The Moment of Truth

Over the years I have written countless articles on the Special Finance sales process. I have discussed the importance of being able to qualify the credit worthiness of a customer prior to them selecting a vehicle – specifically before a Special Finance customer is shown a vehicle that a finance company will never approve a loan on. For years I have called this the green balloon (good credit), red balloon (bad credit) question.

Without question, this is one of the most important parts of the Special Finance sales process. It is a technique that can be trained and learned quickly. The problem is that by itself, it does not guarantee success.

Phone calls this past month with three clients of mine, all very successful franchise dealers, one of which delivers over 100 SF deals per month reinforced this important fact.

One of these dealers, for the past nine months has tried to blend his sales floor, having every sales person using a non-offensive qualifying question or two to make the determination. Indeed they have trained and measured and managed so that most sales people are consistently executing the process properly.

A second dealer did the same. This dealer is already delivering 80 SF deals per month. They were already doing a strong job in the SF department, and their conversion rate as well as the deal gross profits indicate they were just scratching the surface. Their teams unanimously endorsed the idea, determined to more than double their volume and triple their gross profits. They diligently trained, managed and measured.

Guess what. The amazing transformations didn’t happen. Both teams had done a very good job integrating the green balloon/red balloon questions to initially qualify the customer. Then it happened – The Moment of Truth.

The Moment of Truth is the precise point in the car deal where the dealership has identified a customer as a red balloon, taken the customer statement and pulled a bureau. It is the point where the customer has followed your lead, willingly given their personal information and you now know their credit history. It is when the customer and the salesperson have performed their duties, and now the customer has to be directed to the appropriate inventory.

The Moment of Truth is when the person managing the deal, now must direct the deal. Just like a quarterback who takes the snap must direct the play, read the defense, take the snap, and make the handoff, throw the pass or run downfield, the car deal must be managed in the same manner. The quarterback must immediately take action, lest they become the bottom of a pile of 300-pound linemen.

The person managing the SF deal must do the same. SF customers generally will be very open with their information. They know that they have had credit problems and are willing to provide their very personal information in order for you to be able to honor your claims – “Financing for everyone, bad credit – no problem.” What they now expect is for you to give them their options.

What was happening in both of the above Moments of Truth was that the sales desk froze, essentially fumbling the ball. They would gather the information then freeze with indecision due to lack of confidence in where to go with the financing. More indecision led to more lack of confidence, often resulting in the customers being sent home and told that the finance manager would work on their deal and call them back in once they were approved.

Based on the dealership’s marketing, the customer’s bubble was burst. Then, when the financing was secured, the finance manager or sales person was inevitably unable to get the “approved” customer back into the dealership. Sound familiar?

Once you have identified a SF customer, it is imperative to be able to quickly direct them to appropriate vehicles in inventory. The green balloon/red balloon process is really a finance detour in the road to the sale. Once you have successfully navigated the detour, it’s time to get back on the road to the sale. If you fail to continue down the road, the customer simply reverses course and leaves. In this day and age there are other options, which translates to other dealers ready and willing to take the lead.

To be in the Special Finance business, you simply must have people trained and in position, and others cross-trained, to be able to handle the Moment of Truth. These individuals must know the programs and the niches served by their portfolio of banks and finance companies. They must be able to say A + B = Deal with ABC Finance company, and by knowing that, you should be able to direct customers to which vehicles in inventory will make the best match between them and the finance company.

Notice I haven’t put names or positions on this person. Generally it is the person known as the Special Finance manager, but it doesn’t necessarily have to be that person. Whatever the title is, that person must be able to direct the deal at the Moment of Truth.

Certainly, there will be times when (due to a variety of reasons) it may be impossible to tell exactly which finance company or which program the customer will be approved for. That doesn’t change the fact that the road to the sale must continue. In order to do this, the manager must use their expertise and experience to draw a reasonable conclusion, by which allowing for the appropriate deal guidelines a selection of vehicles are offered. Without this, the deal simply winds up at a dead end. If you are totally lost, collaborate (quickly) with your sales and finance management team, but just as the quarterback will get sacked due to moments of indecision, so will your deal. Finally if you feel you have a deal but aren’t certain where, err on the side of a lower payment and/or lower loan to value (LTV) vehicle.

There is no easy way to develop the skills and the confidence; it takes training and practice. There is a fine line between prudent and walking deals, just as there is a fine line between aggressiveness and recklessness. The dealer and/or executive management must set the boundaries at what is and isn’t acceptable. The sales management team must then do what is necessary to develop their aggregate skills to capitalize on every potential SF opportunity.

Generally, in every dealership, there is at least one person that has the ability to look at a customer’s information and credit history and match them up with an appropriate financing option. What I have often seen is that this person tends to wind up being the “go-to” person. If they are out or unavailable, everything grinds to a halt.

So often when we talk about training, we think of training new sales people or tweaking the practices of established sales veterans. We often overlook training the management team – especially with day-to-day business. The sales management team needs to have frequent and scheduled meetings to discuss credit and deals among themselves to help foster the development of their mutual decision making skills. Savvy SF managers are not born. While they are likely born with the necessary intellect, only training and experience will hone those skills.

With every SF opportunity, you must be able to make a seamless transition from the meet and greet to the finance detour and back to the road to the sale. The Moment of Truth will take place in every one of those opportunities. Once you are able to quickly and confidently recommend the appropriate vehicles to your sales person or customer, you will find yourself converting a much higher percentage of deals, at benchmark and above gross profits.

Doesn’t feel like it connects like it should. What do you think?


Vol. 1, Issue 3