. In addition, it’s important to maintain contacts when employees leave their current dealership for those same reasons.

Be a Problem Solver

You do this every day for your current clients. Why not do it for prospects? When researching prospective clients, do your due diligence in identifying areas where they can improve operations and incorporate them into your presentation. Mystery shop their store. Review their website. Submit an online inquiry and evaluate their follow-up practices. Look at their online reviews. Determine the strength of their social media presence. When you call them, use your research and ideas to have something interesting to say. The dealership personnel will be more intrigued to see what you have to offer and how you can make them more successful.

Dealership consolidation will only continue to grow. The best way to fortify your business is to focus on your expansion opportunities, as well. At EFG Companies, we have over 36 years of experience servicing agents and dealerships across the U.S.  With our industry insight and client engagement, our agent clients receive valuable tools, insights and strategies to face their unique challenges. Unleash your growth potential with EFG. Contact us today.