Take a Page From Daniel Boone in the Special

Finance Department

I’m showing my age again. I used to watch the Daniel Boone show as a kid. I liked the ‘coon skin hat, and I remember he was always tracking someone or something. Little did I know, that would rub off on me later in life (the tracking, not the hat).

One of the first things I learned in my college business courses was that you must measure in order to be able to manage. While the past does not necessarily predict the future, to understand history certainly gives you more ability to make better decisions in the future. Without measuring, the tools of forecasting and budgeting could not exist.

The age old definition of insanity is to expect different results from repeating the same thing. Differing results may occur when dealing with random events.  Flipping a coin for example, but dealers do not, generally, base their livelihoods on the flip of a coin. In business, how do we make sure we don’t repeat our failures? We track what we are doing and modify our approach accordingly.

While I was in the life insurance industry, immediately out of college, my mentor was no doubt responsible for helping form a important opinion I still live by today. With regards to sales management, while you certainly set goals for results, managing the sales activities is more important. Back then, the activities revolved around sending out introductory letters, prospecting (cold) calls, the number of appointments set, the number of presentations made and the number of applications written.

I might not be able to control whether or not I would deliver a life insurance policy that day (my ultimate pay day), but I knew everything that had to take place in order for it to happen. Applications had to be written before underwriting could approve them and before they could be delivered.

I knew I could control all the activities necessary to write the applications, and, therefore, measured them all. I also knew if I performed the activities, the results would follow. It worked that way in the insurance business. It also worked that way six years later when I bought my first new car store, and it has ever since.

Special Finance is a numbers game. The benchmark delivery rate of all leads is nearly 17 percent. That means five out of six leads each month do not wind up buying. Some of those failures are due to the inability to find finance companies willing to approve the deal. Others come from failures in the telephone or sales process. The key is to understand where these failures, and successes, take place so you are able to correct or improve on the ones you can control.

Just today, a successful dealer client of mine, after recently vowing to become an MIT grad (Most Improved Tracker), wrote to tell me her dealer group had just finished the extensive installation and training of powerful new CRM software. Now I am not suggesting you need to go out and purchase a new software package to track your activities, but in her e-mail she detailed that she now had conclusive proof of just how many leads the stores had simply been blowing away.

Now, as a result of tracking, they had not only learned they needed more sales people, but that one particular sales person had blown off a particular lead (claiming the customer was not able to be financed). The real reason was the salesperson had more leads than they could possibly work, and that lead didn’t look easy, so they were cherry-picking leads.

The difference was this time they were able to catch it, review it, redirect it to their other store, gain an approval and deliver a vehicle. They were, additionally, able to address the flawed activity of the sales person and correct it. This is all due to tracking. My guess is this month’s entire CRM support bill was covered, and then some, by this one saved deal.

I am frequently asked by dealers and Special Finance managers alike, “What is the latest and greatest thing in advertising for Special Finance?” There are a number of people,reading this, who will attest to my reply. “How many leads are you currently receiving every month?”  The reason I am asking is, of course, does the dealership really need more leads? Or do they need to find a way to work the leads they are already receiving more efficiently (to deliver more cars), just like the case described above?

So what activities should we track? I would suggest many. Many stores work blended floors, or at least look to convert as many bad-credit walk-ins (those that I often refer to as “Red Balloons”) as possible through the SF department.

One store I work with expects to pull a credit bureau on 50 percent of their customers, and half of them (or 25 percent of the total leads) are Red Balloons (RB). To ensure the proper qualifying activities are taking place, the store must not only know if they are pulling the appropriate number of credit bureaus, but how many of them are RB. The next activity tracked is, how many of them are turned to SF before the vehicle is selected. Finally, they track the closing rate of the RB.

Before they were tracking, should their SF volume (the results) be low, then one might erroneously assume they had no SF traffic. Now, they can identify if they are pulling too few credit bureaus, if the RB percentages are truly too low, and what percentage of the customers were shown vehicles before they were identified. Through managing this information, they have improved their SF volume dramatically, before striving to increase traffic.

[An actual tracking sheet used by a dealer follows this article.]

Additionally, I suggest you focus on your lead activities. You must know how many leads you receive (I suggest by source), then how many are called within an hour of receiving the leads (time is of the essence).  Were they ever called, how many appointments were set, how many confirmed, how many were kept, and of course how many were delivered? You may even wish to keep track of how many calls the sales person or call center makes each day.

I am sure some of you are reading this and thinking, “Yeah, right. When am I supposed to worry about all of that?”

It’s been proven countless times; the line between success (20 percent delivery rate) and failure (2 percent delivery rate) when working e-leads and other generated leads is often razor thin. It hinges on both how and when the lead is worked. Without tracking, you may work tirelessly to fix a part of the process that was never broken, forever overlooking the real root of the problem. Tracking can show you where the problem lies.

Dealers often wonder why some dealers can achieve a benchmark closing rate, or better, on their leads, with $3,500 to $4,000 average gross profits per deal. They often assume either it is all hype, or a manager is playing with desktop publishing—cheating the system. It is simple, they work smarter.

The fact is I have never met an elite performing SF department or dealer who doesn’t know the exact activity levels in their dealership, and, once they learned what they were, it was the catalyst that propelled them to new levels of success. They may not have Daniel Boone in the SF seat, but they sure have learned to track like him.

Vol. 1, Issue 1