It was July 2012 and Alvin “Big’ Al” Heggs was faced with one of those life-altering decisions. Fresh out of Chrysler’s 18-month Dealer Candidate Development (DCD) program, he could either return to a guaranteed seven-figure paycheck as a general manager at an AutoNation store in Houston or buy an underperforming dealership in the Phoenix suburb of Mesa, Ariz.
Heggs took the less certain path. Through the DCD program, which is designed to give minority candidates a leg up in purchasing and operating dealerships, he bought Superstition Springs Chrysler Jeep Dodge Ram in January 2013 with $300,000 of his own money and a $2.7 million loan from Chrysler. The gamble paid off: In a little over three years, the dealership has more than doubled its net F&I profit and the average number of vehicles sold per year.
The achievement is the result of a serious commitment to process by Hegg’s core team, a group of five automotive retail professionals the dealer principal drafted from his previous store in Texas. Director of Operations Ken Murray, Finance Director Ben Saxton, General Sales Manager Kevin Barnes, Controller Skip Whatcott and Office Manager Layla Davis all opted to follow Heggs from Spring Chrysler Jeep Dodge Ram, which was in the process of being acquired by AutoNation while Heggs was enrolled in the DCD program.
“It was a leap of faith,” Heggs says. “I jumped and said, ‘Hey, I think we can do this for all of us.’ That was my main objective, to make sure that each one of my guys was making $1 million a year themselves before I finished and hung up my automotive boots.”
When Heggs closed the deal on Superstition Springs, the store was far from an F&I powerhouse. Net F&I profit was around $240,000 a month, and the F&I team was averaging $600 per copy on 75 new and 60 used units sold.
“The dealership was just sitting there, basically needing CPR at the time,” Heggs jokes.
But Heggs knew all the dealership needed was a proven process and a staff that was committed to following it. Luckily, he had five people whom he had already been working with for 12 years.
“I knew coming here, we could probably do the same things we did [at our last dealership],” he says. “Lo and behold, we did.”
F&I net profit has skyrocketed to an average of $510,000 a month on 211 new and 102 used vehicles sold. The F&I department is now averaging $2,700 per copy, something Saxton attributes to giving customers a “100% presentation, 100% of the time.”
“We’ve really focused on taking the customer on a journey to let them know, ‘Hey, these products that you’re purchasing are products that not only do you need, but that provide real benefits,’” he says. “There’s a true value to what we’re offering.”
Trust the Process
Superstition Springs employs 28 sales consultants, as well as four F&I writers and an F&I assistant who operate under Saxton. The latter follow a process that starts in the showroom with an informal meet-and-greet between the customer and the F&I manager — a “preliminary check-up,” as Saxton calls it — before the customer is escorted into the F&I office.
The F&I process the dealership follows was developed by Team One Group’s George Angus, whom Saxton credits for helping his producers tap into the “psyche” of customers, and one of its authorized agencies, Coffeen Management.
As the process goes, customers first sign the title documents before the F&I manager walks them through the ancillary product offerings using MaximTrak’s menu presentation. Saxton says every customer must sign an accept/decline form for each product as “additional backup.” Not only does this provide proof that customers are fully aware of what is being offered, the technique gives Saxton and his team a second chance at selling each product.
“We’ve had really, really good communication with the customers, which I think has helped out tremendously in the long run,” he says. In fact, the dealership’s sales satisfaction index score has remained well above the national average for three years running, while chargebacks sit at 6%.
The finance office is currently averaging 3.78 products per deal, with vehicle service contracts leading the way with a 61% acceptance rate. Also offered is dent-and-ding repair, CalTex’s paint-and-fabric protectant, which the dealership preloads on every vehicle, and etch.
“One of the things we’ve tried to do is just get real aggressive on the front end of the car deals to push that volume number, and try and really focus on noncancelable ancillaries in the back,” Saxton notes.
Another one of Superstition Springs’ secret weapons is the Internet. The dealership receives about 43,000 impressions per month on its website, but has no designated Internet department to field the leads that funnel in. Instead, Superstition Springs has all 28 sales consultants participate in a round-robin approach to work those leads. This keeps sales staff from getting overwhelmed, Saxton says, and allows them to spend a little extra time helping Internet customers.
“We do that because what we have found in the past is that if you give one Internet manager 500 leads, and he’s happy with selling 30 cars a month, he’ll always sell 30 cars a month,” Saxton explains. “What do you do with the other 470 leads?”
The result of this approach has been extremely positive: Not only do sales consultants have the time to really work those online leads, they’ve gotten creative with how they respond to online queries. And what’s really translated into sales is video, Saxton says.
“You hear it all the time when customers come in: ‘Hey, I’ve never had anybody go that extra mile to send me that video or to answer my question,’” he says, adding that the dealership’s closing ratio has increased a few percentage points since his staff starting using video two months ago.
Heggs’ team employed a video email program called Covideo at their previous dealership, but smartphones have made it simple and easy for sales staff to record and edit from their own devices. Staffers are equally enthusiastic about social media, posting to the dealership’s Facebook page and sharing those posts on their personal pages.
“It’s so important to have that image out there, where you’re sharing with everybody what you’re doing out in the community and with each other,” Saxton says of the dealership’s Facebook page, which has more than 2,000 likes. “That way, people get to know you as a person and not just a businessman or a dealer.”
On the Spot
Another technique that has become a mainstay at Superstition Springs is spot delivery. Done incorrectly, spot deliveries can be a lose-lose situation for both dealer and customer, especially if the customer is forced to return to the store to recontract because the dealership can’t place the deal with a finance source. But Heggs and Saxton have ensured that this is never the case by creating great relationships with the dealership’s finance sources. That means meeting buyers in person, putting a face to a name, and establishing a personal connection.
“We got into the mindset of, ‘Hey, if there’s a customer here, you can’t replace them.’ One of the things we’re going to have to do a better job of is building relationships with the banks so that we can find a way to get these deals purchased,” he explains. “Let’s face it, it costs a lot of money to get a customer to the door of any dealership. If you don’t take that opportunity while they’re there and don’t spot deliver them, then the guy down the road is going to do it.”
The second prong of the dealership’s approach to spot deliveries is exercising excellent judgement. Heggs’ team is extremely deliberate and methodical when it comes to this practice, performing thorough customer interviews and file reviews. It helps that the dealership’s F&I team is mostly made up of former F&I directors, individuals who are used to being held accountable for the decisions they make.
“We talk about those deals on a daily basis and communicate what these banks are doing, just so we can make really, really good decisions,” Saxton explains. “The other thing is we’ve hired pretty much all ex-F&I directors or they’ve been F&I directors at one time. We decided early on we wanted the best of the best.”
Iron Sharpens Iron
Heggs and his team take compliance seriously, and the dealership works with Automotive Compliance Consultants to test and certify every employee on the regulations governing the car-buying process. The company also comes in every quarter to perform deal audits.
“We have 100% compliance testing for any type of job position,” Saxton says. “Either you pass or you fail. We don’t accept anything less than 100%.”
As for training, the dealership stages weekly meetings for F&I staffers called “Mentor Monday.” The get-togethers are designed to allow team members to train and teach each other. The sales team stages a similar meeting to review performance, discuss what worked and what didn’t, and share sales techniques. An additional monthly meeting with Coffeen Management focuses on product presentations and compliance in F&I.
“Compliance is obviously a big deal in the store,” Saxton adds.
The dealership’s collaborative culture can be largely attributed to the leadership of Heggs, who, as a former NBA player, takes teamwork very seriously. And his favorite saying, “Iron sharpens iron,” has become the store’s mantra.
Heggs passion for improving his team also extends to the community his dealership serves. Superstition Springs has provided more than 50 scholarships to local students, sponsors the local United Way and United Food Bank, and helped put women in need in transitional housing.
But none of this would have been possible, Heggs says, if it weren’t for the team that followed him all the way from Texas. “It’s like when you take that 30,000-foot drop, you don’t drop by yourself,” Heggs explains. “You make sure you’ve got a team of Navy SEALS ready to go into battle with you.”