Best Practices

Podcast: Brett Collett of Equifax

CARY N.C. - 

For this episode, we get back to basics — as in the fundamentals of auto-finance underwriting that include credit, character, capacity and collateral.

In light of a changing market impacted by sales trends and technology, Brett Collett, who is strategic automotive consultant for Equifax, shared a conversation with Nick about how these four basics remain vital to keeping metal turning and portfolios growing.

Check out the conversation below.

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6 suggestions to help dealers in Italy build confidence with female customers

PADUA, Italy - 

Looks like dealers in Italy are struggling to gain the confidence of their female customers, just like some dealers in the United States.

And the potential remedies could help stores on both continents.

According to a study conducted by CDK Global in North America, 43 percent of women in Italy do not trust dealerships.

The research carried out by CDK Global revealed that many women feel uncomfortable when they are looking for a vehicle to buy, precisely because they are women. Analysts at CDK Global scrubbed 64,000 reviews, finding that 43 percent of women do not trust the automotive industry and often describe their buying experience at dealerships in a completely different way than men.

The study found that the reviews and the language used by the customers contain valuable information to understand what is appreciated or not in their experience within the dealerships. The words “stressed,” “confused,” “disregarded,” and “intimidated” were among the top ten most used by women, and many of them, especially in sales and service reviews, said they felt “insecure” or “stupid.”

“It is already known that women are generally not comfortable at dealerships, but research highlights the real extent of the problem,” said Renato Dagostino, general manager of CDK Global Italia.

“In fact, women are increasingly influencing the purchase decisions of the car, which is why it is very important for dealers to make sure they offer women the right shopping experience,” Dagostino continued.

The reviews were divided by department (sales and service) and then further distinguished on the basis of the final judgment. The words most widely used by men and women indistinctly highlight that the most felt need in general is to receive a “fair” treatment from the dealership staff, who is “available” and able to make the customer “happy” at the end of the experience.

However, the results showed significant differences regarding the elements that influence the experience of men and women.

Men, in the reviews, focus much more on the product, while women focus in particular on the interaction with the dealership staff, which highlights the importance of rethinking the “customer experience” reserved for female customers.

For women, “understanding” was the most used in positive sales reviews, often along with other adjectives such as “kind” and “considerate.”

In both sales and service, women have noticed that the “smile” of staff (even those with whom they did not interact directly) contributed to creating a positive experience.

The experts of CDK Global were based on the evidence that emerged from this analysis to suggest the following advice to dealers, aimed at improving the experience of women in dealerships:

—Keep eye and smile: Help build a positive climate of trust and a lasting relationship.

—Find out what is important in a vehicle they are looking for: Positive reviews underline the ability to listen and the willingness to understand their specific needs.

—Give clear information: Explaining the various issues in a comprehensive way can eliminate any concerns or doubts of the customer, putting her at ease.

—Giving continuous and constant updates: Many positive reviews include the word “continuously” in relation to communications and interactions with the dealership.

—Offer a welcoming environment at the dealership because the details are important: Provide amenities such as clean bathrooms, WiFi in the waiting area, a children’s area, free drinks and a variety of reading materials.

—Create targeted advertising campaigns: Differentiate messages for women.

Researchers at CDK Global have found that many dealers are already on the right track and that this often positively surprises women who go to the dealership. The results show that dealers can seize the opportunity to stand out as companies that are particularly attentive and sensitive to female customers.

For more information on CDK Global in Italy, visit .



Dealertrack rolls out 2018 Compliance Guide

NORTH HILLS, N.Y. - 

A free resource to help dealerships manage their compliance responsibilities is now available.

Dealertrack recently released its 2018 Compliance Guide, which outlines the changes and updates in compliance that will affect dealers in 2018.

Now in its 13th year, the Compliance Guide is a leading resource on current trends and best practices in F&I compliance.

“Dealers understand that compliance can be critical to their bottom line, but many do not know how to balance staying current in today’s ever-changing regulatory environment with the day-to-day needs of running and growing their business,” said Jay Seirmarco, assistant general counsel at Cox Automotive. “For the last 13 years, Dealertrack has offered the Compliance Guide, free of charge, because we know how valuable such a resource can be for dealers seeking to improve their dealership’s operational efficiency.”

With “Confidence in Every Deal” as this year’s theme, Dealertrack highlighted the guide focuses on the Consumer Financial Protection Bureau’s examination of automotive dealer transactions under the Larger Participant Rule.

Furthermore, Dealertrack noted that it is anticipated that the CFPB will also be seeking to enforce compliance with federal consumer credit protection laws in auto financing.

Additionally, Dealertrack added that it is expected that the Federal Trade Commission will continue to examine claims of so-called “yo-yo” financing and perhaps initiate claims related to lack of disclosure of applicable safety recalls for vehicles at dealerships.

The Compliance Guide is designed to highlight what is ahead for dealers in 2018 and provide tips for managing compliance with confidence, geared towards establishing a culture of compliance, enhancing data security and maintaining customer transparency.

Given the emphasis that the CFPB and FTC appear to be placing on examining auto finance practices and, in the wake of widely publicized 2017 security breaches, creating a culture of compliance should remain a priority for dealers, according to Dealertrack.

To register to receive a complimentary copy of Dealertrack’s 2018 Compliance Guide, .



Dealers targeting high-value customers see more return with less ad spend

CARY, N.C. - 

After using over 700 different characteristics to target high-value customers via Semcasting's new patented IP targeting solution, dealers of Luther Automotive Group have seen impressive results over the course of six months.

“It’s one thing to attract your own customers to purchase another vehicle, it's a totally different thing to go into the marketplace and look for households and customers that have never interacted with your dealership in the past,” says Michael Murphey, general manager of automotive solutions at Semcasting, creator of the solution SmartTarget Conquest, which is designed to bring dealers buyers who will transact with them for years to come.

Using transactional data to create a custom predictive model built from dealers existing high lifetime value customer base, Semcasting’s SmartTarget Conquest identifies and scores households in their trade area who have the appropriate affluence and lifestyle to meet its own high lifetime value criteria.

Households who have previously done business with the participating dealers are excluded.

“So we’re serving display adds only to households that have never transacted with the dealership in the past,” Murphey said.

Luther Automotive reported that 45 percent of the customers targeted had at least one service at the dealership, profit per vehicle increased by 17 percent and cost per conversion was as low as $139.39.

When asked about the over 700 characteristics that Smart Target Conquest evaluates, Murphey said each dealership he’s ever built a model for has a unique model.

“If I take a Honda dealership in Minneapolis and compare their high lifetime model to a Honda dealership in Miami, their models are incredibly different. That’s why we take the time to onboard every dealership’s DMS data and look at the slight nuances of all of their different customer bases instead of putting together some vanilla model, and say this is the type of model that will work for your dealership,” he said.

Though most high-value customers might buy new, the model does not exclude customers who may be looking for used options.

“The model is built on the premise of those customers that not only purchase a vehicle but have multiple services with the dealership as well and does not discriminate against new- or used-car buyers,” Murphey explained.

“With the success of SmartTarget Conquest we've worked with Luther stores to create specific used-car modeled audiences that have shown incredible success.” 

In a recent case study, after evaluating that campaign model's results against a control group of households who met high lifetime value criteria but were not served display advertising, Semcasting found that after six months, in addition to the campaign audience conversion being 3 times better, the average profit generated by the campaign audience was 17 percent higher than the control audience.

Profit generated from the campaign totaled $78,600 from 15,233 households, while the control group only generated only $61,700 with 42,039 households — more than double that of the campaign.

Additionally, for a 60-day period, all devices associated with the campaign audience were reached at an average frequency of three impressions per day, per household, according to Semcasting.

“Dealerships need to be thinking more about the life cycle of that customer, and by focusing on the customers that not only will purchase a vehicle, but have the propensity to service that vehicle in the future, that’s really the roots of where this product came from,” added Murphey.



For independent dealers, PPMs keep buyers coming back

CHICAGO  - 

As independent auto dealers look to bolster their competitiveness and strengthen their performance, many are turning to practices franchised dealers have been using for some time to increase their service business and retain customers.

One practice, which automotive consultant Ed French of AutoProfit says “builds the cadence of turn” is to offer buyers prepaid maintenance services to establish the independent dealer’s service center as a “known commodity.”

Prepaid maintenance programs (PPMs) can help dealers bring buyers back for regular oil changes and other discounted services that build with them a habit of servicing their vehicle with the selling dealer.

Customers who develop a habit of maintaining their car at your store are 60 times more likely to purchase their next vehicle from you, DMEautomotive has noted.

Ryan Williams, president of prepaid maintenance program company Fidelis PPM, says independent dealers providing these plans to buyers can help them turn cost-centered service facilities into break-even operations and for many, profit centers.

“Independent dealers using PPMs to drive service and purchase retention are enjoying repair order upsell advantages of $70 per repair more and retention of 68 percent or more of customers whom the dealership has given to or sold prepaid maintenance,” Williams says.

These advantages are similar to what franchised dealers who are employing these plans enjoy, Williams says. According to NIADA data, half of all independent dealerships operate up to five service bays. Using dealership-branded prepaid maintenance programs is a proven way to help keep those bays productive.

A recent report from J.D. Power, Automotive Analyst Note, Satisfied Service Customers Likely to Remain Loyal to the Future notes, “complimentary maintenance and prepaid maintenance also drive more visits to dealers.”  Customers that indicated they either prepaid for a maintenance package or that their vehicle included complimentary maintenance when purchased in the 2015 study made 88 percent of their service visits to dealerships in 2017; those who did not have this benefit in 2015 made 75 percent of their service visits to dealers in 2017.

These plans typically feature a package of discounted oil services, tire rotations, fluid service or other routine maintenance functions. Plan holders are encouraged to use these services several times a year to better maintain their investment and develop a habit of returning to the dealer not the aftermarket for these services.

The current market favors dealers who promote their business to retain customers, French says.

“The market is changing rapidly, and the answer is yes, PPMs are right for it for three basic reasons,” he says. One is the average miles on preowned cars that independents are selling are less than ever; they’re newer than ever; and the average transaction price for used vehicles at franchised dealers is $19,000 and $16,000 for independents.

“These factors make service contracts attractive to buyers at independent dealerships to help mitigate the risk that comes with cars that are more expensive. I look at PPMs as a complement to service contracts because PPM use establishes a pattern of owners returning to their independent dealer’s service facilities to have these routine services done there,” French says.

Independent dealers who link customers back to their dealerships by using PPMs continue a retention strategy those cars original dealers and owners started.

“The cars that are now flowing into independent dealers’ lots these days are off-lease cars in superb condition because they have been well taken care of, and many were placed into service with the lessee holding a PPM from the leasing dealership to keep those customers returning to that dealership,” French notes. “If you’re selling cars having already been enrolled in prepaid maintenance plans why not keep it that way because it’s going to extend the second half of the vehicle’s life.”

Buying vehicles having previous PPM coverage can help independents build value into their inventory. French notes that Carfax reports indicate regularity of service visits, which he says suggests those vehicles in their earlier lives where benefits of more routine maintenances promoted by preventive maintenance. Sharing this report with prospective buyers is a great way to build confidence in that vehicle and the reason to continue that level of maintenance that a PPM can drive.

PPMs for used-car buyers

Putting PPM coverage into the hands of used-car buyers helps connect them to the dealership after the sale. Consider these points from the Fidelis PPM report; Loyalty is Elusive, Customer Retention is Measurable, about used-car buyers:

  • Risk-avoidance consumers who want peace of mind about future vehicle maintenance needs.  They have grown up watching OEMs give PPMs away with the purchase of new cars and come to expect similar treatment for the used vehicles they purchase.  
  • Cash-flow-strapped consumers whom Bankrate.com notes cannot meet even a $500 emergency expenditure.
  • Leading busy lifestyles with little tolerance for inconveniences like vehicle maintenance -- prepaid plans help smooth the bumps
  • Deal shoppers whom retailers report that 85 percent of consumers look for coupons before visiting a dealer. PPM packages convey value to these buyers.

PPM best practices

Dealers using prepaid maintenance programs to increase store retention build a culture around these benefits.

  • Extend equal responsibility to F&I and service for promoting the plan to keep them involved, cooperative, and invested in program success
  • Link pay plans and spiffs to plan-based production goals and targets
  • Use a program offering automated marketing, claims reporting, and other features
  • Reminder mailings, especially those that show savings occurred through plan use, keeps usage above 65 percent
  • Make it mobile, as 53 percent of consumers likely to schedule service appointments will use a mobile device
  • Be sure the plan mechanisms provide reliable performance and ROI reporting for management

“Margin squeeze, competition, and unusual market factors mean every dealer — franchise and independent — must use whatever measures possible to improve R.O.I. and retain customers. The prepaid maintenance product is an excellent product that used-car buyers find exceptionally useful these days as they seek to protect both their vehicle investment and their budget,” Williams says.

 



COMMENTARY: 3 wide-ranging trends dealers should monitor in 2018

BROOMFIELD, Colo. - 

In my more than 15 years in the auto industry, I’ve seen various ups and downs in the market as well as both wild optimism and doom and gloom. We’ve experienced record-breaking new-car sales the last few years, and as we dive deep into 2018, most dealers are optimistic that we’ll continue to enjoy strong sales, with only a small decline in overall volume.

Here are three trends to keep an eye on in 2018:

Tight used-car inventory

Following what’s now called the Great Recession in 2008, we saw a lot of belt tightening both from consumers and dealers. That was followed by “Cash For Clunkers” and also the trend of consumers hanging on to their vehicles for eight to 10 years before eventually selling or trading them in. Fast forward a decade later, and most of the consumers who decided to hold on to their used car longer than normal have finally given in, disposed of their vehicle, and upgraded. The result? Fewer in-market car shoppers ready to sell, trade and purchase. Which of course means less readily available inventory for dealers to stock their lots with.

Used-car acquisition is at the core of any strong dealership’s business model, and finding the “right” units to stock isn’t easy. Over the last several years, it’s been even tougher to find inventory through traditional channels (physical auctions, trade-ins, etc.)

The recent hurricanes have also had a significant impact, with Black Book estimating that up to 1 million vehicles (including commercial and fleet vehicles) along the Gulf Coast were salvaged. That development sucked the inventory out of many markets, as used vehicles were routed to the flooded areas where demand was high.

What we’ll continue to see in 2018 is increased competition for a limited inventory pool. That means dealers will need to roll up their sleeves and look for alternative sources of used vehicles. That might mean more online and non-traditional auctions, dealer-to-dealer transactions, and street purchases.

Consolidation will continue

Large dealer groups and mega chains will continue to grow and expand in 2018. That can either be a threat to or opportunity for smaller dealers, depending on how they position themselves.

Let’s face it. The mega chains have economies of scale that single-point or small multi-roof operations just don’t have. At the same time, though, large dealer groups are much like a battleship, turning slow and unable to react quickly in some instances.

Single-point and small dealer groups have the ability to pivot and change direction quickly.

They can try new strategies for vehicle acquisition, sales and marketing, and quickly gauge results and implement change. They can also harness the power of selling “local” and leverage relationships within their community.

The good news for smaller dealers is that they can operate just as efficiently as larger dealer groups. The mega chains have the resources to analyze data and optimize local inventory, but so do the small dealers who implement the right inventory-management tools.

The right time to research new tools and vendors isn’t when sales are down; it’s when things are going well. So if a downturn is coming, and it will at some point, be ready. Get your house in order now, and make sure your team is armed with the processes and tools it needs to be as efficient as possible for the lowest monthly cost to your store.

More distractions

Is your dealership worried about self-driving cars, vehicle-subscription services, and ride sharing? How about Carvana grabbing market share, or Amazon getting into auto sales?

These developments are real, they have legs, and they will take some market share from local dealers. But there’s no need to panic. There is a long runway in front of us before some of these things take off. In some instances, the infrastructure, processes and regulations are potentially decades away.

I predict we will see small incremental changes in pockets around the country, but not to the extent that the auto industry will be completely revolutionized in 2018.

Rather than worry about things you can’t control, you should continue to focus on what you can control: your inventory, merchandising and customer experience. Leveraging good up-to-date data will help you select and sell the rights cars at the right price for your local market.

Also, nearly all dealers can benefit from creating an “Amazon-like” experience for shoppers. This means total transparency across all departments, a quick and simple way for consumers to transact online, a customer-first approach, zero-pressure sales departments, and top-notch customer service. Focus on speed and making it easy for your customers to do business.

Overall, I think 2018 has the potential to be a great year for dealers! Those positioned to see the most success will be the ones that re-evaluate their processes and operations regularly (as every good dealership that wants to evolve and grow should do).

Dealers, don’t be distracted by all the noise of pending disruption. Listen to it, take note, and be cautious. But remember, focus on what you can control, and position yourself accordingly in your local market. I wish all of you a Happy New Year and continued success in 2018.

Josh Dougherty is vice president of sales with DealersLink (www.dealerslink.com), an automotive systems integration and networking technology company based in Broomfield, Colo.



Podcast: Hudson Cook’s Patty Covington and Eric Johnson

CARY, N.C. - 

Many individuals make a New Year’s resolution to broaden their knowledge base. For industry professionals who made that kind of commitment, especially ones who are involved or are interested in auto finance, the first episode of the AuSM Podcast of 2018 is geared for you.

Before the holidays, Nick had a conversation with Hudson Cook partners Patty Covington and Eric Johnson, who also serve as the instructors for the Consumer Credit Compliance Certification Program orchestrated by the National Automotive Finance Association.

Patty and Eric described the educational requirements as well as the potential benefits after completing the program, which takes an in-depth examination of how vehicle installment contracts are originated and ways federal and state regulators oversee that process.

Check out the conversation below.

Download and subscribe to the AuSM Podcast on  or on . 

You can also listen to the latest episode in the window below.

All episodes can be found on our  or by visiting ausm.info/ar-podcast.

Please complete ; we appreciate your back on the show!



4-step process for effective text messaging at your dealership

LEHI, Utah - 

The way that consumers research, find, and engage with dealership has changed significantly in recent years. In the past, dealers would buy newspaper and radio ads, put up a billboard, get listed in the Yellow Pages, and wait for customers to call or show up to their dealership.

Now, the process is much more detached. While traditional advertising and marketing are important to create awareness, they are no longer the primary sources car buyers turn to when deciding which dealership to choose. Online searches are now king. Today’s car buyer typically searches for dealerships near them, reads reviews, maybe looks at your website, and then calls or messages you directly from your listing.

The option for customers to message businesses is a new addition. Google recognized that more and more customers would prefer to message a business as opposed to placing a call. In fact, 90 percent of consumers want to use messaging to interact with a business – with 50 percent preferring to message via SMS text.

The problem is only 48 percent of businesses are capable of messaging with their customers, but that number will likely increase with the launch of Google Click-to-Message. To help you get started, we have outlined the steps to get your dealership’s account set up to accept messages from your customers.

Here are the four steps to setting up Google Click-To-Message:

1. Login to your Google My Business page

2. Select messaging in the left menu and add phone number

3. Verify that number with a code sent from Google

4. Now searchers can message your dealership

Tips for interacting with customers via text

Now that your dealership is all set up to take incoming texts, let’s review some tips that will help you successfully interact with your customers.

1. Be responsive

Oftentimes when consumers are conducting an online search on their mobile device, they want their questions answered immediately. This is because they are likely experiencing what Google refers to as micro-moments. These are when consumers want to know, want to go, or want to buy. If your online presence isn’t able to quickly answer their questions, they will probably move on to your competition.

One of the main reasons that online searchers want to connect with you via text is they feel like it is a quicker, more efficient method of communication. But that’s only true if the dealership is placing an emphasis on quick response times.

To ensure this happens, general managers should make sure their team is well equipped to offer quick responses to customers. If you don’t consistently respond to messages in a timely manner, customers will know because over time Google will post typical response times on your listing.

2. Don’t ask for sensitive information via text

This might seem obvious, but it bears repeating. Businesses should never ask for sensitive information like credit cards, banking information, or social security numbers over text. While text messages seem secure, the information isn’t encrypted so the data could be vulnerable.

3. Ask for customer back

Another valuable way to utilize text messaging in your customer interactions is asking for back. A lot of times customers don’t want to take the time to fill out a lengthy customer satisfaction survey, but they would be willing to answer a few questions via text. That is because asking questions via text comes across as more personal and less intrusive than a survey.

One way to approach this is by asking your customers after a transaction is complete, “On a scale of 1 to 10, how likely would you be to recommend this business to a family or friend.” And then follow that up with one or two questions about the service your business delivers. Our research has shown that approaching customer back this way results in significantly higher open and response rates than traditional CSAT surveys.

4. Invite customers to review your business

Text messaging is also a good method for collecting public facing customer back on your Google My Business listing. One of the biggest reasons to use text messaging to do this is many people are already signed into their Google account on their smartphone, so it’s much easier to connect them directly to your Google reviews page.

5. Encourage customers to add you to their s

Texting with your customers will help you build stronger more loyal customers. To help you reinforce that loyalty, try texting them a vCard with your information on it. If customers have access to your phone number in their s, it removes one of the steps in the car buying journey. It will help you evolve from being just a dealership to being their dealership.

Jon Eyre is director of content at Podium, which helps businesses drive user-generated content in the form of online reviews to increase visibility, improve business operations and drive the purchase decision. The company serves more than 50,000 users across all business sectors and has a robust automotive division. More recommendations from Podium are available through webinars the company has hosted with AuSM that are available here as well as here.



Podcast: Cort DeHart with MBSi Corp.

CARY, N.C. - 

We circle back to one of the most difficult challenges of the automotive business — repossessions — for the latest episode of the AuSM Podcast. Nick is joined by Cort DeHart, who is the corporate strategy manager with MBSi Corp. The conversation touches on how complicated repos can be and how the industry is working to streamline the necessary processes.

We also look ahead to where Cort is returning again for a keynote session during Repo Con, of which MBSi Corp. is the presenting sponsor.

Check out the conversation below.

Download and subscribe to the AuSM Podcast on  or on . 

You can also listen to the latest episode in the window below. All episodes can be found on our  or by visiting ausm.info/ar-podcast. Please complete ; we appreciate your back on the show!

 



NADA reiterates IRS warning about new phishing scam

WASHINGTON, D.C. - 

The National Automobile Dealers Association relayed a warning from the Internal Revenue Service about the latest tax-related activities generated by unscrupulous entities on the Internet.

The IRS warned all e-services users to beware of a new phishing scam that tries to trick tax professionals into “signing” a new e-Services user agreement. The phishing scam seeks to steal passwords and data.

Officials explained the scam email claims to be from “e-Services Registration” and uses “Important Update about Your e-Services Account” in the subject line. It states, in part, “We are rolling out a new user agreement and all registered users must accept its revised terms to have access to e-Services and its products.” It asks the individual to review and accept the agreement but takes them to a fake site instead.

NADA suggested that all tax professionals should be aware that as e-Services begins its move later this month to Secure Access authentication and its two-factor protections, cybercriminals likely will make last-ditch efforts to steal passwords and data prior to the transition.

“As the IRS has warned over the past few years, these sophisticated schemes are adaptive in nature, and everyone should be cautious before clicking on a link or entering sensitive personal information,” NADA said.

IRS commissioner John Koskinen added, “These scams evolve over time and adjust to reflect events in the news, but they all typically are variations on a familiar theme. Recognizing these schemes and taking some simple steps can protect taxpayers against these con artists.”



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