Unless you or your customer is getting a refund, tax time isn’t the most joyous time of year. Except for those individuals who filed for bankruptcy and now have trustees holding their money to pay off debts, the vast majority of special-finance customers have historically received tax refunds. That’s why it’s critical you prepare now if you hope to cash in on what amounts to special finance’s version of Cash for Clunkers.

Considering the economic times we’ve experienced, the demographics of our customers will be a little different this year. “I think this tax season could be one of the most difficult and competitive years yet for subprime,” said Dustin Jones, finance director of Boch Honda in Boston. “Customer fear of being rejected for an auto loan is at an all-time high. Now, more than ever, families across America need their tax refund checks.”

And if you’ve been in the business for any length of time, you know that tax season always seems to come earlier with each passing year. A big driver of that is technology, which is why dealers like B.A. Nerison, owner of Wheel City Auto Sales in Sioux Falls, S.D., are getting an earlier start on tax season this time around.

“Be prepared, because it will come and go fast,” he said. “Customers are getting money sooner (via electronic filing). No longer can we count on two solid months of steady tax money.”

It’s also clear that dealers will have to compete for how that tax money is used. “Customers that are unemployed or have fallen behind on their bills will have their money spent before they even get it,” noted Nerison.

What that means is dealers will need to be a little smarter about their preparations than in past years. Consumers are struggling and dealers will have to compete with the perception that credit isn’t available.

“Preparations for this year’s tax season really started back at the end of September for us,” said Boch Honda’s Jones. “We really want to work on building the customer’s confidence and creating awareness that lending options are available. Our company is focused on meeting the customers’ needs.”

Marketing With a New Spin

Marketing is obviously an integral part of a successful tax season, as customers need to know that you are willing to work with them. However, Jones said dealers need to be cognizant of the stresses felt by consumers in this economic climate.

“Through our advertising, we want to portray that we are not looking to seize the customer’s refund check,” he said. “Instead, we want them to know that we can help them purchase a vehicle utilizing as little of the refund as possible. Taking more of a community service approach in aiding them in their purchase of a vehicle is our goal.”

It’s also important to have a firm understanding of a customer’s situation so you can properly communicate with him or her. Simply put, stress causes customers to lose sight of their goal, and in this scenario, their goal is to get a car. Dealerships like Lindsey Ford in the Washington, D.C., area, not only understand this reality, but they make sure their marketing plans reflect that awareness.

“We are taking a different approach in our advertising,” said Mark Law, finance director for the dealership. “For example, instead of doing a 20,000 piece mailer, we are mailing to 10,000 people twice to emphasize our message. Customers are embarrassed of their credit situation, especially people who have never had bad credit. You need to earn their trust first and we feel like that is best accomplished with a consistent message that we are here to help.”

Dealers also should consider other marketing strategies and mediums to relay their message, such as mining your customer database to create an e-mail campaign. Not only can you reach a large number of your customers, but you can do so rather inexpensively. Additionally, companies that offer these types of services will email your customers several times to ensure a good response, so take advantage of what’s available.

Going to the Source

Another good strategy is to locate every tax service company within proximity of your dealership. Just make sure to have your fliers or brochures available so they can distribute those to their customers. And if bird dogs are allowed in your state, make sure to offer something to these companies for referring customers to you. This is a strategy that Al Serra Chevrolet in Colorado Spring, Colo., has employed for years.

“We set up referral sources with the local Jackson Hewitt, Liberty

Tax Service, and H&R Block, as well as local independent tax preparation companies,” said A.J. Ager, the dealership’s finance director. “We pay their tax preparers commissions whenever they can get one of their customers to visit us.”

Another good marketing idea is to sign up with an online tax preparation company. They usually have marketing materials they can provide you, as they make their money off the refunds they prepare. That means the cost to the dealer is usually minimal.

“We are signing up for TaxMax so we can offer customers that walk in the door or are in our database a refund service,” said Ager. “Plus, they have a program that allows us to file a customer’s refund based on their last check stub of the year, and they have great marketing signs that we put up all over our lot.”

Cindy Christensen, general manager at Herbie’s Auto Sales in Greeley, Colo., said marketing to today’s troubled consumer may require a bigger commitment on the part of dealers. “We offer to match customers’ down payments up to $1,000,” she said. “We have a lot of repeat and referral business, and we make sure that our database of customers knows that we are willing to work with them. The cash incentive is our way of showing them our commitment to them.”

Playing the Inventory Game

Equally important to one’s marketing efforts is one’s strategy for attaining the proper inventory. This is an area that you need to start planning for before the first of the year. Auction prices drop every year during late November and December, but spike back up in January as dealers decrease their inventories for year-end. Smart special-finance dealers will capitalize on this so they can load up with inventory that they will own back of left book.

“We start looking for tax season inventory in December when nobody else is looking for cars,” said Al Serra Chevrolet’s Ager. “This usually translates into us owning cars for a $1,000 or so less than if we wait until January.”

Understanding that money is made when vehicles are purchased, not sold, Al Serra Chevrolet scours Websites like Craigslist for people looking to sell their cars for “Christmas cash.” “This is especially helpful in stocking up our buy-here, pay-here inventory,” Ager said.

Eric Fishbein, special finance director for Conicelli Auto Group in Pennsylvania, agrees that inventory is a huge part of a dealer’s success during tax season. “It is important to stock a good selection of inexpensive vehicles for your tougher deals,” he said. “Don’t forget $3,000 down gives you 30 percent equity on a $10,000 car, but only 15 percent on a $20,000 car.”

Firm Up Lender Relations

The last critical ingredient to your tax season strategy is making sure your lender relationships are intact and healthy. The key is to have a proper lender spread, because it’s important to have different lenders that buy all tiers of credit (prime, near prime, subprime, equity and niches) so you can capitalize on every opportunity that walks through the doors.

Tax season is also a good time to evaluate your lenders and contact them to make sure your portfolios are performing well. In fact, calling your buyers to ask them about your portfolio delinquencies will go a long way in strengthening your relationship. And relationship is the word to remember, because you need your lender and they need you.

Especially with the limited capital in the current market, dealers who have strong portfolios will be the ones who get favors. That’s why it’s important that dealers also consider taking buyers out to lunch for a change. Remember, expense accounts for these bank reps have decreased considerably, so why not take them out for a bite to eat and solidify those relationships.

“Tax season is an important time of year to make sure your lender relationships are strong because you’ll be sending them an increase in business and you’ll be asking for a few more favors to get harder deals done,” noted Marc Danner, finance manager at the Rhode Island-based Tracy Chevrolet.

For those dealers in the dealer controlled finance business, it is especially crucial that one sticks to his or her underwriting fundamentals. “We will stretch on deals during tax time if the customer has a big down payment, but we try to minimize the exceptions,” said Wheel City’s Nerison. “In the past, these decisions have led to increased delinquencies. We manage these deals in collections with a shorter leash. If you do have to repo one, at least the bigger down payment decreases the loss we take.”

Tax season has always been a great time to be in the special finance business, especially if you don’t mind working long hours. It can be a big increase in business. And in this economy, we all need to take advantage of every opportunity that comes along.

Did You Know?

PREPARING FOR A SUCCESSFUL tax season is definitely important, but did you know there’s a federal incentive for your customer to buy now. Due to the American Recovery and Reinvestment Act of 2009, customers who purchased new vehicles may be entitled to a special tax deduction when they file their 2009 federal tax returns next year. Below are seven facts you need to share with your customer:

1. State and local sales taxes paid on up to $49,500 of the purchase price of qualifying vehicles are deductible.
2. Qualified motor vehicles generally include new (not used) cars, light trucks, motor homes and motorcycles.
3. Purchases must occur after Feb. 16, 2009 and before Jan. 1, 2010.
4. This deduction can be taken regardless of whether or not you itemize other deductions on your tax return.
5. Taxpayers will claim this deduction when fi ling their 2009 federal income tax return next year.
6. The amount of the deduction is phased out for taxpayers whose modifi ed adjusted gross income is between $125,000 and $135,000 for individual filers and between $250,000 and $260,000 for joint filers.
7. The deduction may not be taken on 2008 tax returns.

The agenda for the seminars will include interactive presentations of how to properly use the most common social media marketing tools. The latest trends and technology will also be discussed, as well as social media etiquette, search engine marketing, popular Web design tools and the viral power of video.

“Social media is growing at a staggering pace,” said David Johnson, director of e-commerce at NGDS. “The underlying principles are similar to what car dealers have tried to do for years but on an exponential scale. Social media is all about making friends and building relationships. The dealership that embraces the use of social media and uses it correctly will take market share from their competitors at an unprecedented rate.”

As a bonus, dealers in attendance will receive a copy of Johnson’s book, Joining the Conversation: A Dealership’s Guide to Building Business Through Social Media.

“We are extremely excited about the program that David Johnson and his team have put together,” said NGDS CEO Rob Hagen. “David, like everyone we recruit to our company, has spent the majority of his career working inside a dealership. David has spent the past 10 years selling cars, running a BDC and Internet department plus consulting with other car dealers. He has catered his presentation around the specific needs of every profit source inside a dealership including finance departments and service departments.”

Johnson cautioned dealers not to jump into social media unprepared or risk souring customer relations. “The key is to build relationships first before you pitch your product,” he said. “People like to do business with people they know, like and trust. Once you have gained their trust, then you can offer your products. Otherwise, people will not be interested in what you have to say and label you as a spammer.”

NGDS has seminars planned for Houston, Los Angeles, Orlando (immediately prior to NADA 2010), Albuquerque, Atlanta, Memphis and Las Vegas. For more information, visit http://www.nextgendealer.com/index/seminar.

When was the last time you looked at what is selling for you on your used car lot? I don’t mean what sold last week, what used cars have sold for you over the last year or two. A report to show you this is available in any DMS. Pull that report and compare it to your current inventory. You may be a little scared!

With turnover the way it is in our industry, every used car manager is going to have his “favorites” that he believes sells better than others. It is true having several program Camry’s at a Toyota store works well but loading up a Ford lot with them is not a smart proposition.

Pull this report and look for trends. Look what the public comes to your lot to buy.  Rule out the one or two sales of a given model. When times are good, you can take a chance a “cream puff’ that gets traded in.

Look for models that you have consistently sold month over month. This is what you want to have on your lot. Used car prices are fluctuating so fast these days, make sure to have vehicles that will turn and earn!

Also, look at how long it took these models to sell on average. Try to stock inventory that has a fast turn over.

Look at average miles and ACV of what has sold for you. This will all give you valuable information on what your inventory should look like.

When you are done analyzing this information, you should be able to put together a virtual inventory that works best for your store. Go compare that to your current inventory and see how many units you have that do not fit into your ideal inventory model.

Soon, new car supply will catch up with demand and then demand for used cars will decrease causing values to decrease. Don’t be kept with a lot full of water!

Think efficiency and play to the majority in this economy to maximize your profits. When things get better in the economy, then you can take a chance on that used Porsche on your Ford lot because you think it will increase your drive by traffic.

Boston, Massachusetts- November 13th 2009 Next Generation Dealer Services (NextGenDealer.com) announced today  that they have acquired the forward thinking TheNACSP.com. TheNACSP.com is an association of car people, each with their own “blog style” website built on a platform that was designed from the ground up to be search engine friendly.

TheNACSP.com was founded by Scott Sanders, a former Internet sales manager, who was always thinking of ways of generating incoming leads. Building and maintaining a website is costly, while hiring a professional SEO expert was out of the question due to price, Scott had the idea of creating a website that many could share in the expense while still giving each salesperson their own website, and TheNACSP.com was born.

Wanting to take the vision a dozen steps further Next Generation Dealer Services have acquired TheNACSP.com with the intention of making the site the go to place to buy a car. Propelled by the notion that people would rather buy from people Next Generation Dealer has a plan in place for national exposure using national radio and social media tactics that they have pioneered.

“We are going to make this huge!” Says Rob Hagen, CEO of Next Generation Dealer Services. “With the direction the internet has taken, it only makes sense that  people would jump at the idea of getting to know their car salesperson before they ever stepped foot at a car dealership. What we will be doing is building trust by being transparent, letting the customer see who the salesperson is before they even contact them.”

“This is the 21st Century,” Rob goes on to say. “We want everything now, we no longer have to look for news because the news comes to us. Searching for a car online can be daunting because no longer do you have one “lot” to look at you have hundreds and thousands of them. TheNACSP.com will give the customer an avenue where they can have a professional do all the work for them.”

While you can still go to TheNACSP.com and sign up, Next Generation Dealer Services will be giving the site a facelift as well as moving the domain over to a new URL.

Rob Hagen
Phone: (225) 938-0993
Email: RobH@NextGenDealer.com
Web: NextGenDealer.com

Let me pick your brain on a couple of things

With BDC shit

How do you feel about auto responders?

How often do you follow up on internet leads?

How much do you like templates?

Here you go AJ:

How do you feel about auto responders? It is an absolute necessity. Customers are looking for instant gratification. Now it is important to have as much information in your emails to be written in HTML so the auto responders can be as personal as possible. We have actually have a guy on staff that does copyright work and then we turn them over to out IT guy to write the HTML for our clients.

How often do you follow up on internet leads? You call them 3 times per day for the first three days (only leave one voicemail), 2 times per day for the next four days, 1 time per days for the next 8 days, every other day till day 45, and then every third day until day 90. Then, you want to email them every day for the first seven days (have different messages each time) and then every third day.

Here are some stats from when I was in Houston. I wanted to know how much work it took my BDC to get in a customer that eventually sold. I studied about 300 sold deals to gather this information. It was very interesting.

17.6 days old – average age of a lead when they walked in our dealership

9.2 phone calls – average number of calls it took to get someone in the dealership

4.9 emails – average number of personalized (does not include auto responders) emails it took to get someone to visit the dealership

22% – percent of sold customers that started off with only an email address and no phone number….some people like to communicate by email first and you have to earn their trust before they will take the next step

One other thing about this study, it was only information on sold customers but that was not the only thing I tracked. It is important to track contact, appointments, shows, and sold to get a full picture. If any number drops, you know what your team needs to work on.

Contact rate gets low – not enough dials by the BDC….they need to work harder

Appointment rate low – not asking enough, not demonstrating a sense of urgency, not controlling the conversation, maybe losing customers with tone…this is a broad area. I have a report that I make the BDR’s fill out if they have a low appointment rate until it returns to standard. The report has them fill out the reasons an appointment was not set anytime they make contact but no appointment. You will start to notice trends and know where you need to train.

Show rate low – not setting real appointments, not answering any of the customers concerns (many scripts are designed to keep the customer in the dark and this will hurt your show rate….have a script that asks for customer participation and train your people to answer the customers concerns), not resetting appointments (if a customer is not there in an hour from the time they are supposed to be, BDR’s need to be calling them. REAL IMPORTANT: They need to call and not badger the customer by asking why they didn’t show. They need to call and say “I am so sorry I was busy but I wanted to call you up and see how you are enjoying your new ride?” This customer who was scared of being turned down is now regretting now showing since it is obvious by that statement that your dealership gets a lot of people in cars. They will reset appointments and show.), asking for too many stips (this will overwhelm people….most information can be found online these days)

Sale rate low – this not a BDC thing but it is a way to manage your overall department

How much do you like templates? Templates are okay if they are written right. A lot of them are not and use a lot of words that trigger a negative subconscious response from the customer….for instance, every time you say dealership, customers subconscious travels back to past negative car buying experiences of theirs or friends…You need to eliminate certain words to keep people’s minds in Present Time. This is the only way they can receive the information you are relaying to them. Another example, ever hear a commercial for Ditech? They used to always say we can have an answer back for you in an hour…..what does this mean? That there is a possibility you could be turned down….Listen to their commercials now, they say we will have your approval request back to you in an hour….This shit works!!!!!!

http://specialfinancecoach.com/blog1/my-hero/

This will be my first Veterans Day since my Dad’s passing. He passed away fittingly on Memorial Day this year. It was my first experience in losing someone close to me to Cancer. It is such a terrible disease and I pray that one day a cure is found.

I haven’t wanted to talk about his passing almost as if I didn’t say anything, it didn’t happen. This changed recently. I met a gentleman named Chris Purdy at a book signing. He was signing his book named The September Effect. In hearing the description of the book and the obvious passion Chris had for it, I was moved to purchase it immediately.

The September Effect is a story about his Dad’s struggle with cancer and the subsequent emotional struggles Chris went through in the years after his death. I enjoyed reading every page and it made me realize the feelings I am having are normal.

What can’t be explained or rationalized are the events that recently happened at Fort Hood. Our soldiers prepare and understand the possibilities of being injured or killed in a military zone but to be gun downed by someone in the same uniform on their home base. I know it will take a long time but hope the men and women of our armed forces that were affected by this can get their lives back together.

Every day we enjoyed freedoms that are protected by our military. On this day, please remember to be appreciative and thank a soldier.

This year, I won’t have the opportunity to call my father and thank him personally but I know he is still listening.

Thank you Dad for your service to our country and God bless America!

Happy Veterans Day!

I learned a lot at this show but I must say that the thing that sticks out the most to me is how the internet has changed the car business. Having spent 17 years in a dealership and having the concept of the car business being a “today” business pounded into my head, I was astonished to hear research that a customers buying cycle was as long as six months now.

Here is how a typical customer buying cycle goes these days. First, they are hungry for information to help them make a decision on what vehicle are right for them and their family. At this point, a customer is not ready to look for price or engage with a dealership. They want information on crash tests, equipment packages, durability ratings, etc. For this reason, microsites have gained a lot of popularity. Microsites are designed to be informational portals that are a natural bridge to the dealership when the customer reaches the second step of the buying cycle.

Second step is when a customer is interested in looking at how much their purchase is going to cost them. They want to know specials and rebates that are available. At this stage, the microsites lead the customer to the dealer’s website so they can research this information.

The next step a customer can one of two ways. They could submit a lead and request information from the dealer on price or availability or they could just visit the dealership without making contact online. It is estimated that roughly 75% of customers won’t submit a lead but instead will visit the dealership. This is why a dealer’s website has to be up to date and inviting to a customer. People like a website that is personal.

A great example of that is Boch Toyota (http://www.boch.com/). Boch is one of if not the largest Toyota dealer in the country. Their website tells you a lot about Ernie Boch besides he wants to sell you a car. It even has games and invites a customer to not only browse the site but also stay for awhile and enjoy themselves.

In my next installment, I will tell you what was said about Social Media Marketing.

Stacy Alford, founder of Next Generation Dealer Services in Baton Rouge, La., discovered these products this year at NADA and has seen them grow tremendously. Mr. Alford said, “Now is the time for everyone in America to tighten their belt and I wanted to find ways to save dealers money so that I could share in their future success!”

The first of these products are internet leads that come directly from the wholesale source for third party internet leads. “We have worked out a deal to allow dealers to pay wholesale for leads they are already buying while saving them as much as 40% per lead. Dealers have been using this savings to buy more leads or just increasing their return on their investments,” says Mr. Alford.

Next, NGDS has partnered with a credit bureau reseller to save money on dealer’s bureau costs plus provide them with a product that monitors customers turn downs until their credit has improved enough to be able to get approved. “This product really excites me because it can save dealers money and help them sell more cars! Plus, if a dealer gets both products, they receive Red Flag for free!”

Lastly, NGDS has agreed to offer their dealers a bi monthly payment program to offer customers that does not cost a dealer anything to get involved. “Credit unions have been doing this for years to help customers gain equity,” Alford said. “With negative equity being such a huge factor facing dealers today plus this is an opportunity for them to make a little more money and the finance manager to make some as well, this is an absolute win – win!”

Now is the time to think outside the box and save where you can but also increase sales and profits at the same time!

Stacy Alford can be reached at 225-324-9384.

Hi, my name is Rob Hagen, the Special Finance Coach and CEO of Next Generation Dealer Services (nextgendealer.com). We have purchased a handful of tickets for dealers to attend as our guests. The last year has been tough for dealer everywhere and this is our way of lending a hand. A Web year is approximately one seventh of a calendar year (roughly 52 days) and the car business is without a doubt headed to the internet! Every day you are not keeping up with the latest technology, you are falling behind your competition.

GE once did a study that said companies get a 42 to 1 return on investment in money spent on training. In Orlando, there will be training for every aspect of a sales department! Sales are starting to improve so why not learn from some of the industries greatest minds to prepare you for the rebirth of the car business. Here is a link to the conference information:

http://www.fi-conference.com/Default.cfm

I will be putting on a one day seminar in conjunction with the Special Finance Institute that will be covering the following:

• Understanding the mindset of the “new” special finance customer
• What does the future hold for special finance
• What lenders are still buying
• Tips for “farming” future business with customers that can’t buy today
• Lead handling processes to maximize your ROI
• Understanding today ROI and tomorrow ROI
• Where to get good leads
• The impact of Web2.0 on our business
• How microsites get you positioned properly
• Working your customer database to uncover sales treasure
• Marketing for 25 deals a month on up to 100 and beyond
• BHPH 101 – Fundamentals for the dealer considering starting a BHPH department
• Finding niche deals with pre discharged BK customers (learn how I have averaged $4672 per deal on these customers over the last seven years….hint – no negative equity!!!!!!) and military personnel
• And much, much more!!!

There will be lenders in attendance for you to meet and ask questions as well as numerous successful dealers to network with and share experiences.

These passes will be first come first serve so put it on your calendar now and call me at 225-938-0993 or email me at robh@nextgendealer.com to get you registered as our guest.

Internet leads can be frustrating, but there can be hidden treasures in each one. Rob Hagen goes on a digging expedition, and shows you why there is no such thing as a bad lead.

Most dealers have a love/hate relationship with internet leads. More and more dealers are shifting their advertising dollars to the internet, but many get frustrated with the leads they get. Well, I am here to tell you that there are no bad leads, just bad processes.

Next week, I’ll dive into good practices for handling leads, but this week I want to get you thinking about return on investment (ROI).

Most dealers calculate leads ROI this way: “I bought 100 leads this month and sold eight cars for an 8 percent ROI.” That might be today’s ROI, but my question then becomes: What did you do with the other 92 people? This is where you find your hidden treasure, or as I like to call it, tomorrow’s ROI.

Every dealer in the country has spent the last year cutting staff and expenses, but in the very near future, dealers will be creating a new position: database manager or database supervisor.

Think about it. What is the single most important asset to a dealer? His database! There are car deals just waiting to happen every month from your database, but very few dealers work their database the way they should.

Let’s say you have 92 people who want to be customers of yours. How do you handle them after the first initial attempt at contact?

Internet leads don’t close as often as walk-in customers. That’s because Internet customers are in the earlier stages of the car-shopping process, and most are simply looking for information.

Credit lead customers are looking for information to see if they can get approved. New-car leads are looking for information on the newest models, incentives, and availability. They want information to help them get closer to the decision stage.

So what can be done to stay in touch with your database long term?

E-mail blasts are becoming a staple in dealer’s ad budgets. Several of my clients have experience mixed results using e-mail blasts. However, considering that there is virtually no cost associated with running such a campaign, any sales is gravy, or lagniappe (“a little something extra”), as we call it here in New Orleans.

You can do them in conjunction with manufacturer programs. If Toyota comes out with zero-percent financing on the Camry in the middle of the month, you can email anyone who came in on a Camry over the last year or two, or however long you want to go back.

If you have a business development center, a great way to work your database is by doing phone call blasts. You can purchase very inexpensive software that will call a portion of database and leave a message or play a recorded message of your choice.

A dealership newsletter is also a great way to stay in touch with your database. You can do a newsletter that incorporates every aspect of your dealership. For example, service and parts can incorporate coupons into the newsletter, sales can list new rebate programs or used car specials, and finance can offer discounts on aftermarket warranties.

Besides that, it is a great place to let people know about how your store is involved in the community. Plus, you can give special recognition to employees, salesmen, and service techs of the month.

E-mail blasts, phone blasts, and newsletters are great, but you need to make sure your database is as current as possible. When you talk to a customer either in sales, the BDC, or service, update your CRM with new phone numbers, addresses, and email addresses.

In our earlier example, you had 92 people that went unsold in the month you bought the lead. Let’s say you properly work these leads for the next year and sell one of them each month. What is your ROI now? Let’s see, add 12 sales to the original eight from the first month and now you’re looking at an ROI of 20 percent.

It’s been difficult in the current economy to look beyond the current month, but you need to focus on the big picture. You need to realize that you have a huge opportunity to find hidden treasures in every lead, but just remember it takes a little digging to find the gold.

To e-mail Rob, e-mail him at rhagen@special-finance.com.