The Industry's Leading Source For F&I, Sales And Technology

Special Finance®

15 Steps to Subprime Success

March 2009, F&I and Showroom - Feature

by Tom Herald

"Customers today don’t have any money!" "We had 15 ups and couldn’t sell any!" "They had no money and were buried in their trade!" "He had the worst credit I’ve ever seen!"

If you’re hearing statements like these at your dealership, here’s a news flash for you: People who need special financing have bad credit, and they don’t tend to have much money! The solution to the problem is rather simple: Stick to a process that works.

Many talented people in the car business have made things much more difficult than necessary, either by deviating from a proven path to a closed deal or shooting from the hip without taking a good aim at the target. They take shortcuts, make stereotypical generalizations or, even worse, give up and blame all their problems on the economy or the market.

My advice is to refuse to participate in a bad economy. Instead, stick to what you know — your game plan and your goals. Take care of the elements that are within your control, like staying on the road to the sale.

The 15-Step Special Finance Road to the Sale

1. Plan for the sale. You will increase your chances of selling by developing a consistent plan of attack that accounts for all possible outcomes, questions and objections. Sales is about numbers, and you must have contacts, prospects and a presentation to sell anything. Your sales plan is your road map to achieving your goals.

2. Attract prospects. Special finance customers need reliable transportation and want both value and variety. They are often jaded, however, by the flurry of fast-talking, unprepared salespeople who over-promise and under-deliver. They have become skeptical of offers for "Guaranteed Financing." Your advertising must set the tone for a relationship that builds trust in the minds of your future customers.

3. Master the telephone. If your entire team does not learn to master their phone skills with proven scripts and word tracks that bypass price and overcome objections, you will find your traffic count low and your customers’ credit scores even lower. You will miss out on that segment of the market that actually has the ability to shop at other stores, and more and more dealers are taking the plunge into special finance. Most customers will shop from the comfort of their homes and in front of their computers. They’ve been turned down by your competitors, and they want to avoid any further embarrassment.

4. Set the appointment. An appointment implies professionalism. Your time is valuable and in demand. The ability to set appointments in a way that will compel your customers to actually show up is a critical. You must be able to separate yourself and the dealership from the competition via the Internet and the telephone.

5. Master the meet-and-greet. A bad first impression will put your prospects on the Be Back Bus. First stop? Your nearest competitor. Every customer must be met with professionalism and enthusiasm. You must be able to handle the typical sales derailers such as price and vehicle right from the start. A standard initial greeting welcomes the customer and gives your sales team enough confidence to stick to the plan.

6. Perform a needs analysis. Assessing each customer’s particular needs is step No. 1 in your first face-to-face meeting. This analysis will separate you from the competition and help position your team as experts in the industry. The needs analysis also is a critical step in the process for bypassing price and taking directing the customer’s focus to the financing. Remember, what you’re really selling is the opportunity to improve their credit rating. The needs analysis is a tool that can be used later in the process to shore up the deal and/or increase the down payment.

7. Take the statement. Also known as the credit application, the customer statement is the second part of the interview, subsequent to the needs analysis. It must be accomplished accurately, with diligence and attention to detail. The information will be used to make important credit decisions and there is little room for error, particularly when it comes to the calculation of gross monthly income and time on the job.

8. Make a credit decision. Time is of the essence! With accurate information, you can and must make a correct assessment of the customer’s credit strength and buying power. Only then can you present vehicles for sale that will sell at a profit and fit the needs of the customer. Without a thorough needs analysis, an accurate and complete application, and a detailed credit bureau report, you will make your lenders’ decision needlessly difficult.

9. Vehicle selection/reselection. It is important to give the customer a selection of vehicles from which they can choose and never give the impression that they have to buy something they don’t like or want just because of their credit situation. So don’t worry about the customer getting locked onto a vehicle that will not work. Most customers will choose a vehicle that meets their budget first, then their needs, then their wants.

10. Structure the deal and obtain lender approval. While the salesperson is demonstrating the vehicle, the desk or finance manager is working to get an approval from the lender with the deal fully optimized based on the LTV. This step must be finalized before delivering the vehicle to the customer. However, again, time is of essence. You don’t need the final approval to accomplish the four-square presentation. As long as you don’t have immediate turndowns from the banks, you can proceed to the customer presentation.

If you delay too long while you try to make the perfect decision or want the approval in hand, you risk losing your customer’s attention and interest, and your chances of delivering a profitable deal will drastically decrease.

11. Demonstrate the vehicle. While the financial details are being worked at the lot, the salesperson is taking the customer on a test drive and selling the vehicle itself. It’s important to treat your special finance customer as you would any other customer and exceed their expectations as a prospective buyer. The test drive should be as routine as every other step of the sales process. You should have a pre-determined demonstration route that includes a pull-off location to accomplish the “walk around” away from all the distractions of the other vehicles on the lot.

12. Go over the numbers. A presentation of financial numbers to any customer should never take place unless you have all the decision-makers present and your customer is ready to make a commitment to purchase. Otherwise, you are only empowering your prospect with enough information to go shopping. The purpose of the customer presentation is twofold: First, to isolate and overcome objections, then to gain customer commitment.

The best and most effective technique I have found to accomplish this is the four-square presentation. If it is used properly with a consistent and proven word track, it will help you close more deals and increase the much-needed down payments you need to boost profitability.

13. Close the deal. Never fail to ask for the sale. You must ask the prospect to buy your product and then gain their commitment; the true litmus test for commitment is the deposit. A prospective customer will not leave a deposit unless they are reasonably certain they are going to buy.

14. Contract and deliver. Once you’ve sold a vehicle that you can get financed and on which you can still earn a profit, you must now contract the customer and deliver it to them. This is the step in the sale where there is zero tolerance for mistakes. Your contracts have to be perfect and you must collect the stips up front. Otherwise, your contracts in transit will cause the ARs to skyrocket and your comptroller will be screaming.

The one stipulation that should never be missing from any special finance deal is proof of income. Anyone who presents loan documents for a customer to sign must be thoroughly trained on all federal and state compliance requirements along with the various lender programs. They also should be familiar with vehicle title and registration requirements for the states in which you do business.

15. Ask for referrals. This is the last and perhaps most important step on the road to the sale. This is your chance to ask your customer for referrals — not references, but referrals. You should ask for five referrals from every sold customer with the expectation of gaining three new prospects. The close of the sale is when you have the best rapport with your customer and the deal is still fresh. You’ve invested a lot of time, money and effort into your customer and at this point in the sale they will be more than glad to provide some referrals. If they’re not, you may have some serious problems with your sales process that’s going to cost you business in the future.

If you implement a detailed and consistent road map and execute it every time, all the time, with no exceptions, your team will understand the process and improve with every sale. Your sales ratios will increase along with the gross profit of every deal. Your customers will be more satisfied and the turnover among your sales staff will decrease. We are all creatures of habit and the more we do something, the better we become at doing it, the more we understand and the more confident we become as a team.

Tom Herald is a consultant and trainer with Marlborough, Mass.-based Benjamin Herald Associates. He has more than 20 years’ experience in the industry, including 10 years as a dealer principal. E-mail Tom at therald@special-finance.com.

Your Comment

Please note that comments may be moderated. 
Leave this field empty:
Your Name:  
Your Email: