Profit Through Protection – Doing It Right

By Myril Shaw, Dealer Profit Services

Are you offering all of your customers all the Optional Protective Products you can?

If the answer is yes, congratulations…you are one of a pretty small club.  If the answer is no, you are probably leaving money on the table.

Going back to the “Yes” answer, are you making sure that your customers know that they have been offered everything – if the answer there is “no”, you could still be at risk.

Let’s start at the beginning.  What are Optional Protective Products?

Your unit comes with certain warranties and other protections direct from the manufacturer.  These can include engine warranties for a specified term, accessory warranties, “stem-to-stern” or “full vehicle” coverages.

Notwithstanding the manufacturer’s products, there is a lot of room to give your customer’s even greater peace-of-mind.  These “Optional Protective Product” offerings may include things such as:

• Pre-paid maintenance (great for customer retention)
• Engine warranties with terms or coverages which exceed those of the manufacturer (note that these are typically transferable and so enhance the value of the unit on resale)
• Accessory warranties with terms or coverages which exceed those of the manufactured and/or on non-manufacturer installed options
• Interior and exterior protection products to ensure that your customer’s unit remains looking like it did the day they purchased it
• Tire and Road Hazard protection which make sure that your customer is not stuck on the side of the road
• GAP Waiver to protect the customer against out of pocket loss payments in the event that their unit is totalled
• And more…

In some quarters, there is a reluctance to offer these products.  Some believe that they are “rip-offs”, others believe that they are just too much trouble.  They are neither.  Your customers are buying a lifestyle and all of these products are designed to protect and enhance that lifestyle – and they do – in every case.

Once you start doing this, you do incur certain responsibilities, and, yes, liabilities.  You MUST guarantee that every customer you sell to gets to hear about every (relevant) Optional Protective Product every time (clearly, cash buyers don’t get offered GAP and people buying a boat with a Mercury engine don’t get offered a Yamaha warranty).  Cash buyers must be offered all the relevant products.  Finance buyers must be offered everything – despite the fact that the amount of these products that can be financed may be limited (in which case, they could be added to the down payment.)

Failure to offer everything to everyone could result in significant consequences.  Customers who were not offered available products and who subsequently needed them may hold you, the dealer, liable…and they will be right, every time.

There is straight-forward protection for you.  It is called the “Sign To Decline” or the “Optional Protective Products Disclosure”.  During Closing/Delivery, the customer signs a document stating that they have been offered and that they have chosen to decline whichever products they declined.

Two things can happen when the customer is presented with this document.  They can sign, and you are protected, or they can ask questions – now you have another chance to sell more.  It doesn’t get better than that.

Make more money and sleep better at night – how good does that sound!

Dealer Profit Services, LLC can help. Whether you want someone to take over your F&I and just drive profit to your store, help you some of the time, need some quick advice or just provide F&I Training/Consulting, we are here to help you. Contact us anytime at info@dealerprofit.com or give us a call at (470) 326-0966. 

Get Down With The Down!

By Myril Shaw, Dealer Profit Services

"Can I get $0 down?"

How often do you hear that?

Here is the issue!

The natural instinct for every salesperson and for almost every finance person is to say, "Well, we'll see what we can do!"

While that may seem right…it is a horrible answer for the deal.

Of course, you need to be respectful to the customer.  You also have to be respectful of your store, your business and your job.

While the Hypocratic Oath of selling is, "First Do No Harm," the oath of the position is, "Lock It In and Maximize."

A large down-payment does so much for a deal…and a zero-down rarely does anything good.

When you say, in response to, "Can we get $0 down?", "We can look at that – although typically our lenders our looking for 20% down – this is a luxury purchase which is not like a Ford, so the requirements are different.  What can you put down?", this is game changing response.

What does a large down payment do for a deal?  Let's count the ways:

1)    A large down payment indicates commitment to the deal – you know that these people want to make the purchase and that they are financially prepared to;

2)    A large down payment decreases the Loan-to-Value is a very positive way and ensures that the terms on the balance will be as favorable as possible;

3)    A large down payment increase the amount available for backend sales in two ways: first, it simply opens up cash for backend sales; second, it indicates that you can have a conversation about increasing the down payment to include more backend that is effectively paid for with cash – or to reducing their large down payment and including more backend.

Offering $0 Down may be good for the car guys, and it may be polite for the rest of us…it is horrible business for the rest of us.

Reach for 20% down all the time, settle for 10% and politely grumble about less.  It reality, the customers' credit profile, or the price of the unit they are buying, may drive some of this in any case – the moral here is that when it comes to down payments, bigger is better!

I'm down with the down!

Sound familiar?  Let me know at myril@dealerprofit.com.

Make it a practice to do quarterly training with both Sales and F&I on best practices, and make sure to include these Top 10 warnings.

You maximize your F&I profits when you treat F&I as a full sales lifecycle process and not just a single point, isolated profit center event.

Dealer Profit Services, LLC can help.  Whether you want someone to take over your F&I and just drive profit to your store, help you some of the time, need some quick advice or just provide F&I Training/Consulting, we are here to help you.  Contact us anytime at info@dealerprofit.com or give us a call at (470) 326-0966.