THE ART OF THE REFERRAL Marketing Soldiers

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SALES MATTERSBY JOHN CHAPIN

HOW TO GET AND STAY MOTIVATED WHEN SELLINGPaths to Motivation

Sales is a profession that requires you to be “up” and motivated most of the time. It is also a profession in which you can get knocked down very quickly from the amount of rejection that’s required for success. As a result, one of the biggest questions I get from salespeople is: “How do I get and stay motivated?”

Here are some forms of motivation.External Negative My first manager would say, “If I put

a gun to your head you’d do business.” External negative is a negative consequence or penalty for not doing something.

This motivation is all about accountability and consequences.

When motivating others, a sales manager usually starts with a probation period followed by loss of one’s job for failing to do the necessary work or make quota.

When motivating oneself, the most effective form is usually a financial penalty. For example, when putting off some scary calls to big prospects, I finally told a friend that if I didn’t make the calls in the next 30 days, I owed her $1,000. By the way, I made the calls on day 29. Yes, sometimes I struggle with this stuff too.

External Positive External positive is a reward for work

done or a goal achieved. This is not as powerful as the first motivator, as generally we respond more to pain, but is still a way to get leverage on ourselves and others.

To motivate others, it could be $100 for the person who makes the most calls in the next hour or a limo lunch for whoever closes the most business this week.

To motivate ourselves this can be dinner at our favorite restaurant, a dream vacation, or some other indulgence upon the completion of a goal.

Intrinsic This is the most powerful motivation

among high achievers. This form has the most potential power and, if strong enough, can be used all by itself. This is the personal “why.” In other words, what are the personal reasons you need to be successful?

To motivate yourself, decide what you really want out of life. What do you want your life to ultimately look like? What do you want for your family and your kids? What do you want to do and be?

If you had no limitations on time or money, how would your life be different? What will your perfect day look like 20 years from now?

What drives you? Is it your dream lifestyle, taking care of your kids and future generations, leaving a lasting legacy, or a combination of those things?

To motivate others, help them find their why. Where do they want to be in their career five, 10, or 20 years from now? Ask them: If they had no limits on time or money, what would they have and do with their life? What is their endgame? Do they want to retire and to where?

PeerThis is who you spend your time with

personally and professionally. People usually rise to, but rarely above, their peer group. Birds of a feather do flock together.

This also relates to your environment. If you have an office of negative people in which no one is held accountable, any success will be fleeting or completely nonexistent.

To motivate others, provide a work environment that is positive and professional in which people are held accountable. Have them look at the people they hang out with.

To motivate yourself means hanging out with positive people who have goals and are achieving big things. It also means getting rid of negative people and negativity in general.

Other Ways to Motivate Yourself• Write out your goals in the morning

and at night and have them in front of you during the day. • Create a vision/dream board. • Keep negatives out and put in plenty of positives through books, thoughts,

images, and inspirational and motivational ideas.

• Have rituals and routines in place to create self-discipline.• Announce goals to friends, family, and

in public forums, and have people hold you accountable.• Accept there will be problems and see them as challenges. • Have a support system in place, people

who are positive and upbeat and will help you turn around a tough day.• Take 100 percent responsibility for your life. Where you end up will come down to you and what you do, not the

economy, the job market, who’s president, or anything else.• Realize that doing what you need to do

is ultimately a question of character and integrity.• Who wins when you win and loses

when you win? Who is for you and against you? Make sure the right people win.

• Every call gets you closer to a sale. If a sale is $1,000 and you have to make

100 calls, each call is worth $10, regardless of what happens.• If it will ultimately take 10,000 hours

of work for success, every hour you put in gets you closer.

• Every day you either grow or die based upon the effort you put in. Choose to grow today.

• The quickest way to motivation, self esteem, and self-confidence is to get the job done, especially when it’s hard

or you don’t feel like it. • Get comfortable being uncomfortable.

Face and conquer fears. Do something that scares you every day.

• Your legacy, your future, and the future of those closest to you, are all at stake every day. What’s required is that you do what has to be done and push and stretch yourself to your potential.

Realize you won’t always be motivated. That’s why it’s important to form good habits through self-discipline. If you have an ingrained habit of making all your prospecting calls every day from 9 to noon, then on the day you feel a little down that habit will help carry you through.

Also, whether or not you are motivated, you have a job to do and promises and obligations to live up to. You have to find a way to get the job done. In life there are things we don’t want to do we have to do anyway. If you simply put in the hours, make the calls, and do the necessary activity, you will be successful. John Chapin is a sales and motivational speaker and trainer. He has over 27 years of sales experience as a number one sales rep and is the author of the 2010 sales book of the year: Sales Encyclopedia. For more information, visit www.completeselling.com or email johnchapin@completeselling.com.

4 OIADA / July 2017 www.oiada.com

ADVERTISING /MARKETING Autotrader.com866-836-1455Used Cars.Com by Dealix650-599-5616Cars.comJames Lynch312-601-5052Carsforsale.comGrant Lockner605-306-3492Interactive financial Marketing GroupTravis Weisieder804-248-0892

ATTORNEY Byrd Cabrera LLPRobert (Scott) Byrd310-365-1954Auto PartsAutoZone, Inc.Daniel Narvaez971-218-2300AutoZone IncRay Curry503-964-9420

BOND & INSURANCE Hecht & Hecht Insurance AgencyLarry Hecht503-542-1130Shepard & Shepard Business SolutionsTodd Shepard1-855-396-0488 #8Kelly Martin Insurance AgencyKelly Martin503-625-2615

ASSOCIATE MEMBERS DEALER AUCTION Manheim Seattle Auto AuctionRay Priest206-762-1600Manheim Portland Auto AuctionAlex Fraser503-286-3000ADESA Seattle Auto AuctionMark Dumbler253-735-1600DAA SeattleDave Blake253-737-2200United Vehicle AuctionsLori Jacoby503-380-1927ADESA Northwest Auto AuctionMark Melton541-689-3901ADESA Portland Auto AuctionJerry Hinton503-492-9200Crosspoint NW Dealer AuctionBrian Hardy503-594-2800DAA Northwest (Dealers Auto Auction)Mitzi VanVoorhis509-244-4500Car MaxSean McDonald804-747-0422

DEALER SOFTWARE Frazer Computing IncJake Morley888-963-5369Motor Vehicle Software VituJohn Brueggeman546-270-6699

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Lobel FinancialDavid Lobel714-816-1301Oregon Auto FinanceGary Veum541-868-0472The Equitable Finance Co.Brandon Fox503-808-7939Pac West Credit LLCJohn Kiefer541-868-2595United FinanceTodd May503-238-6488Oregon Community Credit UnionRich Black541-681-6311Nationwide InsuranceMark Tischer503-339-4165Credit Concepts IncJason Moon541-342-8545Veros CreditJohn Pierce714-415-6125 x21131Reliable Credit AssociationsDavid Marx503-462-3022Ted Investment LLCTom Garza503-213-1109

FLOORPLAN Lobel FinancialDavid Lobel714-816-1301NextGearRobert Torbet503-358-3911

INSIDE 06 ...................... Facebook Organic Reach is Near Extinction08 ................................................................Art of the Referral10 ................................................ Rejoice in ROI from Training12 .........................Keys to Increase Your Vehicle Throughput

WHAT’S NEWConvention Education Sessions OnlineThe NIADA Convention & Expo June 12-15 offered a wealth of information for dealers on a variety of topics. If you missed a session, or would like a refresher, sessions will be available on NIADAconvention.tv mid-July.

ADVERTISER’S INDEX ADESA ................................................................................... 7DAA Northwest/Seattle .....................................................IFCManheim .............................................................................. 11Manheim Portland ............................................................. BCNextGear Capital ................................................................. 10Protective ............................................................................... 5VAuto ................................................................................ IBC

OFFICEOregon Independent Auto Dealers Association 9150 SW Pioneer Ct Ste. H Wilsonville, OR 97070800-447-0302

NIADA HEADQUARTERSNATIONAL INDEPENDENT AUTOMOBILE DEALERS ASSOCIATIONWWW.NIADA.COM • WWW.NIADA.TV2521 BROWN BLVD. • ARLINGTON, TX 76006-5203 PHONE (817) 640-3838OIADA Dealer News is published monthly by the National Independent Automobile Dealers Association Services Corporation, 2521 Brown Blvd., Arlington, TX 76006-5203. Periodicals postage paid at Dallas, TX and at additional offices. POSTMASTER: Send address changes to NIADA State Publications, 2521 Brown Blvd., Arlington, TX 6006-5203. The statements and opinions expressed herein are those of the authors and do not necessarily represent the views of OIADA Dealer News or NIADA. Likewise, the appearance of advertisers, or their identification as members of NIADA , does not constitute an endorsement of the products or services featured. Copyright © 2017 by NIADA Services, Inc. Inc.STATE MAGAZINE MGR./SALES Troy Graff • troy@niada.comEDITORS Jacinda Timmerman • jacinda@niada.comAndy Friedlander • andy@niada.comMAGAZINE LAYOUT Christopher Hanley • chris@niada.comPRINTING Nieman Printing

PRESIDENT Siamak Lotfi

EXECUTIVE VICE PRESIDENTJim Weaver

BOARD OF DIRECTORS1ST VICE PRESIDENTGary Brooks

SECRETARY/TREASURERSalvador Alvarez HerreraZamora Auto Sales

CHAIRMAN OF THE BOARDGary Sargent

Floorplan XpressJosh Chandler503-621-9260

Auto Cap Services (ACS)Michael Smith800-800-6494Online Review ManagementPodiumKaylie Smart801-376-0677Public AuctionWoodburn Auto AuctionSteve Morin503-981-8185Petersen Auction Group of OregonCurt & Susan Davis541-689-6824

SECURITY Pro-VigilKris Brackin210-858-1105

SERVICE CONTRACTS AUL CorporationJacqueline Swank800-826-3207Elite Warranty, IncAl Ham503-530-0912Automotive Business DevelopersShannon Meany541-944-9186Benchmark Dealer ServicesJacob Bangert360-834-3333Protective AssetDylan Doran818-836-1455

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INTRODUCING THE NEW PROTECTIVE AUTO CARE PLAN Higher mileage vehicles need a higher mileage protection

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6 OIADA / July 2017 www.oiada.com

SOCIAL MEDIABY KATHI KRUSE

FACEBOOK ORGANIC REACH IS NEAR EXTINCTIONNow What?

Facebook organic reach refers to how many people you can reach for free on Facebook by posting to your page.

Organic reach has been declining for years, and it’s a common misperception that Facebook is doing this to make more money. While it’s true they need to make money (like all businesses), the decline in organic reach can be attributed to more complex issues faced when exponential growth occurs.

Why is Facebook organic reach declining?There are two main reasons.The first reason involves a simple fact:

More and more content is being created and shared every day.

You’ve probably felt this change yourself. There’s now far more content being created and shared than time to absorb it, something Mark Schaefer talked about in his book The Content Code.

On average, there are 1,500 “stories” (posts) that could appear in a person’s newsfeed each time they visit Facebook. For people with lots of friends and liked pages, as many as 15,000 potential stories could appear any time they log on.

As a result, competition in the newsfeed is increasing, and it’s becoming harder for any “story” to gain exposure in the newsfeed.

In addition to the growth in content, people are also liking more pages. The number of pages liked by the typical Facebook user grew

more than 50 percent last year. With each new page like, competition in the newsfeed increases even further.

The second reason for declining organic reach involves how the newsfeed works. Rather than showing people all possible content, the newsfeed is designed to show each user the content most relevant to them. Of the 1,500-plus stories a person might see whenever they visit, their newsfeed displays approximately 300.

To choose which stories to show, the newsfeed ranks each possible story by looking at thousands of factors relative to each person. This is what’s known as the Facebook newsfeed algorithm.

The Facebook algorithm roller coaster.I was recently asked by a potential client

to help create an “organic strategy” to market their business on Facebook. I thought it was an important topic to discuss since there really is no such thing as organic reach anymore. Each social media channel has its own algorithms, and since the introduction of Facebook ads, organic reach has all but evaporated.

Social media is a pay-to-play

environment now.As you may know, 10 percent of Kruse

Control profits go to animal welfare. The conduit for my cause is Hanaeleh Horse Rescue, for which I volunteer my time on the board, do marketing and personally help with the horses every weekend. We have a lively Facebook page with over 65,000 fans.

As a volunteer-run non-profit, we have very little budget to spend on Facebook ads so I’ve become quite creative over the last few years to grow our community of like-minded horse lovers and advocates.

It’s amazing to see what you can do with entertaining, informative content when you have zero budget to work with. The page is my bellwether that signals me when

Facebook shifts their algorithms.Regarding content, we are a horse rescue

so we have that going for us, which many independent dealers don’t. Who doesn’t love horses, right? Our organic reach is always above average because people like horses and we provide awesome content to keep them engaged.

For an independent dealer, it’s tougher to come up with awesome content, which is why I recommend starting with a written content strategy.

Up until a few months ago, the Hanaeleh page was still getting about 20-30 percent organic reach. But in the last few months I’ve seen it drop to 10 percent, and in some cases even lower.

Can dealers succeed on Facebook with decreased organic reach?

Currently, according to optimistic data, an average Facebook post reaches around 5 percent of page fans. However, there are other stats available claiming the average organic reach of a Facebook post can be as low as 2 percent. So if your Facebook page has 1,000 fans, your new post will be seen by 20-50 people on average.

Facebook ads solve the problem of declining organic reach.

Here are four fantastic ways to leverage Facebook ads to reach more people and engage more customers.

1. Create brand awareness.Reach people more likely to pay attention

to your ads and increase awareness for your brand.

2. Increase engagement and/or page likes.

Get more people to see and engage withyour post or page. Engagement can

include comments, shares, likes, event responses and offer claims.

3. Lead generation.Collect lead information from people

interested in your business.4. Increase conversions.Get people to take valuable actions on

your website or app, such as adding payment information or making a

purchase. Use the Facebook pixel or appevents to track and measure conversions.Important note:If you don’t have a Facebook ads strategy

as part of your social media strategy, you will not get the traction for which you’re looking. Without a solid strategy and Facebook ads to promote your content, many of your entertaining and intriguing content will never see the light of day.

Now that you know Facebook ads solve the problem of declining organic reach, commit to taking the next step of putting them into action.

Kathi Kruse is an automotive social media marketing expert, blogger, consultant, author, speaker and founder of Kruse Control Inc. Kruse Control coaches, trains & delivers webinars focused on integrating social media and online reputation management into dealership operations.

8 OIADA / July 2017 www.oiada.com

MARKETING MATTERSBY KENNY ATCHESON

THE ART OF THE REFERRALMarketing Soldiers

Imagine waking up tomorrow morning with the knowledge there is an army of marketing soldiers battling to send business to your door.

I view referrals as marketing soldiers. Wouldn’t it be great to have the ability

to generate an endless, steady flow of customers at a reliable, predictable pace?

That’s what a referral plan and system can do for your business.

The number one principle with referrals is to treat them like other media. Put forth effort, devote time, and invest money with the expectation of earning a positive return on your investment. You could probably find yourself earning a lot more referrals doing so.

StabilityLet’s look at some things that aren’t so

stable.A company reliant upon cold calls likely

struggled when the Do Not Call list and regulations were enacted. The same thing happened with broadcast fax, then later texting. New laws and regulations were implemented and had to be obeyed.

Then there were changes in the marketplace such as DVRs and the way

media can be delivered. People record shows so they don’t have to sit through commercials.

Newspapers struggle. Yellow Pages are going from print to digital.

An overnight algorithm change in Google can hurt your company’s search engine rankings. Your business could go from ranking number one to disappearing off the first page in the blink of an eye. It happens all the time.

In 2016, Google AdWords Pay-Per-Click went from ranking 10 ads to four ads on the right side of the first page. If your business previously succeeded by ranking number five of 10 listed, your ad likely disappeared overnight.

Then the world shifted towards mobile. If your advertisements were geared for people who used desktop computers or laptops, and your website wasn’t mobile-friendly, you faced another challenge.

These are just a few laws, rules, and changes.

The pricing of media is also unstable. You could be totally reliant upon a specific type of media and have a sudden dramatic change occur that hurts your business.

These things are not stable. However, a constant flow of referrals is much more stable.

If your company has a great referral system in place that is implemented regularly, referrals and repeat purchases

will come at a steady and somewhat predictable pace.

Hot tip: Think of repeat purchases as previous customers who refer themselves. Implement the same behaviors and systems to generate referral customers you use to generate repeat customers.

Under-the-Radar“I don’t know why that dealership is

so successful while we struggle. We have similar inventory and I don’t think they advertise.”

This is what the head of your competition will likely say when you have a powerful force of referral soldiers doing battle to send business your way. I am a fan of under-the-radar strategies.

A constant flow of referrals is hard for a competitor to copy.

One Way to Earn More Referrals

Your customers don’t spend nearly as much time thinking about your dealership as you would hope, no matter how great their experience was.

If one was asked during a casual conversation if they knew of a great dealership, your customer would probably recommend you.

If your customer was at a barbeque and overheard someone else’s conversation, your customer may not be willing to walk over, interrupt and say, “Excuse me but I overheard you’re looking for a great dealership. I know just the one.”

Each situation requires the escalation of your customer’s motivation to be willing to refer you.

To occupy space in your customers’ brains at all times, including situations they are motivated to refer your dealership, you must communicate with them regularly. Occasional big customer events are good. Continuous communication

via print and email newsletters that offer fun, value, and prizes is a less expensive way to occupy brain space.

Referrals provide stability and consistency. Many behaviors and systems that are used to increase referrals also increase repeat purchases. Keep that in mind when considering the effort or investment associated with communicating consistently with customers.

Kenny Atcheson is the founder of Dealer Profit Pros and author of Marketing Battleground: How to Deploy Under-the-Radar Strategies to Explode Your Profits. To learn more, visit www.DealerProfitPros.com.

www.oiada.com July 2017 / OIADA 9

AUCTION NEWS

THREE SEASONED LEADERS NAMED MANHEIM GENERAL MANAGERGreg Milam New General Manager at Manheim Seattle

Manheim continues its commitment to excellence in the vehicle remarketing industry with the promotion of three experienced leaders to general manager roles: Dave Rathjens at Manheim Lakeland, Greg Milam at Manheim Seattle and Martin Sandoval at Manheim Central California.

“Manheim has a strong track record of developing our team members into leaders, and we’re fortunate to have these pros as new general managers,” said Manheim regional vice president Julie Picard. “Dave, Greg and Martin have shown a deep commitment to serving our clients, and we are confident they will enhance the ways their locations help our clients become more profitable.”

Dave Rathjens, Manheim Lakeland Rathjens began his career at Manheim

in 1999 as an inspections manager. Most

recently, he was assistant general manager at Manheim Tampa. Through the years, he has held various roles at Manheim Ohio and Manheim Kansas City, including vehicle entry manager, body shop manager, repo/lease manager, recon manager and operations manager.

Prior to joining Manheim, Rathjens spent 10 years in the U.S. Army, with the majority of his time as a paratrooper in the 82nd Airborne Division. He attended Drake and Ashford universities where he graduated with a bachelor of arts in organizational management. He has also participated in various Manheim leadership programs.

Greg Milam, Manheim SeattleMilam has held several Cox

Automotive leadership roles for the past 18 years. Most recently, he was director of mobile auction sales and operations, where he leveraged his strength in client relationships and operations to grow mobile sales volume by 16 percent year-over-year.

He started his career with Cox Automotive in finance and has since held various roles with the organization, such as district manager for Dent Wizard, project manager for Manheim China, director for Manheim Exporttrader.com and assistant general manager for Manheim Atlanta. Greg earned a Bachelor of Science in Business

Administration and a Master of business administration from Auburn University.

Martin Sandoval, Manheim | Central California

Sandoval joined Cox Automotive in 2013. He was most recently a regional account executive for NextGear Capital. Prior to that, he was vice president of operations and director of auto finance at Zinc Financial.

Earlier in his career, he held various leadership roles in financial services, sales operations and automotive manufacturing. In his new role, Sandoval will empower his team to provide responsive solutions that connect clients with Manheim’s integrated suite of products and services. Sandoval earned a Bachelor of Science in business administration and a Master of Business Administration from the University of Phoenix. He is currently pursuing a Doctorate of Business Administration from California Southern University.

“Their significant automotive experience, leadership skills and knowledge will be of great value to our clients and team members,” said Manheim regional vice president Tim Janego. “We’re looking forward to the results they will drive at their locations.”

10 OIADA / July 2017 www.oiada.com

ACCELERATEBY GWC WARRANTY

REJOICE IN ROI FROM TRAININGA Wise Investment Think about all the investments you make in your business. Perhaps it’s new advertising. Maybe it’s new technology or signage on your building. And, of course, there are investments in people and inventory.

But how much do you know about the return on investment from each of these? Sure, you know how much profit you clear on a car. But do you know how much business you gained from expensive new advertising or a new fancy piece of technology?

One activity that can drive added profits and is easily trackable from an ROI perspective is dealership training. Perhaps more so than any other investment you make in your dealership, the effects of training are measurable and profitable – especially when it comes to F&I training.

First, you’ll need to start with a baseline. For instance, if your training is aimed at selling more vehicle service contracts, know the percentage of deals on which you sell a VSC today. Set a target, and seek out the tools you need to get there.

Next is finding the right training approach. For dealers on the run, online, interactive options often work best. When you can train on your

schedule as time allows, it’s easier to make your way through coursework at your own pace. Not to mention that if your service contract provider can offer a discounted or no-charge training option, it’s a major savings compared to paying full freight for a training platform or sending staff away for conferences or seminars.

Finally, you’ll need to track your results. With F&I products, it can even be easier than tracking how many more cars you sell because of a new approach or training strategy. By knowing your penetration rates upfront, inserting F&I training can make for a clear cause and effect with more service contracts sold.

From there, you’ll be basking in the ROI benefits from your new F&I training strategy – bottom-line bonuses like increased back-end profits, higher profits per unit and even long-term repeat and referral business.

WITH F&I PRODUCTS, IT CAN EVEN BE EASIER THAN TRACKING HOW MANY MORE CARS YOU SELL BECAUSE OF A NEW APPROACH OR TRAINING STRATEGY. BY KNOWING YOUR PENETRATION RATES UPFRONT, INSERTING F&I TRAINING CAN MAKE FOR A CLEAR CAUSE AND EFFECT WITH MORE SERVICE CONTRACTS SOLD.

PRODUCTS AND SERVICESBY NICK ZULOVICH, SUBPRIME AUTO FINANCE NEWS

EFG COMPANIES ROLLS OUT VIRTUAL F&I SOLUTION Simplicity Finance and Insurance

EFG Companies recognized independent stores that turn about 50 vehicles monthly need the same F&I resources as franchised stores that watch two, three or four times that many units roll over the curb each month. It’s why the company announced the launch of its virtual F&I model, Simplicity Finance and Insurance.

With Simplicity Finance and Insurance, EFG Companies said dealers can expect to generate upwards of $1,000 per retailed unit, get more paper bought, increase product penetration, and make F&I compliance a non-issue.

Mark Rappaport, president of EFG’s Simplicity Division, acknowledged many independents struggle to generate F&I profit with inventory that does not meet finance company requirements, limited financing options, little investment in F&I training in a high-turnover industry, and inconsistent day-to-day staffing.

“As you know, the employees and teams at the independent dealerships have to wear a number of hats. Wearing all of those hats sometimes doesn’t make you the most effective in all the facets tied to running an automotive dealership,” Rappaport said.

“Often we found, on the independent side, it’s the salespeople handling the F&I business and often the salespeople are really good at sales but don’t have the time, ability or expertise and background to be able to support the F&I process, where a franchised dealership would have the significant bench strength to be able to do that.

“At the independent level, when you’re doing 25, 50, 75 units a month, it becomes a little more difficult to support that from a resource standpoint and get the bench depth to make it in a profitable and functional manner. We decided there was an opportunity here to help support our dealers at the independent level to provide them with a service that offers them access to the bench strength on retail operational hours basis and gives them the ability to be sure we’re doing everything compliant and we’re doing it in the most effective format to add more profit to their back end.”

EFG Companies has developed a way to leapfrog over these issues without adding a single F&I person to staff. Simplicity Finance and Insurance can give dealers instant F&I expertise and improves the customer experience, while increasing

F&I profits.This virtual F&I model enables dealers to

focus on the front-end process, while a team of expert F&I personnel take care of the finance process from EFG’s headquarters, streaming live into the dealership. EFG’s professionals handle the financing, deal structure, product sales, contracting and funding to drive back-end profit on each vehicle sale.

Rappaport explained all the independent dealer needs is a private room with high-speed dedicated Internet access to get started. An EFG representative will come to the store, set up the equipment and provide multiple days of training. Within a short timeframe, the store can be finalizing deliveries with Simplicity Finance and Insurance.

According to AutoTrader, the average time spent in the F&I process is 61 minutes. However, the average consumer wants that time cut in half. With Simplicity Finance and Insurance, the F&I process takes just over 30 minutes.

EFG Companies president and chief executive officer John Pappanastos said, “We developed Simplicity Finance and Insurance to enable these dealers to evolve the F&I process from a basic transaction to a highly-lucrative profit center that enhances the consumer experience.”

To learn more about Simplicity Finance and Insurance, visit www.efgcompanies.com.

12 OIADA / July 2017 www.oiada.com

MANAGEMENT MATTERSBY DALE POLLAK

KEYS TO INCREASE YOUR VEHICLE THROUGHPUT AND PROFITABILITYThree Strategic Priorities

We’ve arrived at an interesting time for retail sales of new and used vehicles. Both sides of the business face a market supply/demand imbalance, which raises risk for dealers.

In new vehicles, there’s almost an inventory pile-up on some dealers’ lots. Dealership days’ supply is running well north of the norm. Some dealers don’t even have the kind of vehicles (e.g., SUVs and trucks) today’s buyers really want. Factories have pledged to adjust their production mix and pace, but I’m told they could, and should, do more. Meanwhile, retail sales appear to be driven by ever- higher incentives, which ultimately crimps the contribution each car makes to the dealer’s bottom line.

In used vehicles, the big headline is the rising supply of off-lease, or near-new vehicles, in the market. We’ve begun to see the effects of this supply surge: Market Days’ Supply metrics are up across several segments in most markets. Wholesale prices are also more volatile, due largely to the supply surge. On top of all this, the incentive-driven new vehicle market is eroding the “value gap” between new and used vehicles – adding further risk to front-end margins and retail sales.

Most industry observers expect buyer demand for new and used vehicles to remain relatively stable in the coming months. But a “relatively stable” degree of buyer demand is no guarantee you’ll be able to sell more vehicles and make more money than you did last year or the year before – particularly if you aren’t doing things any better or different to offset competitive threats and ongoing margin compression.

In light of these conditions, I encourage dealers to be more diligent and focused on three strategic priorities.

Pursue the Fast Sellers This priority helps dealers mitigate

the drag on operational performance and profitability that comes as vehicles sit, and sit, in your inventory. If you make it a top priority to acquire vehicles based on favorable market days’ supply and cost to market metrics, you’ve set the stage to attract buyers, drive a faster pace of sales and achieve the gross profits you expect.

Manage Your Return on InvestmentA sometimes underappreciated reality

of today’s retail market is that age matters in both new and used vehicles. Over time, the return on your capital investment in any vehicle diminishes, whether this depreciation comes from changed market conditions, floorplan/holding costs or some other factor.

These are the variables dealers must track as they manage each vehicle’s lifecycle and strive to maximize ROI. By focusing more keenly on each vehicle’s ROI, dealers are less likely to overprice vehicles and allow any car to remain in inventory past the point it delivers a sufficient return. This emphasis on ROI naturally leads to a more efficient and more profitable pace of sales.

Reduce Your Discounts For some dealers, this priority might be

considered a “last frontier” for additional profitability. Here’s a common situation: Dealers have accepted the reality they must price their vehicles to the market. In sum, they are offering a reasonably fair offer on their vehicles. But, at the desk during negotiation, there’s little or no recognition of the pricing strategy.

Managers and sales associates don’t explain to customers how your fair market pricing is purposeful – it’s intended to eliminate much, if not all, of the need to haggle over a purchase price. The absence of this discussion opens the door for buyers, some of whom are already satisfied with the price you posted online, to ask to pay even less.

Dealers who have made discount reduction a priority typically pick up $200 to $500 in front-end gross per vehicle they were effectively giving away. Their first step: Track the discounts on every deal to identify who contributes most to the problem.

Each of these strategic priorities, if executed correctly, can help dealers gain operational efficiencies that lead to competitive advantage.

But it’s the trifecta, working in tandem together, that truly provides the ability to achieve your goals of selling more cars and making more money in today’s “relatively stable” market.

Dale Pollak is founder of vAuto and has published several books on his Velocity Method of Management.

www.oiada.com July 2017 / OIADA 13

WASHINGTON UPDATEBY SHAUN PETERSEN

NIADA GOVERNMENT REPORTLatest Government Issues and Activity LEGISLATIVE

The House of Representatives passed the Financial CHOICE Act of 2017 by a 233-186 vote June 8.

The bill, introduced by Rep. Jeb Hensarling (R-Texas), would overhaul the Dodd-Frank Act of 2010 and make substantial reforms to the Consumer Financial Protection Bureau. It’s been a major focus of NIADA’s lobbying efforts and was one of the top legislative priorities at the 2016 National Leadership Conference and Legislative Summit in Washington D.C.

NIADA’s support for the bill centers around three important points.

• It would restructure the CFPB to make it accountable to Congress and the American people by subjecting it to expanded congressional oversight and judicial review, and by funding it through the congressional appropriations process rather than automatic funding through the Federal Reserve.

• It would protect consumers’ ability to resolve differences with businesses through arbitration, which can be faster,

cheaper and more efficient than the courts.

• The bill would revoke the CFPB’s anti-consumer indirect lending guidance document, which would have raised the cost of car and truck loans by restricting auto dealers’ ability to discount credit. The bill would require the CFPB to obtain

public comments and consider the cost of credit to consumers before issuing

similar in the future. NIADA is continuing its efforts to get the

bill through the Senate and to the President’s desk.

REGULATORYFor the moment, the future of the CFPB

is in the hands of the D.C. Circuit Court of Appeals, which on May 24 heard oral arguments in the case of PHH Corporation v. CFPB. That’s the case challenging whether the CFPB’s structure, with a single director who can be removed only for cause, is constitutional.

Last fall, a three-judge panel from that court ruled it was unconstitutional and could be fixed by allowing the President to fire the director at will, but the CFPB petitioned for rehearing by the full 11-member court.

Attorney Lucy Morris, who followed the oral arguments for the Hudson Cook law firm, said the questions asked by the judges suggested the court seems to be leaning in favor of the CFPB’s current structure.

Morris, a member of the team that set up the CFPB when it was formed in 2011, said the arguments against the bureau’s position “did not appear to convince several judges, who failed to see how the CFPB’s structural novelty amounted to an unconstitutional defect that diminished the President’s power to enforce the law.”

The court’s ruling is not expected until late this year or early 2018.

PACRegion I got a big head start in the annual

PAC Cup competition at last month’s NIADA Convention and Expo, as Jeff Baker of Muskegon Car Credit in Grand Rapids, Mich., chairman of the NIADA BHPH Commission, and his wife Cheryl both contributed $5,000

to the NIADA-PAC fund – the maximum annual amount allowed by law.

In all, Convention attendees contributed $13,750 to the PAC fund during the event.

The PAC Cup competition pits NIADA’s four regions against each other in a battle to raise the most money for the PAC fund between the Convention and the National Policy Conference, coming up Sept. 25-27 in Washington D.C. The winning region is awarded the coveted PAC Cup. Region II – the Southeast – has won the past two Cups.

Shaun Petersen is NIADA’s senior vice president of legal and government affairs.

14 OIADA / July 2017 www.oiada.com

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READ & RESPOND AND CERTIFY BELOWCOMPLE TE THIS TEST AND CERT IF Y BELOW THAT YOU HAVE READ THE ART ICLES FOR JULY 2017.

“Facebook Organic Reach is Near Extinction”True/False: The decline of organic reach is simply so Facebook can make more money.True/False: Without a solid strategy and Facebook ads to promote your content, many of your entertaining and intriguing content will never see the light of day.

“How to Get and Stay Motivated when Selling”Which of the following did the author list as a form of motivation?a) External negative. b) External positive. c) Intrinsic.d) All of the above.

“The Art of the Referral”True/False: Referrals can be viewed as marketing soldiers battling to send business to your door.“Keys to Increase Your Vehicle Throughput and Profitability”What strategic priority can help your increase your vehicle throughput and profitability?a) Pursue the fast sellers. b) Manage your return on investment.c) Reduce your discounts. d) All of the above.True/False: Most industry observers expect buyer demand for new and used vehicles to remain relatively stable in the coming months. But a “relatively stable” degree of buyer demand is no guarantee you’ll be able to sell more vehicles and make more money than you did last year or the year before.True/False: If you make it a top priority to acquire vehicles based on favorable market days’ supply and cost to market metrics, you’ve set the stage to attract buyers, drive a faster pace of sales and achieve the gross profits you expect.

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