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How to Build Your BK Business

Dealers and special finance managers are fighting for their share of the still-growing and highly profitable bankruptcy segment.

March 2018, F&I and Showroom - WebXclusive

by Denny Long

Come to the rescue of your recent bankruptcy customers by putting the proper resources and processes in place, getting them in the right vehicle, and helping them reboot their credit profiles. Photo by Tommi Ek via Flickr
Come to the rescue of your recent bankruptcy customers by putting the proper resources and processes in place, getting them in the right vehicle, and helping them reboot their credit profiles. Photo by Tommi Ek via Flickr

The recently bankrupt consumer may be the most profitable segment of the entire subprime automotive category. Of course, the dealership must have the right finance sources and the right inventory. You also must have a dedicated marketing program, an F&I director or special finance manager who understands the segment, and the willingness to work these profitable leads.

In return, you can make your investment back 10 times over. A dealer in Oklahoma recently shared with me that he spent just $2,400 in one month and made over $30,000 in gross profit on the sales his campaign generated. That’s an unbelievable return. Let’s discuss the 10 keys to a successful BK business.

1. Find the Right Partners.

Most subprime finance companies will buy a recently discharged bankruptcy, but you need at least one of a handful of specialty lenders if you’re going to target recently filed Chapter 7 bankruptcies. Here's a shortlist to get you started:

  • Prestige Financial
  • Tidewater
  • CPS (Consumer Portfolio Services)
  • AFS Acceptance
  • Avid Acceptance
  • Friendly Finance Corporation
  • 1st Investors Financial Services
  • United Auto Credit

2. Create a Marketing Program.

There are a limited number of consumers filing for Chapter 7 bankruptcy in your market. To dominate it, you need to have the right combination of tactics and a strategy that will convert the highest number of consumers into interested prospects.

3. Hit Them Early.

There are new Chapter 7 bankruptcy filings in your market every week. You must be in front of these prospects as soon as possible after their filing. You must use a program that mails every week.

4. Hit Them Often.

Many of these consumers don’t know what to do right after they file. After all, bankruptcy is typically a once-in-a-lifetime experience. Although many will respond immediately, you should also cater to those who are not sure by mailing them at least twice between their filing date and their discharge date.

5. Deliver Your Message Quickly.

You must use first-class mail to make sure your offer gets into the consumer’s hands as soon as possible. It does little good to mail every week and then use “standard” postage, which can take weeks to be delivered.

6. Make Sure Your Offer Gets Opened.

You are going to be competing with several other dealers for these consumers, so you must send something different. They won’t respond if they don’t open your offer.

7. Send a Professional-Looking Offer.

It’s amazing how many dealers send BK consumers a photocopied letter and wonder why they get little or no response. There are a limited number of these prospects. If you want to maximize your response, you must spend a little extra to create a professional-looking offer.

8. Make It Easy to Respond

These consumers have been traumatized. You must tell them exactly what you want them to do to respond to your offer and you must make it as easy as possible to respond. You should also offer multiple methods to respond to your offer. Many like to just pick up the phone while others prefer to do business via a website.

9. Answer the Phone When They Call.

These consumers are looking to speak with someone that’s willing to help them, but they aren’t willing to dig through a phone tree or wait on hold forever. If you’re not sure what I mean, try calling someone at your own dealership. It’s typically a nightmare. You should market with a phone number that rings right to a knowledgeable person that’s going to answer most every call.

10. Follow Up on Every Lead.

No matter how good your system is, you won’t get every prospect on the phone the first time. You should follow-up with every prospect by phone, email, and postal mail. You can easily double your sales by using a proper follow-up system.

Do all the right things while marketing to the recently bankrupt consumer and watch your profits rise. Good luck and good selling!

Denny Long is president of Credit Mail Experts and ranks among the industry’s leading experts in direct mail and subprime marketing. Email him at denny.long@bobit.com.

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