Training » 5 Critical Success Factors » Dedicated Personnel

5 Critical Success Factors:

1. Dedicated Personnel


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The first of those fundamental of Subprime is having a department or personnel dedicated to sub-prime and the proper process for handling those customers.

I state as a fundamental that dealerships should have a dedicated sub-prime department or personnel. What that will look like will vary from dealership to dealership depending upon a number of factors including: training, maturity of your sales force, the percentage of sub-prime sales to total sales and more. In dealerships with large sub-prime volume, the sub-prime effort may involve the entire sales and finance staff. In other dealerships, it may be as simple as one individual working with a dedicated number of sales reps. What does not vary is that these customers should be handled through a different sales process than prime customers. For most dealerships, that will mean having a separate department or dedicated staff to handle sub-prime.

Let’s first consider the market surrounding your dealership and why you should even focus on these fundamentals. Within a 30 mile radius of most dealerships, an analysis of credit scores shows that approximately 50% of the individuals have credit scores of 640 or less. Simply put, the market share is too large and profitable for most dealerships to ignore. Because of the dispersion of credit scores today, practically every dealership is to some degree in the sub-prime business. The degree to which your dealership is involved might be best defined by the following questions. Are you “re-actively” or “pro-actively” pursuing sub-prime business and how are you handling those customers? Re-active business comes from lot traffic. For most dealerships, a significant percentage of their lot traffic is sub-prime. To be pro-active means that you advertise for or pursue sub-prime customers. The challenge I’ve found many dealerships have, particularly those who only re-actively or minimally pursue sub-prime, is that they work their sub-prime prospects incorrectly.
  • Properly sold, sub-prime business is handled completely backwards from your prime business and should be separated from it.
Our normal habit in the sales process is to meet, greet, ask discovery questions, engage our prospects in a product decision and then discuss price and financing. If those prospects happen to fall in the half of our population that is “prime” we have acted correctly. If however, they fall in that percentage of business that is “sub-prime”, we have not. Prime prospects should be engaged in product decisions early in the sales process. Sub-prime prospects should not. Sub-prime prospects should first be engaged and then kept in a credit decision until the appropriate time comes to move them to a product decision. Once you’ve worked with a lender to secure an approval and payment call, then direct your prospects to “the vehicles the finance company has approved for your budget”.

Two primary problems arise if we fail to follow this procedure. First our closing ratio with sub-prime prospects suffers. How many times have you had a prospect land on a vehicle only later to discover they are credit challenged? You may be successful in later getting them approved with a sub-prime lender, but the problem arises when the payment call structures for a used program vehicle and not the SUV they have landed on. It is difficult to move that customer once their expectation is set. Landing sub-prime prospects on “finance appropriate” vehicles first will improve your closing ratio. A second problem arising from pre-maturely allowing sub-prime prospects to engage in product decisions is that gross profit will suffer. Often just to make a sale, we force ourselves into taking a small gross deals just to keep the customer from buying elsewhere. By working our prospects first through the credit process and then engaging in “finance appropriate” product decisions, we will also increase gross profit.

To properly handle your lot traffic, have your sales reps ask a few discovery questions before engaging prospects in product decisions. “Did you come in today looking for new or used vehicle?... Is there a vehicle you plan to trade in? Do you own that vehicle outright or are you still making payments on it? Who is that vehicle financed with?... Had you planned to pay cash for your new vehicle or would you be interested in looking at some of our finance plans?... Have you previously financed an automobile? Who was that with?” If during this discovery process, the name of a sub-prime lender or other information comes up suggesting this customer may be sub-prime, your sales staff should be trained to immediately move the customer into a finance process. “Mr. Customer can I make a suggestion? To save you time, I’ve found that it is helpful to first get some information that will allow our finance department to begin the process of securing your financing. Why don’t we go inside, get that done, and then begin the process of selecting your vehicle?” However you choose to redirect the prospect, it is important to begin working with credit first.

Managing your pro-active sub-prime traffic can even be more focused. In a perfect world, your sub-prime customers would walk up to the curb, present their credit application and permission to pull a bureau and then patiently wait while your trained staff began working with them through a credit process. That simply doesn’t happen if by your advertising you create additional lot traffic. Through use of toll-free numbers and application services you are able to come very close to a perfect solution. In most cases, I suggest advertising those toll free numbers blindly, where your dealership is not mentioned by name. This engages the customer only in a credit decision. If you choose to advertise your dealership by name, you by default engage prospects in a product decision. Another benefit of advertising blindly is the ability to expand your market share. If you advertise your dealership/franchise by name, some prospects who perceive themselves to be loyal customers of another make may never call. Advertising blindly will capture those prospects. Finally by using toll free numbers you are able to direct prospects directly to your staff that is trained and prepared to work sub-prime customers. To excel in sub-prime sales necessitates working your prospects “backwards” through the sales cycle: meet, greet, discovery and credit. Credit and the customer’s capacity to repay a loan will determine a payment call which translates to “finance appropriate” product decisions. For most sales teams, unless very well trained and practiced, it is difficult to change hats midstream and move effectively from “forward” to “backward” selling. That difficulty, the desire to improve closing ratio and maximize gross profit, along with other disciplines unique to sub-prime are reasons why most dealerships benefit from having a separate department or dedicated staff to handle sub-prime. Remember these fundamentals are building blocks. Just like proper blocking and tackling will help a team excel in football, perfecting these basics will help your team excel in sub-prime sales.


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