When You Think Your Leads Are Terrible, Remember This...

The quality of these leads hasn't changed. It's the circumstances these people face that is different.

The subprime mortgage crisis effects subprime customers the most! Many of them are "victims" of these subprime mortgage loans and are unsure of what their mortgage payment will be when their rate goes up!

These same people that were banking on the equity in their home continuing to rise and many took out equity lines or second mortgages and now don't have the equity left to support these loans.

The housing market is down, and many of the people who work in it are feeling the pain. The construction worker, carpenter, framer, electrician, plumber, etc. all were riding high when the new housing market was in full swing. Now, many of them, if they are still employed, have gone from 70-80 hour weeks making big overtime to 40 or less hours a week with no overtime. Income is way off, so many of them don't have down payments available.

Remind yourself that now is when you can really shine. Most finance guys would walk away from this market because it's too hard to do the business. Don’t be one of them

Beware of Who Is Selling for YOU!

This showed up in my inbox this morning. Seems like I get something like this on a regular basis!

State reaches settlement with Washington car dealer and ad agency over deceptive marketing

Dealer group was accused of using a series of deceptive tactics to lure customers (10/30/2007)

The Washington Attorney General’s Office announced settlements with a car dealer and an out-of-state advertising firm accused of using deceptive promotions to sell cars.

The settlements resolve a civil lawsuit filed against Bruce Titus Automotive Group and Level 10 Marketing, based in Slidell, La. The defendants did not admit any wrongdoing but agreed to pay civil penalties and comply with injunctive provisions concerning their marketing practices.

The Attorney General’s Office alleged the defendants advertised cars without disclosing all terms, including stating how many vehicles were available at a specific price, that they suggested that financing could be guaranteed regardless of a consumer’s credit history, and used “simulated checks” and contest promotions that could mislead consumers. Those actions violated at least three of Washington’s consumer protection laws.

According to the complaint, the defendants sent ads that offered misleading prices and made it appear that the cars were substantially discounted. They also allegedly charged undisclosed fees and advertised vehicle lease and financing terms without all mandated disclosures. Some promotions were sent in envelopes labeled “OPEN IMMEDIATELY – TIME DATED MATERIAL” that resembled official certified mail. Other mailers looked like checks and included the words “PAY TO THE ORDER OF” but were actually ads. And some vehicle ads included statements such as “credit problems – no problem.”

The dealership group will pay $5,000 in civil penalties plus $30,000 in attorneys’ fees and legal costs. Level 10 will pay $15,000 in attorneys’ fees and legal costs. They also agreed to pay $10,000 in civil penalties, which will be suspended provided they comply with the settlement terms.

More often that not, out of state marketing companies don't seem to know your laws. Google any lead generator or marketing company's name followed by the word "lawsuit" and see what you get, before you sign up. Attorney generals throughout the country are cracking down on "deceptive marketing practices" by out of state companies holding staffed events or doing mailers for automobile dealerships.

PIN Reports Days-to-Turn for 2005 Used Models

By Jennifer Reed, SubPrime Auto Finance News Editor October 29, 2007

WESTLAKE VILLAGE, Calif. — When looking at how quickly 2005 model-year vehicles are selling at stores, Power Information Network saw an interesting trend come to light.

"The fastest-turning used 2005 model-year vehicles bear one clear similarity with the fastest-turning new vehicles: Both groups are dominated by imports," officials indicated.

Reviewing 12 used vehicles with the lowest turn rate, PIN discovered that 11 were foreign brands. All imports covered Toyota, Nissan or Honda models, executives highlighted.

"Also, 10 of the 12 models are light trucks but in contrast to new-vehicle trends, only one of the fastest-turning used trucks (Murano) is a crossover," officials said.

10 Fast-Turning 2005 Models Include:
Toyota Sequoia: 26 days
Nissan Armada: 26 days
Dodge Sprinter: 28 days
Honda Odyssey: 29 days
Infiniti QX56: 30 days
Toyota Sienna: 31 days
Toyota Tacoma: 31 days
Nissan Murano: 31 days
Toyota 4Runner: 32 days
Infiniti G35: 32 days
Nissan Titan: 32 days
Lexus ES Series: 32 days

According to the company, data was gathered Jan. 1 though Oct. 21. Additionally, officials noted that more than 10 models were included because of ties. Results were based on sales at franchised dealerships.

Who’s reading your mail?

I’d like to introduce you to a member of my family. Her name is Chooch, and she’s 14 years old. She doesn’t work, does not have a driver’s license or a Social Security number, and as far as I know, has no credit file.

Let me start out by explaining something. My home phone number is listed in Directory Assistance under Chooch’s name. If you haven’t figured it out by now, Chooch is my border collie. That’s right…my dog! I do this so, when someone calls my home during dinner and asks to speak to Chooch, I know it’s a telemarketer. So far, Chooch has gotten calls for magazines, insurance and political contributions.

But recently, something new has started to happen. Chooch has been pre-approved for credit cards, real estate auctions and most importantly, she started to receive mailers from auto dealers!

One of the credit mailers Chooch recieved!

So, who’s reading your mail? Do you really know who your mail campaign goes to? Direct mail is not cheap, as we all know, and unless your piece is being opened and read by real consumers who need an auto loan, how effective can it be? In order to maximize the effectiveness of your advertising dollars in today’s market, you need to be sure that your marketing efforts are precise. After all, advertising dollars are limited, and, just like you teach your sales people, you have to sell value in order to sell your product.

Offering easy credit to customer with good credit is like trying to sell a compact to a family with six kids. It might work, but in reality, it’s going to be a hard sell. Make sure that the mailer you buy maximizes its impact on customers who truly need your credit offer. Using blind, targeted mail, with a genuine offer of credit, produces customers who want your help, not the gift or gimmick it offers. After all, how many gifts did your last mailer give out versus the number of cars it sold?

Maximizing YOUR Results

The question is "Out of the last ten potential customers that came in for a car, how many left without one?" Conservatively, dealerships are losing at least one Special Finance deal a day or 25-30 deals a month. An analysis of the lost opportunities enables a dealership to correct the processes that are losing these customers. With re-training in proper Special Finance processes a dealer can go from being simply average and frustrated in their Special Finance efforts to solidly and consistently successful.

What does that mean in real money? By recapturing the lost opportunities at $3,000 average gross per deal, an additional $75,000-90,000 in gross profit is added simply by correcting existing mistakes. By using a consistent process, we can look to add 18-22 additional units a month. This means, with a $3,000 average gross, consistent process adds $54,000-60,000 a month. Combining that with the customers recaptured from lost lot traffic, it is reasonable to add another $129,000-150,000 a month to the bottom line. That is $1,548,000-1,800,000 a year in a market that most dealerships are largely ignoring.

TOP TEN REASONS YOUR LENDER SHOULD BUY THIS DEAL

10. IF YOU COULD ONLY SEE THESE PEOPLE, YOU’D BUY THEM
9. YOU’VE GOT TO HELP ME, IT’S THE OLDEST CAR ON MY LOT!
8. LOOK AT IT THIS WAY, HE CAN’T FILE BANKRUPTCY FOR ANOTHER SEVEN YEARS. 7. WHEN’S THE LAST TIME I ASKED YOU FOR A FAVOR?
6. YOU SHOULD ONLY HOPE THIS GUY GOES BAD, YOU’LL MAKE MONEY ON THE REPO!
5. NO, HE’S NOT A GYPSY – HE’S A ROOFER.
4. YOU DON’T WANT ME TO HAVE TO CALL YOUR BOSS, DO YOU?
3. COME ON, THIS GUY KNOWS THE OWNER.
2. YOU HAVE TO HELP ME; THE CAR’S ALREADY BEEN ON THE ROAD FOR TWO WEEKS!

AND THE NUMBER 1 REASON WHY THEY SHOULD BUY THIS DEAL…

OK – BUT THE REPO WASN’T WITH YOU!!!

Good Special Finance Managers Are Marketing Specialists First

Published by Jim Wagner April 14th, 2007 in strategy.

I’ve always believed that the most successful special finance managers are marketing specialists first. They look to find channels of business in every area possible. In addition to the traditional areas of marketing, like print and radio advertising and even internet leads, they’re constantly looking for new ways to drive more customers into their departments.

Here are two innovative ways to add incremental business to your department. If you execute consistently on them and have average traffic, these two tips can earn your department another $450,000 a year. That’s worth five minutes of your time, right? Read on.

Market to Your Customer’s References

When you’re looking at an approval from one of your subprime lenders, you probably love it when proof of income, residence and references are waived. I can understand your excitement over the first two items because they’re a pain to collect. But, if I were you, I’d be collecting ten references on each customer, regardless of whether or not it’s a requirement of your bank. I’d also be having your salespeople collect them up front, before you start trying to get them approved. That way you have them for approved customers and your turndowned customers. You’re going to talk to five times more people that you don’t approve, right?

References are great leads. They probably share the same demographic as the customer who gave them to you. Some of them are family members. Others are friends. If you treat all customers with respect and fairness, they’re going to spread the word to the people they interact with, the same people they gave you as references.

Every day, you should be sending out letters to each of the references you’ve collected from. Your call center or business development center could also give them a call. If you use a CRM tool be sure to load these leads into the system under the specific category of references so you can track your close rate.

Whichever approach you plan to take, your efforts to market to and close the references you collect can make you real money. If you talk to 100 people a month, and you collect ten references on each, that’s 1,000 good leads to work on. Even if you only close 1%, you’re going to see another 10 units a month. At 2,500 a copy, by thinking smart, you’ve made another $25,000 a month and $300,000 a year. Even if you don’t talk to that many people, I promise you’ll find substantial success and incremental profit by using this method.

Follow Up With Your Turned Down Customers

Every bad credit customer you finance today probably could not be financed at one point in the recent past. Not too long ago they might have had open bankruptcies, recent reposessions, slow credit, an open judgement, or even mistakes on their credit file. Most special finance managers shake the hand of the turned down customer, tell them they’re sorry they couldn’t help them out, and move on to the next. Into the dead deal file goes your customer to be forgotten forever.

If you’re doing that, stop today. For every customer you get financed, there are at least five more that you did not. Why not take ten minutes or so to consult with your customer and help them put together a plan that will help them get back on track. Here’s an article I wrote on repairing bad credit. Feel free to print off the article. Or, use your own experience to talk to them about credit repair. Print off a checklist of credit repair methods with your contact info on it. If you do that, you’ll earn their loyalty.

When they’re qualified to buy a car in a year or so, you’ll be the first person they call. Do this with enough customers, and you’ll be moving your department to the next level. Plus you’ll be building your reputation.

If you’re a store delivering 25 special finance customers a month, you’re probably talking to about 100 customers who you could not finance. That’s 1200 a year. Even if you eventually close only 5% of those customers, you’re talking a lifetime value of over $150,000 per year on your turned down customers!

There. I’ve shown you how your department can make another $450,000 a year in profit. I don’t know your payplan, but based on even the weakest you’re going to increase your standard of living.

If you’re a special finance manager who wants more success, remember: you’re a marketing manager first.